Friday, 30 April 2021
The Economic Content of Narodism, Chapter 4 - Part 21
Struve's analysis remained at the level of abstraction, to which he tacks on his Malthusian doctrine about overpopulation arising due to population rising more than proportionally to the means of subsistence. But, there is nothing, even in his own presentation, that confirms such a thesis, and that cannot be explained by Marxism. If we start with a more or less equal and uniform peasantry, the introduction of commodity production means that, even initial minor variations become exaggerated, in the manner described by chaos theory.
Market fluctuations, the small initial advantages of of some producers compared to others, results in money accumulating with some, with which they buy additional animals, more and better implements etc. As a result, their initial advantages are magnified. They accrue more money, they buy more animals, more implements and rent additional land. They employ additional labour. Even if they buy this labour as a labour-service (rather than as wage labour, i.e. labour-power) it produces, for them, surplus value, because, employed on their land, with their superior implements, and animals, it acts like complex labour. But, as the rich farmers accumulate more money, and some peasants are ruined, and must sell not a labour-service, but their labour-power itself, so the money in the hands of the rich peasants becomes capital. They now employ labour as wage labour. They pay the labourer only wages, equal to the value of their labour-power, appropriating surplus value as the difference between those wages and the new value their labour creates.
Lenin, again, sets out, here, the stages this passes through as capital in different forms exploits the peasant, who at first retains their own means of production, and engages in extensive agriculture, on an inefficient and irrational basis.
“Capital can exploit peasants in the grip of ruin as long as they retain their farms, and, letting them carry on as before, on the old, technically irrational basis, can exploit them by purchasing the product of their labour. But the peasant’s ruin finally develops to such a degree that he is compelled to give up his farm altogether: he can no longer sell the product of his labour; all he can do is to sell his labour. Capital then takes charge of the farm, and is now compelled, by virtue of competition, to organise it on rational lines; it is enabled to do so thanks to the free monetary resources previously “saved”; capital no longer exploits the peasant farmer but a farm labourer or a day labourer.” (p 483)
Marx made clear – Theories of Surplus Value, Ch. 9 – that Sismondi was only right in pointing out the evils of capitalist production, as against those economists who denied that contradiction. He was wrong in not recognising that, despite those evils, capital carries out a progressive historic role.
Will The DUP Bus In Poots?
Probably like most people, until a couple of days ago, I had never heard of Edwin Poots, despite him serving as the MLA for Lagan Valley for the last 23 years, and currently being the DUP's Minister for Agriculture, Environment and Rural Affairs. He has come into he limelight after throwing his hat in the ring to replace Arlene Foster as DUP Leader, after she was unceremoniously dumped by the DUP, following the disastrous turn of events they have faced in the last two years.
Poots, of course, will face opposition from better known DUP politicians, such as Ian Paisley and Jeffrey Donaldson MP, as well as Gavin Robinson MP. Even by the Neanderthal standards of the DUP, Poots is a wacky reactionary. He believes the Earth is only 7,000 years old, and believes in Creationism, rejecting the theory of evolution. Not surprisingly, his views on LGBT rights, and on women's rights are equally Palaeolithic. His reactionary nationalist views are of a similar vein. He would pose a bigger problem for Boris Johnson than has Arlene Foster, because he would be likely to take a harder Unionist line, in demanding that Johnson remove the border down the Irish Sea that he imposed, as part of Britain getting a trade deal with the EU, that minimises the losses to Britain from Brexit.
Johnson, of course, is not going to do that, for the simple reason that he agreed to that border in the Irish Sea, because, unless he was going to agree to the deal that Theresa May had agreed, or else unless he agreed to Britain openly remaining in the Single Market and Customs Union, the only route to a deal with the EU resided in the Protocol, and the Irish Sea Border. Had the DUP supported May's bad deal, they would have avoided, Johnson's even worse deal, but they made the mistake of believing anything that Johnson says. Its basically that, which Foster has now paid the price for, but it was the DUP as a whole that fell for Johnson's lies.
Indeed, had the DUP opposed Brexit, back in 2016, they may have swung enough votes to prevent it, given the wafer thin majority with which it was approved. It would have certainly further undermined any constitutional legitimacy that the vote had, given that Scotland and Northern Ireland voted decisively against it. But, the DUP's own stupidity and reactionary politics drive them into the Brexit camp. Like most Brexiters, they probably thought they would lose the vote, anyway, and so they were free to engage in political grandstanding without having ever o face the consequences.
For the DUP, those consequences are quite clear. They have alienated even a significant chunk of Protestant voters, and that the most important part, the younger voters, who will have votes in elections for years to come. Those voters grew up with all of the advantages that the EU brought with it, and that now, the DUP and Boris Johnson have, at least to an extent, ripped away from them. Their only protection from having all of that ripped away completely now resides in the non-unionist parties in Northern Ireland, as well as in the EU, most immediately represented by the Irish government. It is the EU, and the Irish government that has protected the rights of Northern Ireland citizens, by insisting on the Protocol, which keeps Northern Ireland inside the EU, for all intents and purposes indefinitely.
By putting the border down the Irish Sea, between Britain and Northern Ireland, Boris Johnson effectively signalled that he sees the inevitable progress of Northern Ireland being into a reunification with the Irish Republic. The trade deal that Johnson signed with the EU, has been an inevitable disaster for Britain, with exports having crashed. But, essentially, Northern Ireland is in the EU, and so the same problems of British exporters have been replicated now into Northern Ireland also. That means an acceleration in the integration of the Northern Ireland economy into that of the Republic, that was taking place anyway, and a corresponding severing of the economic relation between Northern Ireland and Britain, just as Brexit means an inevitable reduction in the economic ties between Britain and Ireland as a whole, as the latter re-orientates much more to trade with the rest of the EU.
If the DUP does choose Poots as their next leader, it will be fitting. To have as their Leader someone who most of us have never heard of, whose views are so reactionary that even many young Protestants will be turned away from, is just a reflection of the fact that the DUP itself has pursued a policy that has led to its own increasing irrelevance.
Thursday, 29 April 2021
The Fed and Inflation
Yesterday, the US Federal Reserve kept its policy stance unchanged. It recognised in its statement that the US economy is surging, and that inflation is rising. However, it argued that employment is still below pre-lockout levels, and that the inflation was mostly “transitory”. In his press conference, Fed Chairman, Jerome Powell, said that they knew how to deal with inflation, and that, if it started to become entrenched, they would act. The Fed is trying to calm financial markets, particularly bond markets, which have seen inflation rising sharply, and have begun to raise interest rates, reflected in the sell-off of bonds and rising bond yields.
Powell spoke about the strength of the US housing market, but was then asked, in that case, why is the Fed still buying $40 billion of Mortgage Backed Securities (MBS) each month? Powell seemed to have no answer to this question, other than to say that the Fed had always bought some MBS's from the start of QE, as one means of adding liquidity to the system. Anyone who has read about the 2008 financial meltdown, or seen the film The Big Short, will know that it was the selling of mortgages to people who, in many cases, would not be able to them back, in the case of rising interest rates, which led to the inflation of house prices, and which led to the creation of Mortgage Backed Securities as a means of continuing to issue those sub-prime mortgages, which was a spark for the crisis. It was outright manipulation, and possibly fraud, which enabled that to continue, with the MBS's being given AAA credit ratings, by the credit agencies that enabled money to continue to pour into investments that were essentially worthless. What the Fed is doing is pretty similar, except, it is simply buying those MBS's directly itself. If it didn't, and so put a safety net underneath them, many speculators would probably not touch them with a barge pole.
In other words, it is similarly interested in keeping inflated asset prices inflated, not just property, but also MBS's, and other derivatives. The argument that the economy needs this monetary stimulation is clearly nonsense. The US economy grew by 6.4%, in the first quarter of this year. Its likely to grow by more than 10%, in the second quarter, as the country opens up, and fiscal stimulus begins to ramp up demand. It feeds into a global economy that is also surging, causing primary product and agricultural product prices to soar. Demand is rising so fast in some sectors that demand for microchips has led to shortages, with an increasing number of companies having to curtail their own production of commodities, because they cannot get the chips they require.
Although employment and unemployment is uneven, with some jobs disappearing, and others will disappear as furlough schemes end, in other sectors, firms can't get the workers they need, resulting in wages being bid up rapidly. Yet, the opening up of economies, and effects of oceans of liquidity fed out in income replacement schemes, direct payments from government and so on has not even begun to show up in the data. The US PCE deflator data, which is a measure of inflation, looks to be coming in at between 3.5 – 4.0%, whilst the current reading of inflation is itself 2.6%. Yet, as set out previously, the inflation data is itself massively understated, because its compiled using baskets of goods that in many cases cannot be bought due to lock-outs, but under-represents or misses out all those goods that consumes have been buying during the lock-outs, and whose prices have risen sharply. The real level of inflation is already around 10%, when adjusted for the effects of lockouts. One survey done for the BBC showed food prices rising by around 23%.
The problem for the Fed is that inflation is already here. It says its transitory, and will act if it seems to be resulting in higher inflation expectations, but by then it will be too late. It will only take a few months of consumers and businesses seeing prices rising sharply for them to factor that trend into their expectations. Most know the inflation is already here, and as the economy opens up, and surges in demand hit sector after sector, as the huge amounts of liquidity surge into pumping up monetary demand, it will not just be microchips whose supply is inadequate to meet that demand. The first response of firms will be to hike prices, as has already been seen on previous occasions when lockouts were temporarily lifted. Seeing that surging demand, and rising money profits, as inflation rises, they will seek to expand their own production rapidly, but will hit the same kinds of bottlenecks when it comes to their suppliers, and available workers.
Suppliers will then also hike prices, and as firms scrabble to get workers, they will have to offer higher wages, meaning that existing workers will demand their own wages be increased. All of the additional costs that have been imposed as a result of the fracturing of supply chains, dependent on Just In Time, will mean that these costs will be increased further, Britain will suffer even more because of Brexit, breaking those supply chains and imposing increased costs to an even greater extent. The US is forecast to create at least 7 million jobs over the coming Summer. Its not just the number, but the speed of creating them that represents a problem for firms.
The Fed says it knows how to react, and will not fail to do so, but the trouble is that it takes two years for changes in monetary policy to feed through into the real economy. So, if the Fed waits until the Summer to raise its policy rates, it will not be until the Summer of 2023 that this begins to impact inflation. In other words, in the intervening months, inflation would most certainly have become well embedded in expectations. It would mean the Fed would end up well behind the curve as bond markets continue to sell off, and yields begin to rise. The Fed would become rapidly side-lined from real events, an occurrence it is not likely to relish. The only way it would be able to regain control would be to raise its policy rates sharply, in the way that Paul Volcker did in the 1980's, but that would mean raising them very sharply indeed, because the intention would be to cause a recession to slow the economy, and, thereby, rein in the inflation.
There is another problem, here, due to the ridiculously low absolute levels of its current policy rates. For large companies, the consequence of QE, and the bond buying of the Fed, has been that they too could issue bonds at high prices/low yields, i.e. they too could borrow cheaply. That is because, rather than using the funds raised by such bond issuance for productive purposes, they have used it to buy back shares, to boost balance sheets, and make capital transfers to shareholders. Smaller firms have, meanwhile, been in no such fortunate position. Most of them could not borrow money, because banks have used money also to buy financial or property assets, or lend to those engaged in such activity. Small firms have had to rely on their own personal financing, to borrow on credit cards, and other high cost sources.
So, for large companies, if the Fed raises its policy rates from the current 0.25%, to even 1%, the effect of this, in deterring borrowing and investment by big firms, is going to be negligible. A company that sees its money profits rising by 20-30%, as demand soars, and inflation pushes its prices higher, is not going to be deterred, by having to pay an extra 0.75% to borrow the money to cover its expansion. In the 1980's, Volcker had to raise US policy rates into double digits, to cause the economy to slow, and persuade people to save money rather than borrow it, taking it out of circulation, and so causing inflation to be curbed. Yet, the 1980's was actually a period of long wave downturn and stagnation, albeit in the early 1980's a period of stagflation. The rate of profit in the early 1980's was still low, having been increasingly squeezed by rising wage share during the 1960's and 70's.
Today, the rate of profit is high, and we are in a period of long wave uptrend that has merely been hibernated by the deliberate policies of governments and central banks to slow the economy, and divert money into financial assets. Slowing the economic surge that is coming will be much harder than it was for Volcker in the 1980's. Yet, it has been precisely in order to inflate asset prices that central banks have bought those assets, and, thereby, reduced yields, in many cases even to the extent of producing negative yields. The process of capitalisation, which determines the pries of assets, means that asset prices move in a proportionally opposite direction to interest rates. If interest rates double, asset prices halve. The problem then becomes pretty obvious. If the Fed doubles its policy rate from 0.25% to even just 0.5%, and this is reflected in yields through the economy, then the prices of assets are halved. If it raises rates to 1%, then asset prices fall to a quarter of where they are now. That would take the Dow Jones back to around 8,000.
Now, its not entirely that simple, because the other factor involved, is the actual revenues these assets produce. If a combination of a surging economy, plus inflation means that company profits increase rapidly, then they can also pay out more in dividend/interest, so that revenues increase, and that would offset some of the effects of capitalisation. But, given that, in order to try to restrain the economy, and so inflation, the Fed would need to be raising interest rates way beyond 1%, the problem it faces can be seen. More significantly, and the reason it is wanting to try to placate the bond markets currently, is that long before it moves, the real interest rates in the economy would already have been moving up sharply, and the bond markets selling off.
So, far, the commentary on interest rates is only focussed on rising inflation, but as I pointed out some time ago, its not primarily inflation that causes interest rates to rise, but a shift in the balance between the supply and demand for money-capital. As CNBC Bond Market reporter, Rick Santelli, said last night, what bond traders are looking at is not just rising inflation, but the huge amount of borrowing that has already been undertaken, but not yet manifest in new bond issuance, by governments, to cover it. That is before we consider the $2 trillion of additional borrowing that the Biden government is proposing, which will almost certainly grow much larger in coming months, and is matched by similar borrowing by governments across the globe. And, as businesses seek to quickly ramp up their production to meet all of this rising demand, they too will have to borrow massively to fund it, as well as using much larger proportions of their own profits to fund such expansion. In short, the demand for money-capital is rising, to coin a phrase exponentially, whilst the supply of money-capital gets reduced.
It seems unlikely that the Fed could now raise interest rates as sharply as would be required to slow the economy, in these conditions, so as to get inflation under control. What is for sure, the idea that central banks are not going to raise their policy rates until 2023, is nonsense. They will have to raise rates this year, and even then they will be way behind the curve as market rates of interest rise, and bond markets sell off sharply. The first response of central banks seeing such sell-offs in asset markets will be to double down in trying to print money tokens to buy up those worthless paper assets. They will do that, because they still want to inflate those prices so as to protect the paper wealth of the top 0.01%, who own all of their wealth in the form of this fictitious capital. But, in these new conditions that will not work. The borrowing is going to fund consumption, both unproductive consumption and productive consumption, feeding through into additional demand, which with rising liquidity simply means further rising inflation.
A huge crash in asset prices is now inevitable, a crash that will make 2008 look like a blip.
Michael Roberts and Historical Materialism - Part 7 of 12
Marx's theory requires a recognition of the role of The Law of Value as a natural law, applying throughout all modes of production, and then an historically specific analysis of the conditions existing under any particular mode of production. That means that categories themselves have to be understood as historically specific. Yet, Roberts says,
“Then from 1450 to 1600 the population (and labour supply) recovered and real wages fell. In 1630, the English economy was back to almost exactly the same point it was at in 1300.”
This is a strange argument for a Marxist to make. Capitalist production begins in the towns in the 15th century, as the towns grow, creating the minimum size of market required for capitalist production to be able to undercut the independent handicraft producers. Its why, as Marx describes, capitalism has to begin in the towns and such industrial production rather than in agriculture.
Engels spells it out clearly in his Supplement to Capital III. He describes the first areas in which a capitalist industrial rate of profit is established. Indeed, a study of Marx's analysis of capitalist rent, itself shows that you cannot have capital invading agriculture, and producing capitalist rent (surplus profit) unless first you have had developed an average annual industrial rate of profit, which determines what is a surplus profit and what is not! The first areas listed by Engels, of capitalist production are shipping, mining and textiles.
"Shipping on the scale practiced by the Italian and Hanseatic maritime republics was impossible without sailors, i.e., wage-laborers (whose wage relationship may have been concealed under association forms with profit-sharing), or without oarsmen — wage-laborers or slaves — for the galleys of that day. The guilds in the ore mines, originally associated workers, had already been converted in almost every case into stock companies for exploiting the deposits by means of wage-laborers. And in the textile industry, the merchant had begun to place the little master-weaver directly in his service, by supplying him with yarn and having it made into cloth for his account in return for a fixed wage — in short, by himself changing from a mere buyer into a so-called contractor.
Here we have the first beginnings of the formation of capitalist surplus-value. We can ignore the mining guilds as closed monopoly corporations. With regard to the ship-owners, it is obvious that their profit had to be at least as high as the customary one in the country, plus an extra increment for insurance, depreciation of ships, etc. But how were matters with the textile contractors, who first brought commodities, directly manufactured for capitalist account, into competition with the commodities of the same sort made for handicraft account?"
Engels describes this initial development of capitalist production, as industrial production in textiles, as the merchant capitalists becoming buyers up, as Lenin describes also in Russia, and then actual employers of former independent producers as wage workers. As Engels describes, in conditions where these independent producers still have their own small plot of land, in the towns, to provide for their own subsistence, its not their labour-power they have difficulty in reproducing, but the value of their means of production. The greater the proportion of means of production in their output, i.e. the higher the organic composition of capital, the bigger a problem this is for them. So, for those independent producers who fail, it is those whose production has such a high organic composition that first lose them, and become dependent upon merchant or money-capitalists to provide them. Where the merchant sold means of production to the independent producer, now they provide them free, but appropriate the ned product in return only for a payment of what amounts to wages.
But, Marx in Theories Of Surplus Value, as with Lenin's account in "On the So Called Market Question", and other essays, and most notable in "The Development of Capitalism in Russia", describes how the more efficient independent commodity producers, were also able to accumulate capital, and become capitalist producers.
And, it is this process, again as Lenin describes in "On The So Called Market Question", which undermines the domestic industrial production of the peasant households, upon which they increasingly relied for money revenues, which leads to their ruination, and conversion into wage labourers too, creating the basis for a large market for agricultural products and the invasion of agriculture by capital.
"The next step in the subjugation of industry by capital takes place through the introduction of manufacture. This, too, enable the manufacturer, who is most often his own export trader in the 17th and 18th centuries — generally in Germany down to 1850, and still today here and there — to produce cheaper than his old-fashioned competitor, the handicraftsman. The same process is repeated; the surplus-value appropriated by the manufacturing capitalist enables him (or the export merchant who shares with him) to sell cheaper than his competitors, until the general introduction of the new mode of production, when equalization against takes place. The already existing mercantile rate of profit, even if it is levelled out only locally, remains the Procrustean bed in which the excessive industrial surplus-value is lopped off without mercy.
If manufacturing sprung ahead by cheapening its products, this is even more true of modern industry, which forces the production costs of commodities lower and lower through its repeated revolutions in production, relentlessly eliminating all former modes of production. It is large-scale industry, too, that thus finally conquers the domestic market for capital, puts an end to the small-scale production and natural economy of the self-sufficient peasant family, and places the entire nation in service of capital. "
(ibid)
But, its precisely for this same reason that the numbers of wage workers employed in capitalist production remains tiny, compared to the number of petty-commodity producers, and peasants. Indeed, as Marx writes in The Critique of the Gotha Programme, even in the middle of the 19th century, in Germany, peasants comprised the majority of society.
So, the role of wages in relation to living standards, for the majority of society, can play little role during this period. This analysis seems similar to that of Lange, which was criticised by Marx, and of Struve, who utilised Lange’s argument in relation to Russia, and was criticised by Lenin, who also dismissed Lange’s argument. Even if we assume that the number of non-capitalist wage workers increased – in other words workers employed by the feudal lords as retainers etc., and paid wages – this still represents a small proportion of society.
As Lenin points out, dismissing this same argument from Struve and Lange, its not wages that determine the living standard of the direct producing peasant, but a) the fertility of their land, and b) the proportion of their product taken from them by the landlord in feudal rents, by the Church in tithes and the state in taxes. What does happen, during this period of growing capitalist industry in the towns, is that the feudal lords find themselves requiring a larger surplus product, as commodity economy expands, and they seek to buy this wider range of industrial products, especially, as Marx explains, given the towns, on the basis of this capitalist production, begin to exploit the countryside via unequal exchange.
The growing merchant class bring in exotic products from oversees, as global trade expands, also creating a basis for capitalist industrial production, as Marx sets out in The Manifesto. The feudal lords arena of consumption is expanded, and its this which causes the landlords to not only move from Labour Rents, through Rent in Kind to Money Rents, as they need money to buy this expanded range of industrial commodities, but leads them to increase the proportion of the peasants output that must be handed over as rent. Its that which impacts the living standards of the peasants not changes in wages, given that the peasants, be they serfs or freeholders, are not paid wages!
The need of the peasants to acquire money to pay rents, tithes and taxes, where previously they only needed to supply surplus labour or surplus product, means that peasants must now also begin to produce commodities, rather than engaging entirely in direct production. As Lenin describes, its this boost to commodity economy, as the peasants must engage in increased domestic production, and begin to divert a portion of their agricultural output to commodity production, to sell to an increasing town workforce, which creates the basis for the differentiation of the peasantry, which is not possible until capitalist development in the towns promotes this demand for agricultural commodities, and so, commodity production in agriculture. Even, then, of course, as Marx describes, and Lenin also establishes in “On The So Called Market Question”, this commodity production in the countryside is not capitalist production, unlike that already established in the towns. But, the commodity economy now implanted in the countryside creates the basis for the differentiation of the peasantry into proletarians and bourgeois, just as the differentiation of the independent commodity producers in the towns had done previously.
Wednesday, 28 April 2021
In The Elections Support Pro-EU Candidates
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| Rejoin The EU - Build A Workers' Europe |
Lenin advised the British Communists to remain in the British Labour Party, despite its own bourgeois ideology, which developed from the bourgeois ideology of the trades unions that created it. But, in none of these cases do Marxists simply give support to these Workers' Parties uncritically, or remain silent about the bourgeois nature of the politics these organisations inevitably are burdened with, when they are initially created. Nor do the Marxists give up their own organisation or political programme. Any mass workers' party inevitably arises on the basis of bourgeois ideas, because the working-class itself is imbued with those bourgeois ideas, the ruling ideas of the age, until it is freed from them, by a combination of its own experiences, and the drawing out of the lessons of those experiences, by the Marxists. Indeed, that is one reason the Marxists have to belong to those organisations, to get the ear of the workers, and to go through those experiences with them, so as to draw out those lessons, to educate, agitate and organise them.
In Britain today, the Labour Party fulfils this role of Workers Party, despite its bourgeois ideas, and despite it moving rapidly rightwards under the leadership of Keir Starmer. We can never let these ephemeral and superficial movements in the bourgeois ideology of the Workers' Party, sometimes more to the right, sometimes more to the centre, change our fundamental assessment of what it represents, and so our orientation towards it, which actually means our orientation to the working-class, whose party, for good or ill, it continues to be. All Marxists should be a part of the Labour Party, on that basis, to continue to play that role of gaining the ear of workers, so as to draw out the political lessons of their experiences, to continue to educate, agitate and organise that working-class within the party, so as either to fundamentally change, or, more likely, to create the mass working-class support for a new Workers' Party, a party with not bourgeois, but socialist ideas as its basis.
So, as members of that party, Marxists obviously call for support for Labour in elections. They do so, not on the basis of the sectarians, such as the SWP, or the Socialist Party, who for 99% of the time remain aloof from it, and so from the working-class, whilst giving uncritical support for Labour during the elections, but on the same basis that they conduct their activity 100% of the time inside the party, of continuing to educate, agitate and organise those workers inside the party and amongst its supporters. Elections, for Marxists, are a time when the political lessons can be drawn out most sharply, and so when their critique of the bourgeois politics of Labour should be emphasised even more forcibly, and the alternative to them provided.
In the elections next week, therefore, Marxists will call for a vote for Labour, but not uncritically, especially given the rapid shift to the right of the party under Starmer, and its undignified collapse not just into reactionary nationalism, with its support for Brexit, for the uncritical support given to Johnson's protection of British war criminals, his tightening of immigration controls, and general jingoism, as Starmer attempts to wrap himself in the flag, but even into reactionary parochialism as witnessed by its opposition to the creation of a European Super League, on the ridiculous grounds that football fans are only those that live in the home town of any club! Marxists will call for a vote for Labour, because they see through these current right-wing politics, to the basis of their activity in the party itself, which is to gain the ear of workers, primarily the most advanced section of those workers, to provide them with an alternative to organise around, and so create the conditions for ending the dominance of the reactionary politics.
But, the fact remains that the decisive issue of the day continues to be the rise of reactionary nationalism, and now reactionary parochialism. The latter is not just reflected in Labour's reactionary parochialist opposition to the ESL, an opposition that has been mirrored by much of the Left, which itself has drifted deeper and deeper into the mire of separatism, and nationalism, but also reflecting that seen in the creation of the Northern Independence Party, an idea so ludicrous that when I first heard about it, I thought that it was somebody who was just taking the piss to illustrate how ridiculous and reactionary those nationalist and separatist ideas actually are. This reactionary nationalism is the biggest threat to the labour movement we face. We must confront it mercilessly, and drag the labour movement out of that mire. The first stage of rebuilding the labour movement is that it should be able to breathe clean air, freed from that choking stench of nationalism and separatism. The tip of our spear is the militant struggle for internationalism, which following Brexit, means a demand to reverse that disaster, and to re-join the EU at the earliest opportunity, and begin the task of building a Workers' Europe.
In the last few decades, as conservative governments favoured the petty-bourgeoisie, which, at least in the developed economies, grew in relation to large-scale capital, that petty-bourgeoisie has asserted itself over those conservative parties, hence Brexit, Trump et al. Being an electoralist party, the Labour Party has responded to this move, by itself trying to compete with the reactionary nationalists of the Tory Party, by wrapping itself in the butcher's apron, which is a strategy guaranteed to fail. Voters will always spot a fake, or a pale imitation, and vote for the real thing, not the pale imitation. Its why, under Starmer, Labour has gone backwards, even from the disastrous position that Corbyn's reactionary nationalism left it in.
Worse still, large sections of the Left, influenced over the years by the reactionary nationalism of Stalinism, and Left reformism, itself is characterised by the same reactionary nationalism, demonstrated by its own opposition to the EU, and so on. Much of that Left is characterised by Sismondism rather than Marxism. In other words, its politics is based upon a visceral hatred of capitalism, rather than a passionate desire to build socialism. Instead of seeing, as Marx did, that the path to Socialism leads through the continued development of capitalism, and the heightening of its contradictions that brings, much of the Left sees its role being to instead hold back the development of capitalism, or even to turn back its existing development, to less mature forms. That is what opposition to the EU is about, what the desire to destructively break up the UK is about and so on. This is the stance of the petty-bourgeois reactionary, and romantic, not the Marxist.
This same position was taken by the Russian populists, or Narodniks. Lenin points to this attitude expressed by one of them, who thought that the role of the western labour movement had been, and was to engage in such holding back of development, and that they should aim for the same thing in Russia. Lenin responds,
“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.”
(The Economic Content of Narodism, CW2, p 353)
The EU, and the ESL are such manifestations of capitalist development, and it is no part of a Marxist programme to oppose such development, or to call for it to be reversed. Rather our task is to represent and further the interests of the workers within that progressive development, so as to move closer to Socialism. The fact, that we have seen the rise of reactionary nationalism and parochialism, not just on the right, but also on the left, as well as opportunistically in the centre, is indication that this remains the most important class issue of our day. The job of Marxists is to stand against it all the more militantly.
The future of Britain inevitably remains in the EU, and Brexit is merely a temporary dead-end within that historical journey. The Brexit that the Brexiteers promised has not, and could not happen, because it was an impossible utopia, in which Britain would have all the benefits of being in the EU, without bearing any of the costs or responsibilities of membership. Britain has had to agree to abide by EU regulations, whilst now having no say in the formulation of those regulations. Its exports to the EU have crashed as, even with the trade deal, it faces mountains of paper work, and the costs that go with it, simply to show that it is complying with those regulations. Its fishing industry, has been effectively destroyed by Brexit. And, Brexit is creating inevitable centrifugal forces in Britain itself, with the most obvious being the creation of the border down the Irish Sea, leading towards a United Ireland, and increased support for Scottish independence, and now even growing support for Welsh independence. The idiocy of the Northern Independence Party, shows just how these centrifugal forces have been strengthened, not just tearing the unity of the state apart, but the unity of the working-class along with it.
In the elections, therefore, Marxists should support those Labour candidates that offer a clear pro-EU position, and the perspective of taking Britain back into the EU at the earliest opportunity. The victory of Biden, against Trump, has been a boost, particularly given Biden's own pro-EU stance, and consequent hostility towards Johnson. The EU continues to tear the Tory party in two, which is what is happening now, following the expulsion of Cummings and the Leave.EU crew from Downing Street. Again, Starmer has failed, given his own pro-Brexit stance, to run with this, instead focusing on the more or less apolitical issue of Johnson's home décor! It is mirrored in the absence of any politics from the literature of any Labour candidates in the upcoming elections, which makes it increasingly difficult for any socialist to enthusiastically support any of its candidates.
However, where they exist, we should support such pro-EU Labour candidates, and draw out the lesson that our perspective is not just for the development of the EU, but for the creation of a Workers Europe, on the basis of a united struggle by workers in all countries, for socialist policies. All resources should be mobilised to support those candidates, and elsewhere, we should develop pro-EU, anti-nationalistic programmes, to pursue, drawing in as many Labour Party members, trades unionists and so on as possible.
In 2017, Labour's vote increased substantially, because its anti-Brexit stance was able to draw in the support of Greens, Liberals, and others, as the only possible means of stopping Brexit, and certainly a hard Tory Brexit. Corbyn, by shifting back to his traditional pro-Brexit stance, in 2019, threw all of that away. Starmer, has gone further. He too has collapsed into reactionary nationalism and support for Brexit, along with all of the other jingoistic, flag waving positions he has adopted, but he has also lost the more radical social-democratic policies that Corbyn had mobilised support around. Its no wonder that Starmer is left flailing, as he slowly sinks beneath the waves he wants Britannia to rule once more. The likelihood is that Labour will be hammered in these elections, though the media's attacks on Johnson, in the last week or so, appear designed to try to mitigate that loss. They don't want Starmer to look too bad compared to Corbyn, after all.
In developing our anti-nationalist/pro-EU agenda for the elections, we should seek to win back those Greens and Liberals that Labour won over in 2017. It seems inevitable given the reactionary nationalism of Labour, combined with its complete lack of any political message in its election material, that this will be a hard task, and, just as many Labour members have left to join these organisations, many more progressive Labour voters, not just in the cities, but also in those red-wall seats, will give their votes to these parties too, which will enhance the losses suffered by Labour. Our message to those Greens and Liberals is to join with those of us that continue to argue for a progressive, socialist and internationalist programme within Labour, to continue that work to educate, agitate and organise those progressive and internationalist forces, to bring about the change we need, and to put a halt to the drift into the mire of reactionary nationalism and parochialism. In the end, until we build a mass Workers Party, built upon the ideas of international socialism, the reality remains that the Labour Party is the only Workers' Party we have, and it continues to be the case that the way forward runs through it.
Workers of The World Unite
Rejoin The EU
Build A Workers Europe
The Economic Content of Narodism, Chapter 4 - Part 20
II - How Mr. Struve Explains Some Features of Russia’s Post-Reform Economy
Struve correctly notes that, in the 20 years following the Reform, the rise in agricultural prices was largely to the benefit of the landowners and prosperous peasants. He notes that differentiation of the peasantry had to increase, and, on the basis of the comments of local investigators, notes that the construction of railways raised the living standards of prosperous peasants who geared more production to the markets these railways opened up. The prosperous peasants, thereby, sought to rent additional land, bringing them into conflict with poorer peasants, with the former inevitably coming out on top. He cites Postnikov's work, showing that 40% of the sown area of the prosperous peasants was devoted to the market, whereas the poorer peasants increasingly lost their independence, and were reduced to selling their labour-power. Struve notes,
““The development of money economy and the growth of the population,” says the author, “lead to the peasantry splitting into two parts: one that is economically strong and consists of representatives of a new force, of capital in all its forms and stages, and the other, consisting of semi-independent peasants and real farm labourers” (239).” (p 481)
Struve, therefore, arrives at the correct conclusion that what we have, here, is not just an increase in quantitative inequality, but a qualitative change, the creation of a new social force, a new form of property. Its not just that prosperous farmers have become even more prosperous, but that they have acquired capital, and this capital also enables them to appropriate surplus value from which they can produce even more capital. They appropriate the surplus value from those that do not own capital. Where, previously, merchant capital and usurer's capital appropriated surplus value from the producer, in the form of commercial profit and interest – unequal exchange – the capitalist farmer now appropriates surplus value directly, in production, from their labour. The merchant and usurer appropriate surplus value by unequal exchange, but the capitalist farmer engages in a process of equal exchanges of values with the wage labourer. They pay the wage labourer the value of their labour-power, as wages, but appropriate the whole of the new value the labourer produces, by the exercise of their labour, and, thereby, appropriate the surplus value contained in it.
“The creation of this new force is accompanied by the creation of new types of peasant farms: firstly, of a prosperous, economically strong type that engages in developed commodity economy, crowds out the peasant poor in the renting of land, and resorts to the exploitation of the labour of others; secondly, of a “proletarian” peasantry, who sell their labour-power to capital.” (p 481)
Struve notes that this could not occur without commodity production, but as commodity production becomes dominant, these changes become inevitable. But, Struve, even here, cannot escape his Malthusianism.
“... in his view only one side of the matter finds expression in the process mentioned (“only the progressive side”), but in addition to it he sees another, the “technical irrationality of all peasant economy”: “in it expression is given, so to speak, to the retrogressive side of the whole process,” it “levels” the peasantry, smooths out inequality, operating “in connection with the growth of the population” (223-24).” (p 482)
Tuesday, 27 April 2021
Michael Roberts and Historical Materialism - Part 6 of 12
Every theory must be based upon some fundamental law. The theory of evolution on the law of natural selection, the theory of the development of the universe on the law of gravity, and so on. The theory of historical materialism is similarly based on the Law of Value. The Law of Value is the natural law that applies to all societies, and drives the changes within society. It is The Law of Value that determines what can be produced within the constraints of the material conditions existing at any time and place. And, it is The Law of Value that determines that, in order to relax those constraints, Man has to raise labour productivity, so as to be able to produce a greater quantity and range of use values, with the labour at his disposal, and that is done by developing a social division of labour, and by developing the means of production, or instruments of labour. As Marx says in The Critique of the Gotha Programme,
“And what is "useful" labour? Surely only labour which produces the intended useful result. A savage – and man was a savage after he had ceased to be an ape – who kills an animal with a stone, who collects fruit, etc., performs "useful" labour.”
And, this is significant, because already, here, we see a distinction, and the basis of class society. Marx, here, rails against the Lassallean notion that labour is the source of all wealth and culture, and that useful labour is only possible as a result of society.
“Labour is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labour, which itself is only the manifestation of a force of nature, human labour power. the above phrase is to be found in all children's primers and is correct insofar as it is implied that labour is performed with the appurtenant subjects and instruments. But a socialist program cannot allow such bourgeois phrases to pass over in silence the conditions that alone give them meaning. And insofar as man from the beginning behaves toward nature, the primary source of all instruments and subjects of labour, as an owner, treats her as belonging to him, his labour becomes the source of use values, therefore also of wealth. The bourgeois have very good grounds for falsely ascribing supernatural creative power to labour; since precisely from the fact that labour depends on nature it follows that the man who possesses no other property than his labour power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labour. He can only work with their permission, hence live only with their permission.”
(ibid)
Now, the owners of these forces of Nature, be it land, or capital – or in the case of slave societies human labour-power itself – are able to charge a price for it, and, thereby, to extract a portion, or indeed all of the surplus product, or surplus value created by the producer. The owner of land, in feudal society is able to extract rent directly from the producer. Under capitalism, the capitalist farmer extracts surplus value from the labourer, and the owner of land, extracts rent from the capitalist, thereby indirectly appropriating a part of the surplus value created by the labourer. The industrial capitalist extracts profit, because they do not utilise their capital unless they can obtain the annual average rate of profit, and ultimately, that means that workers are not employed, unless they hand over surplus labour to the owner of capital, as the price of being allowed to work. The money-lending capitalist extracts interest from the industrial capitalist, and, thereby, appropriates a portion of the surplus value produced by the labourers, and first appropriated as industrial profit by the industrial capitalist. Herein lies the material basis for the social classes that arise upon these different forms of property, and the social relations that develop between them.
Monday, 26 April 2021
The Economic Content of Narodism, Chapter 4 - Part 19
Struve begins with the unfounded Malthusian proposition that overpopulation arises because population grows disproportionately to the means of subsistence. On that basis, he concludes that agricultural production is inadequate, and so a rise in productivity is beneficial to “the peasantry” even though he has previously said that “the peasantry” does not exist, because it consists of assorted strata.
If Struve had adopted the method of Marxism, Lenin says, he would have approached the matter differently. He should have started with the actual production relations, in Russia, and not with abstractions. He would then have seen that the oppression of the producer, of the individual peasant, was not a result of chance or whim, or of politics (for example in relation to the size of allotment), but was the result of the domination of capital, “which necessarily comes into being on the basis of commodity economy—he should then have shown how this capital destroys small production and what forms class contradictions assume in the process.” (p 479)
The domination of the individual peasant producer by capital first takes the form of that exploitation by merchant's and usurer's capital. As the peasant must increasingly produce commodities, to obtain money, to pay redemption fees, taxes and so on, the more they are dependent on merchants to sell their products in more distant markets, and they are exploited by usurers who charge large amounts of interest on the money borrowed to cover redemption payments etc. But, as part of this process, as markets also expand, the more the merchants and usurers take over the means of production of the ruined producers, and turn the producers into wage labourers. A portion of the merchant's and usurer's capital, thereby, becomes productive-capital.
This productive-capital takes over agriculture as it finds it, as extensive agriculture. That itself means it assumes particular forms appropriate to this more primitive form of agriculture. But, as markets develop, and production increases, capital steadily transforms agriculture into a more rational and efficient form of production. It becomes more intensive. More small producers are ruined, the average farm size increases, and that facilitates the introduction of machines and more scientific methods that raise productivity and transform production into intensive agriculture, with its own specific forms.
“It would then have been sufficient simply to contrast these two successive forms of bourgeois production and bourgeois exploitation, in order that the “progressive” character of the change, its “advantage” to the producer should be quite evident: in the first case the subordination of labour to capital is covered up by thousands of the remnants of medieval relations, which prevent the producer from seeing the essence of the matter and arouse in his ideologist’s mind absurd and reactionary ideas about the possibility of expecting aid from “society,” etc.; in the second case this subordination is quite free of medieval fetters, and the producer is enabled to engage in and understands the necessity for independent, conscious activity against his “antipode.” Instead of arguments about a “difficult and painful transition” to capitalism we would have had a theory that not only spoke of class contradictions but also really disclosed them in each form of “irrational” and “rational” production, and of “extensive” and “intensive” farming.” (p 479)
Lenin concludes that Struve's Malthusian claim that overpopulation in Russia was due to inadequate production of means of subsistence was not supported by the facts, and was based on an erroneous methodology. The Russian overpopulation was a result of the domination of capital. Struve's claim that overpopulation is a consequence of natural-economic relations is only true, in Russia, insofar as such feudal relations continued to exist, and so added to and complicated the capitalist overpopulation. Such feudal remnants act to hold back the development of capitalist relations, and this makes things doubly hard for the producer. They suffer the evils of feudal production as well as the evils of capitalist production, but, by slowing down capitalist development, they limit the benefits the producer obtains from capitalist production, which offset the evils it inflicts upon them. They suffer both from capitalism and from not enough capitalism. At the same time, Danielson did not prove the capitalist nature of overpopulation in Russia, because he did not analyse the domination of capital in Russian agriculture, where most of the overpopulation was created. Both Danielson and Struve failed to analyse the differentiation of the peasantry into a rural bourgeoisie and proletariat, as a result of capital dominating agriculture.
“This ignoring of class contradictions by Mr. Struve naturally led to the fact that the quite correct thesis of the progressiveness and desirability of technical improvements was expressed in an extremely vague and unsatisfactory form.” (p 480)
Sunday, 25 April 2021
Michael Roberts and Historical Materialism - Part 5 of 12
Darwin's theory is based on the fact that biological organisms must physically reproduce themselves, by some form of sexual reproduction, and this process, which we now understand, as a result of the study of genetics, means that those genes that produce certain favoured characteristics are passed on, whereas those that produce unfavourable characteristics are not, because members of the species with them tend to die out more quickly.
Marx and Engels' theory is similarly based upon the fact that, in order to reproduce himself, Man must consume, and to consume, beyond the most primitive human societies, he must produce. Where Marx and Engels' theory differs from that of Darwin, is that biological organisms do not consciously change the material conditions in which they exist – clearly they do change those conditions, but not consciously – whereas Man, and the social organisms he creates, does consciously change those conditions.
As Engels puts it in his Letter to P.V. Lavrov,
“The essential difference between human and animal society is that animals are at most gatherers whilst men are producers. This single but cardinal distinction alone makes it impossible simply to transfer the laws of animal societies to human societies. It makes it possible that, as you justly remark, “Man waged a struggle not only for existence but for enjoyment and for the increase of his enjoyments ... he was ready to renounce the lower enjoyments for the sake of the higher.” Without contesting your further deductions from this, the further conclusions I should draw from my premises would be the following: – At a certain stage, therefore, human production reaches a level where not only essential necessities but also luxuries are produced, even if, for the time being, they are only produced for a minority. Hence the struggle for existence – if we allow this category as valid here for a moment – transforms itself into a struggle for enjoyments, a struggle no longer for the mere means of existence but for the means of development, socially produced means of development, and at this stage the categories of the animal kingdom are no longer applicable.”
What is the driving force then, in this process? It is that Man is driven to produce to meet his needs, and, in the process, is driven to produce by the most advantageous means available to him at the given time and location. As both describe, in fact, where the material conditions are so conducive for Man to meet his consumption requirements, there is little incentive to be inventive in devising means of raising labour productivity. So, the Native American tribes, were able to meet their needs from the large land areas they lived on, and from the fertile land, and ample supplies of bison, and other animals. In Europe, however, Man is led to develop settled agriculture, and to develop industry.
The underlying law of Darwin's Theory of Evolution is then the Law of Natural Selection, whereas the underlying law of Marx and Engels' theory is The Law of Value. Both operate as natural laws, and form the scientific basis for analysing the process of change and diversity. As Marx explains The Law of Value, is such a natural law, in his Letter to Kugelmann,
“Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.”
The Global Economy Is Surging
The global economy is surging. Chinese GDP rose by more than 18% in the first quarter of this year. The IMF forecasts global growth for the whole of 2021 to rise to 6%, with US growth coming in at 6.4%. The 33% bounce back in US GDP in the final quarter of last year, gives some idea of the bounce back that can be expected in the next quarter, as lockouts are ended, especially given all of the stimulus that is being pumped into the economy, and it feeds into stronger global growth, such as that already seen in China. These figures have already been revised sharply upwards since January, and with stimulus packages still being introduced across the globe are likely to be revised upwards sharply again. The Eurozone Purchasing Managers Index, for manufacturing, has come in at a record 63.3 for April, again up from the March figure. The Eurozone Composite Index, which combines manufacturing and the much larger service sector, has also risen to 53.3 for last month. Any figure above 50 represents economic growth.
Yet, the world has not yet fully opened up from all of the government imposed lockdowns that have crippled economies during the last year. When those lockdowns end, in coming weeks, the surge in the global economy is likely to be even greater, and the vast oceans of liquidity that have been released are going to be soaked up by that expansion, as companies scramble to increase output to meet rapidly rising demand, to find available workers, and means of production. Already, the inevitable consequences of that are being seen in rapidly rising inflation of food and primary product prices. As companies seek to expand after a period when their own profits and revenues have disappeared due to lock down, and their balance sheets have been denuded, they are going to need to borrow like there is no tomorrow, pushing interest rates sharply higher. In fact, that is already being seen as companies seeking capital compete with governments that have engaged in huge borrowing to finance furlough and other income replacement schemes, as well, now, as major fiscal stimulus programmes in infrastructure, for capital. Yields on bonds have soared in recent weeks, even though in absolute terms they remain very low.
This illustrates the point I made some months ago in response to Paul Mason. Paul had argued,
“We’ve entered the worst economic slump since 1921, with a global economy that was already stagnant, heavily unequal and debt-burdened. Anyone who thinks the current geopolitical order will survive hasn’t understood the 1930's.”
But, as I pointed out, this is not the 1930's, and although the lockdowns and lock-outs caused the worst economic slow down in 300 years, that was not at all the same as the crisis and depression of the 1920's and 30's, which resulted from an overproduction of capital. There is no overproduction of capital currently. On the contrary, when businesses are allowed to operate, profits remain high, as does the rate of profit. The economic slowdown was a purely self-inflicted wound imposed by governments, not a result of economic conditions. And, because profits are high, when firms are allowed to operate, and the rate of profit remains high, and because, in the main, capital itself has not been destroyed during this period, as soon as firms were, and are allowed to operate, in conditions where huge amounts of liquidity have been pumped into the economy, as income replacements etc., demand surges, businesses raise prices, and obtain even bigger profits, prompting them to want to reap whilst the sun is shining, by expanding their output, which means taking on more labour, buying in more materials and so on.
As I said at the start of the lockdowns, this will be uneven. Some capital has been destroyed. Some small businesses were crushed. Small shops and service providers have gone bust, and the capital they had, small scale but possibly in large numbers, which will only be apparent when furlough schemes end, is no longer functional, unless others come along, in a similar line of business, to pick it up on the cheap. Some large scale capitals have been hit hard, such as airlines, airports, as well as aircraft producers, car producers, and in Britain, Brexit has exacerbated that, but governments are not going to allow these large strategic industries to go to the wall. They will encourage some further concentration and centralisation of capital, through mergers and acquisitions, but they will also be forced to hand over huge sums in bailouts to keep them going, whilst they rebuild revenues and balance sheets. So, when furlough schemes end, we will likely see a sharp rise in unemployment, even as, in other spheres the demand for labour rises sharply pushing up wages. This will be a problem of the wrong type of labour in the wrong places.
But, the 1930's, this most certainly is not. As I said, at the start of the lockouts, what this will do is to accelerate some of the processes that were already underway, such as the death of the High Street, the shift to online retail and so on. But, also what it means is that this surge in economic activity, the surge in demand, causing prices and interest rates to rise sharply, spells the end of the dominance of fictitious capital that has been in place since the 1980's, and which has been sustained beyond its normal bounds, as a result of state intervention via QE to inflate asset prices, and austerity to hold back economic growth.
QE could inflate asset prices only so long as government debt issuance was kept at lower levels, so that, as central banks bought existing bonds, their price rose, encouraging other speculators, and financial institutions to pile money into such speculation, starving the real economy of those funds. But, the astronomical levels of borrowing to fund unproductive consumption, over the last year, which is going to continue and increase into the next year, to finance bail-outs, infrastructure spending and so on, means that bond issuance, and other forms of debt financing is going to rise sharply. As an experiment in MMT, nearly all of the money that central banks might now pump into circulation to buy bonds, is money that is going to feed straight out into the real economy, raising inflation, and spurring further economic activity, which will spur on additional investment, which will spur on even more borrowing, and more economic activity, which will cause interest rates to rise further. The proponents of the Magic Money Tree will want to claim credit for the economic expansion, which would occur anyway, though not at the same pace, but, of course will not want to accept responsibility for the sharply rising inflation, or interest rates, or the crash in asset prices that will result from it, which could again result in attempts at a return to even worse austerity, as the state attempts to protect the ruling class owners of that fictitious capital.
Rising interest rates cause asset prices to fall, because they reduce the capitalised value of the revenues of those assets. With yields on assets at such absolutely low levels, even small absolute rises in rates represent large proportional increases, and correspondingly large falls in asset prices. As asset prices fall sharply, and as economic growth accelerates, it becomes a no-brainer for anyone with money-capital to put it to work productively in real production, where rates of profit will be many times the yields available on assets. The only thing that has driven money into the speculative purchase of assets that, in many cases, already have negative yields, is the prospect of high levels of capital gain, from continued asset price hyperinflation, stoked and underpinned by central banks. Now, that will have gone.
Saturday, 24 April 2021
The Economic Content of Narodism, Chapter 4 - Part 18
Skvortov relates how the building of a railway links the countryside to the towns and cities. Larger markets for agricultural products now open up; agricultural prices rise, and there is an encouragement of additional commodity production, to meet the demand from the towns. This agricultural commodity production is still peasant production. Alongside it, as Marx also describes, had always gone domestic handicraft production. However, now, the same railway brings these same products to the countryside from the town. In the towns, these commodities are produced by large-scale capitalist production, and so undercut the peasant handicraft production. That means the peasants can no longer rely on the additional income from such production, which is one reason that some of them are ruined. The other reason is that peasant agriculture itself is inefficient and haphazard. It is prone to crop failures.
““Agriculture has also been conducted hitherto in a primitive fashion, i.e., always in an irrational way and, consequently, harvest failures are no rare occurrence, but with the building of the railway line the rise in the price of the product, that formerly resulted from crop failure, either does not take place at all or in any case is considerably smaller. That is why the natural consequence of the very first crop failure is usually the collapse of many farms. The smaller the surpluses left from normal harvests and the more the population have had to count on earnings from handicraft industries, the more rapidly the collapse occurs.”” (p 475-6)
So, as capitalist industry develops the old style peasant production is increasingly unable to provide the agricultural and primary products required, even having exhausted the land in trying to do so. That contributes to crop failures that ruin some peasant farmers and, as the towns are connected to rural areas this capitalist production of the towns destroys the rural handicraft production. As peasant farmers are destroyed, capitalist farms arise to replace them and now use efficient, scientific methods that reduce crop failures, prevent the former destruction of the land, and introduce capital intensive methods that require less land for any given level of output. Some of the ruined peasants become agricultural labourers, the rest move to the towns to join the ranks of the industrial proletariat.
The availability of cheap labour-power, as a result of the creation of this relative surplus population, means it is possible to establish factories producing modern agricultural implements, to replace primitive tools, used by peasant producers, and as these are introduced in capitalist farms that steadily increase in size, so productivity is raised further. The more the average farm size increases the this makes it possible to also introduce machines that raise productivity further still.
“Other kinds of industries also develop. “In general there is a development of urban life.” There is a development, out of necessity, of mining industries, “since, on the one hand, a mass of free hands is available and, on the other, thanks to the railways and the development of the mechanised manufacturing and other industries there is an increased demand for the products of the mining industry.” (p 477)
On this basis, a district that was previously densely populated becomes depopulated, as the former agricultural population is dispersed. A much smaller number are now employed in agriculture, but this agriculture now, as capitalist agriculture, is much more efficient in terms both of land use and employment of labour. It produces much more with less. And, the same is true with other primary production. At the same time, the transformation of agriculture and primary production into capitalist production, requires the development of industries to produce the machines and other equipment required for this production.
“Increased intensity is manifested by the change in the system of crop raising. The three-field system is impossible because of harvest fluctuations. A transition has to be made to a “crop rotation system,” which does away with harvest fluctuations. Of course, the complete crop rotation system, which requires a very high level of intensity, cannot be introduced immediately. At first, therefore, grain crop rotation [proper succession of crops] is introduced; cattle-raising, and the planting of fodder crops are developed.” (p 477-8)
All this demonstrates, Lenin says, once again, that technical progress, under commodity production, leads inexorably to bourgeois economy. The farmer, like the petty producer in the towns is divided into those that become capitalists and the rest who become proletarians.
“Mr. N. —on’s chief error is not that he ignores intensive agriculture and confines himself to extensive agriculture, but his vapid lamentations about “us” going the wrong way to which he treats the reader, instead of analysing the class contradictions in the sphere of Russian agricultural production. Mr. Struve repeats this error by obscuring the class contradictions with “objective” arguments, and only corrects Mr. N. —on’s secondary errors.” (p 478)
Its a shame that Struve does that, Lenin says, because, in doing so, he weakens his correct argument that ““fear” of technical progress in agriculture is absurd.” (p 478)
Now Democratise All Companies
The right-wing, populist government of Boris Johnson has responded to a tide of reactionary opposition to the proposal to set up a European Super League of top football clubs, in the manner that would be expected. Johnson, of course, sat himself on top of the wave, and quickly rushed forward with populist statements and proposals, in order to do so. For him, it was also fortunate that other reactionary interests, such as his friend Mohammed Bin Salman, also lobbied him, to oppose it, as he has his eye on taking over Manchester United. That he should do so, is not surprising, because the current ownership of top football clubs is indeed rather feudal, being in the hands of one billionaire or another, with change at the top coming in the form of a periodic change of dynasty, but no change in the underlying social relations.
The European Super League, actually, offered a way out of that, because, by putting football on a rational European basis, and all of the revenues that goes with that, it meant that other ownership structures for football clubs were opened up that would have meant the possibility of taking control out of the hands of a few billionaires. That is why some of the top supporter owned and controlled clubs in Europe, such as Barcelona and Real Madrid were part of the initiative, because they knew that, given the level of debts within football, given that costs are governed by player salaries that have been driven up by competition to secure them by the billionaire owners, who operate much like medieval patrons of the arts, the only way any club that does not have such a billionaire owner can survive, is by getting much larger revenues from media coverage.
In fact, all of the outrage from fans, in England, about the proposals, is much like the situation in the Middle Ages, when serfs were left backing one feudal lord as against another, as what the opposition has amounted to is not the ending of control of clubs by billionaires, as was suggested, but is to strengthen that very form of ownership! Of course, those very same fans have always been over the moon when, seeing the potential for their own club losing such patronage, some other billionaire comes along to save their bacon. Such appears to be the case, now, with the fact that the Glazers may pull out from Manchester United, but their place will be taken by that well known promoter of freedom and democracy and other progressive causes, Mohammed Bin Salman of Saudi Arabia. No protests about this butcher, coming along to own and finance the club appears to be planned by those same fans.
But, there is one good thing that has come out of this carnival of reactionary parochialism. Populists always respond to an upsurge in popular anger, by making hasty statements and promises. Boris Johnson, with his legendary lack of attention to detail, or facts, or ability to look forward further than the next stunt, came out to promise legislation that would give control of clubs to supporters. Keir Starmer, adopted his usual position, two steps behind Johnson, holding his coat-tails, and the rest of the Labour Party followed behind Starmer as loyal retainers. Now, in terms of this specific proposal there are very obvious, and immediate problems. For example, how is a “supporter” to be determined. Is it only, for example, season ticket holders? That would exclude thousands of fans of top clubs in Britain alone, let alone the millions of fans of those top English clubs, like Manchester United, across the globe. Manchester United is thought to have at least 100 million, and as many as 600 million Chinese fans alone! If on the other hand, all of these fans were able to register as supporters, much as the Co-op allows its customers to be a member by paying £1, wouldn't such an arrangement be too unwieldy to be able to exercise any kind of real democracy? After all, although the co-op, theoretically, allows all its members to participate, the reality is that the majority do not, meetings are held very irregularly and in locations where most cannot attend, and so real control rests in the hands of a more or less permanent bureaucracy. This is always the problem with any kind of consumer co-op, as against a worker owned co-op.
The other problem, is obviously that, if you are a billionaire owner of a football club, why on Earth would you put millions of Pounds of your own money into it, and then let a few thousand other people, decide how it is going to be spent? Anyone who thinks that is going to happen is living in a fantasy land. If the government ever did introduce legislation giving control to supporters, then the obvious immediate consequence is going to be that the billionaires would pull their money out, and, given the levels of debts in football, the English and Scottish Football Leagues would collapse. Net debt in the Premier League alone is £4 billion, or 83% of revenue. If that is the case with the top clubs, imagine the parlous state of the rest of the English football clubs. And, when all of that sends football into decline, what do you think the media companies, who currently pay billions to screen matches is going to be?
That is why this proposal is never going to see the light of day. It will disappear into the long grass, of years and years of commissions and inquiries, if it even gets that far. But, by raising this question, Johnson has uncorked the genie from the bottle, because, if it is valid to ask the question about should football companies be democratically controlled, it is even more valid to ask the question – shouldn't all companies be democratically controlled? It is more valid, because many football clubs are privately owned companies, not even publicly listed corporations. Its why individual billionaires can come in, and simply buy up ownership and control from the existing owner. That makes such clubs more like the privately owned capital of the early 19th century, rather than the large socialised capitals that arose in the second half of the 19th century, in which the company itself is a legal person, and shareholders are merely creditors of the company, people who lend it money in the same way as bondholders lend money, banks lend money, in exchange for interest, or landlords might lend land to a company in exchange for rent. None of that lending to the company should bestow any legal right for the lender to exercise control over the company, any more than a bank that gives you a mortgage to buy a house has a right to control how you use the house, what colour to paint your rooms and so on.
So, if football companies are to be placed under the control of supporters - though a more realistic and effective measure would be to turn them into producer cooperatives owned and controlled by the players, managers, ground staff, coaching staff, administrative workers and so on – then surely it is logical that all companies should be treated in the same way! Why shouldn't workers in a car plant, or a bakery be able to expect that control over their workplace be in their hands, rather than in the hands of shareholders. After all, the future and livelihoods of tens of millions of workers, of citizens up and down the country are dependent upon the future of those companies and their performance. Why should that be left at the whim of a tiny number of billionaire shareholders, rather than being placed under the democratic control of the workers?
After all, in Germany, that fact is already recognised. Germany has long since had co-determination laws that give workers, via the trades unions, the right to elect half of the members of company boards. In practice, of course, this is largely for show, because shareholders also elect half the members, and the Chairman has a casting vote, meaning workers can always be outvoted. But, the principle is established in such laws, it simply requires that principle to be implemented consistently, by workers electing all of the members of boards, and exercising full control of the company. The EU, also recognised this principle in its Draft 5th Company Law Directive. Even the social-democratic government of Harold Wilson, in the 1970's recognised it, when it set up the Bullock Committee into Industrial Democracy, which recommended that the trades unions should elect 50% of company board members.
So, it is not unreasonable to expect that Keir Starmer, and today's Labour Party, having trailed behind Johnson and his proposal to put football companies under the control of supporters, should at least build upon the ground established by Wilson and European social-democracy, by committing a Labour government to removing the control over all companies by shareholders, and vesting that control instead into the hands of companies' workers. That simple measure of introducing the principal of industrial democracy would be the equivalent of the struggle for political democracy conducted during the 19th and early 20th century.