Musk Shows Why Shareholders Should Not Control Companies

Elon Musk is a rare breed. On the one hand, he is so rich that he can operate as a private capitalist in spheres where only socialised capital would normally be able to operate. It allowed him to use that money to set up, for example, Tesla and SPACEX, at a time when, socialised capitals were being used simply as cash cows for channelling dividends and capital gains to shareholders, rather than using profits for real investment in productive capital, particularly in new types of commodity. On the other hand, Musk too is a shareholder, and even he is led to operate his companies as socialised capitals, whilst acting in the way that all shareholders do, whose interests are fundamentally contradictory to the interests of socialised capital.

In Capital I, Chapter 35, Marx summarises the process of evolution of industrial capitalism, as first individual commodity producers, in the towns, undergo a process of differentiation, resulting from competition between them for market share. It is the application of The Law of Value, and from it develops new social forms, in the same way that the Law of Natural Selection explains the evolution of new biological species. The most efficient commodity producers prosper, and vice versa. Unlike, in previous times, when those who failed simply became serfs, servants, slaves or paupers, changed material conditions, in the large medieval towns, with sizeable markets, and more extensive commodity production, means that the more successful, independent producers were able to become capitalists. They took over the means of production of their failed neighbours, and employed them as wage workers. So capitalist production arises first as industrial production in the towns, in the 15th century, and expands from there.

The Law of Value continues to operate, and is manifest, via, competition, in driving production to become ever more efficient, as each producer, must seek to produce more use-values, each with a lower unit value, and that requires each to produce on a larger scale, so as to obtain economies of scale, and so as to justify the use of machinery, which replaces labour, revolutionising their production, and so massively reducing the individual value of their output below its market value, and giving them additional profits and competitive advantage. It increasingly drives out the remaining individual commodity producers, who become proletarianised, and then also drives out even the smaller capitalist producers, so that the size of capital required to produce at an efficient level grows ever larger.

There are always some new smaller private capitalists entering production, and, as Marx describes, some of them are members of existing capitalist families, who use their own private wealth to establish some new venture. Musk is similar to one of those, and we could think of Bill Gates as another such example. Other sources of such new private capitalists have been the former professional managers of large firms, who, Marx describes, in the 19th century, took the opportunity, in periods of vibrant economic growth, to branch out on their own, and establish new businesses. But, at the same time that a large number of these new creations are arising, the same law of value continues to operate in the background, and to destroy the least efficient, and to ensure the growth of the efficient, now not just from their own organic growth, but also from mergers and acquisitions of other companies.

Many are called, but few are chosen, and so, out of the thousands of new small businesses created every year, many fail within the same year, and around 75% fail within five years. In Britain, there are around 5 million small businesses, but they are never the same 5 million, from one year to another, because of this high rate of failure. They represent the large petty-bourgeois class that has grown larger since the 1980's, as the growth of large-scale British industrial capital was held back by the polices of deindustrialisation, and financialisation introduced by Thatcher and her heirs in the 1990's, and early 2000's, and as the shareholders controlling those large companies, used their position to divert profits and capital gains to themselves, and away from investment in production.

That petty-bourgeois class represents the remnants of the old monopoly of private capital, discussed by Marx, in Capital I, and is reactionary, precisely because it represents a stage of capitalist production that is already, now, a century out of date. They are mostly involved in those areas where large-scale capital has no interest. They are the domestic window cleaners, gardeners and so on, or else they survive only by exploiting their own and family labour more than would be the case if they were just a wage labourer, for example, the corner shop that stays open all day every day, and so on. 

As a private capitalist, with tens of billions of Dollars, Musk is an anomaly, in being able to utilise his private wealth, in the same way that a 19th century private capitalist would do, to simply buy himself the required factories, equipment and labour-power, on a sufficient scale to operate efficiently, at least, in some new areas. Even, there, of course, he takes advantage to set up these businesses as limited companies, so that, unlike a private capitalist, his own private wealth is not at risk, if the business fails, unlike the corner shop owner, who must pay up for any debts and losses they incur.

As Marx described in Capital I, as production required capital on a scale larger than any of the private capitalist families could muster, that monopoly of private capital became a fetter on capitalist production itself, and had to be burst asunder for capitalist production to continue to develop. It was burst asunder by the development of large-scale socialised capital, of the replacement of ownership of industrial capital by private capitalists with the ownership of industrial capital by companies, which were themselves legal entities in their own right, whether they be joint stock companies or cooperatives, both forming, as Marx describes them, in Capital III, Chapter 27, the dissolution of capitalist property within the capitalist system itself, and as the transitional form of property between capitalism and socialism.

As socialised capitals, they do not suffer the limitation that the monopoly of private capital imposed on capitalist development. The capital belongs to “the company”, and not to any named individual or group of individuals. The company itself is a legal entity, but is personified, at any one time, by all the associated producers that comprise it, i.e. by all of its workers, including the managers, administrators, technicians and so on, required for its operation. To use the analogy used by Marx, the workers are like the musicians in an orchestra, and the professional managers are like its conductor. They are all necessary components, and all paid wages by the company. Its most obvious manifestation is in the form of the worker cooperative, where the managers are themselves appointed by the workers.

The company obtains the funds required for its operations from its own profits, from money loaned by its members, from loans from banks, as well as from capital markets, via the issuing of shares, bonds, debentures and so on. Because, the money from these loans can now come from society as a whole, the old restrictions imposed by the monopoly of private capital are swept away, as these vast sums of potential money-capital can now be mobilised to provide investment of productive-capital on a mammoth scale. 

Every company that does not need all of its profits to finance its own expansion, can put that money into the capital markets, so that it is available to other companies whose current profits are not sufficient to cover their needs for investment; every former private capitalist who retires from business, can put the proceeds of the sale of that business into those markets, and live off the interest; every worker whose wages need to be saved so as to cover future purchases, and eventualities, saves money whose small amounts, individually, are amassed into huge sums, by the banks, when they aggregate them across millions of workers.

But, it is obvious that those who simply loan money to a company are not, thereby, the owners of that company, any more than a bank that lends money to someone to buy a house, is then the owner of the house, or which lends money to a small business to buy a machine is the owner of the machine. The lender is the owner of the money they lend, nothing more, entitling them to it being returned at the end of the loan period. The interest they obtain on that loan is, then, the price they obtain for having sold that money-capital for a specified period, in other words, to have given up possession of it, and handed over its use-value (the ability to produce the average rate of profit) to the borrower. In fact, its precisely for that reason that, where the borrower has bought that use-value, it is they that has the right of ownership and control over it, for the specified period, and not the lender.

Its the same as with labour-power. The wage worker sells their labour-power, as a commodity, to the capitalist for a specified period of time, and obtains the value of their labour-power, as a wage, in return. Having bought it for that time, the capitalist owns it, and has the right of disposal over it. The capitalist has not bought the worker, who has the right to sell their labour-power elsewhere, or to use their time as they choose, outside the contracted period. It is what distinguishes the free wage-worker from the slave or serf.

If a seller of umbrellas, takes the money from a buyer, the buyer of the umbrella does not expect the seller to continue to exercise a right of ownership over it, and the buyer of capital, in exchange for interest/dividends, should no more expect the seller of that capital to demand continued ownership rights over it, either.

In the case of a worker cooperative that is obvious. As Marx set out in his advice to the First International, in such a cooperative, it would be acceptable for the cooperative to take loans from some of its members, in return for a small rate of interest, but such loans would give the individual workers no additional rights of control as against any of the other workers. Control rests with the associated producers, each of whom gets a single vote. The same should be true of all other forms of socialised capital, be it private limited companies, public limited companies, multinational corporations, or consumer cooperatives.

The shareholders, in each case, are merely lenders of money-capital to the company, and nothing more. They have given up ownership of their money, sold it for a specified period, to the company, in exchange for a payment of interest/dividends. What that rate of interest is, should, at any time, be determined by the market, by the interplay of demand and supply for money-capital, and not by the lenders themselves dictating how much they will appropriate from a capital they do not own.

They are able to do that, currently, simply because existing laws, passed in the interests of the ruling class, that owns the majority of these shares, and controls all of them, by various intermediaries, have given shareholders the right to appoint company boards, and to vote over the use of socialised capital they do not own. It is as though the law gives the seller of umbrellas the right to decide to still use the umbrella themselves, even though they have been paid for it! That is why, those shareholders, over the last 30 plus years, have been able to continually increase the proportion of profits used to pay out dividends, rather than be used to invest in capital accumulation. Its why the executives they appoint to look after their interests as shareholders, rather than the interests of the company, have used profits to buy back shares, so as to push up share prices, rather than use the profits for capital accumulation, and even to borrow money via the issuing of bonds, for that same purpose.

This is what Marx set out in describing the antagonistic and contradictory interests of these money-lending capitalists as against industrial capital. But, there are limits to all that. At a certain point, the amount paid out in dividends would equal the amount of profit. Already, former Bank of England Chief Economist, Andy Haldane, pointed out that where dividends accounted for 10% of profits in the 1970's, today, they account for 70%. And, if no profit was accumulated as capital, so that capital ceased to expand, then profits too would cease to expand, so that to increase dividends any further would mean physically asset stripping the economy, converting capital itself into revenue, and so shrinking capital. It would be extended negative reproduction. This limitation on a continued increase in dividends (and the same applies to rents) is what leads lenders (of money-capital and land) to become more concerned with capital gains, obtained by ever inflating prices of their assets, and to obtain revenue, by converting a portion of those capital gains into revenues.

The consequence of continued increases in asset prices, when revenues from those assets (interest/dividends and rents) stop rising so fast is that yields fall. Its those conditions which mean that sudden crashes in financial and property assets are likely, and it has only been the action of central banks, in printing money tokens, which they have used to buy up those assets that has enabled both asset prices to continue to rise, and to be inflated once more, each time bubbles have burst. As Marx points out, at a certain point if money keeps simply being used as interest-bearing capital rather than as industrial capital, the yield on it drops to a level where its owners see the benefit of using it directly themselves as industrial capital. Again, that is where Musk, with his vast wealth, can use it to simply accumulate industrial capital itself, rather than to buy shares and so on.

Let me give a real life example from the extreme other end of the spectrum. In the 1980's, like many other workers, I found myself the victim of Thatcher's economic policies, and on the dole. Like many of them also, alternating between unemployment and precarious, part-time and temporary employment, I decided to become self-employed, which I did for several years. As with Engels, it enabled me to see these relations from the inside. The basic economics were as follows. I had fixed capital of around £5,000 consisting of computer and office equipment and vehicles. In addition, my circulating constant capital, at its highest level, amounted to around £500 per week for materials, and around £100 per week for fuel and other expenses. As with most self-employed people, I did not assign an actual wage to myself, but a reasonable figure for that, at the time, would have been a further £200.

Turnover amounted to around £1,000 per week, so that profit amounted to around £200 per week, or a rate of profit/profit margin of 25%. In terms of an annual rate of profit, however, that was £10,000/(£5,000 + £800) = 172%. In other words, the capital actually advanced, was the £5,000 of fixed capital, plus the £800 required to buy materials and fuel, and to cover wages for a week, because, I turned over this circulating capital each week, meaning that, at the start of week 2, it was already reproduced in the takings from the previous week. By comparison, if I had taken this £5,800 and put it in a high yielding deposit account, at the time, I might have made, perhaps, 10% interest on it, equal to £580 of interest, as against the £10,000 of profit.

So, the incentive for someone like Musk, faced with a choice of buying more shares, or bonds, which might yield say 5%, or using his money to buy a factory, equipment, materials and labour-power to start a space technology company, which returns, say, even just 30% annual rate of profit on that investment, profit which, because it is his private capital, is all his, becomes a no-brainer. This also illustrates again the difference between private capital and socialised capital. All of the capital that I employed as a self-employed person, belonged privately to me. If I wanted to use a vehicle, a piece of office equipment, or any of the materials for my own personal use, I was free to do so. That is not the case with socialised capital. It is not the personal property either of shareholders, or of the associated producers within the company.

The thing that stops the Musk's of the world from converting, on a large-scale, back into private capitalists, so as to obtain these much higher returns of profit, as against yield on shares, is that they have been guaranteed even larger returns as capital gains from ever increasing asset prices, resulting from central bank policies of money printing, and QE. But, whilst the Musk's continue to bid up asset prices by using their private wealth for the purchase of paper assets rather than investment in real capital, they continue to want to exercise control, as shareholders, over the socialised capital they do not own. And, its here that Musk clearly demonstrates why that should not be.

Its not long ago that Musk not only put billions of Dollars of his own wealth into Bitcoin, but also had Tesla buy Bitcoin, and agree to accept it in payment for cars. If Musk wants to waste his own money gambling on worthless cryptocurrencies that is his own concern, but that is not the case with the companies of which he is merely a shareholder, and where, also, it is the livelihoods of thousands of workers at stake. From the time he made that decision, Bitcoin has again lost more than half its value, as it descends towards its true value of zero. And, the latest pronouncement is similar. Musk has declared that he has a “very bad feeling” about the economy, and wants to cut his workforce by 10%.

In fact, his Tesla factory, in China, as the ridiculous lockdowns there have been lifted, has just trebled its output! What Musk really means is that, as a shareholder, he sees labour shortages across the globe, which, combined with sharply rising inflation, means that wages are rising, and workers, as with the LA Dockers, are going to be demanding even higher wages, shorter hours and better conditions. It means that interest rates are going to be rising, as profits have to be used to finance those wages, and increased capital accumulation, as those increased wages create additional demand for products and services, rather than to pay out dividends, and so the only way that those interest rates can rise is if asset prices fall. What Musk is concerned about is that any such fall in asset prices is going to put a huge dent in his paper wealth tied up in those millions of shares, bonds and other assets, whose prices have been inflated astronomically over the last 30 years.

What Musk is reflecting is the same concern as the other speculators who see that spectre haunting them of rising inflation, wages, and interest rates, and cratering asset prices, and so a desire to try to prevent it. They want a recession, or at least they want workers to believe that a recession is at hand, so that they will moderate their wage demands, and slow down their consumption, so as to slow economic growth, in order that central banks will pause their tightening policies, and facilitate another rise in asset prices. It is a moderated version of the measures taken by the Chinese state to physically slow the economy by repeated and ridiculous imposition of lockdowns on its citizens on the basis of its zero-Covid policy.

All of that is done in the interests of protecting the narrow interests of the top 0.01% at the expense of the rest of society, and shows why it is time that their control over companies should be ended, and replaced by democratic control by their employees.

A Contribution To The Critique of Political Economy, Chapter 1 - Part 18 of 29

Money is universal social labour, and is the equivalent form of the value of all the commodities on the other side of the equation. If the total value of commodities produced and to be circulated is 1 million hours of labour, then money, the other side of the equation must also equal 1 million hours. If the money commodity is gold, and 1 gram of gold is equal to 100 hours of labour, then 10,000 grams of gold is the universal equivalent form of value of these commodities.

But, again, its obvious that, no matter how long the list of commodities that represent this side of the equation, representing the exchange-value of the money commodity, or how that list is comprised, it cannot change the value of 1 metre of linen, or 1 gram of gold etc. The metre of linen still has a value of 10 hours of labour. Again, this is vital in understanding the nature of the money commodity, money tokens, prices and inflation. Because prices are measured in quantities of the money commodity, a change in the value of that commodity will, all else being equal, cause a change in the prices of all other commodities.

“But any commodity considered as exchange-value is both the exclusive commodity which serves as the common measure of the exchange-values of all other commodities and on the other hand it is merely one commodity of the many commodities in the series in which the exchange-value of any other commodity is directly expressed.

The existing number of different types of commodities does not affect the value of a commodity.” (p 39-40)

The key to this is to reverse the equation. With The Relative Form of Value, each commodity has its value expressed indirectly as an infinite number of exchange-values, with every other commodity, or else as a single exchange-value against a quantity of all other commodities combined. But, if this equation is reversed, which is what exists with The Equivalent Form of Value, then the value of every single commodity can be expressed indirectly by its relation to just one, or a few commodities, eventually against just one money commodity, which represents The Universal Equivalent Form of Value. 

In other words, taking Marx's example, we can now express the value of coffee, tea, bread and calico, individually, as a quantity of linen, which becomes the equivalent form of the value of each of these commodities, and, by the same token, of the value of all of them combined. It acts as an indirect and contingent measure of their value. Indirect, because it does not measure their value directly in terms of the labour-time required for their production, but in terms of a quantity of linen, a quantity that can only be determined by first knowing the value of the commodity and the value of linen, so that a proportional relation can be established; contingent because this proportional relation depends not only on the value of the commodity, but also the value of linen, and so changes as a result of changes in either or both.

For the same reasons, however, the exchange-value of the one commodity, the money commodity, can only be expressed as an infinite number of exchange-values against all other commodities, or else as a single exchange-value against an infinite list of all other commodities combined.

“The exchange-value of a commodity as the objective expression of universal social labour-time finds its appropriate expression of equivalence in the infinite variety of use-values.” (p 40)

Back To Part 17

Forward To Part 19

Ukraine and The Fourth International Executive Bureau - Russian Troops out of Ukraine - Part 2 of 2

In Ukraine, of course, its not a matter of the workers aligning themselves with a revolutionary bourgeoisie and petty-bourgeoisie, itself fighting against an existing ruling class, as it was in 1848, or as it was in respect of Chiang Kai Shek in 1927, but of an already entrenched Ukrainian ruling class, firmly in control of a capitalist state, and with the huge state and military power of NATO imperialism standing behind it! The calls for defence of Ukraine, to “Defend The Fatherland”, are no different to those made by social-patriots in World War I and II. Indeed, they are worse, because it is not only a call to ally with the Ukrainian ruling class and its state, but to ally with the NATO imperialism that stands behind it, which is still the dominating component of imperialism, and as a result of which, as Trotsky put it in “Problem of the Ukraine” it “sell(s) the Ukrainian people to one imperialism or another in return for a promise of fictitious independence.”

In the Spanish Civil War, Trotsky notes that the tragic mistake made by Nin and the POUM was that, because they saw the Spanish Stalinists as being a very small party, they thought that they would be forced to play a subordinate role, within the Popular Front, given the much larger forces of the anarchists of the CNT, and the centrists of the POUM. That mistake, Trotsky says, was to forget the fact that, behind the Spanish Stalinists, stood the Comintern, and the powerful force of the USSR itself, so that, within a few years, it was the Stalinists that had become the dominating force within the Popular Front, and able to perform their function as hangman of the proletariat.

It was a failure to think dialectically. The failure of the centrists and anarchists to see that, and to maintain a strict organisational and political separation from the Popular Front led to disaster, just as it had done in China. But, the forces of the Comintern, standing behind the Stalinists, in Spain, are as nothing compared to the forces of NATO imperialism standing behind the Ukrainian ruling class and its state, and any idea that tiny socialist forces in Ukraine, or internationally, can ally with them without being completely absorbed and subordinated to them, is dangerous, if not wilful, fantasy, representing an equally appalling betrayal.

As Marx continues,

“To be able forcefully and threateningly to oppose this party, whose betrayal of the workers will begin with the very first hour of victory, the workers must be armed and organized. The whole proletariat must be armed at once with muskets, rifles, cannon and ammunition, and the revival of the old-style citizens’ militia, directed against the workers, must be opposed. Where the formation of this militia cannot be prevented, the workers must try to organize themselves independently as a proletarian guard, with elected leaders and with their own elected general staff; they must try to place themselves not under the orders of the state authority but of the revolutionary local councils set up by the workers. Where the workers are employed by the state, they must arm and organize themselves into special corps with elected leaders, or as a part of the proletarian guard. Under no pretext should arms and ammunition be surrendered;

Although the German workers cannot come to power and achieve the realization of their class interests without passing through a protracted revolutionary development, this time they can at least be certain that the first act of the approaching revolutionary drama will coincide with the direct victory of their own class in France and will thereby be accelerated. But they themselves must contribute most to their final victory, by informing themselves of their own class interests, by taking up their independent political position as soon as possible, by not allowing themselves to be misled by the hypocritical phrases of the democratic petty bourgeoisie into doubting for one minute the necessity of an independently organized party of the proletariat. Their battle-cry must be: The Permanent Revolution.”

(Address To The Executive Committee of The Communist League)

Back To Part 1

Next Down With Putin

US Durable & Capital Goods Orders Strong

The latest data for US Durable and Capital Goods Orders, came in strong, showing, again, that the demands of speculators, and perennial forecasts of catastrophists, for recession, are unlikely to be met. Durable goods orders for May came in up 0.7%, month on month, and capital goods orders (essentially replacement for wear and tear and accumulation of fixed capital), rose by 0.5%.

The figure for durable goods has been up for seven of the last eight months. In March its was up 0.7%, in April 0.4%, and this month's 0.7% massively exceeded the estimated increase of just 0.1%. Durable goods orders for transportation rose 0.8% month on month, reflecting the fact that the world is just starting to get moving again, after all of the idiotic lockdowns start to get removed.

Inventories were also up again, now having risen for sixteen consecutive months. As I have set out previously, increases in inventories can be good or bad, depending on why they increased. On the whole, this increase is good. It signifies as its prolonged trend suggests that businesses are increasing their stocks of equipment and materials in anticipation of continued increases in demand for their products.

Part, however, of the reason can be bad. Firstly, because of supply chain bottle necks, as seen with the lack of microchips for use in car production, firms are delayed in turning over their capital, as they have to wait for shipments of components. Secondly, whilst globalisation had probably gone as far as it could, for the time being, in bringing about a further international division of labour, other political developments were essentially turning it back. Brexit is a good example, but NATO imperialism's economic war against Russia and China is another, as it introduces a range of trade frictions, and encouragement for firms to move from a Just In Time regime, to a Just In Case, regime, in which they hold larger inventories, to protect against supply disruptions. That means both a reduction in productivity causing the value of commodities to rise, as well as slowing the rate of turnover of capital, bringing a fall in the annual rate of profit.

The strength of durable and capital goods orders is another indication that all of the claims about imminent recession amount to nothing more than wishful thinking. On the one hand, the greedy speculators are hoping for a recession, so that the central banks will stop tightening liquidity, and their asset prices might rise again. On the other hand, the catastrophists are hoping for a recession, because their reactionary pessimism is a reflection of their view that capitalism is in its death agony, and in some condition of permanent crisis or stagnation, with the next recession always imminent, because, in their crude determinist model, the basis of socialism is that workers will only rise up to replace it on the back of such crises, rather than that the working-class will utilise capitalist development to strengthen its position, to take control of the productive forces created by capitalism, and, thereby, surpass it, and build Socialism on the foundations it has already created.

The conditions, today, are much like those in 2008, when similar siren calls were being made. But, as I pointed out back then, those calls were unjustified. Employment and economic activity continued to rise into 2008, and created conditions for workers to become more confident, and rebuild their organisation, and start to demand pay rises. As I pointed out at the time, it was not economic crisis that led to the global financial crisis, but economic strength. That economic strength, increasing the demand for capital and labour caused wages to rise, which squeezed profits, which together with increased demand for capital caused interest rates to rise. It was those rising rates that sparked the financial crash, and today, rising rates have already caused the NASDAQ to fall by 30%, and the S&P by 25%, not to mention the collapse of purely speculative assets such as Bitcoin.

The strong durable and capital goods orders are only part of the jigsaw, as we will see economic activity increase in China, as it is forced to abandon its ridiculous zero-COVID strategy. As the Chinese economy ramps up, it will drag the rest of the global economy with it. That will give another twist to the global demand for primary products. But, we are also seeing wages rise across the globe, so far only from the natural process of supply and demand, where labour shortages have caused forms to compete for available labour by having to sharply increase wages, and bonuses in specific sectors, but which is now set to see big pay rises for millions of workers, as they organise industrial action. Non-state businesses are likely to quickly settle with their workers, as happened in the similar period of the 1950's and 60's, and as with tanker drivers back in 2008, as they see their ability to pay, being a worthwhile cost, as they look at rising demand for their goods and services. Workers employed by the state may not fare so well, but the very fact that they can more easily move to jobs in the non-state sector will eventually pressure governments to concede there too.

Those rising wages will be the next leg in raising aggregate demand, as workers use those wages to fund consumption, which, in turn, will lead to businesses seeking to increase output so as not to lose market share to competitors.

A Contribution To The Critique of Political Economy, Chapter 1 - Part 17 of 29

Emphasising the point made earlier that it is concrete labour that is the source of value, whereas it is abstract labour that is the essence and measure of value, Marx makes clear that the productivity of labour can only be the productivity of concrete labour, i.e. it is the quantity of use values it produces.  That is why as productivity rises, unit values fall, i.e. a given amount of value is spread across a larger quantity of use values.

“Scarcity or abundance brought about by natural circumstances seems in this case to determine the exchange-value of commodities, because it determines the productivity of the specific concrete labour which is bound up with the natural conditions.” (p 38)

And, the value of commodities only changes if this quantity of abstract labour required for their production changes. However, the exchange value of a commodity changes not only as a result of changes in its own value, but also as a result of of changes in the value of all other commodities. This is significant when considering a money commodity, prices and inflation. Take the situation in respect of the Relative Form of Value. Marx sets out the following set of relative values of linen.

1 yard of linen = ½ lb. of tea

1 yard of linen = 2 lbs. of coffee

1 yard of linen = 8 lbs. of bread

1 yard of linen = 6 yards of calico

But, this could also be expressed in another way, so that instead of a list of such ratios to other commodities, it could be expressed as one exchange-value of linen to every other commodity.

1 yard of linen = 1/8 lb. of tea + ½ lb. of coffee 2 lbs. of bread + 1½ yards of calico.

In fact, this list, and this single exchange-value, can never be complete, because the number of commodities in it is continually expanding, as new use values are developed. However,

“Since the exchange-value of one commodity is measured by the use-values of all other commodities, the exchange-values of all other commodities are on the contrary measured in terms of the use-value of the one commodity measured by them. If the exchange-value of one yard of linen is expressed in 1/2 lb. of tea, or 2 lbs. of coffee, or 6 yards of calico, or 8 lbs. of bread, etc., it follows that coffee, tea, calico, bread, etc., must be equal to one another in the proportion in which they are equal to linen, a third magnitude, linen thus serves as a common measure of their exchange-value. The exchange-value of any commodity considered as materialised universal labour-time, i.e., as a definite quantity of universal labour-time, is measured successively in terms of definite quantities of the use-values of all other commodities; and on the other hand the exchange-values of all other commodities are measured in the use-value of this one exclusive commodity.” (p 39)

It doesn't matter, from this perspective, which commodity this is, which is why, as Marx says in Theories of Surplus Value, all commodities are money. All can fulfil this function of being the indirect measure of the value of other commodities. It is material conditions which, actually determine, concretely, which commodity it is that ends up being singled out, via the process of trade, as the money commodity. Again, whilst the exchange-value of a commodity is determined by the list of commodities against which it is compared, that cannot change its own value.

Suppose the value of a metre of linen is equal to 10 hours of abstract labour. Its exchange-value might then be 1 kilo of potatoes + 1 litre of wine + 1 bible + 0.5 kilos of cotton. In other words, the total value of these commodities is also equal to 10 hours of abstract labour, each has a value of 2.5 hours of labour. But, if a new commodity is introduced, let us say carrots, a kilo of which also has a value of 2.5 hours, then the exchange value of the metre of linen becomes 0.8 litres of wine + 0.8 kilos of potatoes + 0.8 bibles + 0.4 kilos of cotton + 0.8 kilos of carrots. The total value of these five commodities now, also, being equal to 10 hours labour.

But, its also obvious that, so long as the total labour-time on this side of the equation is equal to 10 hours, so as to balance the 10 hours of value of the 1 metre of linen, the quantities of the five commodities themselves can be infinitely varied. For example, no one would buy 0.8 bibles, and so, if the exchange value of 1 metre of linen were expressed against this list, but including 1 bible, the quantity of the other 4 commodities would have to be proportionately reduced. Again, this is vital in understanding what money, the money commodity and money tokens are, and represent.

Back To Part 16

Forward To Part 18

Greedy Speculators Demand A Recession

Turn to any of the financial speculation channels like Bloomberg or CNBC, or listen to any of the representatives of the spivs and speculators, and you will hear them screaming that we must have a recession. They, of course, find an echo in all of the catastrophists, for whom the next recession is always imminent, or see the economy necessarily languishing in some condition of crisis or long depression.  Liberals like Larry Summers have come out in defence of the greedy speculators' interests to argue that the US will need to have a 5% unemployment rate for several years to reduce inflation.

Why are they all demanding a recession? Because, for the first time in forty years, apart from a couple of years prior to the financial crash of 2008, wages have started to rise, and workers have begun to see things move in their favour. The greedy speculators who have had forty years of wages being squeezed, profits rising, and asset prices being sent to infinity and beyond, by central banks printing money tokens to cause asset price inflation, now see even slightly rising wages causing profits to grow more slowly, and interest rates to rise, causing the huge financial and property bubbles to begin to burst.

The speculators want a recession, in order that the current tightened labour markets should become less tight, as a result of millions of real human beings, who actually work for a living, being thrown out of work. You might think that the speculators would be alarmed at the prospect of a recession that would lead to businesses not making so much profit, but not in the least. Just look at what happened from Spring 2020 onwards, during all of the period of enforced lockdowns. Those lockdowns had the same effect as a recession, preventing workers from working, and goods and services that we all need being produced.

Yet, during that period, financial markets soared to even higher levels! At the end of March 2020, the Dow Jones stood at 21,917, and by the end of April 2022, it had risen to 32,977, a rise of 50%! Nor was that the highest point. At its highest, in 2022, the Dow hit nearly 37,000. It has only started to fall, as the lockdowns were lifted, economies opened up, workers started working again, and also began spending money, leading businesses to need to accumulate capital, employ yet more workers, and to have to pay higher wages and interest rates in the process.

In fact, that is the same thing that has happened since the mid 1980's. In the early 1980's, as firms introduced new labour saving technologies, workers were thrown on the dole. Wages fell, profits rose. With more workers on the dole, and workers incomes falling, demand for wage goods fell, relative to output, economies grew more slowly than they had during the preceding 25 years, but the share of output that went to profits increased. That also meant that a greater share of those profits could be used to pay out interest and dividends, because, with output growing at a relatively slower pace, a smaller proportion of profit was required for capital accumulation. That was also helped by the fact that a lot of fixed capital was massively depreciated, as a result of the new technologies introduced. Marx calls that a release of capital.

Whilst the amount available to pay in interest/dividends rose, the increased supply of money-capital, relative to the demand for it, meant that interest rates fell, and the manifestation of that comes in the form of higher share prices. For example, suppose the average share price is £1, and the average dividend is £0.10, a 10% yield, with interest rates also at 10%. Now, if interest rates fall to 5%, i.e. the amount you get on £1 is £0.05, the £0.10 dividend you get on a £1 share looks twice as good, so people tend to use their money to buy shares, which pushes up their price. To get back to the same yield, share prices would have to rise to an average £2, so that the £0.10 dividend then represents a yield of 5%. However, because profits rose, and more was paid out in dividends, dividends might also rise to say £0.20. Now, this makes the shares look even better value. For this £0.20 dividend to only be as good a return as the rate of interest, the average share price would have to rise to £4, a rise of 300% from its original level.

In fact, although the 1980's was a period of relative stagnation, with the 1990's continuing that trend, it was a period of astronomical increases in asset prices of all kinds, be it shares, bonds, property, and then spreading out into all sorts of things that could form the focus of speculation from wine to art, to vinyl records. Between 1980 to 2000, the Dow Jones index rose by 1300%, whereas US GDP rose by only around 250%. The rise in stock markets, and other asset prices has nothing to do with how well the economy is doing in terms of growth or providing full employment and rising incomes. On the contrary, the two things usually move in opposite directions, precisely because increased economic growth, rising employment, and consequent rising wages, means squeezed profits, and squeezed profits, in such conditions, means more profit has to go to finance capital accumulation, rather than the payment of interest/dividends, and that causes asset prices to fall.

The greedy speculators are not at all concerned about ruining the lives of millions of ordinary working people, by demanding a recession and that those workers be thrown on the dole, because that is the condition for them seeing their share prices, bond prices, property prices and so on increase. The speculators, of course, contribute nothing to society's well being. Listen to the financial speculation channels and you will hear them described as investors, but they are no such thing. An investment involves advancing money-capital to purchase real productive capital, which is then used to produce real goods and services, new value, and in the process, surplus value, which is the basis of profit, and yet more capital investment. But, that is not at all what the speculators do.

What the speculators do is to simply gamble, as though they were in a casino. They use money, often not even their own money, as the 2008 financial crash demonstrated, not to buy productive capital, but simply to buy shares, or alternatively bonds, or derivatives of them. This is presented as being “investment” in capital, because, after all isn't the money raised from the sale of shares and bonds used to buy this productive-capital? The answer to that question, however, is an overwhelming no.

Only a tiny proportion of the shares traded on stock markets are new shares, issued to raise finance for businesses. The vast majority of shares traded are existing shares, and, in simply continuing to bid for these existing shares, the effect is to push up their prices. If the total value of shares is $1 trillion, and rises to $2 trillion, as more money comes in to demand them, this does not result in $1 trillion going to the companies whose shares are traded. The money simply goes as a capital gain to those shareholders who bought at a lower price, and sell to someone else at the new higher price. They gambled successfully, but whilst that made them richer, it produced not one new product, and added not one cent to the overall wealth of society. Its a bit like someone betting on a horse race. If I bet on a horse at 100-1, and it wins, that's great for me, and bad for other punters who lost their bets, and whose money comes to me. But, none of that money I win goes to the owner of the horse, who trained it, fed it and so on.

Its no different than with houses. The large majority of houses bought and sold in England are existing houses, with newly built houses forming only 7% of all transactions, and 8% of the value of transactions.

So, when more money comes in to increase demand for houses, and causes prices of houses to rise, it does relatively nothing to increase the number of houses supplied, or the wealth of society. It simply puts more money into the hands of the existing house owners who sell their houses, although by the same token, when they come to buy another house, they will see its price has also risen leaving them, usually, worse off.

But, for the speculators who are not interested in property as somewhere to live, none of that matters, because, just as with shares, and bonds, they have come to care very little about the small amounts of revenue they can obtain from these assets. What they have grown addicted to is the continual large capital gains from them, as asset prices appeared able to just keep going higher, as long as interest rates were kept low, and when that became increasingly impossible, as long as central banks were prepared to step in and print money tokens to be used to buy up the worthless paper, and so inflate the asset prices once more. So, for example, large numbers of consortia of speculators put money into large, very expensive property developments in London and other large cities across the globe, and yet were prepared to leave them empty of tenants. Why, because they came to believe that central bank money printing would ensure that property prices rose by 10% a year and more, inflating their paper wealth without them needing to lift a finger.

And, this is the nature of the greedy speculators who, today, demand that governments create a recession, so that the people who do actually lift a finger, the people who go to work each day, driving trains, buses and so on, who work in offices and factories, and create the wealth, are thrown out of those jobs, prevented from working, in the same way they were prevented from working under lockdowns, or as a result of previous austerity measures. They want that so that the conditions that existed before, in which wages were kept low, enabling profits to increase, when interest rates were kept low and money printing was able to go into inflating asset prices, could be restored. The problem they have is that the money printing they had to do in the last two years created the huge levels of inflation we have now, and as workers respond to that, we see the way the greedy speculators respond.

“No”, they cry, “workers can't expect their wages to keep up with prices. It is the natural order of things that workers should know their place. Only we are entitled to see our wealth grow fabulously year after year, as our God given right!” And, of course, the liberal politicians like Biden and Starmer, and their ideologists like Summers come out to sing this same song in chorus that workers must accept real terms wage cuts, for the good of “society”. And, if workers will not accept such wage cuts then the speculators and their representatives will seek to impose them.

That is what Summers means when he says that unemployment would have to rise to 5% for years. Its what the Tories mean when they say that they will change the law so that even the safeguards that workers won 40 years ago are removed, and their conditions made even more precarious, their rights reduced even further! And, they show that in order to win such a fight they have no interest in the health and safety of consumers either, as they propose putting untrained and unqualified temporary agency workers into skilled jobs on the railways risking, serious accidents, leading to death, destruction and serious injury.

Capitalism, in its social-democratic/one nation variant was supposed to ensure that the position of workers improved year after year, but the reactionaries of the Tory Party want to turn workers' conditions back to a worse level than they had even in the 1970's! When the Tories say they want to tear up agreements that date back to the 1970's that is what they mean.  Things like the Equal Pay Act, were also introduced back in the 1970's, as part of those gains made by workers to go some way to protecting them.  Given the option, the Tories would scrap that too, in order to enable profits to rise.  That, of course, is why they wanted Brexit, so that they could push for all of those reductions in workers pay and conditions, and in consumers rights and so on.

When people like Summers talk about recession, and the narrative that recession is around the corner is ubiquitous across the media, what they have in mind is that consumers – for which read workers – will be forced to cut back on their spending, which, in turn, will lead firms to not feel the need to expand to grab market share, and so they will stop hiring and start firing. The trouble is that no matter how much they want to talk up the imminence and inevitability of recession, in the hope of, at least, slowing economic activity, the data does not point to any such outcome. Across the globe consumers still have lots of savings they can use for spending, and whilst the huge increases in energy and food prices, caused by NATO's boycotts and blockades of Russian exports, acts as a drain on consumer spending, what the speculators depend on is that workers will not be able to increase their wages to cover these higher costs, and so to be able to continue spending at the same level. Indeed, its to try to prevent that that the speculators are trying to increase the talk of recession, and to undermine workers ability to get higher wages.

The rash of strikes in every part of the globe, many of which are not being reported shows that hope is likely to be dashed. In Britain, the media has covered the rail strikes, and mentioned that millions more workers are planning strikes across the country, but they have not covered the pending strike of 50,000 dockers in Los Angeles, nor the recent huge strike wave in Belgium, and the same thing is happening on every continent.

It is happening, because, as I have said many times, going back to the early 2000's, as strikes began to erupt then, ahead of the 2008 Financial Crisis, this is not the 1980's. Nor is it the 1970's, as the lazy media frequently use as a comparison. It is the equivalent of the late 1950's, and early 60's, when a similar period of long wave expansion was taking place, and the demand for labour increased, without the prospect of technology replacing it, and so when capital had to continue to employ more labour, and to pay it higher wages, as firms sought market share, and their share of available profits, profits that were then increasingly squeezed by those higher wages, as Glynn & Sutcliffe and others described, which led to higher interest rates and progressively falling asset prices adjusted for inflation. Those asset prices fell, in real terms, for twenty years between 1965 to 1985, including some sharp declines along the way.

The hope of the speculators and liberals was that, just as in the last forty years, prices would rise, wages would fail to catch up, so profits would rise, and so interest rates would fall, and asset prices would rise again, and money would again be drained out of the real economy into this speculation, so that commodity price inflation would again be eradicated. But, the possibility of that was already shown to have ended in 2008. It has taken Herculean efforts of fiscal austerity by governments, along with deliberate bribes to push up house prices, along with astronomical levels of currency printing and buying of paper assets, by central banks, followed by overt physical measures to destroy economic growth via lockdowns – the most odious form of which is China's ridiculous zero-COVID policy – to prevent economies growing, the demand for labour rising, and so wages squeezing profits. The policy's time was already up, and the last two years, firmly banged the final nails in its coffin.

Whether hourly wages rise or not, the growth in the workforce means that the wage fund itself has grown, creating additional demand for wage goods, boosting aggregate demand, and meaning that firms individually have to respond by trying to grab their share of the increased market, and that creates a virtuous circle as far as labour is concerned, because, then, more of them are employed, labour supplies become tighter, and so wages themselves start to increase alongside the greater employment of labour, and consequent growth of the wage fund. The only constraint on that is when profits become so squeezed, as in the 1970's, that it leads to a crisis of overproduction of capital, sharp stoppages of production, and capital engages in technological innovation to replace labour, but we are a long way from that point, as we were in the late 50's and early 60's. The conditions we have, with still high levels of profits, and with the last innovation cycle still providing the basis for the technologies being rolled out, means that, as in the 60's, and early 70's, a period of stronger economic growth, and rising employment and living standards is ahead.

People like Summers believe that, in addition to the effects of higher energy and food prices eating into disposable income, and fear caused by scare stories about war and pestilence, the remaining bit of the task will be accomplished by higher central bank interest rates. But, workers can cover higher living costs by rising wages, as the rash of strikes now demonstrates, and those higher wages will mean they can continue spending as before. In fact, in conditions of rising prices, they have an incentive to bring forward spending where they can, front loading demand, and so incentivising firms to accumulate capital even faster, spurring economic growth more. The scare stories about COVID have run their course and more, and the attempts to introduce new bogeys in the form of Monkey-Pox, and Polio seem to have fallen flat. As for war, people lose interest in the news stories quickly, and that is seen with the way that the spike in internet searches for Ukraine, quickly disappeared to nothing.

As for interest rates, they are massively negative. With US inflation in double digits for workers, a US Fed Funds rate of 1.75%, is negative by around 8% points, and the position in Britain is even worse. Moreover, the majority of people do not pay for current consumption from borrowing, although the least affluent do, via Pay Day loans and loan sharks, but given the astronomical levels of interest they charge, a point or two either way on the Fed Funds Rate or UK Bank Rate, makes not the slightest difference. Some people are using savings to supplement income to cover current consumption, but that is because a) they are still making up for consumption foregone during lockdowns, and b) they have not yet increased their wages to cover that consumption, but that is coming over the next months. They are certainly not going to be convinced to keep money in savings with a massively negative interest rate for savings deposits, rather than continue to use it to supplement income to cover consumption.  In fact, that in itself will cause market interest rates to rise.

In fact, what people do use savings for is to buy big ticket items such as houses. But, as they see house prices falling along with other asset prices, money savings to be used for that purpose become supercharged. If house prices fall by 50%, then every £10,000 of savings you have, becomes worth £20,000 overnight, for use in buying a house. Given that rising interest rates will cause such a crash in asset prices it creates an incentive to hold back on that spending, as against day to day spending, draining money out of assets and into the real economy, a reversal of the conditions existing for the last forty years.  In both the US and UK, the data for the housing market shows a sharp slow down in demand, for houses, whilst houses are being put up for sale at a higher rate, meaning prices will soon start to fall noticeably.

And, the same is true in relation to businesses. With an annual rate of profit still at historically high levels, and many multiples of times higher than nominal interest rates, and money profits rising by around 10% due to inflation, there is no reason on Earth why businesses would be dissuaded from continuing to accumulate capital, as a result of interest rates at 3-4%, the level that speculators seem to think is their limit. Why would you do that, especially as you see demand for your goods and services continue to rise, and know that if you do not seek to grab your share of it, you will never get it back, and will put yourself on course to go out of business? The last time UK inflation was at this level, Bank Rate was at 13%, and, even in 2007, Bank Rate was at 5.75%, even though inflation was less than half what it is today.

Its true that, in the early 1980's, Paul Volcker raised interest rates sharply, and squeezed inflation out of the system, but its not actually true to say that he caused a recession, and that it was that which ended the inflation. There had been recession during the 1970's and early 80's, but far from it ending inflation, inflation surged to its highest levels, soaring to around 27% in the early years of Thatcher's government. What squeezed out the inflation was the reduction in the amount of currency in circulation, not recession, and not higher interest rates. Volcker pushed against an open door, because, by the time he began raising rates sharply, the conditions for a sharp recession, followed by stagnation had already been created. The technological revolution of the 1970's and early 80's that brought the microchip and associated base technologies, meant that labour could be replaced, and wages could be reduced. Workers could not recoup what they lost from inflation, so profits rose. That is what the spivs and speculators want to mimic, now, but the conditions are completely reversed.

Central banks will raise interest rates, and the spivs and speculators will squeal, as they insist that they must pause or reverse course, as asset prices continue to fall, and the pundits on the speculation channels whimper about whether they have seen capitulation or not yet. But, the higher rates, which remain massively negative, and insignificant compared to annual rates of profit, will not cause consumers to stop spending, nor firms to continue accumulating capital. They will cause asset prices to continue falling, however. And, as workers continue to increase their wages to cover rising prices, as they feel more and more confident, as economies expand, so central banks will continue to pump liquidity into circulation, even as they raise rates, and the increased liquidity will buffer profits against rising wages, but will also consequently mean that inflation remains high for a long time, meaning that any prospect that central banks might pause their rate hikes, let alone might begin to reduce them any time in the next decade, can be abandoned.

Boris Bashed

Boris Johnson's reactionary, petty-bourgeois, nationalist party got bashed in the two by-elections on Thursday, in two very different parts of the country. The lessons of the by-elections are clear, not just for the Tories, but also for Starmer's reactionary, petty-bourgeois nationalist Blue Labour, which won in Wakefield, but got fewer votes than in 2019, as against the performance of the bourgeois Liberals in Tiverton and Honiton, who increased their vote from 8,000 in 2019, to nearly 23,000.

Neither result is good news for socialists and the working-class, but, of the two, the sweeping success of the bourgeois Liberals, in the latter, is much better than the win for a reactionary, petty-bourgeois Labour Party, in the former, because socialists are the inheritors of the modernising, radical and progressive traditions of the liberal bourgeoisie, whereas the petty-bourgeois reactionaries of both Tories and Labour, are a throwback to the conditions and ideas that preceded them.

As Lenin put it setting out this attitude of Marxists (disciples) to both of those other trends and traditions, of liberals (enlighteners) and petty-bourgeois reactionaries (Narodniks).

“The enlightener believes in the present course of social development, because he fails to observe its inherent contradictions. The Narodnik fears the present course of social development, because he is already aware of these contradictions. The “disciple” believes in the present course of social development, because he sees the only earnest of a better future in the full development of these contradictions. The first and last trends therefore strive to support, accelerate, facilitate development along the present path, to remove all obstacles which hamper this development and retard it. Narodism, on the contrary, strives to retard and halt this development, is afraid of abolishing certain obstacles to the development of capitalism. The first and last trends are distinguished by what may be called historical optimism: the farther and the quicker things go as they are, the better it will be. Narodism, on the contrary, naturally tends to historical pessimism: the farther things go as they are, the worse it will be.”

(Lenin, The Heritage We Renounce, p 525)

That is obviously a problem for Marxists, in Britain, today, because we have no option but to work inside the Labour Party as the mass party of the working-class, connected to the class organically, whilst, at least at the moment, under Starmer, and his reactionary Blue Labour regime, its politics have gone from bourgeois neo-liberalism/conservative social democracy to reactionary, petty-bourgeois nationalism and jingoism.

That is not true of the party as a whole, whose mass membership continues to be dominated by the former, or even more healthier, progressive social-democratic and even socialist ideas, but the Bonapartist regime of Starmer means that it is the reactionary PLP, in conjunction with its apparatchiks that have control of policy, organisation, and access to the media. In essence, there are two Labour Parties coexisting within the same shell, with one being a small parasite, based in parliament, that is leaching the lifeblood from the other.

It is the mass membership of the party that actually represents the progressive elements, and is in tune with the mass of core Labour voters, as was seen by the rapid growth of that element inside the party, and its implantation in the class, in the period between 2015 and 2017, with it bringing about the largest rise in the Labour vote, in the 2017 General Election, since 1945. Its notable that it was Corbyn's attempt to revert to those reactionary, petty-bourgeois nationalist ideas, in 2019, that destroyed that movement, and decimated Labour's vote, ahead of the 2019 General Election, and that it has been the continuation and intensification of those reactionary nationalist ideas, by Starmer, since 2019, that has seen Labour's electoral position weaken further, as well as having further demoralised its membership. At the same time, it is the Liberals and Greens that continued to be, then, the advocates of those progressive bourgeois liberal ideas, in relation to opposition to Brexit, and so on, that have seen the greatest advance, both in terms of electoral support, and party membership.

That does not take those parties beyond the limitations of their bourgeois liberal ideas, described by Lenin above, but it is, at least, progressive, in comparison to the reactionary petty-bourgeois nationalism of Starmer and Blue Labour.

For Boris and the Tories, there is no saving grace in the by-election results, particularly following their terrible results in the last local council and regional elections, where, again, the bourgeois liberals of the Lib-Dems and Greens made huge proportional advances, whilst Labour languished as a pale shadow of the Tories. The Tory defeats also follow on from huge defeats to the Liberals in Shropshire North and Chesham and Amersham. In Tiverton, the Tories have held the seat more or less for a century. In 2019, the Liberals did not even come second, but were third behind Labour. In 2019, the Tories won with 36,000 votes (60%), with Labour second on 11,600 (19.5%), whilst Liberals trailed with 8,800 (14.8%).

By 2022, Starmer's Blue Labour was destroyed. Falling from second to third, on just 1,500 (3.7%), and barely ahead of the Greens on 1,100 (2.5%). The Liberals, by contrast, increased from 8,800 to 22,500 (52.9%), a swing of 29.9% in their favour. Labour's vote fell by 10,000, or about 90%, whilst the Green's vote fell by 1,000, or about 50%. Both were undoubtedly due to tactical voting, but its notable that the tactical voting was in favour of the formerly third place Liberals, and not the formerly second place Labour, which is mortally damaging for Labour's chances in huge numbers of constituencies across the country, and again mirrors what happened in North Shropshire, where Liberals swept from third to win, hoovering up Labour votes, as Labour becomes indistinguishable from the Tories, or even UKIP, in terms of its jingoism, having also ditched the more progressive social-democratic economic policies of Corbynism.

This huge win for the Liberals, in a century old Tory seat, in Tiverton, is in stark contrast with Labour's flaccid performance in Wakefield, a former Labour stronghold, that the Tories only won in 2019, and whose Tory MP, was forced to resign in a sex scandal. Given all of the travails of the Tories currently, and with tactical voting against them, as seen in Tiverton, Labour should have won with an avalanche of votes, burying the opposition parties.

Of course, Starmer came out to claim the win as momentous, but the truth is that Labour's performance, even here, was appalling. In many ways, it copies the story of Macron in France, who was able to win against the reactionary nationalist Le Pen, on the basis of lesser-evilism, but the shaky foundations of which are illustrated both by the abysmal lack of support for him and his politics, as well as his own use of reactionary nationalism to boost his position, a consequence which saw him lose his majority in parliament, with both the Left and Right advancing at his expense.

In Tiverton, turnout fell from 71.9% to 52.3%, but, in Wakefield, turnout fell from 64.1% to just 39.5%. That is appallingly low, indicating the lack of support for any of the candidates, in a seat where neither the Liberals nor Greens have any past record that might have made them an alternative. Again, this large level of support for “None of The Above”, the large majority of voters sitting on their hands, is reminiscent of voters attitude to Macron in France. In 2015, Mary Creagh scored 17,300 votes for Labour with a 61% turnout. By 2017, the huge benefit of Corbyn's Labour Party was seen as Creagh's vote rose by about a third to 23,000, on a turnout of 65.8%. By 2019, with Corbyn having resurrected his past pro-Brexit position, and with the Labour Right having spent four years attacking him, and undermining the Labour Party itself, Creagh's vote fell to 18,000, on a turnout of 64%.

Labour's vote share in the by-election is lower than that of Creagh when she won in 2017, but with turnout that is barely two-thirds of that in 2017. Even compared with 2019, Labour's performance in the by-election looks abysmal, with their candidate Simon Lightwood getting just 13,000 votes, or only about two-thirds of the votes of Creagh in 2019, when she lost, having obtained 18,000 votes! The Liberals saw there vote drop to a third of what it was in 2019, but a large part of that seems to be that the Greens, who did not stand in 2019, overtook them. Again, that is bad for Labour, because in the last local and regional elections, the Greens who have been more vocal in their continued opposition to Brexit, and who are seen as more radical than the Liberals on economic issues, also did better than the Liberals, proportionally.

In 2019, the turnout was 64.1%, and fell to 39.5% in 2022.  That is a drop of 38%.  In 2019, Labour secured 18,000, and a 38% drop from that would be 11,160.  Labour scored 13,166, which is obviously better, but in 2019, Labour lost!  Compared to 2017, when Corbyn's Labour scored  23,000 votes on a 65.9% turnout, however, its clearly not better.  The turnout in 2022 was down 40% compared to 2017, meaning that Labour's 2017 vote of 23,000 should have fallen to 13,800, whereas it fell to 13,166.  So, Labour under Starmer, even in a mid-term by-election, in a seat that has been traditionally Labour, where the former Tory MP had to resign as part of a sex scandal, with Boris Johnson assailed on all sides, attacked by a large part of his parliamentary party, attacked by the vultures of the Tory media, with inflation at 40 year highs, and living standards under attack, could not even perform as well as did Labour under Corbyn in 2017!!!

The justification given by Starmer and Blue Labour for wrapping themselves in the butcher's apron, and careening head first into jingoism and reactionary nationalism, is that they needed to win the votes of the petty-bourgeois reactionaries and bigots that voted for Brexit, and gave Boris Johnson his victory in 2019. But, the failure of that approach was already obvious when Corbyn tried it in early 2019! Despite all of the lunacy and chaos caused by Brexit in the intervening period, despite the idiocy and affect on people's lives from lockdowns, and now of the highest inflation in forty years, it is still failing, as it inevitably must, to win those reactionaries and bigots to Labour, even if, as a supposedly progressive party, it should want them. Labour won in Wakefield not because it won over large numbers of reactionaries and bigots from the Tories, but simply because a large number of those Tory voters stayed at home! Labour cannot count on that always being their saviour.

Northern Soul Classics - Restless - Margie Hendrix

 

Friday Night Disco - I'm So Excited - Pointer Sisters

Me too, as its Northern Soul Night tonight at Moorville Hall.

Victory To Our Rail and Tube Workers

Our brothers and sisters working in the rail industry have shown the way forward, in their successful strike action so far this week. The fact that the Tories have been led into ever more excited and ridiculous levels of lying and fabrication about the dispute shows just what shaky ground the government is on, and the extent to which they are worried. We know that Boris Johnson is an inveterate liar, whether it comes to Brexit, Covid, or pretty much anything else. During this week we have seen that its a characteristic of his entire government. The blatant nature of the lies from Chris Philp, and Grant Shapps, were easily refuted, simply from viewing TV interviews, but, as usual with Tory lies, they followed the advice of Goebbels, and kept repeating them, and doubling down on them anyway. Meanwhile, the liberals of Starmer's True Blue Labour, disgraced themselves further.

Rail and tube workers face a particular problem, which is that although their employers in the train operating companies are not government owned – though Network Rail, responsible for the infrastructure is – they are bank rolled by the state, which pays out huge sums to them. In fact, whilst the operating companies continue to pay out around £200 million a year in dividends to their shareholders, they get around £2.5 billion in subsidies from the government, on top of the more than £3 billion grant given to Network Rail. So, the train companies are beholden to the government in a way that, say, TESCO is not.

When TESCO has faced a shortage of drivers, as it expanded its online deliveries, during lockdowns, it was able to simply pay them up front payments of £1,000 to get them from other jobs, and to offer them high enough wages to recruit them. Other haulage firms did the same thing, as lorry drivers' wages rose by around 30%. These firms know they have to pay higher wages to get the workers they need, in order to operate and grab an expanding market share, as demand for their goods and services increases. That is not true with a nationalised industry, or as with the rail companies where the state stands directly behind them as a significant funder. They can ignore the fact that they are losing income and profits, because the state simply fills the gap. Workers are always in a weaker position when they are employed by the capitalist state, as Kautsky described in The Erfurt Programme.

“If the modern state nationalizes certain industries, it does not do so for the purpose of restricting capitalist exploitation, but for the purpose of protecting the capitalist system and establishing it upon a firmer basis, or for the purpose of itself taking a hand in the exploitation of labour, increasing its own revenues, and thereby reducing the contributions for its own support which it would otherwise have to impose upon the capitalist class. As an exploiter of labour, the state is superior to any private capitalist. Besides the economic power of the capitalists, ii can also bring to bear upon the exploited classes the political power which it already wields.”

So, its no wonder that the Tories are using all of their power to try to utilise this superior exploitative power of the capitalist state to defeat the rail and tube workers, just as Thatcher did in 1984-5, in using that power of the capitalist state to defeat the Miners. But, today, is not the period of stagnation and decline of the 1980's, and nor is it the equivalent of the 1970's. On the contrary, it is the equivalent of the late 1950's, and early 1960's, when a new period of more robust growth was just getting underway, and labour shortages began to emerge, giving the conditions in which workers could feel more confident, when the demand and supply for labour itself pushed up wages, and enabled them to begin to rebuild and reorganise their organisations from the bottom up.

This role played by the capitalist state in acting as a battering ram against the working class as a whole is shown in the repeated wage freezes that governments have imposed on government employees over the last decade or so that has also gone along with their policies of austerity, in restricting financing of the NHS, and Local Government, for example, as they sought to divert money instead to bailing out the banks, and ensuring that interest rates were kept down so as to inflate asset prices, and encourage further reckless speculation in financial and property markets, to boost the already fabulous wealth of the ruling class. The wages of government employees have fallen way behind the wages of workers employed elsewhere in the economy, as those businesses have had to raise wages to compete for increasingly scarce labour.

And, of course, the government has continued to ensure that those that represent the interests of the government, which, in turn represents the interests of the spivs and speculators who make their money from gambling in the financial and property markets, are well paid. The executives of the train operating companies earn around £600,000 a year, so its no wonder they are going to know which side of the bread is buttered when it comes to doing the bidding of millionaire Tory Ministers, in insisting that the workers, who actually do the job, and produce the revenues on the rails and tube, should be kept on below average wages, and be offered a measly 3% pay rise, which would mean an actual 8% plus pay cut, in real terms.

The government continues to insist that workers can't get pay rises even equal to the inflation that already exists, on the basis that if they did this would be inflationary! That is, of course, the usual economically illiterate nonsense we have come to expect from Tories who will pump out the most obvious drivel to try to defend their positions, and the interests of the ruling class. If the money price of bread is £1, consisting of £0.50 materials, £0.25 wages, and £0.25 profits, and as a result of inflation rises to £2 (100%), whilst wages rise by only 20%, then assuming that materials also double in price, we would have materials £1, wages £0.30, and profits now £0.70! In other words, money profits would rise by nearly 200%, whilst wages would rise by only 20%, and, in real terms, wages would have fallen by 80%, whilst profits would have risen in real terms by nearly 50%. Its pretty clear why millionaire Tories want to insist that workers wages have to fall way behind the inflation so that profits are able to soar, and so enable even more money to be paid out as interest and dividends, and boost the share prices of the spivs and speculators.

And, of course, just as the massive financial and property bubbles that were blown up, and led to the financial meltdown of 2008 were nothing to do with workers, but they had to pay for them as the bankers and speculators were bailed out, so the inflation that now exists is nothing to do with workers either. It is a consequence of the same money printing that blew up the financial and property bubbles prior to 2008, and has blown up even bigger ones in the 14 years since then. It is all the money tokens thrown into circulation in the last two years of lockdowns, when the government forcibly reduced the production of goods and services that has led to the current inflation, as I predicted, two years ago, it would inevitably do. That same ocean of liquidity is also confronted with restrictions on the supply of oil and gas, as NATO imperialism has blocked and boycotted supplies of Russian oil and gas, causing its price to spike, as consumers have looked to buy more expensive supplies from the US, and the same is true with food prices, as Russian supplies of grains and fertiliser have been blocked by NATO imperialism. None of that is caused by workers, but the Tories are demanding that workers pay the cost of it.

The Tories lies, backed by the Tory media have, of course, presented sob stories about people not being able to get to hospitals on strike days. The obvious response to which is, firstly, isn't that what ambulances are for, and what, in the past, dedicated hospital buses were for, all of which have been removed or reduced as a result of Tory cuts, used to divert money instead to the spivs and speculators. Secondly, would it not be preferable to have healthcare facilities close enough to where people live that they could get there by bus, taxi, or private car, rather than being so far away that they require a lengthy train journey. But, of course, Tory cuts in healthcare funding have made that impossible as they have closed down hospitals and facilities rather than providing additional ones. Thirdly, given that over the last two years of lockdowns the government has forcibly told people not to go to hospitals, and we have the longest waiting lists ever, its a bit rich for them now to complain that they might not be able to make the journey on one or two days!

They have also talked about kids not being able to get into schools to take exams, for which all the same responses as above are even more appropriate. We have had two years of kids being forcibly prevented from going to school by government diktat during lockdowns, even though COVID does not affect young people, and there was no reason why they should have lost any education at all. But again, how crazy is it that schools are so far away from students that it requires a lengthy train journey, which in itself eats into a large part of the day that should have been used for study. And, all of the other sob stories put out by the Tory media can be responded to in the same way, given that they have spent the last two years forcibly preventing people from moving freely around the country, not to mention the limitation on freedom of movement imposed by Brexit, which is itself having devastating consequences at borders in causing chaos and delays and raising costs and prices.

All of that could, of course, be expected from the Tories who have no shame, and will lie through their teeth, as the experience of the last three years has shown, yet again. Unfortunately, the disgraceful response of the liberals of Starmer's True Blue Labour was equally predictable. The best they can come up with is to demand that the Tories intervene to stop the strikes. Well of course, the Tories are intervening to try to stop the strikes – on their terms! Unlike Blue Labour, the Tories know which class interest they are representing, and are going full bore to do so. They are using the full force of the Tory media to spread their lies, and try to whip up moral panic against workers, using the same petty-bourgeois and reactionary forces that backed Brexit to do so. The vox pops are full of the whining of petty-bourgeois market traders, and small business people who believe that the world revolves around them, and that workers should sacrifice their own interests and well-being, just so that their businesses can continue to operate, and provide them with profits.

Starmer, and those that support him, like Paul Mason, collapsed into their reactionary Blue Labour nationalism and jingoism on the basis that they cannot see further the next election, and whose parliamentarist politics sees everything revolving around a few privileged Labour MP's, securing for themselves cushy positions in government, for no other reason than to then just pursue policies indistinguishable from those the Tories are pursuing now. In order to win those seats, these Blue Labour cretins think that its necessary to pander to a bunch of reactionary voters in the so called “red wall” seats in the Midlands, and North. The analysis was rubbish to begin with, because the truth is that those reactionary voters, in those areas, as elsewhere, have never been core, working-class, Labour voters anyway. Those voters who voted for Brexit, and who support other reactionary positions, are almost exclusively petty-bourgeois, or else they are part of that backward, lumpen layer that was never part of an organised labour movement, were generally hostile to Labour and the trades unions, and whose allegiance was always to the racists and bigots who appealed to their prejudices.

But, if you listen to some of those supposed past Labour voters, in the “red wall”, they claim that they had stopped voting Labour, because Labour had stopped being a party that represented ordinary working people. That is undoubtedly true in relation to the years under Blair, but the truth is that Labour has never actually represented the interests of workers, other than where it was also compatible with the interests of capital. Yet, if you really wanted a Labour Party that was clearly being distinctive in promoting the interests of workers, it was that under Corbyn, between 2015-2019. If Starmer really did want to appeal to all those old working-class Labour voters, then surely, like Corbyn and McDonnell, and even some on his front bench, he should be out openly supporting the pickets, and throwing his support behind ordinary working people in a life and death struggle with the Tory representatives of the spivs and speculators!

In 1979, we asked the question of Labour - “Whose side are you on?” Today, as we look at the liberals of Starmer's True Blue Labour, even as a comparison with Wilson and Callaghan's Labour Party, we need not ask the question, because its clear that they certainly are not on the side of the working-class. It shows the need to move from the current upsurge in strike action and unionisation, to rebuilding the labour movement from the ground up. For now, the class struggle has moved out of the political sphere, and into the industrial sphere, where its likely to remain for some time, especially given the choking effect that the bureaucratism of Starmerism is having on the political wing of the movement. But, it can never remain there. It must be the basis of taking the class struggle back into the political sphere.

Lenin pointed out that industrial struggle, strikes over pay and conditions, is not class struggle. It is merely bourgeois trades unionism, bargaining within the system, not seeking to replace the system. It is struggle by individual groups of workers simply to obtain a larger slice of the pie. Only when strikes become general strikes, organised by the whole working class in opposition to the whole capitalist class, and its state, does it become class struggle, which is also why such political General Strikes should not be called for limited aims such as demanding “Tories Out”, as opposed to being part of an attempt to seize control of the state itself.

But strikes do act as schools for class struggle.

“Strikes, therefore, teach the workers to unite; they show them that they can struggle against the capitalists only when they are united; strikes teach the workers to think of the struggle of the whole working class against the whole class of factory owners and against the arbitrary, police government. This is the reason that socialists call strikes “a school of war,” a school in which the workers learn to make war on their enemies for the liberation of the whole people, of all who labour, from the yoke of government officials and from the yoke of capital.

“A school of war” is, however, not war itself. When strikes are widespread among the workers, some of the workers (including some socialists) begin to believe that the working class can confine itself to strikes, strike funds, or strike associations alone; that by strikes alone the working class can achieve a considerable improvement in its conditions or even its emancipation. When they see what power there is in a united working class and even in small strikes, some think that the working class has only to organise a general strike throughout the whole country for the workers to get everything they want from the capitalists and the government. This idea was also expressed by the workers of other countries when the working-class movement was in its early stages and the workers were still very inexperienced. It is a mistaken idea. Strikes are one of the ways in which the working class struggles for its emancipation, but they are not the only way; and if the workers do not turn their attention to other means of conducting the struggle, they will slow down the growth and the successes of the working class.”

(Lenin – On Strikes)

At the present time, strikes are appearing like a rash on the surface of society across the globe, as workers naturally break out, in a response to the attacks on their living standards being imposed by inflation, and as they feel the firmer ground beneath their feet of rising employment, and strengthening economic conditions. This latter is why the representatives of the spivs and speculators continually hype up the possibility of economic slow down, or even recession, and why the greedy speculators themselves are again demanding that states impose recessions on economies so as to hold back workers wages, and rising interest rates so that their share and property prices can again be inflated. But, as Lenin indicates, strikes, and simply bargaining for higher wages can never be a lasting solution, though current conditions do put workers in a stronger position than they have had for 40 years.

Ultimately, as happened in the 1970's, if wages do manage to squeeze profits, the capitalists respond by introducing new labour saving technologies. We are twenty years away from that, but, in the meantime, its necessary to prepare for it, in a way that labour movements did not do in the 1950's, 60's, and 70's. In the end, the class struggle is a political struggle, it is not a struggle about who gets a bigger share of the pie, but about replacing one form of property with another. Currently, it is about replacing fictitious-capital (shares, bonds, property and their derivatives) owned by the ruling class, with the socialised industrial capital that is the collective property of workers, and is the transitional form of property between capitalism and socialism, but over which the ruling class continues to exercise control. To change that requires a political struggle, which requires a Workers' Party. At the very least, it requires such a party that would raise the demand for changing company law, and removing the right of shareholders to exercise control over property they do not own, and to put in its place, company boards democratically elected by the workers in the company.

In reality, if such a Workers Government were ever elected, it would face immediate attempts to overthrow it by the capitalist state, in the way that happened with the Allende government in Chile, in 1973. It requires, therefore, that such a revolutionary workers' party combine activity in parliament with activity outside parliament, to prepare the workers to resist the attempts of the state to organise a coup against them. It requires that such a party promote a party based upon the self-activity, and self government of the working-class, establishing factory committees in each large company that can be the basis of organising democratic control of production, it requires the formation of similar workers committees, in each community, that could organise community policing and so on. It requires that we organise our own armed workers' militia to police and protect our communities and workplaces against the attacks of the capitalist police, and fascist paramilitaries, as workers have seen happen in the US, for example.

But, that is in the future. For now, we need to make sure that we provide utmost solidarity with the rail and tube workers, and with the teachers, health workers and every other group of workers preparing strike action to defend living standards. We must take that new level of activity into the political sphere, with socialists inside local Labour Parties turning out on picket lines, and strikers, and newly radicalised workers being drawn into the Labour Party to pursue the fight against Starmer's liberal agenda. It must be the basis of the unions demanding a democratisaton of the party, and introduction of mandatory reselection, so that we can kick out all of the dead wood, right-wing MP's who never should have darkened the door of Labour to begin with.