Chapter 2.2 – Medium of Exchange - Part 1 of 3

Chapter 2.2 – Medium of Exchange

There is a difference between the barter of commodities and the circulation of commodities. The barter of commodities is represented by C – C. The producer of, say, wine exchanges a litre of it for a metre of linen, produced by a weaver. The basis of this exchange is that a litre of wine requires the same quantity of labour for its production as a metre of linen. This exchange, on the basis of The Relative Form of Value, requires the producers of each pair of traded commodities to have an approximate knowledge of these different values, a process that is facilitated by the fact that different tribes and communities appoint merchants to be responsible for organising the exchanges between them.

The fundamental basis of these exchanges, under barter, is the acquisition of use values. The trade simply exchanges one use value, wine, for another use value, linen, on the basis that the wine producer has wine, which, for them, has less use value than the linen they seek to obtain, and vice versa. The wine producer hands over wine to the weaver, who consumes it, and its existence comes to an end, whilst the weaver gives linen to the wine producer, who consumes it, and its use value disappears with its consumption.

James Mill assumed that this condition, existing under barter, essentially, as Marx says an exchange of products, remains the same with the circulation of commodities, in a money economy, so that the supply always creates its own demand. He assumed that money only intervenes as medium of exchange, so that C – C becomes C – M – C. The purpose of production remains the same, the acquisition of use values for consumption (products) – personal or productive – and money is invented simply to facilitate the exchange, and overcome the limitations imposed by barter.

As Marx discussed in Theories of Surplus Value, Chapter 17. this assumption by Mill (The Law of Markets), adopted by Ricardo, and popularised by Say (Say's Law), is fundamentally flawed. It is flawed because of the difference between barter and circulation of commodities, in a money economy. In a system of barter, its true that supply creates its own demand. The supplier of wine only supplies it on the basis that they also have a demand for the linen they obtain in exchange for it, just as the supplier of linen only exchanges it on the basis that they also have a demand for wine. The exchange between the two simply equates the demand and supply on both sides. If the wine producer could not find a weaver who would exchange linen for wine then they would not supply wine, because the condition of their supply is that they satisfy their own demand for linen in the process.

In such conditions, they might exchange their wine for, say, wheat, instead, if they also have a demand for wheat, but that does not change the fundamental relation. It simply expresses it in different use values. In the end, the wine producer, as with the producer of any other commodity, might simply retain their supply for their own consumption, or take it to another market, on another day. This is the basis of the assumption made by Ricardo, quoted by Marx in Theories of Surplus Value, Chapter 17, that a producer of commodities will not continue to produce them if they do not have a use for them themselves, or if they are not demanded by someone else, for whom they are useful. As Marx sets out, this assumption, valid under barter, is not at all valid under commodity circulation, with a money economy.

Back To 2.B.

Forward To Part 2

A Profound Economic Crisis?

Britain's new Prime Minister, Rishi Rich, in his opening address, talked about Britain facing a profound economic crisis. Of course, any such crisis is one entirely of the Brexitories making, including from his own actions over the last two years, during the idiotic lockdowns.  He was responsible for handing out large amounts of paper tokens, printed by the Bank of England, and pretending that they were money. And, of course, the Brexitories, alongside the ruling class, and other speculators, have been pushing this line about economic crisis for some time, as they try to frighten workers not to push for wages to cover inflation, and as they try to dissuade businesses from expanding, causing interest rates to rise, and so financial markets, and asset prices in general, to, once again, crash. But, is it true that Britain faces such a profound economic crisis, as against simply a crash in these asset prices, assets which are, overwhelmingly, just the property of the very, very rich?

The answer to the question is essentially no. However, that does not mean that government policies and actions, along with those of the Bank of England, may not cause such an economic crisis. A large part of the economic slowdown in Britain and the EU is down to the massive rise in energy prices. That meant that businesses had to tie-up capital to cover these higher prices for the energy they use, capital that otherwise would have been used for consumption by capitalists, or for capital accumulation and expansion of businesses. It also meant that consumers had to spend money to cover energy bills, leaving them short of money to spend on other consumption goods and services, so that firms, engaged in the provision of them, faced slowing demand, and were led to, then, slow down their own expansion.

But, firstly, those massive rises in energy prices are a direct result of NATO's boycott of cheap Russian oil and gas. They have been caused by the fact that Germany, under pressure from US imperialism, blocked the opening of the Nordstream2 gas pipeline which would have brought large quantities of cheap Russian gas into Europe. In addition, the EU introduced policies to boycott Russian oil and gas exports, which again massively increased the cost of oil and gas coming into the EU.

As the EU supported the sanctions again Russia, including exclusion from the SWIFT international payments system, Russia was left requiring payment for oil and gas to be made in Roubles, and the EU refused to do so, meaning that, as existing contracts expired, those supplies of gas also ended. So, this significant cause of economic slowdown, in Britain and Europe, is one that flows directly from British and EU policy, and could be ended, tomorrow, by simply reversing those decisions. At least it could mostly be reversed other than for the fact that the US has blown up both the Nordstream 1 and 2 pipelines to prevent the EU accessing cheap Russian gas!

But, of course, as Russian oil and gas imports were blocked, and the EU and Britain looked to other sources of energy, now, at much higher prices, states were not at all too unhappy about that, because, no longer able to impose lockdowns on populations, to curb economic activity, as the Stalinists in China have been able to do, and with opposition to the policies of austerity that had reigned after 2010, the draining of household disposable income into the payment of energy bills, now to US based oil and gas companies, in which the British and EU ruling class also have large share holdings, meant that there was a prospect of slowing the rampant increase in spending that has prompted rapid economic growth, and demand for labour that was underpinning an upsurge in wages, and strengthening of the position of labour, as labour shortages abounded, as well as the demand for capital, which was raising interest rates, and again causing asset prices to have crashed by around 20% already.

Talk of disposable income being squeezed by rising energy and food prices, as well as of general inflation rising faster than hourly wages was a useful means of spreading a new moral panic amongst populations to frighten them into being more cautious in their behaviour, to slow down spending on consumption, and for businesses on expansion. The trouble is that, despite all of that, consumers have continued spending, and businesses have continued expanding, as competition forces them to do so out of fear of losing market share, in conditions where demand for goods and services continues to increase, despite the energy and food price rises and so on.

In part, that is because, in Britain and in Europe, households were handed those paper tokens as replacement incomes, and, because they were locked down for two years, although they increased spending on some things significantly, i.e. all those things they could buy online, and enjoy indoors, their overall spending was curtailed, meaning they amassed cash hoards, paid down existing debts and so on. They now have those hoards, and strengthened household balance sheets, which they are using to finance consumption of all those goods and services they could not enjoy during lockdowns – with a concomitant hit to all those technology based expenditures they engaged in between 2020-2022, which has caused a big temporary hit to those technology companies.

So, its simply not true that there is some existing, or imminent, profound economic crisis facing Britain, the EU or the US, or indeed, much of the world. China's economy is being deliberately slowed by the Stalinists, using continued lockdowns, under its nonsensical zero-Covid policy, because, as elsewhere, each time it relaxes those lockdowns, consumption and economic activity expands rapidly, and that puts pressure on Chinese interest rates, which then threaten to burst all of the massive serial asset price bubbles that have been blown up, and which would destabilise the regime, and the Chinese ruling class whose wealth is based upon those assets. But, it will not be able to hold that position for much longer, and when that dam breaks, and a surge in Chinese economic activity arises, it will have ramifications for global economic growth, not to mention for interest rates, and a crash in global asset prices.

The most obvious manifestation of the fact that there is no economic slowdown, let alone recession, or economic crisis, is the fact that, throughout the globe, not only does employment continue to rise, but unemployment continues to fall. That is the case so much, that the speculators are demanding a recession, to stop wages rising.  Enemies of the working-class, like Larry Summers, demand that unemployment in the US, needs to rise to more that 5% for more than year, so as to discipline labour, and push wages down.  Its why central banks are raising their policy rates, in a vain hope of creating such a recession, whilst continuing with policies of QE that create inflation!

Both employment and unemployment can rise simultaneously, for the simple reason that the workforce itself continually expands. If the workforce is 1 million, of which 900,000 are employed and 100,000 unemployed, and it rises to 1.2 million, then employment might rise by 100,000 to 1 million, whilst unemployment also rises to 200,000. But, the rise in employment cannot, currently, just be explained by a rising number of workers, because unemployment is also falling, along with an increase in the number of workers moving from part-time to full-time, and temporary to permanent employment. The latest US initial jobless claims data, again, came in better than expected, at just 217,000, and is currently at less than half the number it would be if the US were entering a recession. US GDP growth for Q3, itself came in at 2.6% on an annualised basis, indicating that, far from slowing, the economy is growing.

The increase in employment is evidence that, whatever GDP data might suggest, output itself continues to expand. GDP is not a measure of output, but only of new value created during the year/time period. Its actually, not even a good measure of that, because, as a monetary figure, it is affected by a number of other factors. Given high levels of inflation, what is being seen in GDP data is the fact that significant capital is being tied up, and this is reflected in incomes, making the actual amount of new value created appear less than it actually is.

Total output value consists of c + v + s, whereas GDP, the new value created, during the year, consists only of v + s. That is, it is equal to the wages and profits in Department I and II, which forms the demand for consumption goods, and for the accumulation of additional capital (new c + v). If GDP rises or falls, it only means that the amount of new value created, and resolved into these revenues has risen or fallen, not that the amount of output value has risen or fallen, because it does not take account of changes in the value of c. But, it also does not accurately represent even the amount of new value created, either, because of what Marx explains in Capital III, Chapter 6, and in Theories of Surplus Value, Chapter 22, in relation to the tie-up and release of capital.

Suppose we have, in Year 1 total output equal to c 950 + v 475 + s 475 = 1900, and GDP - 950.  In Year 2, total output is equal to c 1000 + v 500 + s 500 = 2000. GDP is then equal to 1,000. However, during the year, the actual use values that comprise c, the constant capital, must be replaced “on a like for like basis”, as Marx describes it, in order for social reproduction to proceed. In other words, if the 1,000 c consists of 1,000 use values, another 1,000 such use values (raw materials etc.) must be bought out of the 2000 of total output, to replace them.

Suppose, however, that, between the time that the total output, equal to 2,000, is sold, and the 1,000 use values comprising c are bought, the price of these use values rises by 10%. They must still be bought, and the only way they can be bought, at a cost, now, of 1,100, is for some of the profit of 500 to be used for that purpose.  So, what would, then appear is c 1100 + v 500 + s 400 = 2000. It would appear as though profits had fallen by 100, and also that GDP has fallen, because of the tie-up of 100 of capital that previously would have formed revenue. If in the previous year, there was no tie-up of capital, and GDP was 950, it would appear that GDP had fallen by 50, to 900, whereas, in reality, it would have risen by 50, but, now, with 100 of it having been tied-up as capital to replace the higher priced constant capital.

We know that employment is expanding, and given that capitalist enterprises do not employ people to stand around doing nothing, let alone to actually reduce the amount of new value created, but rather to increase the amount of new value produced, we can assume that this increased employment, does, indeed, mean that the amount of new value being created is expanding, and, given the significant increases in employment, is expanding significantly, despite what GDP data might suggest.

We can conclude that the GDP data is simply reflecting the fact that capital is being tied up as a result of 10% rates of inflation, and frictions imposed reducing productivity, as constant capital is replaced during the year. And, a further look would tell us that, its possible that, given that hourly wages are rising more slowly than inflation, some of this tie-up of capital, which is reflected in lower profits, is itself offset by the fact that, currently, capital is able to shift some of that burden of the tie-up of capital on to labour, by money wages rising slower than prices, and raising relative surplus value.

There is also another question in relation to the amount of revenue that goes to the purchase of assets rather than commodities, with this money then being tied up in the sphere of assets rather than the general economy, which I will examine in some future posts.

In fact, its not only US GDP data that shows continued growth, albeit sluggish, but even the latest EU GDP data continues to show growth, so taking in the points above that GDP does not give an indication of output growth, the current condition does not at all signify some profound economic crisis, other than one that governments might create by idiotic policies such as those that Truss and Kwarteng attempted, or else that they deliberately create, as they did with austerity after 2010, or lockdowns after 2020, and that the Chinese Stalinists continue to implement, a version of which would be deliberately shutting down economies by creating physical shortages of energy, requiring businesses to close down for part of the week.

But, the austerity imposed after 2010, simply led to a further relative decline of those developed economies that imposed it. China continued to grow during that period, as did other Asian economies; African economies showed hardly any impact in the period after 2008, continuing to provide 6 out of the world's 10 fastest growing economies, with average annual growth rates above 10%. And, even with austerity, and QE being used to divert money and money-capital away from the real economy into speculation in assets, after 2014, developed economies too, began to expand more rapidly, and notably after 2018, the effect of which was, then, rising interest rates, and a 20% fall in stock markets, before Trump introduced a further impediment to growth via trade wars against China and the EU, and Brexit introduced the threat of frictions in Europe. As even that failed to stop global trade again beginning to rise, it was cut short in 2020, by the physical closing down of economic activity under cover of lockdowns.

In short, the continued rise in employment, fall in unemployment, tight labour markets, and continued rising demand for goods and services, in aggregate, does not give any grounds for believing that output is falling, or that economies are either in, or imminently approaching a recession, let alone some profound economic crisis. These latter facts, of continued economic expansion, causing the demand for capital to rise, and rising employment leading to rising wages, and the potential for a restriction on the increase in profits, available to finance capital accumulation, do represent a potential crisis for the ruling class, however, precisely because they recreate the conditions of rising interest rates that lead to a crash of asset prices, the form in which the ruling class, now, holds all of its wealth.

But, as Marx describes, this kind of financial crisis, causing asset prices to crash, is not at all the same as an economic crisis. Its why we should not allow the ruling class that owns its wealth in the form of that fictitious capital to exercise control of the socialised capital it does not own, and which is the collective property of the working-class. Its actions are, now, even contrary to the requirements of the capitalist system itself, sacrificing real capital on the altar of fictitious capital, and paper certificates.

Even for the continued development of the capitalist system, the existing ruling class has become a fetter, and should be swept aside, with control over capital passing to its collective owners, the working-class.

Chapter 2B. Theories of The Standard of Money - Part 10 of 10

The same applies with the demands of reformists for the state to nationalise this or that business or industry, where the labour it expended in production proved not to have been socially necessary, and so the output did not find adequate demand at prices that reproduced the consumed capital.

Gray “assumed that commodities could be directly compared with one another as products of social labour. But they are only comparable as the things they are. Commodities are the direct products of isolated independent individual kinds of labour, and through their alienation in the course of individual exchange they must prove that they are general social labour, in other words, on the basis of commodity production, labour becomes social labour only as a result of the universal alienation of individual kinds of labour. But as Gray presupposes that the labour-time contained in commodities is immediately social labour-time, he presupposes that it is communal labour-time or labour-time of directly associated individuals. In that case, it would indeed be impossible for a specific commodity, such as gold or silver, to confront other commodities as the incarnation of universal labour and exchange-value would not be turned into price; but neither would use-value be turned into exchange-value and the product into a commodity, and thus the very basis of bourgeois production would be abolished.” (p 84-5)

That was not what Gray, Proudhon and the Narodniks wanted. They wanted commodities to continue to be produced as commodities, but not exchanged as commodities. In reality, it amounts to a petty-bourgeois demand for continued independent commodity production, with all of these commodities then bought by the state – by a central bank in Gray's formulation – which then acts to distribute them to society. A form of that was undertaken by the EEC under CAP, which led to the creation of huge wine lakes, butter mountains and so on, of overproduced commodities.

In order to deal with these contradictions, either the entire scheme must be abandoned, or it requires one aspect of bourgeois production after another to be scrapped.

“Thus he turns capital into national capital, and land into national property and if his bank is examined carefully it will be seen that it not only receives commodities with one hand and issues certificates for labour supplied with the other, but that it directs production itself.” (p 85)

Gray confuses the fact that every commodity is money in the sense that it is a representative of a quantity of social labour-time, and so can act as a claim on that quantity of social labour-time – under barter that is clear, because commodities are directly bought by commodities – with the dogma that every commodity immediately is money, and can always fulfil that function. It assumes, as with Say's Law, that supply creates its own demand, and that commodities are produced and exchanged as products, i.e. solely to satisfy consumption needs. It assumes that commodities continue to be bought by commodities, as Ricardo mistakenly believed, with money simply having been invented to facilitate this exchange.

The same error has been replicated by Paul Cockshott, as I set out, a while ago, in my critique of Paul Mason's “Post-Capitalism”.

“The dogma that a commodity is immediately money or that the particular labour of a private individual contained in it is immediately social labour, does not of course become true because a bank believes in it and conducts its operations in accordance with this dogma. On the contrary, bankruptcy would in such a case fulfil the function of practical criticism.” (p 85-6)

That, essentially, is what befell the Stalinist states, and the same is seen with those welfare states in which this same dogma is applied, sucking in huge amounts of value and surplus value, to subsidise the misallocation of resources, and a consequent effect of negative expanded reproduction.

Although Gray was unaware that the logic of his argument was a progressive undermining of bourgeois production, it was the conscious aim of a number of British socialists, such as Thompson and Bray. By their nature, however, much as with Sismondi, their ideas were, on the whole, reactionary. They were “anti-capitalist”, seeking to place restrictions on it, and to statify it, rather than seeking to develop the contradictions within it, via its more rapid development, and so its replacement brought about from below, by the working-class.

“But it was left to M. Proudhon and his school to declare seriously that the degradation of money and the exaltation of commodities was the essence of socialism and thereby to reduce socialism to an elementary misunderstanding of the inevitable correlation existing between commodities and money.” (p 86)

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Forward To Chapter 2.2

Northern Soul Classics - Can It Be Me - Mel Williams

 

Friday Night Disco - Right Is Right - Rufus

Another month has gone by, and its time for another night of dancing at Soulville.  I'm warming up with this from Chaka Khan and Rufus.

The Banana Monarchy and Voodoo Economics - Part 9 of 9

The measures of reactionary petty-bourgeois governments, at that time, which deregulated, and removed various rights and freedoms from workers, and introduced anti-union laws, did not, of themselves, fundamentally change the relations between capital and labour, more than was already the case arising from changed material conditions in the power of labour as against capital, resulting from the stage of the long wave cycle. Innovation had introduced labour saving technologies, workers were laid off, their bargaining power was denuded, unions were useless in such conditions in trying to bargain a better deal, and, under such conditions, the reason for workers joining such unions are also eroded, weakening the unions further. As Engels had put it,

“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

(Engels Condition of The Working Class in England p 243)

The new laws facilitated the reactionary, anti-worker policies of the small capitalists, but, as again Engels had pointed out, for much of the large-scale businesses, unions had long since been incorporated into a social-democratic model, in which workers were to be imbued with the notion that society was generally a harmonious whole, in which the interests of workers and capital were intertwined, and only sensible negotiation between professional negotiators on each side was required, to ensue their mutual benefit.

"and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends."

So, the big capitals, did not seek to ban unions, but, instead, simply further incorporated them via single union agreements, and whole swathes of lay union officials, who might have acted as a base for rank and file resistance, as the shop stewards movement had done in the 1950's and 60's, were absorbed into the ranks of the full-time bureaucracy.

But, those conditions are, again, now changing, as they were in the early 2000's prior to the 2008 crash, and the imposition of austerity, lockdowns and so on, in the intervening period. One consequence of the appeasement of the interests of small capital, was that its significant expansion, since the 1980's, was itself premised upon a continuation of conditions in which workers could not move to higher paid jobs elsewhere, that the low interest rates continued, that low wages would continue to be subsidised by the state out of welfare benefits, and so on. Its what contributed to the massive drag on productivity rates. Around 20% or about 1 million of the 5 million mostly small businesses in Britain are zombie companies, reliant upon a continuation of those conditions, and, even then, only able to pay the interest on their loans, and not to repay the capital borrowed.

As interest rates rise, wages rise, workers find they can easily move jobs, find the mettle to form unions and so on, the days of those zombie companies are numbered, and a good thing too. Socialists are not Sismondists, and economic romanticists, wanting to preserve those reactionary forms of capital, as against large-scale capital. Quite the contrary. If those small capitals go out of business, as part and parcel of an expanding economy, and growth of large-scale capital, that, in itself, will be a highly progressive development, and, along with it, will also go a weakening of the reactionary petty-bourgeois ideology that currently dominates both the Brexitories and Blue Labour.

A growth of large scale capital, means a growth of workers employed within it, and the potential for them to join unions, to enjoy more civilised conditions, to enjoy all that comes from such collective and cooperative labour, in terms of the development of their class consciousness. It strengthens the ideas of progressive social-democracy, if not immediately of Socialism, and diminishes the ideas of reactionary petty-bourgeois nationalism, and anti-capitalism. Under those conditions, attempts by a reactionary Brexitory government to introduce Enterprise Zones, Freeports and Charter Cities will be dead in the water, neutered at birth in their effect, and also the concomitant idea of trying to impose further anti-working class measures on the right to strike and so on, will be met with the same response that they received in similar conditions in the 1960's.

The times they are a changing.

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Chapter 2B. - Theories of The Standard of Money - Part 9 of 10

Gray begins from the correct standpoint that value is determined by labour-time. In that case, he says, why do we need some additional extraneous measure of value, based upon precious metals. In a post-commodity producing economy, of course, that is true, as Marx sets out above, and in Capital III, Chapter 49.

“after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.”

(Capital III, Chapter 49)

If commodities are no longer produced, then price and exchange-value are redundant. As Marx sets out in his Letter To Kugelmann, exchange value is simply the form that The Law of Value assumes under commodity production. Where commodity production and exchange ceases, and society reverts to the production of products/use-values, exchange value has no relevance. The Law of Value takes the form once more of the direct determination of value by labour-time.

In reality, as now, the system would operate via workers having amounts of value credited to their accounts electronically, and would make payments electronically. These amounts of value might retain historic currency names such as $,£, € and so on, but the reality would be that these were simply symbols representing given amounts of social labour-time.

What Gray failed to recognise was the difference between the concrete labour performed, and abstract labour, as well as failing to take into account what amounts to socially necessary labour. The difference between concrete labour and abstract labour has been described, and also the role of money in reducing all labour to this abstract, universal labour. But, within the context of continued commodity production and exchange, there is also the vital question of demand, i.e. of what actually constitutes use-value for consumers, and so what of the total labour expended was actually socially necessary.

If everyone is given a token equal to the amount of concrete labour they have performed, and so can take out of society's stores goods whose values have been directly determined on the same basis, then the complex labour of the computer programmer would be treated the same as the simple labour of the machine minder. The product of the former would be relatively undervalued, and that of the latter overvalued, so that demand for the former would exceed supply and vice versa. Disproportions and shortages, and overproduction would result, leading to the development of black markets and money prices.

But, even were that not the case, and all the labour was uniform, simple labour, it would not prevent commodities produced in one sphere failing to find a market in another. Just because Sinclair had his workers expend labour on production of C-5's, did not mean that there was demand for them, and so the labour expended on their production, and the production of their components, was not necessary labour, not value producing labour. Failing to recognise that, and so providing all of that labour with tokens to take commodities out of society's store, when, in fact, they had contributed no additional value, no use-values that anyone wanted to consume, would again result in disproportions and crises.

In fact, this is what happened under Stalinism, with huge amounts of nominal labour-time being expended, but which produced things that no one considered to be use-values, i.e. for which there was no demand. The same kind of thing can be seen with all such huge, bureaucratic state endeavours, as with the NHS in Britain.  MMT as a means of QE to pay for it is just another form of it.   As Trotsky described, in The Revolution Betrayed, the fact that the state simply printed more Roubles to cover these costs made any such evaluation impossible, and so prevented a quick response to them.

“Industry, to be sure, continued its rapid growth, but the economic efficiency of the grandiose construction was estimated statistically and not economically. Taking command of the rouble – giving it, that is, various arbitrary purchasing powers in different strata of the population and sectors of the economy – the bureaucracy deprived itself of the necessary instrument for objectively measuring its own successes and failures. The absence of correct accounting, disguised on paper by means of combinations with the “conventional rouble”, led in reality to a decline of personal interest, to a low productivity, and to a still lower quality of goods.”

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Forward To Part 10

The Banana Monarchy and Voodoo Economics - Part 8 of 9

The other aspects of the Brexitories strategy, however, are at variance with that of Maudling and the Tories of both the 1950's/60's, and later of the 70's under Heath. Those Tories were conservative social democrats. They understood the nature of capitalism as determined by large-scale, socialised industrial capital, its need for a large interventionist state, and an expanded single market, i.e. the EU. Their polices were geared to the interests of that large-scale capital, and its rationalisation, accumulation and centralisation. Concern for the small capitalist was kept purely for ideological cover to appease the concerns of the Tory membership, who were kept in the role of purely foot soldiers to raise money and canvas, much as Labour MP's have wanted to limit the role of Labour's membership.

From the 1980's, and particularly from the mid 1980's, the Tories became dominated by those foot soldiers, whose ranks had been significantly swelled by the stagnation of that time, and subsequent growth of the petty-bourgeoisie itself. That is the social base of Brexitoryism. So, when Boris Johnson was forced out by an unholy alliance of social-democratic opportunists, and the Tory Right, it was inevitable that what came next was worse. That ought to be a warning to all those same elements who are now latching on to any opposition to Putin, no matter how reactionary, as the means of satisfying their fantasies. It illustrates once more the truth that my enemy's enemy is most certainly not necessarily my friend, but may be, and often is, much worse!

In the 1980's, the Tories, as they began this transition from being conservative social democrats to being petty-bourgeois, reactionary, English nationalists, manifest that not only by the victory of the Eurosceptics in winning Thatcher to their ranks, but also in the overt shift away from the concerns of big business to those of small capital. One manifestation was their promotion of Enterprise Zones, as areas of anything goes, free market capitalism, in which all of the basic civilised standards established by social-democracy over the previous 100 year could be ditched. And, the coalition of Tories and Orange Book Liberals in 2010, resurrected the idea, only for it again to sink without trace, much as it did in the 1980's.

The motivation of the Brexitories in again promoting Enterprise Zones, Freeports and Charter Cities is clear. It is the inevitable consequence of Brexit, whose reactionary nationalist agenda is based precisely on promoting the interests of uniquely British capital, and the only uniquely British capital is that small, nationally based capital of the petty-bourgeoisie, the self-employed and so on. It is itself inherently antagonistic to the interests of large-scale, socialised capital, a fact that does not trouble the petty-bourgeois, opportunist social-democrats, and Lexiters, of course, because they too are dominated by the reactionary ideas of Sismondism, and economic romanticism, and an irrational hostility to large-scale monopoly capital (anti-capitalism), which is its most mature and progressive form, and foundation upon which Socialism will be built.

But, again, today is not the 1980's. The attempts to roll back history failed, then, despite all the efforts of Tories to do so. The petty-bourgeoisie increased in size and social weight, but that was more to do with the consequences of the long wave cycle, at that point, and of the deindustrialisation of many developed economies, and industrialisation of previously peasant economies, such as China, than any success of reactionary governments in bringing it about. It did not change the fundamental nature of capitalism, as being dominated by large-scale socialised capital, and the subordination of the petty-bourgeoisie to it. Nor did it change the fundamental nature of the state as a capitalist state serving the interests of the ruling class, a ruling class that now owns its wealth in the form of fictitious capital, and which itself depends upon the success of large-scale industrial capital for the creation of profits, from which are paid dividends and interest, and forms the basis of capital gains thereon.

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Forward To Part 9

Brexit Britain is Sunakered

So, Britain is to get its first British-Indian Prime Minister in the form of Rishi Sunak, or Rishi Rich, as his friends might know him. It is further testament to the growth in the role of the British-Indian bourgeoisie, and of the role of Indian imperialism, in the British economy, via Indian multinationals such as Tata, and so on, that now own large chunks of the British economy. Not surprisingly, Indian imperialism welcomed his appointment, talking about the reversal of imperial fortunes, and looking forward to deals that emphasise the rising power of Indian capital, and the rapidly declining power of British capital, outside the EU. We might spend time asking what his economic policies might be, but the reality is that there is no point, because, as the experience of Truss has just shown, it really doesn't matter, because it is the laws of capital, and the power of global financial markets that will dictate what he is forced to do. He may be led to try his luck, or be pushed around politically by the continued divisions inside the Tory Party, but that will only lead to further instability and chaos.

In fact, as one Tory financial backer, Guy Hands, has set out, the Tories are not fit to govern, and unless they drastically change course, in relation to Brexit, and their attitude to the EU, their problems will continue to get worse, leading to some kind of economic crisis, and them going begging to the IMF. At the weekend, Northern Ireland Secretary, Steve Baker, tried to insist, as he put his backing behind Sunak, that the position on Brexit, and, in particular, the Northern Ireland Protocol, would be unchanged, i.e. the Protocol would be scrapped, meaning an increasingly fractious trade war with the EU, at the very time, Brexit Britain is going deeper into crisis, and is more than ever dependent upon good relations with its biggest trading partner, the EU. That is as insane, and detached from reality, as was the policy of his former boss, Liz Truss.

Truss and Kwarteng were actually right that the solution to Britain's economic problems lies in a significant increase in growth. Much more rapid growth, would, if not accompanied by even greater liquidity injections, soak up the existing excess liquidity, and, thereby, rapidly reduce inflation. It would also increase revenues, including tax revenues, so that all of the current budget deficits could be reduced, and government borrowing reduced, taking some of the pressure off rising interest rates. 

However, none of Truss and Kwarteng's policies led to such growth. They only led to higher levels of unproductive consumption, bigger deficits, larger borrowing, higher inflation and higher interest rates. What is more, the ruling class does not want higher economic growth, (or, at least, it only wants it if it does not also mean higher wages and interest rates) precisely because it would also lead to higher wages, and a squeeze on profits, an increased demand for capital, and so higher interest rates, with a consequent crash in asset prices. As the ruling class owns all its wealth in the form of these assets, its such a crash that they, and their state, have been trying to avoid for the last 30 years, and, particularly, in the last 12 years, using austerity, trade restrictions, and lockdowns to achieve it.

What the ruling class would like is to be able to hold back the rise in wages, and enable profits to expand, as inflation continues to push up prices. That is also why pro-capitalist Blue Labour MP's like Rachel Reeves also implore workers not to push for “excessive” wage rises, but instead to put their faith in a Labour government, and why Starmer sacks Labour Ministers for supporting workers on picket lines, and uses the machinery of the Right to deselect them.

What the ruling class seeks is a new round of austerity, which would reduce government borrowing further, encourage a recession, and thereby, undermine the growing power of workers to obtain higher wages. It would also reduce the demand for capital, so that interest rates fell, and so asset prices could again be inflated. Enemies of the working class, such as Larry Summers in the US, are open about this, calling for US unemployment to have to rise to over 5% for more than a year to achieve such an effect.

The trouble is that workers, in Britain, as now, across the globe, are not going to sit back and simply allow that to happen, and, what is more, the simple dynamics of the economy, despite all of the talk about recession and economic slowdown, let alone economic crisis, do not favour such a strategy. That dynamic is more apparent in the US than it is in Britain or the EU, where the self-imposition of huge rises in energy prices, resulting from NATO's economic war against Russia, including NATO's sabotage of Nordstream, is severely hitting economic growth.

In the US, the economy continually frustrates the predictions of economists about impending slow down, as employment continues to rise sharply, and that employment fuels growth of wages, which then feed into rising aggregate demand, which leads firms to accumulate additional capital, and so employ yet more labour. With profit margins still high, there is scope for that to continue for a long time, before rising wages start to squeeze profits to a degree in which a crisis of overproduction of capital arises. The same dynamic basically exists in Britain and Europe, not to mention China, Japan and the rest of Asia.

After 2010, Britain and the EU imposed fiscal austerity. There was clearly no economic reason for doing so, because, as has been stated many times, governments enjoyed the lowest costs for borrowing there has been in 5,000 years! They could have borrowed money, at these historically low rates, to finance their activities, and, in the process, would have kept workers in work, earning wages that could be spent in the high street, would have kept suppliers to government busy producing goods and services, including schools and hospitals, which would, in turn, have employed people, who would have earned wages, and paid taxes, and themselves bought goods and services, providing employment, wages and profits that would have expanded the economy further. The reason for austerity was never to do with the needs of the economy, but was always to do with the needs of the ruling class, of speculators, to prevent interest rates rising from rock bottom, and so causing asset prices to crash again, as they had done in 2008.

But, the consequence of all of that austerity is also that the condition of the infrastructure in many of these economies became even more dire. And, the base from which any further reduction in the level of state provision could be effected has been reduced even further. A comparison can be made with the cuts in local government that occurred in the 1990's. During that time, large chunks of actual service provision disappeared. Leisure services were handed over to private companies, community halls and other such facilities were closed down, council housing was handed over to arms length companies (ALMO's), and so on. But, Councils still needed to function, which required administrators, and they still required expensive computer systems, costing millions of pounds, to deal with the collection of Council Tax and so on, as well as an army of accountants, solicitors and so on.

In short the actual services provided by Councils shrank significantly, but the size of Council Tax bills didn't, because vast amounts of money still were required to pay for the computer systems, the administrators, the accountants and solicitors, and senior executives who remained in place. In large part, particularly District Councils, became not providers of local public services, for which Council Tax was levied, but simply local fiefdoms of politicians and bureaucrats, providing very little, and whose main expenditure was for their own administration, and the collection of Council Tax itself! They ran administrative systems to collect Council Tax, and pay out Council Tax and Housing Benefit.  As I wrote at the time, about two-thirds of District Council expenditure went, not to provide services to their communities, but simply to pay for the continued administration of the Council.

To cut local authority spending, would probably require simply closing down District Councils, and absorbing them into larger Unitary Authorities, which probably should have happened a long time ago, anyway, but there is little scope for cutting the spending of existing Unitary Authorities, County and Metropolitan Councils, because their budgets for the provision of services such as education, and social care, are already inadequate. Schools are already faced with running out of money, as inflation has caused costs to rise substantially, whilst social care has effectively ceased to exist years ago. The Tories proposed to deal with it, via the National Insurance rise, but they subsequently scrapped it.

The NHS is also in a state of collapse. COVID and lockdowns enabled the Tories to disguise the extent to which the NHS no longer exists, for two years, but anyone that has been unfortunate enough to need its services over the last decade and more, knows that it had virtually collapsed years ago. The ending of COVID and lockdowns, whilst waiting lists continue to grow, and waiting times in A&E extend into days not hours, illustrates the degree of its collapse, such that any idea that its budget could be cut becomes ludicrous. Those problems are exacerbated by the idiocy of Brexit, again illustrating how far from reality is the idea of Steve Baker that Britain can afford to antagonise its huge neighbour even further.

Indeed, the ruling class knows that any possibility of increased growth without rising wages and interest rates is dependent upon Britain re-joining the EU, so as to remove all of the remaining frictions and costs, to bring about further rationalisation and concentration of capital, and to obtain the benefits of free movement of labour.

The possibility of any great savings from austerity has gone. But, in addition, large numbers of Tory MP's were elected to parliament in 2019, from so called “red wall” seats, on the basis of the promise from Boris Johnson, and Rishi Sunak of “levelling up”. Many of those MP's were actually keen for Bojo to be brought back by popular demand, to replace Truss, for exactly that reason. They see their short parliamentary careers coming to an abrupt end, if Sunak, or anyone else attempts to introduce a new round of even harsher austerity, which would impact their areas more severely than most.

So, whatever Sunak might be inclined to do, and whatever the ruling class, and global financial markets might want Sunak to do, by imposing such austerity, so as to balance the books, slow the economy, reduce interest rates, and boost asset prices, around 40 or so Tory MP's, from those seats, will vote against it, which, together with the votes of opposition MP's, would make it impossible to get through parliament.

Sunak's only other option is, then, to balance the books by raising taxes. Again, all of those Tory MP's that backed Truss, and whose mantra is lower taxes, will oppose any such plan. They, too, form enough votes to prevent it going through parliament if they are joined by opposition MP's. Whether those opposition MP's do vote against depends on the tax rises proposed. Labour and Liberal, as well as SNP MP's have proposed windfall taxes on energy companies and on banks, so Sunak might get those tax rises through parliament. They seem unlikely to be enough to cover the huge gaps in government finances, even after the reversal of the suicide plans of Truss/Kwarteng.

A large part of that debt came from Sunak's own largesse in relation to lockdowns. The lockdown payments replaced wages and other incomes, but wages represent only a fraction of the amount of new value that workers produce by their labour. A while ago, I estimated that whilst average hourly wages amount to around £15, the amount of new value created by labour is around £55, and all of this new value production was lost to the economy during two years of lockdowns.

On top of that, we now have the energy price cap subsidy to energy suppliers. Originally, that was estimated to cost around £130 billion over the two years to the next election, but, even to next Spring, as now proposed, it amounts to around £48 billion. Funding that, on top of all of the rest of the debt, at a time when inflation is also increasing costs, and interest rates are rising, so that interest charges look set to become the single biggest part of government spending, would require much more in tax raising than windfall taxes on energy companies and banks can provide, let alone the effects of such taxes themselves on the economy.

Austerity will mean a focus not on cutting services, but, even more, on cutting public sector wages. The state is already attempting that, and using its power with near state enterprises, such as the railway companies. But, even that is fraught, because with labour shortages across the private sector, public sector workers are able to simply move into other jobs with higher wages, as has happened for example with whole teams of local authority bin lorry drivers, being recruited by haulage firms, care workers getting better jobs on supermarket checkouts, or in restaurants and hotels etc. The other area of such cuts will be in relation to pensions and benefits. On all of these a Blue Labour government will be better placed to push through the attack.

The problem facing any Tory Leader – and the same problem applies to Labour – is that the party is trying to represent two antagonistic social classes. In the past, the Tory Party's membership was a motley bunch of the old rural squirearchy, mixed with the executives of companies, along with local small businesspeople. The latter always dominated numerically, but the levers of power remained in the hands of the rich, who also provided the funding for the party, and to whom the small business people subordinated themselves. Choice of party leader was always in the hands of Tory MP's, and the party always, therefore, looked to the interests of big capital, and, thereby, the shareholders/ruling class. Whilst paying lip service to small business, and free enterprise, it was always, in practice, a conservative social-democratic party.

That changed in the 1980's, as Britain experienced deindustrialisation, a stagnation in the growth of large-scale socialised capital, and a rapid expansion of the petty-bourgeoisie, whose increased social weight became itself expressed in its takeover of the Tory Party, and support for other parties to its Right, like UKIP. At the same time, the party membership also gained the power to elect the Leader. Given the reactionary petty-bourgeois nature of the membership, it was inevitable that, given the choice, they would elect those that reflected those politics, hence, Boris and then Truss (party members would have again elected Bojo in place of Sunak). But, as just seen, any attempt to implement those reactionary, petty-bourgeois policies, will bring down the wrath of the ruling class, and its expression via the financial markets. The government in Italy will find exactly the same thing, in coming weeks.

The Italian government, at least, has not shackled itself by committing to leaving the EU, as the British government has done, even though, in reality, Britain remains tied to the EU, and the need to conform to single market and customs union rules, most visibly in relation to the Northern Ireland Protocol. Sunak will find that to satisfy the requirements of the ruling class, and financial markets he has to pursue policies that are anathema to the majority of his party membership, and to a large chunk of Tory MP's.

But, a Labour leader faces a similar problem. Labour has traditionally also attempted to reconcile the antagonistic interests of two different classes, the ruling class and the working class, although, on many fronts, these interests do coincide, because it is in the interests of both capital and labour that capital should develop and accumulate on an ever larger scale. But, under Starmer, and as increasing Bonapartist tendencies have undermined democracy in the party, it too has become a Brexitory Party, representing the interests of the reactionary petty-bourgeoisie, and English nationalism, in search of an electoral coalition it believes can put it in government. Yet, such policies are anathema to the interests of both the ruling class, and to the working-class.

Polls show that 67% of Labour voters, now favour rejoining the EU, and if the polls are also to be believed, Labour now has the support of around 54% of voters. So, a reactionary English nationalist agenda, appears to be deluded even just in electoralist terms. At the weekend, around 20,000 people marched in London to call for Britain to re-join the EU. Its not a huge number, but given the current pro-Brexit, English nationalist position of both Tories and Blue Labour, and the fact that the Liberals and Greens are not shouting their pro-EU position from the rooftops, as well as the fact that the TV did not even mention the existence of the demonstration, its not a bad start. Its about ten times the size of any of the pro-Brexit demos that Farage tried to mobilise, in latter years.

Of course, most of those involved in this demonstration were liberals not socialists. But, that does not change the fact that their position is progressive compared to that of the Tories or Blue Labour. Marxists do not advocate support for bourgeois workers' parties like Labour, because of their progressive nature, but simply because, given our own weakness, we seek to gain the ear of the working-class, and its more advanced sections, which itself continues to look to such parties. We do not at all support the reactionary policies and programmes of such parties, and their leaders, quite the opposite, but we do align ourselves with the ordinary workers, and their organisations within them.

“As the experiences of the Russian Revolution teach us – remember this in England and America! – the most important thing of all is to stay in the midst of the masses of workers. You will often go wrong with them, but never leave the mass organisations of the working class, however reactionary they may be at any given moment” (emphasis added).

(Zinoviev’s closing speech at the 15th Session of the Second Congress of the Comintern)

So, we can well understand why progressive workers, who back re-joining the EU by large majorities, will look at the near identity of reactionary English nationalist position of Sunak's Tories, and Starmer's Blue Labour, and conclude, in an election, that the pro-EU policies of the Liberals, Greens, SNP, and Plaid are a better alternative, and, as actual by-elections have shown, as against opinion polls, even where Labour has been in second place, voters have voted tactically for Liberal candidates seen as having a better chance of winning by consolidating that progressive vote, so that the Liberals overtook both Labour and Tory candidates, to win the seat.

These are conditions in which these contradictions, manifest within the two main parties lead towards a realignment, several false starts of which have already been attempted. The Tories are unlikely to be able to push through either the reactionary policies their base wants, or to push through the attacks on the working-class that the ruling class requires. Starmer's Blue Labour is much better placed to achieve that. On the one hand, Starmer can offer up some populist, reactionary, petty-bourgeois “anti-capitalist” rhetoric about windfall taxes, as left cover, whilst using Labour's historic links to the trades union bureaucracy to push through austerity, in the same way that Wilson attempted in the 60's (failed), and Callaghan attempted in the 70's (worked for a while, and then failed catastrophically). Marxists should bear this in mind, in mindlessly demanding “Tories Out” and demanding a General Election.

Currently, we have tens of millions of workers, in Britain, mobilising to demand wage rises, and improvements in conditions. It is the first time workers have risen from their knees, in decades. Reeves demand that they, instead, place their future in the hands of a Labour government, and do nothing to risk it being elected, shows exactly what their intentions are. Calls for a General Election, now, which can only mean replacing one reactionary bourgeois government with another (and one better placed to impose austerity and wage cuts upon workers), is to be complicit in demobilising the workers struggle, in the same way that the French Stalinists did in 1968, amidst widespread workers strikes and occupations. As Lenin put it,

“action by the masses, a big strike, for instance, is more important than parliamentary activity at all times”

(Left-Wing Communism)

Of course, that does not lead us into syndicalism, which was the error of the SWP in the 1960's and 70's, because, as Lenin goes on to say, we need to combine these industrial struggles with the political struggle, to give political solutions to the general problems highlighted by the industrial struggle, including the need to build a revolutionary workers' party. But, that makes it all the more necessary to learn to think, and, in current conditions, to see that a General Election would only act to demobilise the actual struggles being undertaken, with very little opportunity for Marxists to use any election to raise those necessary political demands.

We do not have a large communist party to be standing in any such election, using it as a platform from which to address workers, and present such political solutions; we do not even have revolutionary MP's sitting in parliament under the Labour banner; the leftish social-democratic MP's of the Campaign Group have proved themselves totally useless and compliant, in the face of Starmer's onslaught against them; unlike 1979, when it was possible for Marxists to establish a Socialist Campaign For Labour Victory, and conduct such a campaign mobilising CLP's, PPC's, and trades unions, no such possibility exists today, both because of the weakness of the Left, and because Starmer's Bonapartist regime, inside Blue Labour, would use it as yet another excuse for mass expulsions.

The Brexitory government is likely to blow apart, for all these reasons, just as its predecessors did, but a Starmer, Blue Labour Brexitory government would face similar problems, but different, because of a mass of Labour members pushing in the other direction, in favour of re-joining the EU, and more progressive social-democratic positions. Starmer's increasing Bonapartist tendencies, combined with his adoption of petty-bourgeois, reactionary nationalism, represents all the same traits seen in the past from other national socialists, such as Pilsudski, Mussolini, and Moseley.

As these class divisions between the interests of a reactionary nationalist petty-bourgeoisie, dragging behind it a long tail of lumpen elements, concentrated in decayed urban areas, and the progressive, internationalist interests of the ruling class and working-class break apart both the Tories and Labour, a realignment is not at all impossible. It is the basis on one side, of all the existing red-brown coalitions already established, for example, in Britain between former “communists” of the RCP with UKIP, as well as the national socialists of the CPB.

A coalescence of interest of red-wall Tories, with Starmerite Blue Labour is not out of the question, and would draw in behind it the existing red-browners. On the other hand, the defection of conservative social democrat Tory MP's that took place to the Liberals, before 2019 would be exacerbated, especially if Liberals appear set to pick up Tory seats, and the same applies to all of the progressive, internationalist elements of the Labour Party. The fact that both Labour and Tory are set to lose all their seats in Scotland, itself plays a significant role in this calculus, because it makes it difficult for either party to obtain a working majority in parliament.

If such a realignment did occur, Marxists would, of course, have to reassess the political landscape. We do not fetishise support for the Labour Party, but only on the basis set out above. If, in a realignment, it became clear that the majority of workers, and certainly of progressive workers, looked to some new Liberal/Social Democratic Party, then we would have to determine what our attitude to this party should be, for example, seeking to affiliate trades unions and socialist societies to it. We would again do so, not on the basis that the politics of this party were more progressive to that of the rump Blue Labour Party, and certainly not on the basis of giving any support to the bourgeois politics of any such party, but solely on the basis of continuing to gain the ear of workers, and to mobilise them in political as well as industrial struggle.

Chapter 2B. Theories of The Standard of Money - Part 8 of 10

There is a fundamental difference, however, which is that Gray and Proudhon's system operates within the context of continued commodity production and exchange, and so of competition within the market, whereas what Marx describes is a situation after commodity production has ceased, and where society has moved to the democratically planned production of products. Albeit, this implies continued constraints on distribution, so that it is still not possible to implement the communist principle of “from each according to their ability, to each according to their needs.”

“What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges...

Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labour, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labour in one form is exchanged for an equal amount of labour in another form.”

(Critique of the Gotha Programme)

This equal right is still bourgeois right, precisely because every individual is different and not equal, so that to go beyond bourgeois right requires not equal, but unequal rights and obligations. One labourer is stronger or fitter than another, so that performing 8 hours labour is easier for them than for another; another may have children, whereas other workers do not, and so on. Yet, with equal right, both workers would get the same entitlement to 8 hours labour equivalent in products, even though the stronger/fitter worker has expended less energy, and the second worker requires more products, in order to meet the needs of their children.

Its notable, here, that there is none of the ideas of liberal welfarism in Marx.  Even in this lower stage of communism, the decision of workers to have children is not something that society should compensate them for, that being something left to the higher stage of communism, when the principles of unequal right can be applied.

“This equal right is an unequal right for unequal labour. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only – for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labour, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour, has vanished; after labour has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”

(Critique of the Gotha Programme)

As Lenin described in his writings on economic romanticism, the Narodniks made exactly the same errors as Gray and Proudhon. Marx deals with the errors of Gray and Proudhon, in this regard, in The Poverty of Philosophy.

Back To Part 7

Forward To Part 9

Brexit Britain Has No Control - Part 3 of 3

Sitting where it does, and as a result of its history, and population, the current war in Ukraine, again reflects this reality, with a part drawn towards Western imperialism, and the other drawn towards Russia, but also with those same factors meaning that Russia will seek to exert its control over its own border, including its near vicinity, as NATO imperialism seeks to encroach upon it. Only apologists for the imperialist ambitions on either side (NATO and Russia), or "hopeless pacifist blockheads" can seek to deny this reality, and its implications. As Marxists, we are not moralists issuing ethical decrees of what “ought” to be, but materialists, basing ourselves on what “is”, and a scientific understanding of the social and economic laws that drive states, classes and other social forces to act.

And, although Britain is a more powerful state, still, than Ukraine, given its own long imperialist history, that concrete reality, and those same social laws still apply to it. Britain is, indeed, in a similar position to Ukraine, as a result of Brexit. Britain's leading role in the world ended a century ago, though its colonial empire enabled it to appear to continue for longer. By the latter part of the 19th century, Britain's economic power was already challenged by Germany and France, and by the early 20th century, the US and Japan. The First World War destroyed much of the economic power of Britain, France and Germany. It enabled the US to become the leading economic power, with Japan rising closely behind it.

What WWI and II represented was the playing out of these economic and social laws described above. The individual European states were just too small, on their own, to compete with the giant US economy, or even that of Japan, which was extending its domination over the Pacific region, itself becoming a challenger to US imperialism, and causing it to respond. 

The European states, many of which had their own colonial and imperial histories (poor little Belgium was itself one of the most brutal and vicious colonial powers in Africa), needed to be merged into one centralised European state, but their own history meant this was going to occur as attempts by one or another to assert its dominance militarily over the others. France had been, historically, the dominant power in continental Europe, but once Prussia had created a unified German state, that position changed, as the Franco-Prussian War indicated. If Europe was to be unified, then, short of socialist revolution, it would be as a result of a hostile takeover, by either France or Germany. Britain, in the 19th and early 20th century, as dominant global power, resisted any such development, opposing a dominant France in the Napoleonic Wars, and siding with Prussia, and, then, siding with France, in the 20th century, against a dominant Germany.

But, by WWII, Britain's power had gone, despite all the nonsensical war nostalgia, about Britain's valiant role in that war, and the iconisation of the vile and disastrous leadership of Churchill. By 1940, Germany had rolled over most of Europe, and brought Britain and France to a humiliating defeat at Dunkirk, just as, also, Japan gave Britain its worst ever military defeat in Singapore.  In every encounter, prior to the entry of the USSR and US into the war, Britain was defeated by Germany, and Japan.

Britain was defeated, trapped in its island bunker, being slowly starved into submission. That provided US imperialism with the ideal conditions to, again, step in on the side of the defeated Britain and France, as it had done at the end of WWI. Prior to that, the US had been focused on its main challenger, Japan, in the Pacific, and had even continued to allow giant US corporations like Ford and GM, to operate in Nazi Germany, their plants turned over, themselves to war production, just as also, US banks and finance houses continued to cooperate with Nazi Germany. As Trotsky had pointed out, at the start of the war, the idea that it was about fighting for democracy over fascism, or that the contending states would line up on that basis was a social-chauvinist delusion.

Britain became wholly subordinated to its former US colony, owing it billions of Dollars in debt, which it did not finish paying off until 60 years later, in 2006. With the main challenger to US imperialism, after WWII, coming not from Britain, France, Germany or Japan, but the USSR (despite the US continually refusing to open a second front against Germany, and so causing the USSR to bear the main burden of fighting, for three years, leading it to suffer massive physical destruction, and a loss of 30 million of its citizens) the US saw the potential, and need, to have a large client imperialism, on the USSR's border, and that European imperialism, was, itself, also heavily reliant on the US, as a consequence of the Marshall Plan, which tied it in to all of the giant US multinational companies that expanded into it, to exploit all of the available cheap European labour, and supply its rapidly expanding markets.

Britain, still with the delusion of colonial grandeur, remained aloof from this European project, and, for nearly a decade, its colonial possessions allowed that delusion to persist, as, every Sunday, BBC radio continued to broadcast Two-Way Family Favourites, sending messages and record requests to and from British imperial forces stationed across the globe. But, US imperialism, based upon industrial capital rather than commercial and interest-bearing capital, insisted upon the dismantling of those old colonial empires, to give its multinationals free access to them, just as it had also demanded the end of the role of Sterling as global reserve currency.

As I wrote 40 years ago, Lenin, in his “Imperialism, The Highest Stage of Capitalism”, had got it wrong, and was describing that old world of colonial empires, and not the new world of imperialism based upon large-scale industrial capital, and its need for ever larger single markets, global regulation if not planning, in the interests of the vehicle of that industrial capital, the footloose multinational corporation. Add in the fact that the ruling class is now a global ruling class, and that it holds its wealth entirely in the form of fictitious rather than physical capital, and so is even more detached from any connection to any given nation state, and that picture is complete. What we have is more akin to the kind of super-imperialism, described by Kautsky, than that of competing nation states, described by Lenin.

Britain's post-war economy simply fell into an even more rapid decline, precisely because the old colonial model was itself limited by the same conditions that limit the potential for unequal exchange by commercial capital, and interest-bearing capital, as against the ability of industrial capital to produce relative surplus value in production, and to also, thereby expand the economy itself. It is the difference between the ideas of the mercantilists, as against those of the Physiocrats, Smith, Ricardo and Marx, in relation to the source of the wealth of nations. To survive, and at least slow this pace of decline, Britain needed to join the European Economic Community, but its application was rejected, because France recognised Britain's historic role, as a wrecker when it came to European integration, and also recognised its role as an agent, in Europe, of the US imperialism that Britain was now subordinated to, in terms of its global military and strategic role.

Where Britain increasingly integrated its military systems, and, in particular, its nuclear deterrent with the US military industrial complex, France refused to put its forces, especially its nuclear deterrent (The Force De Frappe) under NATO control. The experience of Britain inside the EU confirmed the fears expressed by De Gaulle, as Britain continued to act as an arm of US imperialism, inside the EU, most visibly seen by the UK's unflinching support for the US war in Iraq, as against the opposition to it from France, Germany and other EU states. Britain, like Ukraine, is, thereby, torn between these two large imperialist blocs.

On the one hand, it is economically tied to the EU. The vast majority of its trade is with the EU, and necessarily so, because the majority of trade always occurs with near neighbours. That remains the case even after Brexit, whatever, the utopians might want to think about the prospect of resurrecting the colonial empire, or a global Britain expanding its trade with China (dead in the water as a result of NATO imperialism's economic war against it), or India (which, as a rising imperialist power, in its own right, would be the main beneficiary of any such trade). British-EU trade has necessarily declined, to Britain's cost, after Brexit, but it is still by far the biggest component, and in order to retain it, Britain had to essentially abandon Brexit, in all but name, and subordinate itself to the EU, accepting its single market and customs union conditions, but now with no political input or control over the formulation of those conditions!

That is also what makes ludicrous the notions of Starmer and Blue Labour, that somehow, the EU would give Britain the same kinds of political rights as an EU members state, but without being inside the EU! That would be like UNITE agreeing that non-union members, or members of a staff association, could turn up at union branch meetings, and vote, as well as enjoying all the benefits of union membership, but without paying union subs, or being bound by union decisions to strike and so on.

Brexit, was, then, a decision to give up the greatest amount of control over its destiny that Britain has ever made. Inside the EU, Britain had a significant influence over EU policies, both because of the size of its population (third behind Germany and France), and of its economy. And, the EU itself is the largest single market on the planet, bigger even than that of the US or China. In terms of the size of its economy, it is second in the world, not far behind the US. Consequently, when it comes to global negotiations over trade, the EU is able to hold its own against the other huge economic blocs of North America, China and the Pacific, and South America. As part of the EU, Britain enjoyed that benefit, but has thrown it away with Brexit. On its own, the UK economy is a minnow compared to the EU, US, China, or these other large blocs, and so, inevitably subordinated to them. In particular, it is subordinated to the EU, because of, rather than in spite of, Brexit.

On the other hand, Britain remains subordinated militarily and strategically to the US, acting as its poodle, as in Iraq, Afghanistan, the Balkans and so on, and now in Ukraine. That is, in part, a consequence of the EU itself remaining subordinated to US imperialism, via NATO, as well as the fact of Britain's historical subordination to the US, since WWII, and its dependence on it for military hardware, and so on. When, rather than if, the EU, as part of its process of political integration, into a fully fledged state, necessarily develops its own army, and separates from NATO, Britain will increasingly be drawn towards it, but will suffer the same kinds of tensions currently endured by Ukraine, as the Atlanticists pull fiercely in one direction, and the Europeans in the other. Both will be an illustration of the fact that Britain has no real national self-determination, nor control, but is pulled inexorably into the orbit of these larger gravitational forces.

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