US GDP Rises 4.9% As It Screws The EU

US GDP, rose by 4.9%, year on year, in the last quarter. That increase is way above the average trend growth of US GDP, and now, coming nearly two years after the ending of lockdowns, cannot be ascribed, simply, to a post lockdown rebound. Of course, some catastrophists such as Michael Roberts and Paul Mason, had even talked, during lockdowns, about a post-COVID slump, which of course, was the opposite of what happened, but means that this current growth is even more impressive, by comparison. It hasn't just been the catastrophists who hoped for a slump, of course. The ruling class speculators and their ideologists have wanted to see the global economy slow down again too, so as to prevent the rise in interest rates that again threatens to crash global financial asset prices, the form in which they now hold all their wealth.

The quarterly rise in US GDP was nearly double that of the previous quarter, frustrating all the hopes of the catastrophists and speculators alike, though the latter continue to proclaim that deliverance, for them, is at hand, in coming quarters, in the form of the long predicted recession, which they hope will lead to lower wages, higher profits, a slow down in the demand for capital, and reduction in interest rates, so as to again boost the already astronomically inflated prices of stocks, bonds and property. The fact that US inflation has fallen significantly, despite this rampant growth of the economy, again illustrates the fallacy of the claims of the orthodox bourgeois economists that tried to explain it in terms of imbalances of aggregate supply and demand, requiring a recession to correct it – really meaning to discipline workers and get them to accept cuts in real wages.

In fact, despite month after month predictions of the coming recession, and slow down in the labour market, it continues to go from strength to strength too. Employment continues to rise, and initial jobless claims, having ticked marginally higher, a few months ago, have, also, been falling, once more, to levels appropriate to a period of economic prosperity, if not yet boom, rather than of recession. As I have previously described, we are not yet at the stage of the cycle in which the demand for labour significantly pushes up hourly wages, but, we clearly are at a stage where that increased employment, and shift to better paid, permanent and full-time employment, increases household incomes, facilitating continued consumer spending.

The GDP figure, however, is flattered for the same reason that, previously, it was negatively distorted. That is the effect of inflation on the tie-up and release of capital. GDP is not a measure of national output, but only of the value added to output by labour, i.e. v + s, which is also equal to revenues (wages, rent, interest/dividends, profits, and taxes). That provides the demand for end consumption, as well as savings used for capital accumulation. The much bigger, and growing, component of output is that which comprises the value of constant capital (raw material and wear and tear of fixed capital) whose value is preserved and transferred to total output, but the demand for which comes from capital, not revenues, and which is replaced directly from total output.

Changes in values (or money prices) of this constant capital, during the year, creates the phenomenon described by Marx, in Capital III, Chapter 6, and in Theories of Surplus Value, Chapter 22, of the tie-up and release of capital, which appears as a one-off fall, or rise, respectively, in the mass of profit, despite no change in the mass of surplus value. If we take, say cotton yarn, we might have the following:

c 100 + v 50 + s 50 = 200.

If, the capitalist comes to replace the consumed cotton, but its price has now risen to 120, because they must produce on at least the same scale, they will use 20 of their produced surplus value (a tie-up of their capital), to buy the required amount of cotton. Although their produced surplus value remains 50, i.e. that is the amount of free labour provided by their workers, their profit will appear as being only 30. The opposite would be the case if the price of cotton fell to just 80. This is the importance of Marx's theory of value, and the explanation of how this commodity value “resolves” into the funds for capital and revenues, as against the cost of production theory of value of Adam Smith and the TSSI, which constitutes the value on the basis of the historic values of the components of production.

Of course, firms do not, generally, only sell their output at the end of the year, and, then, replace the consumed means of production, and labour-power. Their circulating capital is turned over many times during the year, so that this process of sale and purchase, is more or less continuous, and the consequent increase or decrease in profit, resulting from the release or tie-up, is reflecting in the actual reported profit figures. If the above example is considered as happening, say, 50 times in a year, the effect on the reported profits can be seen. But, profits are also the basis for the payment of other revenues, such as interest/dividends, rents and taxes, as deductions from profit. So, if inflation causes a tie-up of capital, because the rise in input prices runs ahead of final output prices, its not only profits that would appear to be lower than they actually are, but also these other revenues.

Of course, firms attempt to compensate for that, because they seek to place the burden on workers. If wage goods prices rise faster than hourly wages, the rate and mass of surplus value rises, so that some of the reduction in profit is shifted on to wages. In conditions such as we have, of rising demand for labour, that is disguised, because workers work more overtime, go from part-time to full-time employment, additional family members get jobs and so on, so that household incomes rise.

But, as central banks reverse QE, via the selling of the bonds on their balance sheet, thereby, reducing the excess supply of currency in circulation, slowing the rate at which the currency/standard of prices is devalued, so inflation is reduced. If input prices rise at a slow rate than end product prices, this above scenario is reversed, leading to a release of capital, and flattering of profits, which, thereby, flatters revenues/GDP.

The US performance contrasts with that in the EU, reflecting the fact that the EU has been screwed over by US imperialism, as a result of NATO's war against Russia in Ukraine, and the subsequent boycott of Russian energy supplies, which caused EU energy prices to rocket. The US, unlike the EU, is a net exporter of oil and gas. As global energy prices rose, it was domestically insulated against that, as a result of its own production. Of course, US workers suffered from it, because they faced higher costs for travel and heating, whilst US oil and gas companies profited from the higher prices, at their expense. But, the US also benefited from exporting that oil and gas to the EU, and elsewhere, now at these higher prices, and consequently profits/revenues, boosting US GDP.

The EU, by contrast, saw a huge rise in its replacement cost of constant capital/energy, causing a significant tie-up of capital, and fall in its revenues. The soaring energy bills for consumers/workers, also led to to them protesting, and demanding higher wages to compensate, which would have meant a permanent rise in wages, squeezing profits. EU governments, as also the UK government, then, acted to head that off, by introducing temporary subsidies to energy bills, and households, funded partly out of profits, and partly out of increased borrowing/liquidity injections, which will hit future profits.

The EU bought in expensive gas and oil, to build its stocks in the Summer/Autumn of 2022, only to see a mild Autumn and Winter, reduce demand for energy, and global energy prices drop. But, the inevitable continuation of the war in Ukraine, as Zelensky's forces fail to make any headway, means that global energy prices are high again, as demand rises to build stocks for the coming Winter. The Zionist/US war against the Palestinians and Iran, means those prices look set to rise further. It is unlikely that Europe will dodge a bullet two years in a row, as far as Winter weather is concerned, meaning it is likely to need to continue to buy oil and gas, in addition to the use of its stocks. Last year, the possibility remained that it could do a deal with Russia for the supply of cheaper gas, but the sabotage of the Nordstream pipelines, by the US and NATO, has removed that option, which was the intention of the US, in the first place.

So, the lacklustre performance of the EU compared to the US economy is not at all surprising, given the burdens that US imperialism has imposed upon it, via the Ukraine War. Yet, even with that, European economies have not fallen into the kind of slump that the catastrophists predicted, and speculators hoped for. Indeed, for the reasons set out above, the actual growth of European economies is likely to be much greater than the GDP figures suggest. The continued rise in employment in European economies, as in the US, is indicative of that.

Consequence of The Lies That Underpin Zionism Exposed

Yesterday, I noted that the contradictions inherent in Zionism, as with Fascism and Stalinism, and other forms of Bonapartism require systematic lying, on an increasing scale, and that those that attempt to defend Zionism inevitably are drawn into those lies, and systemic lying as well.  The use of the equation of anti-Zionism with anti-Semitism is a most obvious example, and the way that, then, led to all the lies of the Zionists in the Labour Party, as they built their attack on the Left, on the basis of that lie, and the creation of a huge McCarthyite parallel universe of rampant jew haters in the the Labour Party, ready to bring back the gas chambers and so on.  Truly delusional, and undoubtedly some of those swept up in that nonsense, designed also to ensure that Labour lost the 2019 election, believed it, given the pervasive nature of the lie, wholesaled by the bourgeois media, and the Zionists inside the party.

But, the lie becomes exposed and ridiculous, when those propounding it have to go from one lie to the next bigger lie, to the next and the next, until the whole edifice eventually collapses under its own weight of contradiction and stupidity, as this recent video demonstrates.

Relative Wages - Part 2 of 3

“Given the necessary means of production, i.e. , a sufficient accumulation of capital, the creation of surplus-value is only limited by the labouring population if the rate of surplus-value, i.e., the intensity of exploitation, is given; and no other limit but the intensity of exploitation if the labouring population is given...

...As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”

(Capital III, Chapter 15)

These are the conditions that existed in the 1860's, 1920's, and 1970's. Unable to physically increase the size of the labouring population, sufficiently, and unable to intensify the exploitation of labour, as the shortage of labour causes wages to rise relative to profits, capital is forced to, instead, create a relative surplus population, by engaging in a technological revolution, whereby, machines replace labour in production. As Marx put it, in Value, Price and Profit,

“Take, for example, the rise in England of agricultural wages from 1849 to 1859. What was its consequence? The farmers could not, as our friend Weston would have advised them, raise the value of wheat, nor even its market prices. They had, on the contrary, to submit to their fall. But during these eleven years they introduced machinery of all sorts, adopted more scientific methods, converted part of arable land into pasture, increased the size of farms, and with this the scale of production, and by these and other processes diminishing the demand for labour by increasing its productive power, made the agricultural population again relatively redundant.”

The other consequence of this technological revolution is that, not only is the relative supply of labour increased, reducing the upward pressure on nominal, real and relative wages, but the value of wage goods, themselves, are reduced, as with the value of all other commodities, as social productivity rises. The value of labour-power falls, meaning that a smaller proportion of the working-day consists of necessary labour, and a greater proportion of surplus labour. Relative wages fall, and the rate of surplus value rises.

However, as Marx describes, workers still resist cuts in nominal wages, even if this goes along with a rise in real wages. The answer to that, for capital, is to be able to increase both nominal and real wages, whilst reducing relative wages. In Marx's response to Weston, he says, that farmers could not simply raise prices to cover the rise in agricultural wages. That is true, in terms of real prices, but, as Marx describes in A Contribution To The Critique of Political Economy, and elsewhere, they can raise nominal prices, provided that the currency/standard of prices is devalued. Unless, the underlying economic realities are addressed, this devaluation of the currency/standard of prices, does not change anything other than superficial labels, and so only defers that manifestation. As he put it, in The Poverty of Philosophy,

“By changing the name we do not change the thing. The quantity of corn, whether supplied or demanded, will be neither decreased nor increased by this mere change of name. Thus, the relation between supply and demand being just the same in spite of this change of name, the price of corn will undergo no real change. When we speak of the supply and demand of things, we do not speak of the supply and demand of the name of things...

Let the sovereign decree that one mark shall in future be two marks, commerce will keep on saying that these two marks are worth no more than one mark was formerly.” (p 80-81)

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The Zionist Rogue State

The Zionist state in Israel-Palestine, has become the world's primary rogue state. Its vicious, genocidal attacks on civilian men, women and children, surpass anything committed by the likes of, for example, North Korea. For decades, it has got away with rogue behaviour protected by its imperialist allies and masters, in the US and EU, as well as by an entrenched network of Zionists in labour movements across the globe, but its current slaughter of civilians in Gaza, the deliberate targeting of hospitals, and schools, as detailed by independent observers, doctors from the Red Cross, UN, WHO and other NGO's, are qualitatively different in scope and barbarism. In the past, US imperialism talked about an Axis of Evil. Marxists do not use moralistic terms such as evil, but if we did, we would have to conclude that the Zionist state is, currently, its well-spring.

The Zionist state is a Bonapartist state, representing an ultra-nationalist, fascistic and racist ruling caste of Zionists. It is even at odds with a large number of Israeli Jews, as seen in recent months, let alone with Israeli Arabs, or the Arabs in the territories it occupies. When Marxists talk about states, we do not talk abstractly about the nation state, but about the capitalist state. The British capitalist state, for example, is not the state of British “people”, but of the British ruling capitalist class. The same is true of the Zionist state. It is not the state of the Israeli “people”, not even the Jewish people in Israel, which is the lie that Zionists try to purvey, but only of that ruling Zionist caste, much as was the case with the German Nazi state, or the Stalinist state in the USSR, both of which were models upon which the Zionists built their ideology for the creation of a totalitarian state.

The Zionist state was built on a lie, and its wholly artificial nature, required the perpetuation of that lie, but, also, in order to keep in place the ruling Zionist caste, huge levels of repression, to deal with the intense contradictions built up within the system. In fact, at the same time that the Zionist state is illustrating that in its holocaust against the Palestinians, Israel itself is imploding. Marx noted that a nation can never be free so long as it holds another in chains, and that is being manifest once more within Israel. Not only is the regime facing opposition from Israeli Jews, but across the globe, non-Zionist Jews are joining with liberals and socialists to condemn the vile, genocidal, and reactionary nature of the Zionist state, a state whose nature cannot be divorced from the ideology of Zionism itself.

The lies told by the Zionist state, became ever more ludicrous, on the same basis that Goebbels talked about the need, if you are going to tell a lie the bigger the better. But, that whole modus operandi of lying, is also the modus operandi of the Zionists and defenders of Zionism outside Israel, too, be it Biden and US imperialism, Von Der Leyen and EU imperialism, Sunak and British Imperialism, or their reserve teams such as Trump and Starmer, or those like the AWL, Labour Friends of Israel, and so on, and their international equivalents. The most obvious example of that was the equating of anti-Zionism with anti-Semitism, and the big lies told, thereby, to launch the fake anti-Semitism witch hunt inside the Labour Party against the Left.

But, the world is now seeing the big lie of Zionism played out in real life, despite attempts by the Zionist state to black out the view of their atrocities in Gaza, and the attempts of imperialism and its media to censor any real criticism of those atrocities. All those that defend the Zionist state, now, are branded with the same mark of Cain, for all the world to see. Those within the labour movement should be cast out into the wilderness.

3) Application of the Law of the Proportionality of Value, B. Surplus Left By Labour - Part 4 of 8

To illustrate Proudhon's confusion, here, Marx reworks the example, and uses an actual amount of capital. If there are 1 million people, each with F1 of capital, so that there is a total social capital of F1 million, then a social profit of 400% is equal to F4 million, and each individual would obtain a profit of F4.

“Likewise a loss of 33 per cent for each of the participants represents a social deficit of 330,000 francs and not of 33 million (100:33 = 1,000,000:330,000).” (p 88)

So, Marx says, if we compared this F330,000 loss for society, with the F4 million profit for society, it would, in fact, leave a F3,670,000 net profit for society!

“This accurate calculation proves precisely the contrary of what M. Proudhon wanted to prove: namely, that the profits and losses of society are not in inverse ratio to the profits and losses of individuals.” (p 88)

Having corrected the basic mathematical errors, Marx then turns to the legitimacy of comparing speed and profits/capital.

“Let us suppose that a transport four times as rapid costs four times as much; this transport would not yield less profit than cartage, which is four times slower and costs a quarter the amount. Thus, if cartage takes 18 centimes, rail transport could take 72 centimes. This would be, according to “the rigour of mathematics,” the consequence of M. Proudhon's suppositions – always minus his mistakes in calculation. But here he is all of a sudden telling us that if, instead of 72 centimes, rail transport takes only 25, it would instantly lose all its consignments.” (p 89)

To put this in another context, take the spinning of yarn. A spinning machine might cost £10, as against a spinning wheel costing £1, but, if the spinning machine is ten times faster, then, relatively, its cost per kilo of yarn spun is the same as that of the spinning wheel. In fact, as Marx demonstrates, no such inventions are introduced unless their cost is such that they are cheaper, So, for example, the spinning machine might cost £5, five times more than the spinning wheel, but, because it is ten times more productive, its relative cost is half that of the wheel.

“Let us return to the fiction of the person-society, a fiction which has no other aim than that of proving this simple truth – that a new invention which enables a given amount of labour to produce a greater number of commodities, lowers the marketable value of the product. Society, then, makes a profit, not by obtaining more exchange values, but by obtaining more commodities for the same value.” (p 89)

In other words, the fundamental role of The Law of Value, in driving forward increased social productivity, by technological innovation. As Marx sets out, in Capital I, for the individual inventor or applicant of such technology, they obtain a first-mover advantage, and higher rate of profit, due to relative surplus value. If 10 firms employ 100 workers each, and each firm produces 10,000 units of a given commodity, per day, with a market value of £100, or £0.01 per unit, and one of these firms introduces a new machine, which enables its workers to produce 20,000 units, the individual value of these units falls to £0.005, but it continues to sell them at the market value of £0.01 per unit, so that it obtains £200 for its output (material costs and wear and tear are not included, here)

If wages are £50, then the average rate of surplus value is 100%, but, in this one firm, the rate of surplus value is 150:50 = 300%. It is as though its workers labour is complex, compared to the labour in the other firms, and produces, for it, a kind of relative surplus value. Its what appears to orthodox economics as additional value created by the machine. In practice, the firm would sell its output at a slightly lower price than the market value (unless demand was such as to absorb the additional 10,000 units at the existing market price), so as to sell all its output, and this also acts to expand the market.

The supply of the commodity increases as the other firms seek to introduce the same machine to compete. The result is that the market value of the commodity is itself driven down to this individual value, at which point, the relative surplus value enjoyed disappears. The market value of all units drops to £0.005, and output of 20,000 units produces £100, with wages of £50, so that the rate of surplus value is once again 100%.

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Relative Wages - Part 1 of 3

Relative wages refers to the proportional share of wages in total output, as against profits. Whilst nominal wages may rise, whilst real wages fall, both nominal wages and real wages may rise, whilst relative wages fall. It is the difference between portion and proportion. Put another way, if the size of the pie gets bigger, both labour and capital may get bigger portions, but the increase in the portion of one may be larger than that of the other.

If nominal (money) wages rise from £100 to £120, but the price of the 100 units of wage goods that workers consume rises from £1 per unit to £1.50 per unit, real wages will have fallen. Previously the worker's real wages consisted of 100 units of wage goods, but their £120 now buys only 80 units. Although nominal wages rose by 20%, real wages fell by 20%. At times when the demand for labour is lower than the supply, this is one way that real wages can be reduced, and real profits rise, even without firms needing to reduce actual money wages, which workers tend to resist. It requires only that firms are able to raise prices, which is facilitated by the central bank providing additional liquidity, so as to reduce the value of the currency/standard of prices.

However, at times when labour is in relatively shorter supply, workers see that although their money wages have risen, the prices of wage goods has risen faster, so that their real wages have fallen. Not only do they see that, but they are in a position to respond to it. As Marx sets out in Theories of Surplus Value, Chapter 21, that response comes in a number of different forms that change as the shortage of labour develops.

Firstly, the shortage of labour goes along with a rise in economic activity/demand for labour. So, workers might initially make up their wages by taking advantage to work additional paid hours. At first, those paid hours might be at flat rate, so their hourly wage does not change, but their daily and weekly wage rises. In terms of households, this is also manifest as a rise in household income, because more family members are employed, more are employed full-time, rather than part-time etc.

If the rate of surplus value is 100%, it doesn't matter whether this is measured hourly or daily. If the worker works 50 hours per week, and is paid £50 in wages, they produce 25 hours of surplus value, also with a value of £50. But, for each hour of labour that also means £1 of wages and £1 of surplus value. If the worker, then, works 12 hours per day, instead of 10, and is paid at flat rate for the 2 hours of overtime, their wages for the day rise to £12, but the amount of surplus value, for the day, also rises to £12.

If the price of commodities remains constant, then not only will nominal wages have risen by 20%, but real wages will also have risen by 20%, i.e. the worker can buy 20% more commodities than they did previously, proportional to the 20% of additional labour-power sold. But, surplus value will also have risen by the same proportion, because there is no change in the rate of surplus value. The portions of both wages and profits rise, but the proportions of both, in total output, remain constant.

However, as the demand for labour continues to rise, and the competition between firms for labour intensifies, firms are led to have to offer enhanced rates for overtime. Workers may be paid the same £10 for the 10 hours of normal time, but get a 50% premium for overtime hours, i.e. for the 2 hours of overtime, they get paid £3 rather than £2. During these 2 hours, therefore, the rate of surplus value falls from 100% to 33.3%. For the whole day, the worker produces the same £24 of new value, but, now gets £13 in wages, rather than £12, whilst surplus value falls from £12 to £11. Compared to the original day of 10 hours, surplus value has still risen by 10%. The portion of both wages and profits rises, but, now, the proportion of wages rises, relative to the proportion of profits.

This is further enhanced when workers also succeed in reducing the length of the normal working-day, or obtain additional holidays and so on, so that, any labour performed in addition to that, is also, then, counted as overtime to be paid at enhanced rates. Finally, as the demand for labour rises further, firms are led to increase the nominal wage offered for the normal working day itself, i.e. hourly wage rates rise. So, for the original 10 hour day, the worker may be paid £1.20 per hour, or £12 for the day. In that case, having produced the same £20 of new value, during that time, surplus value is reduced to £8. The rate of surplus value falls from 100% to 66.6%.

These are the conditions, described by Marx in Theories of Surplus Value, Chapter 21, and also set out, in Capital III, Chapter 15, which, ultimately, results in a crisis of overproduction of capital. That is as capital expands, and employs more labour, which is in increasingly short supply, it cannot expand absolute surplus value, by expanding the individual working-day, or social working-day, and cannot expand relative surplus value either, indeed seeing it shrink as the demand for labour causes wages to rise, and the rate of surplus value to fall.

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Northern Soul Classics - Pitfall - Ronnie Savoy

 

Friday Night Disco - Teasin' You - Willie Tee

 

The Chinese Revolution and The Theses of Comrade Stalin - Part 29 of 47

Stalin had described the KMT, in 1925, as a “Workers and Peasants Party”. Trotsky notes that such a definition has nothing in common with Marxism. I'm not sure this is entirely accurate in its formulation. We do not seek to create such parties, which is why we oppose the calls for a new party that would be a Labour Party Mark II. But, the fact that we do not advocate such cross-class (catch-all) parties does not mean they do not exist, which is why the Labour Party Mark I, came into existence. Lenin described the Labour Party, for example, as a “bourgeois workers' party”, because its base and connection to the unions makes it proletarian, but, its ideology and its leadership is entirely bourgeois. In fact, all mass workers parties are, now, of that type.

Stalin's intention, in this description, was to present the KMT as an “anti-bourgeois alliance of workers and peasants”, and Trotsky says the workers and peasants did follow the KMT, but, as with today's mass workers' parties, its leadership and ideology was entirely bourgeois, right up to the time that Chiang Kai Shek launched his coup. A similar parallel could be drawn with the way that the Nazis drew their base from the petty-bourgeoisie and lumpen proletariat, the latter's “anti-capitalist” ideology being represented by Strasserism. But, the Nazi leadership and ideology was, itself, entirely bourgeois, and geared to the interests of the large-scale, socialised, industrial capital that the reactionary “anti-capitalism” of Strasserism opposed. Hitler, like Chiang Kai Shek, waited for his moment, and then struck down the Strasserites in the Night of the Long Knives.

“After the “withdrawal” of the bourgeoisie (that is, after it massacred the unarmed and unprepared proletariat), the revolution, according to Stalin, passes over to a new stage, in which it is to be led by the Left Guomindang, that is, by one, at least so we are to assume, that will finally realize the Stalinist idea of the “workers’ and peasants’ party”. The question arises: why then will the creation of workers’ and peasants’ soviets mean a war against the authority of the workers’ and peasants’ Guomindang?” (p 47-8)

Soviets are the means of protecting workers' interests against counter-revolution, in the period of dual power, but also means of pressing for a Workers Government. When the centrists and reformists betray the workers, by refusing to break with the bourgeoisie, they form the basis for replacing them with a soviet government. This is the revolutionary perspective of the period of advocacy of bourgeois-democratic revolution, and its defence against fascism or imperialism, not as an end in itself, but as the means by which illusions in that bourgeois-democracy are removed.

The Stalinists, in China, opposed soviets, because of the stages theory, and its requirement for them to act as cheerleaders for the national bourgeoisie. As part of that, they argued not only that soviets would frighten that bourgeoisie, but would provoke a response from British imperialism, whose gunboats sat in the Yangtze and other Chinese waters.

“This argument too is, of course, not formulated in Stalin’s theses, but it is paraded around everywhere in Party meetings (Martynov, Yaroslavsky and others). The school of Martynov would like to kill the idea of the soviets with fear of the British naval artillery. This artifice is not a new one. In 1917, the Social Revolutionists and the Mensheviks sought to frighten us by declaring that the seizure of power by the soviets would mean the occupation of Kronstadt and Petrograd by the Allies. We answered: only the deepening of the revolution can save it. Foreign imperialism will only reconcile itself to such a “revolution” as strengthens its own positions in China at the price of a few concessions to the Chinese bourgeoisie. Every real people’s revolution that undermines the colonial foundation of imperialism will inevitably meet with the latter’s furious resistance.” (p 50-51)

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Relative Wages - Summary

 Summary

• Relative wages refers to the proportional share of output, as against profits

• Even where nominal wages and real wages rise, relative wages can fall

• In conditions of expanding output, driven by rising social productivity, the portion going to wages rises, but its proportion falls.

• Relative wages tend to fall during periods of stagnation and recovery, when, as a result of intensive accumulation, social productivity rises more quickly, and the rate of surplus value rises, amid conditions of a relative surplus population.

• Relative wages rise during periods of boom and crisis, when there is extensive accumulation, slowing social productivity, and a rising demand for labour, which causes wages to rise, eventually squeezing profits to an extent that causes a crisis of overproduction of capital.

• Capital responds to such a crisis by engaging in a new technological revolution, which replaces labour with fixed capital, sharply raises productivity, creates a relative surplus population, starts a new phase of intensive accumulation, marked by economic stagnation and slower growth of gross output, in which net output grows faster, leading to increased profit share.

• As Marx sets out in Wage-Labour and Capital, the best conditions for workers exist in that first period where the economy grows more rapidly, and the demand for labour rises sharply, but those very conditions lead to the crisis of overproduction of capital, and so to the position of the workers being again undermined.

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3) Application of the Law of the Proportionality of Value, B. Surplus Left By Labour - Part 3 of 8

As Marx sets out, Proudhon's method of analysis is absurd, comparing percentages of different things, i.e. the percentage difference in speed with the percentage difference of profit, but he also fails to calculate consistently when comparing the position for the collective “person-society” and the individual, as well as failing to divide by 100 in calculating the percentages.

“We may even overlook the fact that M. Proudhon expresses a quadrupled speed as 400 per cent of the original speed; but that he should bring into relation the percentage of speed and the percentage of profit and establish a proportion between two relations which, although measured separately by percentages, are nevertheless incommensurate with each other, is to establish a proportion between the percentages without reference to denominations.” (p 87)

Its always possible to compare percentages, so as to say 400% is 40 times bigger than 10%, in the same way that 400 is 40 times bigger than 10, but what does it mean to say that the speed of a train is 4 times faster than that of road transport, and then compare this to a percentage of profit? That is like saying a cabbage is four times bigger than an apple, and then relating that to the sweetness of one to the other. As Marx notes, Proudhon arrives at this odd comparison, because he has a vague notion about labour being value, and measured in time, so that he then sees the reduction in time, resulting from the faster speed of the train meaning a reduction in value/labour. He says, indeed,

“Since in society time is value itself, the railway would, prices being equal, present an advantage of 400 per cent over road-transport. Yet this enormous advantage, very real for society, is far from being realised in the same proportion for the carrier, who, while bestowing upon society an extra value of 400 per cent, does not for his own part draw 10 per cent.” (p 86)

From this, Proudhon draws the conclusion that a profit of 10% is worth 40 times less than a quadrupled speed.

“This error arises from his recollecting vaguely that there is a connection between labour value and labour time, and he hastens to identify labour time with transport time; that is, he identifies the few firemen, drivers and others, whose labour time is actually transport time, with the whole of society.” (p 87)

Proudhon then fails to divide by 100, in his calculation, and treats the 400% as though it were an amount of 400. So, he turns speed into capital, and difference in speed into profit, and concludes that,

“A social profit equal to 400 represents for the individual, in a society of only a million men, four ten-thousandths.” (p 88)

But, even if it were rational to equate percentage differences in speed with differences in profit, which it isn't, Proudhon's calculation is still hopelessly wrong, because he has turned 400% into simply an amount of 400, and he then compounds it by dividing by 1 million to arrive at the profit, for each individual of just four ten-thousandths. But, if the labour-time of every one in the “person-society” was reduced by 400%, rather than just the labour-time of the handful of rail workers, Proudhon would have arrived at a wholly different conclusion.

“and a profit of 400 per cent represents for the individual 400 per cent, neither more nor less. Whatever be the capital, the dividends will always be in the ratio of 400 per cent.” (p 88)

To make the 10% profit of road transport, rail, Proudhon concludes, needs to charge 25 centimes, rather than 18 centimes, but can't do so, because it would lose its customers, and so, it suffers a loss of 35%. Proudhon does not seem to consider the fact that these customers might be prepared to pay 25 rather than 18 centimes, precisely because of getting their goods to market four times faster. But, even allowing for that, he, then, takes this 35% loss, and performs the same calculation in reverse to that above, again confusing percentages with amounts. He says,

“A loss of 33 per cent for the consumer would suppose a social deficit of 33 million.” (p 88)

And, so Marx responds,

“A loss of 33 per cent for the consumer remains a loss of 33 per cent for a million consumers. How then can M. Proudhon say pertinently that the social deficit in the case of a 33 per cent loss amounts to 33 million, when he knows neither the social capital nor even the capital of a single one of the persons concerned? Thus it was not enough for M. Proudhon to have confused capital with percentage; he surpasses himself by identifying the capital sunk in an enterprise with the number of interested parties.” (p 88)

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Real Wages - Part 3 of 3

But, similarly, by presenting all of these revenues as simply a price of various factors of production, orthodox economics also disguises the nature of commodity prices themselves, and of changes in those prices. It is the basis of its claims that wage rises cause inflation. Nominal wages are the money price of labour-power, whose value is determined by the value of the commodities required for its production. If the value of those commodities – wage goods – rises, as a result of a fall in social productivity, then its clear that, rather than a rise in wages being the cause of such higher prices, it is a consequence of it. Moreover, the prices of those wage goods may rise, without there being any change in social productivity, or change in their value. The rise in their price may simply be a consequence of a fall in the value of money/standard of prices, as described by Marx, i.e. inflation. In that case, its clear, again, that the higher wages are not the cause of these higher prices, but a consequence of them.

Furthermore, even assuming no change in the value of labour-power, and a rise in wages, then, resulting from a change in the level of demand and supply for labour-power, such higher wages do not result in higher values of commodities/commodity prices, but in a larger proportion of that value resolving into wages, and a consequently smaller proportion into surplus value (profit, rent, interest, taxes). If commodity prices rise, subsequent to any such rise in wages, it is not as a consequence of the rise in wages, itself, but a consequence of central banks facilitating capital in seeking to maintain its previous rate of profit, via increasing liquidity, and devaluing the standard of prices, so as to create inflation. It is that which sets in motion an inflationary spiral, as workers, then have to compensate for these higher commodity prices, by seeking further rises in their money wages.

Its real wages that actually represent the value of labour-power, whilst nominal or money wages may rise above or fall below them. In other words, money wages may be high enough to buy more of the commodities than required for the reproduction of labour-power, leading to a rise in workers' living standards, including an expansion of the range of goods and services they consume. Such periods occur when the economy grows more rapidly, and the demand for labour results in higher money wages. At other times, the opposite will occur, as a surplus of labour exists, pushing down on money wages, so they buy less of the commodities required to reproduce labour-power. Living standards fall.

A rise in workers living standards, of itself does not challenge the position of capital, as the above demonstrates. Money wages and real wages may rise, but do so by less than the rise in social productivity, so that the proportion of necessary labour falls, and surplus labour rises. This was the basis of the social-democratic consensus and of Fordism. It is the rise in relative wages that challenges capital, i.e. the growing proportion of wage share of total output at the expense of profit, as happened, between 1900-1914, 1960-1980, which, ultimately leads to a crisis of overproduction of capital.

Capital responds to such crises by a technological revolution, creating a relative surplus population, and fall in the proportion of necessary to surplus labour, as seen in the 1930's, and 1980's.

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US Imperialism Drives To War With Iran

US imperialism, is driving towards war with Iran. It is just the latest theatre of war for US imperialism already engaged in Ukraine, and a phoney war in the South China Sea, as it seeks to maintain its global hegemony, at the same time that its economic and strategic power is in relative decline. Following defeats in Vietnam in the 1970's, and loss of client dictators such as The Shah of Iran, Marcos in the Philippines, assorted Central American dictators, followed by further defeats in Iraq and Afghanistan, the US now faces the defeat of its proxy war in Ukraine, despite the huge amounts of money and weapons poured into the corrupt Bonapartist regime of Zelensky. At least the brutal Bonapartist regime of Zionism, in Israel, seems to hold out hope for US imperialism, and the potential to distract from its other failures, and continued decline.

There are inevitable divisions within the ranks of US imperialism, however. Immediately after Hamas attack on October 7th, Netanyahu, and others within the Zionist state, immediately came out to claim that the hand of Iran was behind it. The Zionists are continually looking for a justification for war with Iran, because they see in it, a regional, sub-imperialist power, backed by Russia and China, which could potentially challenge its dominant military position in the region, and so act as a pole around which others might be attracted.

US imperialism also sees things in that way too, which is why, after the fall of the Shah, the US backed Saddam Hussein, providing him with WMD, and advisors to engage in a proxy war against Iran, in which, millions died. The fact that there are hundreds of thousands of Christian fundamentalist fanatics in the US, who are more zealous than US Jews, in their support of Zionism, on the basis of a belief in Armageddon, and The End of Days, resulting from a Middle-East War, is just a superficial camouflage and distraction from the real material basis of US imperialism's drive to war in the region, though the resulting catastrophe could be the same.

In fact, the CIA looked for evidence that Iran was involved in planning and facilitating the October 7th attacks, and could find none. Were US imperialism entirely unified in pushing for an imminent war with Iran, they would have found such “evidence”, much as they did when it came to the charade of the presentation of evidence to the UN, by Colin Powell, of Iraqi WMD, in 2003. But, its clear that a sizeable section of US imperialism is driving towards war with Iran. At the weekend, the US Navy, in The Red Sea, became directly involved in the war, by shooting down a missile headed towards Israel from Yemen. The US was quick to link the Houthis in Yemen, with Iran. An indication of the position of US imperialism is given by the NATO propagandist and war-monger, Paul Mason, in his latest missive – Gaza: Time For Restraint.

The article itself is, typically, superficial and full of holes, let alone hypocritical hyperbole, but Mason acts as a front runner of imperialism, though, his position is now so ludicrously pro-imperialist that he has no standing in the labour movement to be of use to the imperialists, as a conduit for their propaganda. As an indication of the superficiality, he presents the ending of US hegemony, and division of the globe into multiple competing poles, as if it is the product, of some kind of plot or conscious strategy of the enemies of US imperialism, rather than being the inevitable consequence of imperialism itself, and of the unfolding of its economic and social laws. He says,

“If you listen to the advocates of multipolarity, they describe it as a project of “nonalignment and peace” - a long, orderly process whereby geopolitics falls into line with the economic reality of rising Chinese power. Multilateralism and the rules-based order are replaced with formalised spheres of influence, in which all universal concepts - human rights, international law, the rule of law - are reduced to localised, culturally relative norms set by authoritarian elites. The West remains free to be universalist and follow the rules, but nobody else bothers. The only trouble that might arise is where America resists the inevitable.”

See what I mean about hypocritical hyperbole. I doubt the Palestinians have seen the supposed commitment to “human rights, international law, and rule of law”, he professes, let alone the prisoners in Abu Ghraib, and so on! But, this, now seems to be the way western imperialism proceeds on the basis of such obvious lies, and the media facilitates them. 

Its not clear that, even in the link provided to such “advocates” that they are “advocates” at all, in the sense that Mason describes, as against simply describing the world as it is, a world in which US economic, military and strategic hegemony has broken down, and is being challenged by China, and others, including the EU, South America, and others in a flux of shifting alliances, much as happened before WWI and II. Describing what is, and what the dynamics are that creates those conditions, is not to be an “advocate” of them. No Marxist, for example, would claim that the break-down of one global hegemony results in “a long, orderly process whereby geopolitics falls into line with the economic reality”. When British hegemony broke down, and was challenged by the rising power of Germany, for example, it resulted in WWI, and its continuation in WWII, with the ultimate winner being neither, but US imperialism. There is nothing orderly about war, but it is the way that imperialism contradictorily proceeds towards its ultimate objective of creating ever larger single markets, and states, on its way to the creation of a global single market and world state.

Mason continues,

“Instead, we can be certain now that multipolarity equals chaos.”

Why would that be news to any Marxist, because, of course, competition, whether it is unrestricted economic competition, or military strategic competition, leads to chaos, until such time that the most powerful win out in that competition, and assert some kind of order that ensures their continued dominance and advantage. Mason takes a point in time prior to this break down of US hegemony, and sees in it a “rules based system”, as though these rules were somehow, neutral, objectively rational rules, rather than what they actually are, the rules designed by US imperialism, for the benefit of US imperialism, just as the laws of any capitalist state are the rules designed by its ruling-class for the benefit of its ruling class.

As with his previous analyses of the Capitol Hill riot, and so on, and his subjectivist analysis of fascism, in general, he gives far too much importance to forces that, actually, on their own, can go nowhere.

“From Niger to Capitol Hill to Hamas, it is not that the Kremlin orders its proxies to disrupt the rules-based system: it is simply that the proxies understand the realm of the possible has expanded. That not only gives them agency, it gives them permission to dream of radically evil outcomes.”

Of course, you can understand why Hamas, and if not Hamas, some other similar Palestinian resistance force, would seek to disrupt those existing rules that enable the Zionist state, daily, to seize Palestinian land and property, for armed Zionist settlers with the backing of the Bonapartist, Zionist state to “use opportunism, symbolic violence, disinformation, terror, rape as a weapon of war and the legitimisation of genocide.” Though, not surprisingly, Mason has nothing to say about those radically evil outcomes being sought by that Zionist state, and backed to the hilt by US imperialism, and its “rules”.

Mason vastly overstated the importance and capacity of the Capitol Hill rioters, many of whom have been locked up for life, their organisations shredded, and not to mention all of those high profile Trump supporters, gaoled, or facing gaol, and not to mention Trump himself. Mason continually operates on the level of appearances and superficiality, and so gets lost, because none of his analysis is located in the reality of class relations and class interest. Its a superficial journalist's description of the world, heavily coloured by his own agenda. So, for example, eighteen months ago, he was telling us that Ukraine was about to defeat Russia, and Russia was going to be sent scurrying not just from Ukraine, but weakened on the global stage itself.

Today, we see that Ukraine is losing badly. It is suffering heavy casualties of its soldiers, despite all of the masses of latest weapons from NATO, because, so long as Russia sticks with its objective of simply securing Eastern Ukraine, Ukraine can make no significant headway. Its soldiers are being ripped apart by shrapnel, because it can't get close enough to Russian troops to exchange rifle fire. It can't get past the first line of Russian defences of mines, and stuck in those positions is shredded by Russian artillery, fired from a distance. As Autumn proceeds, even that progress will be reversed, and Russia will harden its defensive positions further. Zelensky's own position looks tenuous, as a result of that failure.

Indeed, its that failure of Zelensky, and so of US imperialism/NATO, in Ukraine, that gives added urgency for it to seek to distract attention, by a wider war in the Middle-East. Its possible that the intensification of Netanyahu's fascist coup, the increased drive to have settlers seize Palestinian land at a faster pace, to have the overt attacks on the Al Aqsa Mosque and so on, were simply, in Mason's words, a result of the fact that “the proxies understand the realm of the possible has expanded. That not only gives them agency, it gives them permission to dream of radically evil outcomes.” But, Biden could have stopped that. Without the billions of Dollars that the US gives to the Zionist state each year, without the US acting to veto any attempt even to have previous UN resolutions against Zionist occupations and so on, implemented, Netanyahu's government would not have lasted a week.

But, the US did not do that, and the subordinates of the US, despite the so called “rules based order”, did not do that either. The Zionist state was given the green light to ignore even those rules that were drawn up by, and in the interests of its masters. Far from discouraging the Zionist state and its rush to fascism, and intensification of its drive towards “radically evil outcomes”, the US rushed to encourage the Zionist state to enter into deals with other US client states, such as the Saudis, whose rulers, ignored the rules also, and literally butchered the US citizen Jamal Kashoggi, completely ignoring the Palestinians, for whom the US rules based order, cannot even provide them with the promised Two State Solution.

Although, the CIA found no evidence of Iran organising or facilitating the October 7th attacks, Mason is in no doubt, on the matter.

“In the case of Hamas and Iran, we should be in no doubt of what the desired outcome of the aggressor is. Mohammed Deif, the Hamas commander in Gaza, spelled it out on 7 October: the destruction of Israel by a region-wide war.”

The Liberal-Democrats say they would like to form the next government in Britain, but that doesn't mean they have any chance of achieving it. Hamas are a tiny, more or less powerless organisation, when it comes to Israel, let alone the rest of the region. Their power, in Gaza, is mostly down to the role of the Zionist state, in the way it oppresses the Palestinians as a whole, and Gaza, in particular. They have no more ability to destroy Israel than the men in funny costumes that stormed Capitol Hill on January 6th had of carrying through a successful coup against the US state.

What is more, Iran has no desire for a war with Israel either, because it knows that any such war, would certainly give US imperialism the excuse to intervene directly against it. The experience of such US intervention has not been a happy one either, as with its intervention in Iraq, but for the US, even just the creation of chaos in Iran, as it achieved in Libya, would be a step forward, whilst the reimposition of the brutal dictatorship of the Pahlavi's would be even better for the US. Mason of course, has little to say about the fascists in these cases, or the “radically evil outcomes” required for the reimposition of “order”. He simply notes,

“the defence of Israel against Hezbollah would be a war of necessity for those determined to uphold the rules-based order”

His only concern is that Biden and the rest of western social-democracy could not sell this idea to a western working-class already suffering from the effects of years of excess liquidity that inflated asset prices, and that has now inflated commodity prices, whilst workers are told they cannot have pay rises to match, and who are suffering from the effects on energy prices and economies from the effects of western boycotts and sanctions on Russian energy and food exports.

Mason is just the front runner of US imperialism. So, it was not surprising that, on the same day that his missive was published, his fellow neo-cons from the US were in Israel, purveying an identical message. Right-wing Republican war-monger Lindsay Graham, echoing Mason's insistence that Hamas would not have acted without Iranian approval and backing, noted that any response by Hezbollah to the repeated shelling and air strikes on Lebanon, or Israel's bombing of airports in Syria, would also be taken as provocation by Iran, unleashing a joint US-Zionist response.

As I wrote on day one, the Zionist state would look to declare war not just on the Palestinians, but on other Arab states. It has got away with its “radically evil outcomes” committing genocide in Gaza, as it drives towards a final solution to its Palestinian problem, and so has also intensified its attacks on Palestinians in the West Bank. From the start, it launched attacks across the Lebanese border, and engaged in the bombing of the airports in Damascus and Aleppo, in Syria. Now, it has also bombed the Rafah Crossing between Gaza and Egypt, and has also shelled an Egyptian position, clearly as a warning to Egypt, which held an international conference on Gaza, at the weekend.

The world has watched the Zionist war machine in horror, and is rising up against it, including against all those governments that support the Zionist state, or do nothing to oppose it. The lies of the Zionists have become ever more obvious and ridiculous. Apparently, not only does Mason have nothing to say about “How To Fight” Zionist fascism, as presented by Netanyahu, himself a close friend not only of Mason's Bette-noirs Putin and Trump, but sees its continued role as a “necessity for those determined to uphold the rules-based order”, and he also has nothing to say about the genocide committed by that regime in Gaza!

The Zionists need to divert attention from the holocaust in Gaza, and its exposure of the nature of Zionism, both in Israel, and in western democracies, as seen, for example, in its role in opposing the Left in the Labour Party, and in the US Democrats, equating anti-Zionism with anti-Semitism. A wider regional war in the Middle-East meets their requirement to divert attention, and, as US imperialism's proxy in Ukraine, fails, opening a new front against Russia-China, via a war against Iran, meets the needs of US imperialism too.

The Chinese Revolution and The Theses of Comrade Stalin - Part 28 of 47

The Stalinists, having prepared the coup of Chiang Kai Shek, now argued for arming the workers in Nanking, but not in Wuhan, where the left KMT formed the government. They argued against forming soviets, because, in Wuhan, they would be seen as challenging the government of the Left KMT. Trotsky notes,

“These words fairly reek with the apparatus-like, bureaucratic conception of revolutionary authority. The government is not regarded as the expression and consolidation of the developing struggle of the classes, but as the self-sufficient expression of the will of the Guomindang. The classes come and go but the continuity of the Guomindang goes on for ever.” (p 46)

Claiming that Wuhan and the Left KMT was the centre of the revolution was not true. Chiang Kai Shek inherited the old state bureaucracy to support his regime, but the Left KMT had nothing.

“The slogan of soviets is a call for the creation of real organs of the new state power right through the transitional régime of a dual government.” (p 47)

In conditions of dual power, this is always the case. The bourgeois government has at its disposal the army, police, courts, media, churches, and so on. That remains the case, in the event of a Workers' Government, comprising centrists and reformists, and, in this latter case, the state acts as a check upon it, ready to pounce at the sign of weakness. It requires a countervailing, organised power of the workers, which history indicates comes in the form of soviets/workers councils. During the 1984-5 British Miners' Strike, every area saw Trades Councils establish Miners' Support Committees, though these necessarily acted, mostly, to organise fund raising, mobilisation for mass pickets, and so on.

They could not go much beyond that, because of the level of class consciousness, and failure to mobilise the whole labour movement in active support, unlike the 1926 General Strike. But, in 1926, what was required, and what could have developed in 1984-5, was permanently in session councils of workers in each area. That would have countered the effective martial law that Thatcher implemented, and that Baldwin/Churchill implemented during the General Strike.

Trotsky sets this out, in conditions of a Popular Front government, such as that of Kerensky, or of the KMT, or that in Spain, in the 1930's, as well as in the event of a Workers' Government of centrists and reformists.

“The attitude of the soviets to the revolutionary Guomindang will correspond to the attitude of the revolutionary Guomindang to the soviets. In other words: to the extent that the soviets arise, arm themselves, consolidate themselves, they will tolerate over them only such a government as bases itself upon the armed workers and peasants. What makes the soviet system valuable is the fact that, especially in directly revolutionary epochs, it furnishes the best means of guaranteeing agreement between the central and local government authorities.” (p 47)

So, in February 1917, the bourgeois Provisional Government was confronted by the power of the soviets. As Lenin pointed out, the reality was that the soviets controlled the streets, not the Provisional Government. The Bolsheviks raised the demand “Down With The Capitalist Ministers”, aimed at the centrists and reformists in that government, to transform it from a Popular Front government to a Workers' Government, for reasons Trotsky describes in The Transitional Programme.

“The Bolshevik-Leninists resolutely rejected the slogan of the “workers’ and peasants’ government” in the bourgeois-democratic version. They affirmed then and affirm now that. when the party of the proletariat refuses to step beyond bourgeois democratic limits, its alliance with the peasantry is simply turned into a support for capital, as was the ease with the Mensheviks and the Social Revolutionaries in 1917, with the Chinese Communist Party in 1925-27, and as is now the case with the “People’s Front” in Spain, France and other countries.

From April to September 1917, the Bolsheviks demanded that the SRs and Mensheviks break with the liberal bourgeoisie and take power into their own hands. Under this provision the Bolshevik Party promised the Mensheviks and the SRs, as the petty bourgeois representatives of the worker and peasants, its revolutionary aid against the bourgeoisie categorically refusing, however, either to enter into the government of the Mensheviks and SRs or to carry political responsibility for it. If the Mensheviks and SRs had actually broke with the Cadets (liberals) and with foreign imperialism, then the “workers’ and peasants’ government” created by them could only have hastened and facilitated the establishment of the dictatorship of the proletariat. But it was exactly because of this that the leadership of petty bourgeois democracy resisted with all possible strength the establishment of its own government. The experience of Russia demonstrated, and the experience of Spain and France once again confirms, that even under very favourable conditions the parties of petty bourgeois democracy (SRs, Social Democrats, Stalinists, Anarchists) are incapable of creating a government of workers and peasants, that is, a government independent of the bourgeoisie.”

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Real Wages - Part 2 of 3

If wages were a price for labour, i.e. a price equal to the value created by labour, in the production process, then, indeed, there could be no surplus value, and, consequently, no profit, rent, interest or taxes. But, then, there would be no capitalism either, because capital only employs labour, in order to produce profits. What the description of these revenues as prices for the supply of factors of production disguises is the true underlying relation of wage-labour and capital, and the exploitation of the former by the latter, as a condition of its employment. What it disguises is the nature of what the worker actually sells to capital, being not their labour, but their labour-power.

The value of that labour-power is itself determined, like any other commodity, by the labour-time required for its production, which means the labour-time required for the reproduction of the workers. The workers require food, shelter, clothing, education, healthcare and so on, and, as Marx describes in Capital and The Grundrisse, in relation to The Civilising Mission of Capital, the actual physical components of all these use-values required for the reproduction of the workers changes from one country to another, one period of time to another. It involves a historical and cultural component. What wages actually are, therefore, is not a money payment for the supply of labour, but is the value of all these commodities required for the reproduction of labour-power.

If we take capital, as a whole, and the working-class as a whole, real wages are equal to all of those commodities, produced by workers, but in the hands of the capitalists, which are handed back to the workers, to ensure the reproduction of their labour-power. Money wages are only required, because of the nature of commodity production and exchange, under capitalism, in which workers are employed by a wide range of different capitals, each producing different types of commodity. In the 19th century, that was demonstrated by the fact that some employers utilised the Truck System, paying their workers, not money wages, but tokens, which could only be redeemed against goods sold in the stores operated by the employer. The welfare state operates on the same basis, as a huge Truck System, in which part of the workers' wage – the social wage – is paid in truck, in the form of various welfare services such as healthcare, education, social care, and so on.

Nominal or money wages are the market price of labour-power, and like all other market prices, fluctuate on the basis of movements in demand and supply for the given commodity. On that basis, nominal wages may be higher or lower than the value of labour-power.

The description of wages as a price for labour, as against, what they really are, the price of labour-power, disguises this real relation, and source of surplus value – profits, rent, interest, taxes. But, also, because wages are a price for labour-power, whose value can be objectively determined on the basis of the value of the commodities required for its reproduction, it disguises the fact that all of these other revenues – profit, rent, interest, taxes – are a residual, whose magnitude is determined by the magnitude of the former. If the value of labour-power rises, so that a greater part of the working-day is required as necessary labour, then the proportion of surplus labour is accordingly reduced, so that the amount of surplus value is proportionally reduced, meaning the proportion that can be paid out as profit, rent, interest or taxes is reduced.

That does not mean that the amount of surplus value may not rise, only that its proportional share is reduced. If 100 workers are employed for 10 hours, of which 5 hours is necessary labour, a total of 500 hours of surplus labour/value is produced. If the same 100 workers work for 20 hours, of which 12 hours is necessary labour, the total surplus labour/value rises to 800 hours, but the proportion of surplus labour/rate of surplus value has fallen from 100% to 66.6%. Nor does it mean, as Marx describes in Capital III, that because the proportion of surplus value falls, the proportion of any of its derivatives, manifest in these other revenues, necessarily falls. If surplus value is 500, and is divided 400 profit of enterprise, 50 rent, 30 interest and 20 taxes, a fall to a surplus value of 450 might still see, a rise in any of these revenues, with a consequent fall in the others. For example, 340 profit of enterprise, 55 rent, 35 interest, 20 taxes.

If the value of labour-power rises, causing wages to rise, but capital must still seek to reproduce itself, on an expanded basis, the consequence of a fall in the industrial rate of profit, will mean that the surplus profit produced in primary production will rise, causing rents to rise. A greater proportion of profit will be required to finance capital accumulation, meaning less is thrown into money markets as loanable-money capital, causing interest rates to rise, whilst taxes are what is required to finance the functioning of the capitalist state, and consequently unchanged.

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3) Application of the Law of the Proportionality of Value, B. Surplus Left By Labour - Part 2 of 8

Proudhon's analysis is thoroughly confused, and made worse by very bad mathematics. As Marx describes, Proudhon's basic explanation of the existence of surplus value, or surplus product, is the role of cooperative as against individual labour. Proudhon says,

“An axiom generally admitted by economists is that all labour must leave a surplus. In my opinion this proposition is universally and absolutely true: it is the corollary of the law of proportion, which may be regarded as the summary of the whole of economic science. But, if the economists will permit me to say so, the principle that all labour must leave a surplus is meaningless according to their theory, and is not susceptible of any demonstration.” (p 85)

And,

“This principle of surplus labour,” continues M. Proudhon, “is true of individuals only because it emanates from society, which thus confers on them the benefit of its own laws." (p 85)

In other words, Proudhon divides individuals and society, and, then, makes society into a person. As Marx puts it, “he turns it into a person-society – a society which is not by any means a society of persons, since it has its law apart, which have nothing in common with the persons of which society is composed, and its “own intelligence,” which is not the intelligence of common men, but an intelligence devoid of common sense.” (p 85)

Now, it is, of course true that cooperative labour is more productive than individual labour, but Proudhon is far from being the first to have recognised that fact. It is also true, as Marx and Engels describe in many places, that the basis of all surplus-value is relative surplus value, i.e. the ability to raise productivity so that the amount of necessary labour performed by the labourer is less than the amount of labour they actually perform, and one means of achieving that is by cooperative as against individual labour.

This creation of a person-society is the same as the bourgeois-idealist notions of terms such as “nation”, “the people”, and so on, which are abstract and devoid of any concrete analysis of their division into antagonistic classes. Marx quotes Thomas Cooper.

“The moral entity – the grammatical being called a nation, has been clothed in attributes that have no real existence except in the imagination of those who metamorphose a word into a thing.... This has given rise to many difficulties and to some deplorable misunderstanding in political economy.” (p 85)

And, not only in political economy, as seen when such issues as “national self-determination” is discussed, in terms of abstract rights or struggles by “people” and “nations”, as against the rights and struggles of classes.

Proudhon seeks to prove that the surplus produced by labour is solely a consequence of society, and of cooperative labour. He even claims to have done so with mathematical rigour. But, his example is wholly confused, and the mathematics he uses absurd. He wants to show that the benefits of invention that saves labour goes to society, and not to the individual, and so the laws governing society are the opposite of those governing the activity of individuals.

He gives the example of a railway, which is four times faster than transport by road. The cost of road travel is 18 centimes per kilometre. If the railway charged this amount, it would not make 10% profit, he says, the amount made by road transport. So, although rail provides a great benefit for society, as a result of this much greater speed, and saving of its labour-time, for the individual train operator, it would not provide this benefit. Suppose, then, Proudhon says, the train operator raised prices to 25 centimes, so as to make this same profit, the result would be that they would see all of their business disappear to road transport.

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