In Capital III, Marx flatly denies this conclusion. Indeed, its impossible, as Marx sets out. For one thing, interest, rent and taxes are deductions from profit, not something in addition to it! Had he said, profit of enterprise, rather than profit, then, at least that part of his error would have been avoided, but not the rest.
Total value, does, indeed, equal total prices of production, but, its, then, impossible for total surplus value to equal total profits after the redistribution, and determination of prices of production. The formation of prices of production, means that prices diverge from values, and so the value of wage goods will differ from their prices. But, workers, wages are based on the prices they must pay for those wage goods not the value of those wage goods. If the price of wage goods, is, then, higher than their value, wages would have to rise, meaning that the rate of surplus value would fall, and total profits would fall, i.e. would be less than the amount of surplus value, prior to the formation of prices of production. It is also why the rate of profit, based on prices of production cannot be equal to the rate of profit based upon values.
“Suppose, the average composition is 80c + 20v. Now, it is possible that in the actual capitals of this composition 80c may be greater or smaller than the value of c, i.e., the constant capital, because this c may be made up of commodities whose price of production differs from their value. In the same way, 20v might diverge from its value if the consumption of the wage includes commodities whose price of production diverges from their value; in which case the labourer would work a longer, or shorter, time to buy them back (to replace them) and would thus perform more, or less, necessary labour than would be required if the price of production of such necessities of life coincided with their value.”
(Capital III, Chapter 12)
Of course, Roberts, as a supporter of the TSSI, can't agree with Marx's conclusion, here, because it means accepting that the prices of inputs (whether of means of production or variable-capital/wages) are determined/transformed simultaneously with output prices. The only way that total profits could equal total surplus value, is if there were no individual divergences between values and prices of production, but that would require that every capital had the same organic composition, and rate of turnover, in which case there would be no need to transform values into prices of production.
So, as Marx describes, if, in aggregate, the constituents of the variable-capital (wage goods) have a higher price of production than their value, this means that, in terms of the total social capital, the part representing variable-capital, rises. A greater part of the total output must go to wages, and consequently less to profit. So, the total profit falls, and is not equal to surplus value. If, in aggregate, the constituents of the variable-capital (wage goods) have a lower price of production than their value, the opposite would be the case. Wages would be lower than the value of labour-power, and profits would be greater than surplus value. Which of these conditions applies, depends upon whether, in aggregate, the commodities that constitute the variable-capital have a higher than average, or lower than average organic composition of capital, and whether, in aggregate they have a higher or lower than average rate of turnover of capital, and the extent to which these two factors act to counteract, or to reinforce each other.
The total new value created by labour is unchanged, and it is only the different distribution of this new value between wages and profits that is affected. Similarly, as I have set out elsewhere, if total values equal total prices of production, which they do, then c + v + s, is likewise, equal in aggregate, and because v + s, remains constant, c must also be constant. It is only that c + v, then varies, as a result of the variation of v, within v + s. If v rises, and consequently s, falls, then not only will c + v rise, but also, s/v falls, i.e. the rate of surplus value, and s/(c +v) falls, meaning a fall in the rate of profit. The opposite would apply if v were to fall, on the basis of prices of production, as against values. Given Marx's theory, and his analysis that the organic composition of capital, and rate of turnover varies from one sphere to another, so that the annual rate of profit is higher in those spheres where the organic composition of capital is lower than average, or where the rate of turnover is higher than average, and vice versa, it is impossible for the mass of profit, following transformation, to equal the mass of surplus value, prior to transformation, and similarly, for the rate of surplus value, or rate of profit to be the same.
Duhring believed that he could conjure out of his head the whole of pure mathematics, with no prior reference to the real world, simply on the basis of abstraction,
“In pure mathematics, in his view, the mind deals “with its own free creations and imaginations” ; the concepts of number and form are “its adequate object which it itself creates”, hence mathematics has “a validity which is independent of particular experience and of the real content of the world” (p 46-7)
But, the very concept of abstraction, requires a starting point, something that is abstracted from, as Marx also set out in The Poverty of Philosophy.
What is more, there are certain abstract concepts, necessary in mathematics, in order to perform mathematical operations, whilst there is no real world existence of these concepts. For example, the abstract concept of zero took a long time for mathematicians to develop, and yet, without it, modern maths and much of the science that depends on it, would be impossible. Why did it take time to develop the concept of zero? Because, in the material world, there is no equivalent of it. If I am counting beans or sheep, I start with 1 not zero.
The experiments with some animals, showing that they might be able to grasp the concept of zero, does not change that. For example, chimpanzees can be trained to carry out additions using digits, and parrots are often used to perform similar functions, which includes a zero-like concept. But, in all these cases, it is humans that have developed the mathematical concepts as abstractions, and which they then train the animals to perform. In none of the cases did the animals themselves develop the concepts as abstractions or as symbolic language.
Do animals have intelligence, in the sense that they can take experiences of the real world, and, on the basis of it, usually by some conditioned reflex, adopt a purposive behaviour? Absolutely. Birds, learn that they can drop snails from a height, so as to crack their shells and so on, but this amounts again to learned behaviour, from direct experience of the real world, not birds sitting and pondering the question of how to crack shells, let alone the concept of gravity and its nature.
The same is true with mathematical forms. Without the concept of a point, geometry is impossible, and, indeed, many of the other mathematical concepts become impossible too. But, a point is a zero in space. It is something, which has no dimension. Yet, as Trotsky set out, arguing against Burnham, there is, in the real world, no such thing as a point. Everything that exists, exists in space-time, it has dimension and duration.
“How should we really conceive the word “moment”? If it is an infinitesimal interval of time, then a pound of sugar is subjected during the course of that “moment” to inevitable changes. Or is the “moment” a purely mathematical abstraction, that is, a zero of time? But everything exists in time; and existence itself is an uninterrupted process of transformation; time is consequently a fundamental element of existence. Thus the axiom “A” is equal to “A” signifies that a thing is equal to itself if it does not change, that is, if it does not exist.”
Without the abstract concept of a point, other mathematical forms and concepts become impossible, too. For example, a line is a point that has extension in one dimension. But, again, that is something that does not exist in the real world. No matter how thin a line may be, it always has some thickness. The fact that these mathematical concepts, however, exist, purely as abstractions, does not mean that, in order for the mind to develop them, the starting point is not things that actually do exist in the real world.
“There must have been things which had shape and whose shapes were compared before anyone could arrive at the concept of form. Pure mathematics deals with the spatial forms and quantitative relations of the real world — that is, with material which is very real indeed. The fact that this material appears in an extremely abstract form can only superficially conceal its origin in the external world. But in order to make it possible to investigate these forms and relations in their pure state, it is necessary to separate them entirely from their content, to put the content aside as irrelevant; hence we get points without dimensions, lines without breadth and thickness, a's and b's and x's and y's, constants and variables; and only at the very end do we reach the mind's own free creations and imaginations, that is to say, imaginary magnitudes.” (p 47-8)
So, if instead of the workers providing their own welfare services the state undertakes those functions, nothing is changed. Instead of workers setting aside a part of their wages as a social fund, pooled in their Friendly and Mutual Societies, to cover these services, they, instead, have a similar amount deducted from their wages by the capitalist state for that purpose. In fact, precisely because the state does this on a much larger scale, so that the actuarial calculations of risk, are more accurate, in relation to things such as the risk of ill-health, unemployment, and so on, and because the state, utilising Fordist, mass production techniques, can reduce the actual cost of provision of education, healthcare and so on, it reduces the amount that each individual worker, and so the working-class, in aggregate, must set aside for such provision. It, thereby, reduces the value of labour-power, and, contrary to Roberts' assertion, it, thereby, increases the rate of surplus value, relative profits, and the rate and mass of profit. It is why all developed capitalist economies have sought to introduce such welfare states.
Does this mean that the state-capitalist does not advance capital that turns out not to be capital, i.e. that it overproduces commodities/services, such that the capital advanced was wasted, and the labour expended, was not value creating? Of course not, any less than any other capital can sometimes overproduce commodities that cannot be sold at their value. But, the state, in providing things like health and social care, and education, not to mention the provision of benefits, pensions and so on, has far more control over that than does even a private insurance company, let alone if workers provided for their own welfare collectively.
If you take out house insurance cover, and you come to claim on it, the insurance company, is bound by law to honour its commitments. Not so the capitalist state. When you pay National Insurance contributions, it is a contract to be able to obtain the given level of service required, be it unemployment or sickness benefit, pension, or health and social care. But, at its own whim and discretion, the capitalist state can renege on those contracts. It willy-nilly reduces benefits and pensions, in real terms, postpones the point at which they are paid, reduces the level and quality of health and social care provision, education and so on. All of that it does, simply in the immediate interests of capital.
Contrary, to Roberts' claim that things like state education, health and social care are funded out of surplus value, therefore, the reality is that they are funded out of the aggregate variable-capital, or wage fund. If there was no state education, or healthcare, that would not change the fact that workers require those labour-services for the reproduction of their labour-power, and capital requires the reproduction of labour-power, because without the ability to purchase labour-power, it cannot set to work its use-value, its ability to perform labour, and so produce new value, and, thereby surplus value. Indeed, in the past, when capital required workers to be, at least minimally educated, in the 19th century, it either had to set aside funds for that provision, directly, with firms employing teachers to educate their young workers, or else the workers, themselves, set aside a part of their wages to cover the cost of educating themselves and their children, for example in the cooperative schools, often run above cooperative stores, and so on.
Duhring, whilst claiming to be a philosopher of reality, in fact, rather than dealing with this real world, and its dialectical processes, runs from it into the realm of pure ideas and abstraction.
“But our philosopher of reality also had other motives for shifting the basis of all reality from the real world to the world of thought. The science of this general world schematism, of these formal basic principles of being, is indeed, precisely the foundation of Herr Dühring's philosophy. If we deduce this world schematism not from our minds, but only through our minds from the real world, if we deduce the basic principles of being from what is, we need no philosophy for this purpose, but positive knowledge of the world and of what happens in it; and what this yields is not philosophy either, but positive science. But, in that case, Herr Dühring's whole volume would be nothing but love's labour lost.” (p 45)
Philosophy, basically, seeks to answer the same question as theology or religion - “Why are we here?" Science, on the other hand, tries to answer the question - “What do we have, here?”
“... if no philosophy as such is needed any longer, then no system, not even a natural system of philosophy is needed any longer either. The recognition of the fact that all the processes of nature are systematically interconnected drives science on to prove this systematic interconnection throughout, both in general and in detail.” (p 45)
Philosophy, in trying to determine some secret to the Universe, and meaning of life, can only start from the assumption that there is some such secret and meaning, some overall plan or schema, be it consciously or unconsciously designed. Science has no such requirement, but only a requirement to understand what is, and is becoming, which itself is a function of what is. Science can never fulfil that task, and understands it cannot, because it can never uncover the whole nature of reality, as the continual discovery of smaller particles has shown, let alone the relationship between these particles and other aspects of the material world.
“If at any epoch in the development of mankind such a final, definitive system of the interconnections within the world — physical as well as mental and historical — were constructed, this would mean that the realm of human knowledge had reached its limit, and, that further historical development would be cut short from the moment when society had been brought into accord with that system, — which would be an absurdity, pure nonsense.” (p 45-6)
Even in one tiny area of such scientific endeavour, in relation to social science, after the fall of the USSR, Francis Fukuyama was rash enough to declare “The End Of History”, and the extent to which that was nonsense barely took the time for his book to hit the shops to be disproved.
A contradiction exists, therefore, that humanity must try to obtain an exhaustive knowledge of reality, but that task can never be accomplished. The task is not one simply to satisfy intellectual curiosity. Had humans not sought such knowledge, they would not have separated themselves from the animal kingdom. They would not have come to understand fire, the movement of the seasons and tides and so on, all of which were required for the survival of humans, and subsequently, their development.
“But this contradiction not only lies in the nature of the two factors — the world, and man — it is also the main lever of all intellectual advance, and constantly finds its solution, day by day, in the endless progressive development of humanity, just as for example mathematical problems find their solution in an infinite series or continued fractions. Actually, each mental image of the world system is and remains limited, objectively by the historical conditions and subjectively by its authors physical and mental constitution.” (p 46)
All that insurance does, whether it is a social insurance, or a house or car insurance, is to cover the purchase of commodities/services in aggregate, via a collective payment, an aggregated fund from which the specific, individual payments are made. If a group of friends go to a restaurant, and agree to pay for their meals out of a pool into which they all contribute a given proportion, it does not change the fact that what they have purchased, collectively, is a commodity with a given value! Marxists should be familiar with this concept, because it has been usual for the aggregated travel costs of people attending a meeting, somewhere in the country, to be funded via a “pooled fare”, for example. The fact that each individual, thereby, does not pay an amount equal to the actual value of their own transport costs, does not change the fact that each individual purchased a commodity (travel in various forms) with a given value, and that, in aggregate, all of these individual purchases, also represented the purchase of commodities with a value.
So, if workers organised their own welfare provision, under their direct, ownership and control, and, so employed other workers in their schools, colleges, hospitals, care homes and so on, would these employed workers be producing new value? Yes, of course they would, because they are producing commodities and services, required by workers, just as much as if they were producing sausages in a factory. Indeed, Marx says so, himself.
“If we may take an example from outside the sphere of production of material objects, a schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation. Hence the notion of a productive labourer implies not merely a relation between work and useful effect, between labourer and product of labour, but also a specific, social relation of production, a relation that has sprung up historically and stamps the labourer as the direct means of creating surplus-value.”
In the case of a school owned and run, as a cooperative, by the workers in a given community, they would pay the teachers, the value of their labour-power (wages), just the same as if those teachers were employed by a private capitalist, or the state. But, as with all other labourers, the value of that labour-power would be less than the new value created by the teacher, it would, thereby, create a surplus value for the co-operative. If, instead, the teachers established the cooperative, this would not change the value of their labour-power, nor the value created by their labour. The value of the education provided would remain the same, and the workers in the given community would, then, act to commission the services of the school, paying for it out of their collective funds. The only difference, here, is that the teachers, as collective owners of the school, would appropriate the surplus value produced by their labour, as with any other worker-cooperative.
In whichever case, the cost of the provision, as with healthcare and so on, is a part of the value of labour-power, and the workers, to cover this cost, require an equal amount in the payment of their wages. This is not, then, a deduction from surplus value, in total, any more than the element of wages to cover the cost of the workers food, clothing and shelter is a deduction from surplus value. But, this amount, is, also, not some arbitrary amount. In just the same way that if a spinner uses gold spindles to spin yarn, rather than steel spindles, they cannot expect to be recompensed for this unnecessary expenditure, so too with the value of labour-power.
If workers, operating their own welfare system, decided to have lavish schools, and a pupil teacher ratio lower than that at Eton, for example, this would constitute unnecessary expenditure in relation to the labour-power required by capital, just as much as if any given worker decided to eat twice as much as required for their reproduction or decided to have ten children, rather than the two required for the reproduction of the parents' labour-power. There would be no reason why capital would reimburse this excess spending, in the wages paid to the worker, or workers in aggregate. There is an important point, however, which is that having this provision under their own direct ownership and control makes it much more difficult for capital in general to reduce this provision, or to reduce wages to cover its cost.
Duhring wants to make the mind separate from, being separate from Nature. On that basis, thought exists on a separate plane of existence, a plane in which pure abstraction, and where the attuned mind, therefore, can simply pluck these eternal principles, like plucking fruit, or like a religious mystic talking directly to God. Of course, Mind and Nature are not identical, but that does not mean they are separate or unrelated. The mind, indeed, works in the realm of ideas and, consequently abstractions. Like any other process, it begins with a quantity of raw material, and forms it into something new. But, this new thing cannot be separated from the material which formed the basis of its creation. It does not just pop into existence from nowhere.
“... if we then ask what thought and consciousness are and whence they come, we find that they are products of the human brain and that man himself is a product of nature, which has developed in and along with its environment; whence it is self-evident that the products of the human brain, which in the last analysis are also products of nature, do not contradict the rest of nature's interconnections but correspond to them.” (p 44)
A similar debate exists today, in relation to the existence of a so called“hard problem”of consciousness, as distinct from an “easy problem”, of consciousness. The “easy” problem relates to experience of the material world, which results in a common perception, whereas the hard problem relates to why individuals have their own subjective perception of the real world, or qualia, their own tastes, and preferences, for example, which is important in relation not only to philosophical and psychological studies of the mind, for example in relation to cognition and free will, but, in relation, therefore, to economics, in relation to utility/use-value, and its role in terms of demand.
One solution to that question is provided by Roger Penrose and Stuart Hameroff, in their theory of Orchestrated Objective Reduction. It proposes that consciousness is a product not of the interaction of neurons, but of a quantum level process within the neurons themselves. However, the idea that there is any such separation between “hard” or “easy” problem of consciousness is also challenged. Minsky, for example has noted that humans can believe false ideas, and so mathematical understanding of the world need not be consistent, meaning that consciousness then has a deterministic basis. The idea was also challenged by Tegmark, who noted that “any quantum coherent system in the brain would undergo effective wave function collapse due to environmental interaction long before it could influence neural processes (the "warm, wet and noisy" argument, as it later came to be known).” (Wikipedia). Subsequent, experimental science has failed to provide any evidence to support a quantum level explanation for consciousness.
Duhring, however, cannot designate thought as “human thought”, because he considers that to be subjectively self-limiting, and thought, the discovery of his absolute truths and principles cannot be so confined. Like Descartes, he seeks, solely on the basis of reason, to reduce all truth down to what must be true everywhere in the universe for all time.
“Hence, in order that no suspicion may arise that twice two make five on some celestial body or other, Herr Dühring dare not designate thought as human, and so he has to cut it off from the only real foundation on which we find it, namely, man and nature; and with that he tumbles hopelessly into an ideology which reveals him as the epigone of the “epigone” Hegel {197}. In passing, we shall often meet Herr Dühring again on other celestial bodies.” (p 44-5)
Of course, the conclusion that 2 + 2 = 4, is itself a function of humans using base 10 for such calculations. If we use binary, then 2 is 10, and 2 + 2 is 10 + 10 = 100. Moreover, in the real world, such conclusions do not necessarily follow. If we take a drop of water, and add a second drop, we do not get two drops, as they combine into one larger single drop.
Marx's preferred solution was for the workers to organise their own schools, but he recognised that, at the time, this was not a practical solution.
“The case of the working class stands quite different. The working man is no free agent. In too many cases, he is even too ignorant to understand the true interest of his child, or the normal conditions of human development. However, the more enlightened part of the working class fully understands that the future of its class, and, therefore, of mankind, altogether depends upon the formation of the rising working generation. They know that, before everything else, the children and juvenile workers must be saved from the crushing effects of the present system. This can only be effected by converting social reason into social force, and, under given circumstances, there exists no other method of doing so, than through general laws, enforced by the power of the state. In enforcing such laws, the working class do not fortify governmental power. On the contrary, they transform that power, now used against them, into their own agency. They effect by a general act what they would vainly attempt by a multitude of isolated individual efforts.
Proceeding from this standpoint, we say that no parent and no employer ought to be allowed to use juvenile labour, except when combined with education.”
(Programme of The First International)
And, in The Critique of The Gotha Programme, Marx emphasises this opposition to state education further, in opposition to the position of the Lassalleans/Fabians.
"Elementary education by the state" is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and, as is done in the United States, supervising the fulfilment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school. Particularly, indeed, in the Prusso-German Empire (and one should not take refuge in the rotten subterfuge that one is speaking of a "state of the future"; we have seen how matters stand in this respect) the state has need, on the contrary, of a very stern education by the people.”
In the absence of schools provided by workers themselves, such as those established by the cooperative movement, or the education provided by the National Organisation of Labour Colleges, or Plebs League, Marx favoured the kind of arrangement in parts of America, where schools were funded and run by local communities.
In relation to other aspects of the welfare state, Marx and Engels argued, instead for the workers, again, to organise such provision, based on their existing organisations such as the trades unions, and Friendly Societies. Engels wrote, for example, in relation to the proposals in The Erfurt Programme, to support the measures already introduced by Bismark, and Von Caprivi, for National Insurance,
“These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3) pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”
Let us suppose, therefore, that the working-class, had adopted the proposals set out by Marx and Engels, and had created its own social insurance scheme, via its trades unions and friendly societies, so as to provide, for its requirements in old age, unemployment, sickness, as well as its requirements for education. All, of these constitute a necessary part of the value of labour-power, the cost of reproducing the labouring class from one generation to another. That the workers, cover the cost of the provision of these services via the payment of regular insurance premiums, rather than by, each individual paying for the actual services they receive is irrelevant. When workers take out house or car insurance, they do so on the basis that they may or may not, individually, come to claim against that insurance. By pooling the risk, each person taking out the insurance, reduces the amount that, otherwise, they would have to set aside to cover the worst eventuality.
In order to make sense of this “virtual” world, and to recognise it as such, requires that those within it – be it Duhring, Tegmark, or whoever – to examine it first, to categorise it, analyse it, identify its laws and processes. For the virtual humans – or in Tegmark's terminology “self-aware substructures” - in this virtual universe, things would be no different than for real humans in a real universe. Only if someone from outside this virtual universe were to examine it would it be different, as in when someone observes a computer game or simulation. But, then, who is this being outside the virtual universe? In what way would they diverge from the concept of a God?
Alternatively, we might conceive a universe that is governed purely by the laws of mathematics, but which arises spontaneously on that basis, without any external design or construction, as required by a computer model. This seems probably closest to Duhring's argument, however, he believes that these principles are absolute and eternal, whilst modern science proposes the idea of a multiverse, in which different rules apply in each.
Either way, it is not these principles, existing independently, and being simply conjured from the ether by the process of thought that is involved, but an examination of the reality (virtual or otherwise) by human beings (virtual or otherwise), in order to discover them.
“Logical schemata can only relate to forms of thought; but what we are dealing with here are only forms of being, of the external world, and these forms can never be created and derived by thought out of itself, but only from the external world. But with this the whole relationship is inverted: the principles are not the starting-point of the investigation, but its final result; they are not applied to nature and human history, but abstracted from them, it is not nature and the realm of humanity which conform to these principles, but the principles are only valid in so far as they are in conformity with nature and history. That is the only materialist conception of the question, and Herr Dühring's contrary conception is idealistic, makes things stand completely on their heads, and fashions the real world out of the Idea, out of schemata, schemes or categories existing somewhere prior to the world, from eternity, just like - a Hegel.” (p 43)
Whether that external world is a “real”, “material” world, or a virtual world, itself does not matter, so long as it must conform to a set of rules, rather than being purely arbitrary and chaotic. A world such as that depicted in various religious mythologies, in which these laws do not apply, where seas can be parted with the strike of a stick, water turned into wine, horses can fly, and so on, would clearly be different, but science, not to mention our own experience, shows that such things are, merely, fairy tales, at best, and the work of charlatans and deceivers, at worst, asThe Amazing Randi has shown.
“In fact, let us compare Hegel’s Encyclopaedia and all its delirious fantasies with Herr Dühring’s final and ultimate truths. With Herr Dühring we have in the first place general world schematism, which Hegel calls Logic. Then with both of them we have the application of these schemata or logical categories to nature: the philosophy of nature; and finally their application to the realm of man, which Hegel calls the philosophy of mind. The “inner logical sequence” of the Dühring succession therefore leads us “quite spontaneously” back to Hegel’s Encyclopaedia, from which it has been taken with a fidelity which would bring tears to the eyes of that wandering Jew of the Hegelian school, Professor Michelet of Berlin.” (p 43-4)
The real problem, after WWII, in Britain, was not any lack of demand for the coal etc., but that the industries had suffered a severe lack of capital investment to modernise them, and raise productivity, again for similar reasons to those set out above. They were, largely, family owned, private capitals, whose history was shaped by the fact that they were established by, and on the land of, the old landed aristocracy, such as the Duke of Bridgewater.
The capitalist state, therefore, did what no individual private capitalist, or even non-state, large-scale socialised capital, could do, which was to mobilise the required money-capital for such modernisation, and to be able to do so on the basis of a long investment horizon, for the return on that investment. It didn't do so out of any socialist conviction, any more than when banks were nationalised after 2008, as seen from the fact that one of the first actions following nationalisation, was to close hundreds of mines, and sack tens of thousands of miners, as well as to take over all of those mines that were operated by miners themselves as cooperatives.
But, to return to the point, and example, above, we have an output value of £1.2 billion, of which £100 million is surplus value. Let us assume that this state owned coal industry sells the output sans the surplus value, i.e. sells it without realising the £100 million of profit. Has the produced surplus value simply disappeared into thin air? No, of course not. It is simply that, the other capitals that buy coal as an input, now obtain it at a price lower than its value/price of production, and so, themselves, each, appropriate a part of that produced surplus value.
Similarly, households that buy coal for their personal consumption, to heat their homes, obtain it, at this reduced price, which means that it reduces the value of their labour-power, and, consequently, raises the amount of surplus value made by their employers. In fact, a look at the operation of nationalised industries in energy production, steel production and so on, which produced material inputs for other capitals, shows that this was, in fact, normally the case.
The same is true, in relation to the provision of labour-services such as health and social care, and education. Though, there is another difference, here. Marx and Engels were opposed, to the creation of welfare states, and the national insurance schemes, used to fund them. They were highly critical of the involvement of the capitalist state, particularly in education. They set that out in theProgramme of The First International, for example.
In a speech to the IWA, Marx made the following points,
“The question treated at the congresses was whether education was to be national or private. National education had been looked upon as governmental, but that was not necessarily the case.”
There was general agreement that the Church and government had to be kept out of education.
“Education might be national without being governmental. Government might appoint inspectors whose duty it was to see that the laws were obeyed, just as the factory inspectors looked after the observance of the factory acts, without any power of interfering with the course of education itself.”
In response to a proposal by Citizen Milner that children be educated in bourgeois political economy Marx said it,
“was not suitable to be introduced in connection with the schools; it was a kind of education that the young must get from the adults in the everyday struggle of life.”
In fact,
“Nothing could be introduced either in primary, or higher schools that admitted of party and class interpretation. Only, subjects such as the physical sciences, grammar, etc., were fit matter for schools. The rules of grammar, for instance, could not differ, whether explained by a religious Tory or a free thinker. Subjects that admitted of different conclusions must be excluded...”
“According to Herr Dühring, Philosophy is the development of the highest form of consciousness of the world and of life, and in a wider sense embraces the principles of all knowledge and volition. Wherever a series of cognitions or stimuli or a group of forms of being come to be examined by human consciousness, the principles of these configurations are necessarily the object of philosophy. These principles are the simple, or the hitherto supposedly simple, constituents of which the manifold of knowledge and volition is composed. Like the chemical composition of bodies, the general constitution of things can be reduced to basic forms and basic elements. These ultimate constituents or principles, once they have been discovered, are valid not only for the immediately known and accessible, but also for the world which is unknown and inaccessible to us.” (p 42)
This is, Engels says, an, almost, word for word account of what Duhring says. These principles, according to Duhring, are derived purely from thought, and not from an examination of the real world.
“Philosophical principles consequently provide the final complement required by the sciences in order to become a uniform system by which nature and human life can be explained. Apart from the fundamental forms of all existence, properly speaking, philosophy has only two subjects for investigation — nature and the world of man. Thus we find our material quite spontaneously arranged in three groups, namely, the general schematism of the universe, the science of the principles of nature, and finally the science of mankind. At the same time, this succession contains an inner logical sequence, for the formal principles which are valid for all being take precedence, and the objective realms to which they are to be applied then follow in the degree of their subordination.” (p 42-3)
The question, then, is where do these principles come from? According to Duhring from thought, but thought is a process, and, like every such process must have some initial conditions, material to work with. If that initial material does not come from the real world, then, where does it come from? Does it come from the mind itself? But, that would require that the brain already had this material hard-wired into it, in which case where did that coding come from? Moreover, Duhring, himself, has said that “the realm of pure thought is limited to logical schemata and mathematical forms” (p 43)
So, Duhring is left with only one logical answer to the question, which is that there must be some set of such principles existing out there in the ether, independent of Man and Nature, that are waiting to be discovered, in the same way that explorers discovered America. Except, rather than these principles existing in material form, as with America, they exist purely in the realm of ideas, as abstractions, and it is from these abstractions that all reality is, then, constructed. The closest parallel to this, today, is, probably, the concept of the mathematical universe, as with a computer simulation.
But, as I have described, elsewhere, if we take the computer simulation model, it puts human beings, including Duhring, in the position only of being a part of the simulation. As Tegmark, himself, says, “Mathematical existence equals physical existence, and all structures that exist mathematically exist physically as well. Observers, including humans, are "self-aware substructures (SASs)". In any mathematical structure complex enough to contain such substructures, they "will subjectively perceive themselves as existing in a physically 'real' world".
(Tegmark, Max (November 1998). "Is "the Theory of Everything" Merely the Ultimate Ensemble Theory?". Annals of Physics.)
Was the payment of the miners' wages, after WWII, “a deduction from overall surplus value” as Roberts claims? Clearly not. The only basis for such a claim would be if the labour of the miners was not socially necessary labour, i.e. did not produce a use-value, and so was not value-creating labour. Is that really what Roberts wants to claim? Is he saying that the coal produced by those miners, was not demanded by British capital in the steel works, power stations, on the railways, and to heat homes and factories etc.? If, the coal had not been produced, would British capital have simply done without the need for coal?
Only if the capital employed in that production would not otherwise have been employed in such production, if there was no demand for the output, and so it was financed by taxing/siphoning off a part of total surplus value that would have been utilised, more productively, in other ways, can it be argued that this was not itself capital, not, itself, value-creating, and productive of surplus-value/capital. That is true in relation to arms spending, by the state, for example, but it is not generally true of statised capital as a whole, whether it is in relation to coal and energy production, steel, vehicles, transport, or health and social-care, and education. In the late 1980's, and after, the coal industry, in Britain, disappeared, because the demand for coal had been vastly reduced, and the coal required could now be obtained much cheaper by importing it. The same was true of steel, shipbuilding etc.
Is it sometimes true that the state siphons off surplus value, to sustain production in an industry that would, otherwise, not attract capital into it? Yes, of course.
Marx described the situation in relation to forestry, for example. The turnover time for forestry is so prolonged that capital has to be advanced for decades, before a virgin forest is able to produce the trees that can be sold, and, thereby, enable the capital to realise a profit. Its one reason that the rate of profit/profit margin, on such production is so high, in order to return the average annual rate of profit. But, states need the production of trees and timber, so that, even if individual private capitals would not engage in such production, the state must do so, on behalf of capital in general. The same is true with a lot of infrastructure, not to mention, things like the development of atomic energy, space industry and so on. Only when the development of technology in these spheres has reached a stage that the value of fixed capital is massively reduced, does it become possible for non-state capitals to enter these spheres, as, now, with the rapidly growing space industries.
In fact, this is only an extension of the analysis made by Marx and Engels, in relation to the development of socialised capital, in general, in the 19th century. In other words, when production reaches a stage, where the amount of capital required, even as a minimal, let alone optimal size is so huge, private capital, is no longer sufficient. At that point, the monopoly of private capital becomes a fetter on the accumulation of capital itself. It is then supplanted by socialised capital, be it in the form of the cooperative or the joint stock company, able to mobilise the money-capital of the whole of society.
Similarly, after WWII, the British economy needed coal, steel and so on. It could have allowed those industries to disappear, and, instead have imported coal, steel and so on, which is what happened after the 1980's. But, given that, after WWII, Britain already had difficulty funding its import of food, and other basic commodities, which were rationed, it lacked the foreign currency, and the exports to finance such a massive level of imports, let alone the significance of becoming dependent on them for such strategic industries. The latter concern was removed when Britain became a member of the EEC/EU. But, in addition, had it let the coal industry collapse, at a time when it employed around three-quarters of a million workers, with many hundreds of thousands of other jobs dependent on it, in other industries, the state would have had to fund billions of pounds in unemployment benefits, and so on, which would themselves have had to be financed by taxation on surplus-value.
Thousands of self-employed farmers
gave themselves the day off to protest in London about having some of
their existing tax advantages reduced. Of course, 70% of the
population can't enjoy even that privilege, because they are
wage-workers, and have to negotiate their days off with their
employer, some of whom will themselves be farmers. The farmers were
joined by some of the people who are the ones who will really be
affected by the changes in Inheritance Tax on farms, the rich
landowners who rent out their land to tenant farmers, or who operate
farms on a commercial basis, employing professional managers. Some
of those landowners are the richest people in the country like King
Charles, or the Duke of Westminster, but also, include people like
James Dyson, who does not even live in the country, let alone work
his farm.
Prominent on the demonstration,
which was an echo of similar demonstrations in the past, for example
of the petty-bourgeois, Gilets Jaunes, in France, or the Tea Party
supporters in the US, was, of course, Nigel Farage, who along with
all of those farmers and fishing families that supported him, brought
about the Brexit that they are now suffering from, but which,
unfortunately, the rest of us are suffering from, also. Also,
prominent was Jeremy Clarkson, who admitted some time ago that he had
bought his farm, in order to be able to pass on an asset worth
several million pounds tax free to his kids. Clarkson is a good
example, of the fallacious nature of the arguments being presented.
Clarkson has made three series,
shown on Amazon, based around his farming antics. He probably made
as much money from the series as he has made from his farming
activities. The underlying theme of the series, much as with some of
his previous series involving cars, is his general idiocy and
incompetence, but from which he is saved by other people, who
actually do know what they are doing. In the case of “Clarkson's
Farm”, one of those is Caleb, who its clear was the one really
doing the farming. In addition, Clarkson employed a professional
manager, who advised him on the law, rules and regulations, and
oversaw the books. Clarkson's partner, also played a role in the
farm, running a farm shop, and so on, but, as far as I could see, the
rest of Clarkson's family were nowhere to be seen, as far as farming
was concerned.
But, the argument of the farmers is that they need to be exempt from the Inheritance Tax so as to be able
to pass down farms to their children so that these children can keep
the farm in existence. In the case of Clarkson's Farm, there is even
less indication that his children have any interest in taking over
and farming the land, let alone ability in that regard, than he does.
If there is a case for the farm being handed down to anyone on that
basis, it would be to those he employed, such as Caleb, and his
professional manager, yet, they will get nothing!
But, even assuming that an existing
farmer's children did have any kind of interest or ability in running
a farm, it is a peculiar throw back to feudalism to believe that they
should simply have an inherent right to take it over. That idea, is
just an extension of the feudal relics such as the Monarchy, and
hereditary aristocracy. It is wholly undemocratic, but also idiotic.
You may as well say that, because my dad was a tool maker, when he
retired, I should have had a right to inherit his job, whether I was
any good at engineering (I'm not), or not. That is not even the
basis of a class system, but of a caste system. No wonder so many of
these farmers say that they are making no money running their farms,
which should be an indictment of them, in itself, because it begs the
question of how many of them, simply inherited the farm and carried
on with it, with no great ability to efficiently run such a business,
and to be clear, farming is a business, like any other.
To return to the engineering
comparison, there are many small, family owned, engineering
businesses, but the owners of those businesses do not enjoy the same
tax privileges that farmers enjoy. When the owners die, unless they
have made use of the many tax loopholes that exist to be able to pass
on property, which make Inheritance Tax, really, just a voluntary
tax, their estate would pay IHT, like everyone else, at a rate of
40%. Indeed, many farmers themselves do not enjoy the tax privileges
that landowners enjoy, either, because only 54% of farms are
owner-occupied, with 14% fully tenanted, and 35% mixed tenure. So,
if you are a tenant farmer, you have no farm to pass on.
The simple answer for farms is to
operate them as companies, as with most other businesses in a modern
economy, and for that company to then own the assets, which remain
with it in perpetuity. There would, then, be no asset to pass on,
and the company would simply employ workers, as either professional
managers, or labourers, who would be paid a wage, as with any other
business. That would mean that it would be more likely that farms
would be run professionally and more efficiently, reducing the costs
of agricultural products, and removing the need for subsidies and
other advantages. As with all other businesses, the other
consequence of that would be that the less efficient farms would be
taken over by larger more efficient businesses, thereby, obtaining
economies of scale.
Blue Labour in its normal
duplicitous manner, as it tries to appeal to the contradictory
interests of its unstable electoral coalition, has ended up falling
between two stools. It tried to present this change in progressive
terms, but, if it really had been a progressive measure, it would
have facilitated that concentration of capital into larger, more
efficient farm businesses, by removing the insidious privileges
enjoyed by farms as against every other form of capital, or asset.
In fact, it did not do that, because, it has tried to stick with its
own petty-bourgeois, nationalist mindset of privileging the small
business class, of which the family farm is the epitome. As it has
now had to admit, the reality of its proposal is that, those small
family owned farms, will still be able to be passed on tax free up to
a vale of £3 million, and with further continued exceptions and
privileges even after that.
The arguments of these reactionary
small farmers, the majority of whom (60%) voted for the idiocy of
Brexit, and most of whom vote Tory or worse, are unsustainable, and
certainly unsupportable. The claim that farms will have to be sold,
and so would risk future food production is nonsense. If farms are
so inefficient that those that inherit them can't make a profit, or
can't pay the due tax, then its time they did close down, and were
taken over by someone who will run them professionally and
efficiently. There are plenty of professional, trained farmers who
would be prepared to do so, but, also, there are plenty of larger
farm business that would simply swallow them up, and produce on a
larger scale, and, thereby more efficiently.
Of course, as I wrote, some time
ago, for my part, I would scrap IHT altogether, and simply impose
Capital Gains Tax at the same rate as Income Tax, on the recipients.
That would encourage large estates of all types of assets to be
dissipated, and would ensure that the current voluntary nature of IHT
was ended.
“The writings of Herr Dühring with which we are here primarily concerned are his Kursus der Philosophie, his Kursus der National- und Sozialökonomie, and his Kritische Geschichte der Nationalökonomie und des Sozialismus. The first of these particularly claims our attention now.” (p 35)
Engels emphasises the pompous nature of Duhring and his intellectual claims. Thus, on the first page of this work, Duhring proclaimed himself to be,
“the man who claims to represent this power” (philosophy) “in his age and for its immediately foreseeable development” (p 35)
This is not the claim of a mere mortal, who might consider that they have uncovered some important truth about the world they live in, but the claim of a God, or Superman, to have unlocked all truth, absolute truth, for all time.
“Many people, even before Herr Dühring, have thought something of this kind about themselves, but — except for Richard Wagner — he is probably the first who has calmly blurted it out. And the truth to which he refers is,
“a final and ultimate truth”. (p 35)
As such, Duhring cannot limit his scope to current reality, but extends it to all possible realities. He presents it as a materialist philosophy, and yet this presents an obvious contradiction in terms of these other, potential, future realities, i.e. realities that do not physically exist.
“the natural system or the philosophy of reality... In it reality is so conceived as to exclude any tendency to a visionary and subjectively limited conception of the world”. (p 35)
Every philosophy is subjectively limited by the individuals that develop it, because their own thoughts and mental processes are influenced by their own perception of reality. A scientific method seeks to, objectively, identify facts, and laws of motion, but must, itself, be subject to this same limitation. Moreover, as Marx describes, a distinction must be made between Natural Laws, such as The Law of Gravity, The Law of Natural Selection, or The Law of Value, as against laws that are themselves historically limited and conditioned, such as the laws of capital, or wages, or commodity production and exchange.
Duhring seeks to present his philosophy as free from any such limitations, and to have identified Absolute Truth, “although so far we do not see how this miracle should come to pass.” (p 36)
The basic element of this, for Duhring, is to seek only scientific truth. As he puts it,
“From its “really critical standpoint” it provides “the elements of a philosophy which is real and therefore directed to the reality of nature and of life, a philosophy which cannot allow the validity of any merely apparent horizon, but in its powerfully revolutionising movement unfolds all earths and heavens of outer and inner nature” . It is a “new mode of thought”, and its results are “from the ground up original conclusions and views ... system-creating ideas ... established truths”.” (p 36)
In which case, there would be no place for social laws, or historically specific laws. Yet, modern natural science has identified that, even truths about this reality, this Universe, are not, necessarily, true for alternative realities, other universes. Even within this universe, things once thought to be absolute, such as time, are now known to be relative. The latest science even conceives that, at the start of the universe, the speed of light may have been different to what it is now.
Having identified this key to absolute truth, therefore, Duhring felt able to present his own fully worked out schema of the future socialist society, conforming to it, and which could only conform to it, according to Duhring.
“We have given the above anthology only for the purpose of showing that we have before us not any ordinary philosopher and socialist, who merely expresses his ideas and leaves it to the future to judge their worth, but quite an extraordinary creature, who claims to be not less infallible than the Pope, and whose doctrine is the one way to salvation and simply must be accepted by anyone who does not want to fall into the most abominable heresy.” (p 37)
Unfortunately, combined with those traits of the other main strand of socialist thought, that of Lassalle, who Marx described as the model of the future socialist dictator, we have many of those elements to be found in Stalinism, but, also, in many of the small socialist micro-sects that have proliferated.
This was not an example of one of the many works of well-meaning individuals, Engels says, who set down their ideas on paper, with varying degrees of lucidity, as they themselves sought to make sense of the world, and offer some solutions to its problems.
“On the contrary, Herr Dühring offers us principles which he declares are final and ultimate truths and besides which any other views views are, therefore, false from the outset; he is in possession not only of the exclusive truth but also of the sole strictly scientific method of investigation, in contrast with which all others are unscientific. Either he is right — and in this case we have before us the greatest genius of all time, the first superhuman, because infallible, human being. Or he is wrong, and in that case, whatever our judgment may be, benevolent regard for his possibly good intentions would nevertheless be the most deadly insult to Herr Dühring.” (p 37-8)
Duhring's pomposity was also manifest in his dismissal of all those that had preceded him. Engels quotes his statements in respect of the few even considered worthy of his mention.
““Leibniz, devoid of any better sentiments ... that best of all courtier-philosophisers”
Kant is barely tolerated; but after Kant everything got into a muddle;
there followed the “wild ravings and equally inane and windy stupidities of the immediate epigoni, namely, a Fichte and a Schelling ... monstrous caricatures of ignorant natural philosophising ... the post-Kantian monstrosities” and “the delirious fantasies” crowned by “a Hegel”. The latter used a “Hegel jargon” and spread the “Hegel pestilence” by means of his “method which was unscientific even in form” and by his “crudities”.” (p 38)
“Darwinian semi-poetry and dexterity in metamorphosis, with gross-minded narrowness of comprehension and blunted power of differentiation ... In our view what is specific to Darwinism, from which of course the Lamarckian elements must be excluded, is a piece of brutality directed against humanity.” (p 38)
Not surprisingly, for someone who believed they had the only true version of socialism, it was the socialists who fared worst in Duhring's criticism.
“With the exception at most of Louis Blanc — the most insignificant of them all — they are sinners all and sundry, and they fall short of the reputation which they should have before (or behind) Herr Dühring.” (p 38-9)
Duhring did not just dismiss their ideas, but also engaged in character assassination, and an almost Trumpian play on their names.
“Herr Dühring characterises the utopians according to their names, with devastating wit; Saint-Simon — saint (holy), Fourier — fou (crazy), Enfantin — enfant (childish); he only needs to add: Owen — o woe! and a very important period in the history of socialism has been condemned - in four words, and anyone who has any doubts about it “should himself be classed under some category of idiot”.” (p 39-40)
And, Duhring, of course, had to address the socialists of his time, the most notable being Lassalle and Marx, which he did in similar vein. And, of these characterisations, Engels note,
“For the moment — we will guard against voicing any doubt as to their deep-rootedness, as we might otherwise be prohibited from trying to find the category of idiot to which we belong. We only thought it was our duty, on the one hand, to give an example of what Herr Dühring calls
“the select language of the considerate and, in the real sense of the word, moderate mode of expression”
and on the other, to make it clear that to Herr Dühring the worthlessness of his predecessors is no less established a fact than his own infallibility. Whereupon we sink to the ground in deepest reverence before the mightiest genius of all time — if that is how things really stand.” (p 40-41)
Blue Labour, in line with its petty-bourgeois, nationalist ideology is seeking salvation by returning to the ideas of deregulation, previously advocated by the likes of the Miseans, and manifest in the short lived government of Liz Truss that represented the high-point of that trend in Britain. It was, of course, portrayed by the likes of Truss, and the Miseans, as one of the “benefits” of Brexit, to be able to “take back control”, and turn Britain even more into a casino economy, rather like the days of Batista's Cuba. It is, as with Thatcher, in the 1980's, where petty-bourgeois reaction meets, conservative social-democracy (neoliberalism).
In the 1980's, Thatcher began as a continuation of that conservative social-democracy, hence the initial enthusiasm for the development of the EU single-market, seen as a means of creating a much larger market, with common rules and regulation (a level playing field for capital), and so, also, considerably reduced costs that would boost profits, and, thereby, the revenues of the owners of fictitious capital (dividends/interest and rents). But, by the end of the 1980's, the growth of the petty-bourgeoisie, and its increasing social weight, began to be seen in the Tory Party, and Thatcher, who had championed the ideas of Hayek, as a means of undermining the position of workers, and forcing employers to confront them, was driven, inevitably, into its logical extension. The battle raged on in the Tory Party, from then to today.
As Marx and Engels described, even 150 years ago, planning and regulation is not some anathema to large-scale capital, but is central to it. It is what distinguishes that large-scale capital from its immature predecessors, whose remnants linger on in the form of the small private capitals, family businesses, and self-employed, i.e. the petty-bourgeoisie. In the late 1980's, as productivity rose sharply, as a result of the microchip revolution (itself a response to the crisis of overproduction of capital of the 1970's), it caused a huge jump in the rate of profit, as wages fell, with labour being replaced. The value of constant capital dropped massively, as a result of rising productivity, and fixed capital suffered a huge moral depreciation. Not only did a smaller proportion of current output need to go to replace the consumed constant and variable capital (a release of capital), but also meant that any given amount of profit would buy an increased quantity of both of constant and variable-capital, Marx's definition of the rate of profit. It meant that realised profits hugely exceeded the requirements for capital accumulation. Interest rates, inevitably fell, and so asset prices rose.
With labour being replaced, and wages falling, aggregate demand was constrained, and only sustained as a result of a huge increase in the availability of credit. Household debt rose astronomically, not just in Britain, but in the US too, and that was accompanied by further growth of debt of these economies, as deindustrialisation saw a shift of material production to Asia and elsewhere. In both the US and UK, under Reagan and Thatcher, respectively, credit controls were removed, and financial regulation was scrapped, setting the conditions for an even bigger growth of debt, but also, for financial speculation that blew up the asset price bubbles in property, shares, bonds, and an exotic and growing array of derivatives based upon them. It was the foundation for the financial crises of 1997, 1998, 2000, and 2008.
As with the 1929 stock market crash, which resulted in the introduction of the various financial regulations and credit controls that were scrapped in the 1980's, the 2008 global financial crash, and need to bail out the banks and financial institutions, led to the reimposition of some tentative regulation, but a ruling class that had become addicted to capital gains on its already inflated paper wealth, rather than the revenues (interest/dividends, rents) it obtained from those paper assets, could not countenance any severe restrictions that would prevent those asset prices from being further inflated, as central banks pumped increasing amounts of liquidity into them, via QE, and governments constrained economic growth, via austerity, to prevent the underlying rise in the demand for capital from causing interest rates to rise.
Conservative social-democracy, which bases itself on the interests of that ruling-class, and its form of property – fictitious-capital – as opposed to progressive social-democracy, which bases itself on the interests of real, socialisedindustrial capital, pursued that course, not only under Thatcher, and then Major, but also under Blair and Brown. The same was seen in the US, and across the EU, and Asia. But, as I have set out, elsewhere, it had a very definite shelf-life, and sowed the seeds of its own destruction. The warning shock came in 2000, and was followed by the global financial crisis of 2008, which spelled its end.
The ruling class, and its conservative socal-democratic representatives had no solution, other than ever more surreal injections of liquidity to devalue currencies, and inflate asset prices, as well as an obvious undermining of real capital itself, via austerity and other methods of reducing economic growth, trade and capital accumulation, so as to restrain the demand for capital, and so interest rates. All of them, eventually failed to achieve that end, even the physical lockdown of economies, on the pretext of COVID, which itself had the consequence that governments felt impelled to provide income replacement schemes, financed by even more liquidity injections, which destroyed currencies even further, producing not just an inevitable commodity price inflation, but also, a surge in demand, and demand for additional capital, once the lockdowns had to be lifted.
The ruling class has run out of road, but the working-class, the collective owners of real socialised capital, neither understands its position as owners of that capital, nor yet has the class consciousness to demand its rightful control over it. It certainly lacks any mass workers' party able to represent its interests in that regard. It has been left in the old position of trades union consciousness, simply bargaining within the system, albeit, now, in conditions far more favourable than over the previous 40 years, as a result, now, of a growing relative shortage of labour.
A lot has been made of the fact that earnings have not been rising, but, as I have set out, previously, Marx describes the way that, initially, whilst hourly wages do not rise, certainly not in real terms, those wages do rise, because workers work more hours, including overtime, and, as employment rises, more members of households are employed, bringing in additional income. So household income rises, even while individual hourly wages may not. That is what happened in the 1950's, and early 60's.
A look at the US, shows a clear distinction in how Democrat voters – mostly wage workers – viewed the state of the economy, as against Republican voters – largely petty-bourgeois. Democrat voters saw the economy as having done much better than did Republican voters, and that is explained, not because of a political bias, of one group looking through rose-tinted glasses, as compared to the other. It is a reflection of the fact that, in conditions of a growing relative labour shortage, wage workers have, overall, seen an improvement in their household income, whereas the petty-bourgeoisie, the small business people, self-employed etc., have seen a clear deterioration.
The petty-bourgeoisie cannot take advantage of labour shortages to increase its income, because its income dos not come from wages, but from the sale of its goods and services. While increased demand has meant it sold more, inflation has raised its own production costs even more. What is more, in so far as it employs a small number of workers itself, it has seen the wages of those workers rise, raising its costs, and squeezing its small profits even further. It is that petty-bourgeoisie that turned out for Trump, whilst the Democrats, who were seen, under Biden/Harris, to repeatedly intervene on behalf of big capital to force workers back to work, and to accept contracts, at the same time as siding with racist cops, and a Zionist genocide, failed to turn out 12 million of their voters.
Those same processes are seen in Britain and Europe too. The consequence is far more pronounced in Britain, as a result of Brexit. Britain no longer has the protection of the EU, has cut itself off from its largest market, further increasing its own costs, and is 3,000 miles away from the US, making any thought of it becoming the 51st state, or benefiting from any potential trade deal with it, impractical.
The obvious solution for Britain is to re-join the EU. The Governor of the Bank of England, has said that Britain should try to get closer to it, but as James O'Brien, commented, after his speech, exactly what does that mean? Its like leaving a club, and then asking to still use its facilities.
If Britain wants the benefits of the single market and customs union, then, its necessary to join them, and that means accepting the terms of membership, and all the rules and regulations. But, then, why do that, but not be part of the EU itself, so as to have a say in formulating those rules? But, Blue Labour has set its face against any such approach. It is set adrift, and the consequence is seen in the fact that, having taken over an economy that was growing, it now presides over one that has stagnated, since it took office, and, in September, has actually seen GDP fall! That is disastrous for a government that set all of its eggs in the basket of economic growth, as the basis of its entire programme.
The Tories, of course, claim that it's Blue Labour's tax policies that are to blame. Yet, Blue Labour has failed to actually implement any kind of real tax rises that could have provided it with the revenues to finance its meagre programme for investment in infrastructure. As I wrote before the election, it is somewhat constrained in that, again, precisely, because of Brexit. Large firms facing higher taxes in Britain can simply move to the EU, whereas there is little benefit in such firms already operating in the EU, moving to Britain, even if they face higher taxes in the EU, simply because it is a much bigger market, and the costs of business are much lower, offsetting any marginal tax differences. The position in respect of wealth taxes on individuals, is even more acute, as such individuals, can move anywhere in the world to live.
So, its no surprise, therefore, that Blue Labour has reached for that old petty-bourgeois ideology of deregulation once more, as it seeks to finance its plans without raising taxes. Speaking to bankers, Rachel Reeves said that the regulations introduced after 2008 were now too much, despite the minimal nature of those regulations. The same petty-bourgeois approach has been seen in Blue Labour continuation of the Tory policies in respect of Free Ports and so on, where all sorts of cowboys can set up, and avoid even the most minimal regulations.
Blue Labour's proposals for pension funds have all the hallmarks of what happened prior to 2008, in respect of the creation of mortgage backed securities, and other such investment vehicles. The idea of the MBS was that, by packaging a large number of individual mortgages into one security, the small number of individual mortgages that were high risk (that turned out to be the mortgages given to people who had no means of ever repaying them) would be balanced by a larger number of very safe mortgages, so that a bank or other speculators could buy these MBS, thereby, providing the finance to the mortgage companies who would then be able to hand out a much larger number of mortgages. Its what bookies do when they lay off big bets to a series of other bookies.
The sub-prime crisis showed the problem with that. When interest rates started to rise, in the early 2000's, as the global economy grew rapidly, and the demand for capital rose, all of those sub-prime mortgages started to default. When property prices, also fell, the mortgage providers couldn't even get back the value of their loans from selling the house, and the more houses went into a fire sale, the more it depressed property prices further. Eventually, it became apparent that the “good” mortgages, within the MBS were overwhelmed by the bad. The rest was history.
Blue Labour's proposal to create much bigger “mega” pension funds, in itself, is unobjectionable. Bigger funds, mean that overhead costs of administering the funds, and so on, are proportionally less. It does mean that, such larger funds can play the averages, so as to put money into some higher risk ventures, with higher returns. But, the experience of 2008, and of the MBS etc., shows the risks. Another example is that of the Co-op Bank, which took over Britannia Building Society, which also had made a lot of bad loans to people to buy property. These were institutions we were told belonged to their members, and yet the Co-op Bank went bust, and subsequently, it was seen that it had engaged in behaviour that its members, and certainly its workers, would never have condoned, if they had actually had democratic control over it.
There is a good reason that the large majority of ordinary workers who put their savings into ISA's, each year, put most of that money into cash ISA's, rather than into the share or bond ISA's, despite the fact that the latter provide higher returns. It is that they have seen the earlier periods of such higher returns on shares and bonds, which, then turned into large capital losses. Indeed, one reason that regulations were put in place to require pension funds to put money into long-term government bonds, was to ensure a safer long-term source of them funding future pension liabilities. The other reason was, of course, that at a time when those bonds, were themselves over priced, as a result of QE, it pumped further liquidity into them, in the hope of preventing a fall in their price. If workers had control over their pension funds, which, of course, they should, it might well be the case that they would put some of that money into some more risky ventures, but they would ensure that such risk was minimised.
Moreover, workers have a reason to use such funds to actually invest in real capital accumulation, as opposed to what most pension funds and other financial institutions do, which is simply to buy the shares or bonds of companies. The vast majority of the money that goes into the purchase of such shares and bonds, is not used to finance real capital accumulation. It simply changes the ownership of existing paper assets, and acts to push up their price. Workers, by contrast, would have an interest in using the money in their funds to directly finance the purchase of real capital, i.e. the building of new factories, offices and so on, as well as machines, materials, and labour-power.
That real investment is, in fact, anathema to the financial institutions, because it directly produces economic expansion, drawing additional liquidity into the real economy, and away from financial speculation. When the financial institutions, and press talk about “investment”, what they really mean is not investment at all, but only the purchase of financial assets, i.e. gambling on the prices of those assets rising.
Of course, Reeves and Blue Labour are not going to propose giving workers their rightful control over their pension funds, any more than they are going to give them their rightful control over their socialised capital. Reeves simply wants to use the hundreds of billions in those pension funds to finance her governments spending plans, with workers having no say in the matter at all. The media have claimed that the state stands behind these local government pension funds, but that is not true. Like any other company pension fund, both employer and worker pay into them, and the money is managed via a board, and “invested” into various financial assets, usually via a financial institution. The future pensions are paid out of the fund created by these investments, not by the state. However, if Blue Labour seeks to pressure, in some way, these new mega funds to finance more speculative ventures, workers would have every right to demand that the state underwrite any losses sustained as a result of it.
The contradictions in Blue Labour's agenda become more obvious each day, as it pursues that petty-bourgeois, nationalist programme. The Blair-right, former advisor John McTiernan, the other day, caused some concern in the ranks of Blue Labour, when he responded to the whining of small farmers about losing some of their tax advantages, in the budget, by saying that the government should treat them in the same way that Thatcher treated the miners. Such straight talking is not the method for Blue Labour, especially as it talks out of both sides of its mouth, in order to lie to each component of its shaky electoral coalition simultaneously. But, of course, McTiernan is basically correct. The Tories, and the petty-bourgeoisie are quick to point out that workers cannot expect the state to keep them in work, in industries that are not profitable.
Brexit, which many small farmers backed, as with many small fishing businesses, have, now, found the reality of the consequences of that action. But, also, those small farms, and fishing enterprises, are not rational, efficient businesses anyway. Just as many other small businesses disappeared over the last 200 years, because they are not competitive compared to large-scale capital, so too that applies to farming and fishing. They have been kept going by the state, and, indeed, by the EU, via the CAP, where most of them should have been merged into much larger businesses long ago.