Anti-Duhring, Part III – Socialism, II – Theoretical - Part 9

Marx was only led even to this conclusion, in relation to the value of the materials, because he saw the reduction in its value, being limited by its nature as derived from agriculture.

“... some kinds of raw materials, such as wool, silk, leather, are produced by animal organic processes, while cotton, linen, etc., are produced by vegetable organic processes and capitalist production has not yet succeeded, and never will succeed in mastering these processes in the same way as it has mastered purely mechanical or inorganic chemical processes. Raw materials such as skins, etc., and other animal products become dearer partly because the insipid law of rent increases the value of these products as civilisation advances. As far as coal and metal (wood) are concerned, they become much cheaper with the advance of production; this will however become more difficult as mines are exhausted, etc.”

(ibid)

But, as I have set out elsewhere, not only does Marx set out some of the factors that contradict that conclusion, such as the reduction in waste, the use of new materials, improved use of auxiliary materials (particularly energy), but the introduction of synthetic materials, changes in the types of commodities and so on, mean that even this argument for a rising organic composition does not hold. Still less does it hold, in economies where the main production of value and surplus value, has moved to service industries rather than manufacture.

So, there is, really, no basis for arguing that c rises relative to v + s, in the long run, and so no basis for any significant tendency for the rate of profit to fall. However, there is, for these same reasons, a very good basis for there being a regular cycle in which the rate of profit rises and falls, because it is squeezed by a rise in relative wages, as industrial capital grows faster than the supply of labour/social working-day, a crisis of overproduction of capital relative to labour, as Marx describes it in Capital III, Chapter 15.

“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.”

If we go back to Marx's analysis of relative surplus value in Capital I, the first form, as set out, has limited life, because other producers adopt the same machine/technology. However, Marx explains that relative surplus value has a second form. If the value of wage goods fall, as a result of the rise in productivity, a smaller portion of the working-day is taken up as necessary labour. A larger proportion is, now, surplus labour. The rate of surplus value rises. For this to resolve a crisis of overproduction of capital, relative to labour supply it must be a generalised technological revolution, not just a piecemeal change in one or two industries. That is what happens with the introduction of steam engines, electric motors, internal combustion engines, assembly lines, and with microchips.

After each of these generalised technological revolutions, the crisis of overproduction of capital, relative to labour, reverses. It becomes a crisis for labour, which is, now, again, overproduced relative to capital. A relative surplus population. The surplus or net product rises, relative to the gross product, creating a period of relatively slower growth. As profit, the money equivalent of the surplus product, rises, whilst gross output grows at slower pace, the rate of interest falls (because the supply of this loanable money-capital, thereby, rises, relative to the demand for it for capital accumulation). It causes asset pries and speculation to rise, leading to asset price bubbles.

Back To Part 8

SNNS 61

 

Northern Soul Classics - Reach Out, I'll Be There - The San Remo Strings

 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 8

But, did this crisis that industrial capital faced then mean that there was no way out for it, and that the mass of profit must fall, as Smith and Hodgskin believed? Would it mean that, even if it escaped this immediate crisis, it would only lead to a bigger crisis and more rapid series of crises, leading to its collapse, as many modern catastrophists have argued? No, Marx explains.

Ricardo noted that when wages rise so that it is no longer cheaper to use women to pull canal barges, industrial capital turns to the use of horses, which are, in fact, more efficient, especially when barges become bigger and heavier, as more freight is moved around. Industrial capital does not engage in major technological revolutions, which involve it in greater immediate expense, unless it becomes worthwhile to do so. But, this introduction of technology/machines shows again why the idea of a relatively fixed labour supply, leading to falling profits, whilst valid in the medium term, is false in the long-term. If labour productivity rises, less labour is required, or put another way, its as though one worker is now equivalent to 2, 3 or more workers. In Capital I, Marx explains the way this higher productivity results in the creation of relative surplus value in two ways.

Firstly, if one producer introduces some new machine that raises the productivity of the labour they employ, it has this effect of making their labour like complex labour. In other words, it is as though the new value they create in an hour is equivalent to 2,3 or more hours labour of workers employed by other producers of that commodity. That is so because they produce 2,3, or more times the quantity of those commodities, all of which sell at the market value. Its the same as where a farmer has the benefit of more fertile land.

But, this particular advantage disappears when other producers of the commodity introduce the same machine – just as when the use of drainage and irrigation etc., raises the fertility of all land. Now, all of that labour reverts back so that it all produces an hour of new value in each hour worked. However, far more commodities are now produced in that hour so that the unit value of each commodity falls. This, in fact, is central to Marx's explanation of the real basis of the long-term tendency for the rate of profit to fall.

In other words, the value of a commodity is comprised of the value of the constant capital (materials and wear and tear of fixed capital) consumed in its production, plus the new value created by labour in its production. The latter resolves into variable capital (the value of the commodities required to reproduce labour-power) and surplus-value/profit. So, if this new value falls, as a proportion of the value of each commodity unit, as a result of the rise in productivity, but the value of constant capital (c) remains the same, then the value of constant capital rises relative to the new value created (v + s). Unless s rises relative to v (a higher rate of surplus value), s falls relative to c, and to c + v, i.e. the rate of profit falls, even if the total mass of profit rises.

But, in Theories of Surplus Value, Chapter 23, Marx points out, again, that this effect is, also, grossly overstated. Firstly, he points out that where there is a generalised technological revolution, the rise in productivity reduces the value of all those commodities that comprise the constant capital.

If “one worker produces a spinning-machine whereas previously he produced only a spindle, then the ratio of value remains the same...”

A spinning machine, spins much more yarn than a spinning wheel, so the value of the machine is much less per unit of output. What increases is the amount of material spun, in terms of its physical quantity/use value, but, as he noted, it is not these physical quantities that ultimately count, but the relationship of their respective values.

“For us, however, the main thing is: does this fact explain the decline in the rate of profit? (A decline, incidentally, which is far smaller than it is said to be.) Here it is not simply a question of the quantitative ratio but of the value ratio.”

The technical composition of capital is what lies, objectively, behind the rise in the organic composition required to drive the long-run tendency for the rate of profit to fall, i.e. rising productivity means that the physical quantity of material processed rises relative to both the labour required to process it, and the fixed capital which brings about the higher productivity. But, that ignores the role of that rise in productivity in relation to the value of that material itself.

“The cheapening of raw materials, and of auxiliary materials; etc., checks but does not cancel the growth in the value of this part of capital. It checks it to the degree that it brings about a fall in profit.”

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Let Piddington Go

I wrote a while ago that the logic of nationalism leads to a break-up of the nation state.  In the last few days that has been born out.

On the one hand, we have the nationalists in Scotland, Wales and Northern Ireland, demanding that the British nation state be broken up, reversing the main progressive development of the 18th/19th century, largely now driven by the reality imposed by the reactionary English nationalism that led to Brexit.  In England itself, that same failure of Brexit leads to a similar drive towards regionalism, provincialism and parochialism, as seen in the attempts to create regional and metropolitan fiefdoms in the guise of elected mayors.

The ultimate idiocy of that has now come in the form of the referendum in Piddington, again driven by the inevitable failure of Brexit to "bring back control", leading the reactionary bigots, and racists to put forward such a solution rather than have refugees housed in their midst.  The well-healed of the area, of course take the same attitude to many other issues, wanting all the benefits of their rural idylls, without any of the attendant infrastructure.

Well, we should let them go, as they claim to want.  The sooner the better.  Let them then have to pay for their own infrastructure, energy supplies, water supplies, waste services, NHS and so on.  And, of course, they would have no rights to employment outside their borders, or even right to cross that border.  Brexit proved a disaster within weeks, and continues to be so.  The proponents of a Passport to Piddington, would not even get that project off the ground.

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 7

In a joint-stock company/corporation, these same laws of capital apply, but the nature of the ruling-class, today, as a class of parasitic owners of fictitious-capital, brings about the new contradictory social relations referred to earlier. Industrial capital, to be competitive, in the global market, must continually accumulate, and each individual capital must seek to accumulate at a faster pace than its competitors. To do that, it must make more profits and/or retain more profit to use for the purpose of accumulation.

But, the accumulation of industrial capital, as Marx describes in Theories of Surplus Value, Chapter 21, is faster than the growth of the population (labour supply/social working-day).

“We have seen that over 20 years, capital increased sevenfold, whereas, even according to the “most extreme” assumption of Malthus, the population can only double itself every twenty-five years. But let us assume that it doubles itself in twenty years, and therefore the working population as well. Taking one year with another, the interest would have to be 30 per cent—three times greater than it is. If one assumes, however, that the rate of exploitation remained unchanged, in 20 years the doubled population would only be able to produce twice as much labour as it did previously (and [the new generation] would be unfit for work during a considerable part of these 20 years, scarcely during half this period would it be able to work, in spite of the employment of children); it would therefore produce only twice as much surplus labour, but not three times as much.”

Marx uses the term “interest”, here, rather than profit, because he is analysing the argument of Hodgskin, who used that term.

Adam Smith had noted this point, and extrapolated from it the conclusion that the market price of capital (profit) must fall, and the price of labour (wages) must rise, eventually eliminating profit completely. It formed the basis of his explanation for the long-term falling rate of profit. As Marx sets out, in Theories of Surplus Value, Chapter 21, early advocates of labour such as Hodgskin, made a similar argument. Marx sets out why this explanation for the long-term tendency for the rate of profit to fall, which relies on the mass of profit itself being reduced, absolutely or relatively, compared to wages, is wrong. Basically, the argument that the mass of profit must fall, as it hits a buffer of inadequate labour supply, assumes that the labour supply, itself, is relatively fixed. In the long-term, it isn't. Ricardo had already set out what was wrong with that aspect of Smith's argument. Ricardo noted that, where labour is plentiful, capital will use it inefficiently, because its cheap. He uses the example of women pulling canal barges, because they were cheaper than horses.

However, at some point, as industrial capital expands, this existing supply of cheap labour does, indeed, as Smith had argued, begin to run out. The demand for labour rises, and, as seen in Britain, and every subsequent industrialisation, the supply is increased, as labour displaced from the land is drawn into the towns. Nor is the supply of labour only a question of the number of available labourers. It is also a question of how long each worker works. In other word, the labour supply/social working-day, is comprised of the working-day multiplied by the number of workers.

So, industrial capital increases the labour supply/social working-day by, on the one hand, drawing into the workforce all of these latent reserves from the countryside, and, on the other, it, also, lengthens the working-day to previously unheard of levels. So, the mass of surplus value rises, as a result of this rise in absolute surplus-value. In Capital I, drawing extensively on the work done by Engels in The Condition of The Working Class, Marx describes this process, and the way industrial capital used this cheap labour wastefully, until it was used up.

"Agents were appointed with the consent of the Poor Law Commissioners. ... An office was set up in Manchester, to which lists were sent of those workpeople in the agricultural districts wanting employment, and their names were registered in books. The manufacturers attended at these offices, and selected such persons as they chose; when they had selected such persons as their ‘wants required’, they gave instructions to have them forwarded to Manchester, and they were sent, ticketed like bales of goods, by canals, or with carriers, others tramping on the road, and many of them were found on the way lost and half-starved. This system had grown up unto a regular trade. This House will hardly believe it, but I tell them, that this traffic in human flesh was as well kept up, they were in effect as regularly sold to these [Manchester] manufacturers as slaves are sold to the cotton-grower in the United States.... In 1860, ‘the cotton trade was at its zenith.’ ... The manufacturers again found that they were short of hands.... They applied to the ‘flesh agents, as they are called. Those agents sent to the southern downs of England, to the pastures of Dorsetshire, to the glades of Devonshire, to the people tending kine in Wiltshire, but they sought in vain. The surplus-population was ‘absorbed.’”

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 6

In both cases, it forms no part of the circuit of industrial capital. 

As Marx sets out in Capital II and III, this loanable money-capital/interest-bearing capital, sits outside the circuit of industrial capital. It is why this fictitious-capital play no part in the determination of the average industrial rate of profit, and obtains not this average rate of profit (or, indeed, any “profit”), but only interest as a deduction from profit. Far from shareholders being just a continuation of the old, private industrial capitalists, they are, for this very reason, as Marx describes, in Capital III, antagonistic to the interests of industrial capital, and particularly, the current, collective owners of socialised, industrial capital, i.e. “the associated producers”.

Where the private industrial capitalists were antagonistic to workers, as workers, because higher relative wages means lower relative profits, the owners of fictitious-capital (shares, bonds) are antagonistic to workers, not as workers, but as, objectively, the owners of socialised industrial capital. The ruling-class, as owners of shares and bonds, seek to maximise the amount they get as interest/dividends, just as landlords seek to maximise the amount they get as rent, but that means the smaller the amount of profit retained for capital accumulation, i.e. profit of enterprise. It is why the ruling class seeks to retain control over that socialised capital, so that it maximises its revenues – not, now, profit but interest/dividends and capital gains – and appoints Directors to that end.

The workers – associated producers – as collective owners of the socialised capital, as Marx notes in Capital III, Chapter 27, resolve the contradiction between capital and labour by becoming their own capitalist. That is most clearly seen in the worker cooperative. In the worker cooperative, the workers exercise democratic control over that capital, and they also appoint their own day to day managers to carry out the role of “functioning capitalist”, who, to use Marx's description is like an orchestra conductor.

But, even in the worker cooperative, the means of production are still capital, and must remain so as long as commodity production continues to determine the nature of the economy. Each company/cooperative continues to produce commodities for sale, and so competes against other commodity producers. It is exchange value that determines production, not use-value. In order to be competitive, each company must keep the individual value of what it produces below the market value.

It does that by all the same means that every other capital does. Wages cannot rise above the value of labour-power, for example. If they do, then, the rate of surplus value falls. The firms profit falls below the average profit. Over time, this lower level of profit means the cooperative cannot accumulate the capital required to expand production; it loses market share.

The other way a capital stays competitive, even if it does pay higher wages, is precisely this accumulation of capital. In Capital I, Marx notes that, in the 19th century, although British textile workers' wages were 50% higher than those in Europe, British textiles were always cheaper than those produced in Europe, and British profits were also higher. The reason was that the larger scale of production, in Britain, the greater number of machines, and more advanced nature of those machines, meant that, even with higher wages, unit labour costs, and also, unit fixed capital costs, were much lower.

But, in order to accumulate that capital in the first place, it is necessary to maximise profit, so as to be able to buy more and better fixed capital. In a capitalist economy, a worker cooperative is still bound by these laws of capital. The difference for the cooperative is that, in seeking to maximise its rate of surplus value/exploitation, it does so for this purpose of being able to accumulate capital, and so ensure its competitiveness, and longer-term future. Soviet Russia faced the same situation in 1917.

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SNNS 60

 

Northern Soul Classics - I'll Love You Forever - The Holidays

 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 5

In the case of socialised industrial capital, the borrower is the company itself, whether a joint-stock company, a worker cooperative, or a consumer cooperative. The company is itself a legal entity, the equivalent of a person. What it certainly is not is the people who lend it money, and whose rights and interests are not only distinct from it, but antagonistic to it. It borrows the money, and it is the owner of what it buys with that money. However, the company can only be those employed within it. Decisions to borrow money, to buy this or that means of production can only be made by humans, i.e. the associated producers within it. It is they who should exercise democratic control over it, and not shareholders.

There is no reason why shareholders, who simply lend money to the company should have any right to exercise control over what the company does with the money it has borrowed from them. Indeed, banks and bondholders, also, lend money to companies, but have no right to exercise any control over the company. Landowners lend land to companies, but that gives them no right to a vote at company meetings. Owners of equipment loan equipment to companies, but that gives them no right to a say in appointing directors, of determining company policy.

In each of these cases, the lender is simply entitled to an appropriate revenue – interest/dividends, rent – and the return of what they lent, at the end of the agreed period. A landlord can sell the title deeds to their property, in the intervening period, but only on the basis of the new landlord honouring the existing lease. The same with a leasing company. Share and bondholders can sell their shares to other buyers.

There is one reason, and one reason only that shareholders are given control over property/capital they do not own, and that is that, without such control, their continuation as ruling-class would quickly end. Laws of corporate governance were created by the bourgeoisie itself, and, as socialised capital expropriated private industrial capital, leaving the bourgeoisie as just a parasitic class of money-lenders, owners only of fictitious capital, they ensured that they could continue their control over that socialised capital, by using their control of the political regime/parliament.

The classification of shareholders as separate from other forms of creditor, or money-lender, serves simply to preserve the façade that these shareholders are, in some way, the owners of the company, just as were the private industrial capitalists of the past. But, clearly, they are not. The shareholders play no more functional role in the day to day activities of the company than does a bondholder or bank manager. A shareholder may have absolutely no involvement with a company, and yet gets their dividends all the same.

If other money lenders and creditors had the same rights as shareholders this façade would be exposed. For one thing, if banks had the rights of shareholders, simply on the basis of making bank loans to companies, it would raise the question of why they did not have similar rights in exercising control over other loans. If the bank manager came to inspect what colour you painted the walls of your living room, or what you watched on TV, it would soon provoke a response, for example. Yet, the money-capital loaned by a bank to a company is no different to the money-capital loaned to a company by a shareholder.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 4

But, its clear that this perceived role of share ownership, in each of these forms, has no validity. In a worker cooperative, for example, the money put up by each worker is always likely to be only a tiny fraction of the money-capital required. The worker cooperative, as with any other capital, will, usually, need to borrow money-capital from a bank, or directly in the money markets, by the issue of bonds, for example. Yet, the loaning of money in any of these other forms – from the bank, or the buyers of bonds – does not give the bank nor bondholders any legal right to exercise control over the cooperative.

Nor should it. The lender of money is the owner of that money, and so entitled to exercise control only over it. They do so by voluntarily surrendering possession of that money, for a specified period, and on specific terms. For example, they agree to lend the money for, say, 5 years, and, in return, for a given rate of interest, which may be fixed or variable, and so on. But, surrendering possession of the money means exactly that. The borrower becomes the possessor of that money – not its owner – for a specified time, and buys things with it. They pay a price for this temporary possession of the money, and that price is the market rate of interest. As Marx sets out, what they have actually borrowed is not money, but money-capital.

Money can have no price, contrary to the claims of bourgeois economics, however much they try to dress it up with concepts of time-preference and so on. But, Marx explains, loanable-money-capital, can have a price, precisely because, of the nature of capital, as self expanding value. The value of capital, is that, once employed, its use-value is to be greater at the end of its circuit than it was at the start. It is this use-value of capital – not as a thing, i.e. not as machines, materials, or labour-power (commodities) – as a social relation, that has a price, precisely because those that do not own it, are prepared, and are able, to buy it, in order to employ it, so as to obtain the average industrial profit, by doing so. As Marx notes, in Capital III, it is the division of capital into these two different forms – interest-bearing capital, and industrial capital – each antagonistic to the other, and of the owners of these two different forms of capital, that makes possible the category of interest, and determines the rate of interest.

The owners of interest-bearing capital lend money-capital to industrial capitalists, who buy things with it. The commodities they buy – machines, material etc. (constant capital), as well as labour-power (variable-capital) – they not only possess, but own. They buy these commodities, precisely in order to utilise them as capital, to obtain, thereby, the average industrial profit. It is only the potential to obtain this average industrial profit that makes borrowing the money-capital worthwhile, but, also, which makes possible the payment of interest to the lenders of that money-capital.

If I borrow money, and just put it in a box, buried in the ground, at the end of the loan period, it will not have become any more money, whatever the basis of my time-preference. Similarly, if I spend the money on the purchase of commodities for my personal consumption, it will not have expanded in value, whatever my time preference. In the former case I at least have the initial capital sum that I can repay, and only have to find a way of obtaining money from elsewhere, to pay the interest. In the latter, having consumed unproductively the commodities I bought with the money, I now have to find money to repay both the initial capital sum, and the interest. There is no objective basis for assuming either is possible.

Money cannot have have two different values. It cannot have a price – interest – based on a difference in those values. But, as Marx describes, capital, as a social relation, does have two different values, precisely because it is self-expanding value. Its value at the end of the circuit of industrial capital, is greater than it was at the start of the circuit. It is greater by the amount of average industrial profit, whose basis is the surplus-value created in the production process. Interest is not a price of money, but of money-capital. It is a deduction from profit, just as is rent and taxes.

It is not the lender of money-capital – be they a bank, bondholder, or shareholder – that is the owner of the industrial capital, bought with the money-capital they loaned, but the industrial capitalist. The loaned money-capital, might appear to be itself, capital, and to self-expand, by the amount of interest, but it is not. It is Marx explains, simply fictitious-capital. It has no real existence, as capital, separate from the same money-capital, borrowed by the industrial capitalist, and used as industrial capital to produce profit. The industrial capitalist, as the owner of that industrial capital appropriates the profit, and only out of it, then, pays interest to the owner of the money-capital they borrowed. The lender of money-capital has no such right of ownership or control. It is not their industrial capital, and not their industrial profit.

When, a bank lends money to someone to buy a house or a car, the bank has no ownership of the house or car, no right to tell the borrower how to use the house or car, and so on. They only have a right to the return of the money at the end of the loan period, and to be paid the agreed interest on the loan. The interest, is not a price for money, in this case either, but the same price of money-capital, the price the lender could have obtained had they loaned the money to be used as money-capital to an industrial capitalist.

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Forward To Part 5

SNNS 59

 

Northern Soul Classics - Cheer Me Up - The Globetrotters

I found out that one of the members of the Globetrotters was J.R Bailey, whose aliases include Chuck Wood, J.B. Troy, and Al Wilson (Help Me), not the other Al Wilson known for the Snake. 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 3

If we consider the further evolution of industrial capitalism into state-monopoly capitalism (imperialism), by the end of the 19th century, we see a further purposive, but unconscious, transformation. Private industrial capitalism comes to an end, except in its reactionary remnants, as small capital, in the hands of the petty bourgeoisie, the precarious self-employed and so on. Industrial capital becomes socialised capital, in the form of the joint stock company and cooperative. This socialised capital is the collective property of the “associated producers”, i.e. the workers and managers employed in the company. The functional role of the private industrial capitalist comes to an end, just as happened previously to the landed aristocracy.

The socialised industrial capital, objectively, the collective property of the associated producers, who merely borrow loanable money-capital, to acquire it, creates new forms of property, new social relations, and new ideas. This is not yet a new mode of production. It is more like a metamorphosis of the existing mode of production, based on capital and commodity production. As Marx notes, in Capital III, Chapter 27, both the joint stock company and the cooperative are “transitional forms of property”, between capitalism and socialism. In the workers cooperatives, Marx notes, the contradiction between capital and labour is resolved by the workers becoming their own capitalist.

In the joint stock company – the modern form of which is the huge multinational corporation – the capital is, objectively, just as much the collective property of the workers employed in the company as is that of the cooperative. But, unlike the workers cooperative, the workers do not exercise control over their collective property. Instead, control is enshrined in law as resting with shareholders, who are not the owners of that capital, but simply creditors of the company, people who lend money-capital to it, in exchange for interest. Just as in the past, even when the landlord class lost all of their social function in production, they used their control of the political regime, not only to obtain rent, as a deduction from profits, but also to control the conditions under which their rents were set, so now, as the private capitalist has lost their social function in production, they have used their control of the political regime, not only to obtain interest/dividends, as a deduction from profits, but, also, to control the conditions under which that interest/dividends is obtained.

These underlying, objective, social elations are obscured, even in the worker cooperative. In the worker cooperative, it is not the fact that the capital is the collective property of the workers that appears as the basis of their control over it, but the fact that they are also shareholders. In other words, in most worker cooperatives, the workers themselves put up a small amount of their own money to finance the company, and, in return, obtain a share, which entitles them to interest/dividends on the money they advance. This gives the appearance of making this no different to any other joint-stock company, except that, whilst the interest/dividends may be proportional to the money loaned to the company, in both cases, the same is not true in relation to the exercise of control.

In a worker cooperative, every worker gets an equal vote. In a joint stock company, the more shares you have the more votes you have. In consumer coops, another variation appears. It is not the workers that get to exercise control over their collective capital – or even, often to be able to become shareholders in it – but those who consume its commodities. They become members, and get a single vote, by buying a single share; but the dividend they receive is proportional to how much they spend, as consumers, with the coop. Where the joint-stock company entrenches control with the existing, bourgeois ruling-class, because they are the ones with vast amounts of loanable money-capital, and able to buy the most shares, the consumer coop tends to entrench control with the permanent upper echelons of the cooperative management. Consumer shareholders have no direct involvement in the day to day operation of the cooperative, as the workers do, and so come to rely on what they are told by the upper management. The shareholders rarely even turn up to meetings, leading the coops permanent bureaucracy to exercise control. Its why the trades union and social-democratic bureaucrats prefer this model as against the worker cooperative.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 2

Moreover, the commercial bourgeoisie prospers, so it is not just the ideas that these new social relations engender that take hold within the state. The commercial bourgeoisie uses its wealth to better educate its children, who, in turn, increasingly take up their positions within the personnel of the state itself. The state, consequently, becomes, objectively, a bourgeois state. Its ideas are bourgeois ideas, its personnel are increasingly bourgeois, and yet this state continues to operate for the benefit of the existing feudal ruling-class, and within the ideological, legal and political framework of the old feudal regime. It is this contradiction that the political revolution has to resolve.

In Britain, this process takes place over a long period, and is correspondingly confused and messy. The bourgeoisie and landed aristocracy inter-marry, and so on. Although the British state becomes, objectively, a bourgeois state, by the time of the Glorious Revolution, the political regime remains firmly in the hands of he feudal aristocracy well into the 19th century. In 1832, the bourgeoisie, in alliance with the petty-bourgeois commodity producers, and a nascent proletariat, carried through the first act of the political revolution. It gets the vote for bourgeois property owners, and abolishes many of the “rotten boroughs”, and so on. By 1848, the industrial bourgeoisie had become the dominant section of the bourgeoisie, and, as Engels describes, in conjunction with the industrial workers, carries through the second stage of the political revolution. But, as Marx notes, as late as 1865, in his Inaugural Address to the First International, the landed aristocracy still accounted for a majority of those sitting in the Commons, let alone the Lords.

In the US, the process was more rapid, and less messy. The vast land areas meant no landlord class could be established. The landlord class was represented by the British Crown, which acted to appropriate revenues, and by the slave owners, in the South, who produced cotton and other agricultural commodities that fed the British industrial revolution. The American Revolution swept away the first, and established a bourgeois republic, and the second was swept away by the US Civil War, which asserted the dominance of US industrial capital, and of its centralised, but still federal, state.

In France, the process was more prolonged, as in Britain, due to the existence of established land ownership by the feudal aristocracy. The 1789 Revolution was clearer, establishing the Constitutional Assembly, but, as with the English Civil War, saw an immature bourgeoisie have to cede the political regime to Bonaparte. As Marx notes, in the following decades, there were changes back and forth of the political regime, with Louis Phillippe replacing Bonaparte, and then, in 1848, Louis Bonaparte replacing Louis Phillippe, and yet the objective nature of the state remained that of a bourgeois state.

In Russia, the emancipation of the serfs, in 1861, led to a rapid growth in commodity production and exchange, and consequent rapid growth of the bourgeoisie. As Marx and Engels wrote at the time, this change, itself, was driven by Russia's defeat in the Crimean War by the industrial powers of Britain and France. Similar changes occurred in Japan. By the 1890's, objectively, the Russian state was a bourgeois state. Its actions, as Lenin pointed out to the Narodniks, were geared to a more rapid development of industrial capital in Russia. It was as utopian for the Narodniks to make their appeals to that state, to foster their petty-bourgeois schemes, as it is, today, for statists to appeal to the bourgeois state, in Britain, or elsewhere, to act in the interests of workers, or small business; the latter appeal, itself, being reactionary.

In all these cases, the social revolution, which happens purposively, but unconsciously, behind society's back, transforms social relations and ideas. It changes the ideas and personnel that guide the actions of the state. It does all this, whilst, all the time, the old ruling-class continues to control the political regime/parliament etc., and also, continues, thereby, to expand its own revenues, as deductions from the rapidly expanding industrial profits. A spark for the bourgeois revolutions after all was the demands for yet more revenues. In England, it was Charles I's demand for more taxes to fund his army; in the US, it took the form of “No taxation without representation”.

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