Anti-Duhring, Part III – Socialism, II – Theoretical - Part 23

Of the billions paid into pension funds, each year, even the money that does go to buy shares or bonds, rather than line the pockets of the financial institutions, 70% of it goes to buy up existing shares and bonds, and so to simply inflate their prices, rather than financing additional, real capital investment/accumulation. That is the case with all transactions on the financial markets, which act primarily as casinos where the participants simply gamble on which stock or bond is going to race ahead, and which be left behind. As Marx put it,

“It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.”

(Capital III, Chapter 27)

Marx saw no reason why the regular financial crises/crashes, as against the cyclical economic crises, resulting from an overproduction of capital, or an overproduction of commodities, should be a concern of the workers.

“As regards the fall in the purely nominal capital, State bonds, shares etc.—in so far as it does not lead to the bankruptcy of the state or of the share company, or to the complete stoppage of reproduction through undermining the credit of the industrial capitalists who hold such securities—it amounts only to the transfer of wealth from one hand to another and will, on the whole, act favourably upon reproduction, since the parvenus into whose hands these stocks or shares fall cheaply, are mostly more enterprising than their former owners.”

(Theories Of Surplus Value, Part 2, p 496)

But, of course, now that the ruling-class is comprised entirely of such parvenus, and speculators, rather than industrial capitalists, and, because their entire wealth has become dependent on continually inflating asset/fictitious capital nominal prices, it is no wonder that they use the state to ensure that condition persists, even where doing so, directly conflicts with the interests of real industrial capital. As Marx again put it,

"... the reduction of the money equivalents of these securities on the stock exchange list has nothing to do with the actual capital which they represent, but very much indeed with the solvency of their owners."

(Capital III, Chapter 30)

“Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers.”

(Capital III, Chapter 33)

In previous financial crises, such as 1847, 1857, 1929, the state, responded to the events, and threat to production, by ensuring that credit was available for commodity circulation. In 1847 and 1857, as Marx and Engels describe, the financial crash itself had been provoked by the bursting of an asset price bubble, inflated due to low interest rates caused by burgeoning profits, which resulted in the supply of additional money-capital growing faster than the demand for it. The bubble burst when bad bank legislation (The 1844 Bank Act) unnecessarily caused interest rates to rise, because the Bank of England, reduced currency supply, in response to an outflow of gold. The resulting credit crunch led to a sharp curtailment of trade. But, as Marx and Engels note the real nature of the crisis was revealed because, when the Bank of England suspended the Bank Act, so as to facilitate additional currency supply, the crisis ended.

“By such artificial intensification of demand for money accommodation, that is, for means of payment at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis.”

(Capital III, Chapter 34)

But, in all these cases, including 1929, although the state facilitated the credit required to end the credit crunch restricting commodity circulation, it did not bail-out the financial speculators who had lost. As Marx notes above, some lost, others gained. In 1929, those like John Templeton, who sold prior to the crash, and, then, ploughed money in after it, when assets could be bought for 10% of their pre-crash prices, gained enormously. In 2008, and after, the opposite has been the case, as central banks have bailed out the speculators, whilst imposing credit restrictions and financial austerity on the real economy.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 22

So, it is no surprise that, firstly, the ruling-class do not allow the workers to exercise any kind of control over their, now, huge pension funds. In Britain alone, those funds amount to trillions of pounds. It is the kind of amount of potential credit that Marx and Enegls noted could enable the effective expansion of the worker cooperative, to provide the same capitalisation as that enjoyed by the multinational corporations. Indeed, the workers' collective savings, accumulated in those pension funds, are currently a major source of the credit provided to those multinational corporations themselves, because those funds buy the bonds and shares of those companies.

It is clearly as impossible for each individual worker who contributes money to such a pension fund, to directly have a seat on a supervisory board of the fund as it is for every depositor of money in a bank. But that is the case in all sorts of similar situations, in modern society. Those societies, for example, hold elections to parliaments, where MPs are given the task of representing those collective interests. Those parliaments, of course, for all the reasons set out previously, are, themselves, a sham, because significant limitations are placed by the ruling-class on who gets elected, and, if the working-class overcomes even those constraints, the ruling-class simply sweeps away the façade of that democracy by use of its control of the state.

But, that does not change the underlying principle that democracy is the means by which the collective interests of millions of individuals can be aggregated and effectively manifest. We might, as Engels noted, need to counter the threat to universal suffrage by, also, ensuring universal conscription and military training, so that the workers defend their collective decisions arms in hand, organised in militia rather than a standing army; we might want to replace representatives with delegate, based upon a direct democracy and right of recall, but the principle remains.

Shareholders, after all, do precisely that. They vote at regular shareholders general meetings to elect Directors, who act to represent their interests. So, on what basis can workers, who contribute in aggregate, billions of pounds a year to their pension funds, on which their retirement depends, be denied the same right? Given that these are workers pension funds, the funds of workers employed collectively, in given companies, industries, local and central government, etc., there is no reason that these workers should not elect the supervisory boards of those funds to ensure they are used in the interest of workers.

Instead, workers are denied any such control in breach of even the most basic bourgeois property law. Control is given to representatives of the companies, but, for the reasons set out earlier, those representatives are, in fact, representatives not of the company, but of shareholders, i.e. creditors of the company. In addition, these pension funds sub-contract the actual day-to-day financial management of the fund to financial institutions and banks. Who controls those banks and financial institutions – shareholders. Numerous investigations have shown that a huge chunk of the money that workers pay into their pension fund does not even go to the purchase of shares or bonds, but is simply paid out – as much as 60% - in commissions and other fees, to those institutions!

“... the BBC's Panorama on Monday, showed who the real villains are when it came to workers Pensions. It was, not surprisingly, the same Financial Institutions that caused the Financial Crisis, and which is the reason the Tories are now trying to load the cost of that on to workers with cuts in services, and in pensions.

It found that the investment of workers funds was almost like the kind of Ponzi scheme that others have recently been jailed for. It involved, workers money being taken in by Pension Companies, who then placed it with other institutions based on how much of a kick-back those institutions would give them, and a large cut in commission, and administration charges was deducted by each of these institutions. In total these organisations were deducting so much that workers pensions were being reduced by anything between 30%-60%.

“In one HSBC pension plan, £120,000 paid in over 40 years would result in fees and commissions totalling £99,900.”

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 21

That points to where the real basis of the workers' struggle, today, resides. In the same way that in the 18th and 19th centuries, the struggle of the bourgeoisie, backed by the petty-bourgeoise and proletariat was for political democracy and freedom, the struggle of the working-class, today, is a struggle for industrial democracy, as the necessary condition for their real freedom. The bourgeoisie and petty-bourgeoisie, in the 18th and 19th century, did not have to wage a struggle for control over their property. Within each enterprise, they exercised such full control already, on the basis of existing laws of private property. Rather, the struggle was one for political freedom and democracy, so as to reflect their position in society, as ruling class, and, thereby, to remove all of the fetters on the expansion of bourgeois production, in general.

The petty-bourgeoisie, and small private industrial capitalists, today, continue to exercise control over their private property, but, today, the limitation of that is precisely that they are subordinated, in the market, to the power of the mammoth socialised capitals. Their freedom and control is, ultimately, as much a delusion as is the political sovereignty of small nation states, in a world of huge imperialist powers. It illustrates why the demands of the petty-bourgeois nationalists for the right of national self-determination are an even greater reactionary delusion, today, than they were a century ago, when Lenin wrote,

“As the party of the proletariat, the Social-Democratic Party considers it to be its positive and principal task to further the self-determination of the proletariat in each nationality rather than that of peoples or nations. We must always and unreservedly work for the very closest unity of the proletariat of all nationalities, and it is only in isolated and exceptional cases that we can advance and actively support demands conducive to the establishment of a new class state or to the substitution of a looser federal unity, etc., for the complete political unity of a state.”

(Lenin – The National Question In Our Programme)

The petty-bourgeois nationalists demand to “Take Back Control”, as, for example, put forward by the Brexiters and Lexiters, was soon exposed for the reactionary delusion it is. The Brexit negotiations showed just how little “control” even an imperialist nation state like Britain has, when it comes to its relations with other, much larger, imperialist states and blocs of states. But, the fact that, for much of the last 70 years, the socialist movement has been dominated by that kind of delusional, petty-bourgeois nationalism, when it comes to acting as cheerleaders for one petty-bourgeois nationalist movement or another, on the basis of their “anti-imperialism”, paved the way for that delusion, when it came to Brexit, just as it does with Ukraine and Israel/Palestine.

Like the petty-bourgeoisie, and small private capitalists, the workers in the worker cooperatives, also, exercise control over their property, but face the same reality that this freedom and control is extremely limited, because they must compete, in the market, usually against much bigger capitals.

The important role of the worker cooperative, today, therefore, remains in the form that Marx posed it, in 1864.

“The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.”

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 20

But, after 1855, and the passing of the Limited Liability Act, those same processes of capital accumulation, the socialisation of that production, and of the large scale industrial capital itself, leads to an explosion of the joint-stock companies, which, previously, were a minority. It is this form of socialised capital, rather than the worker cooperatives, which became the means by which “the expropriation of the expropriators” was accomplished. It is the joint-stock company, whose form, today, is the limited liability company/corporation, which became the dominant form of socialised capital, as the transitional form of property between capitalism and socialism. The fact that these large corporations, inevitably developed into multinational corporations, breaking themselves out of the fetters of the nation-state is an indication of that transitional nature.

It does not mean that worker cooperatives have no place, today, in that process, but, it does mean recognising the constraints on them. It involves recognising that, to break out of these constraints, a worker cooperative needs to be able to mobilise the mammoth amounts of capital that a multinational corporation does. It also means that, like the multinational corporation, it cannot limit itself to being tied to the nation state, let alone some smaller, local operation. That, also, shows why the statist notions about nationalisation are, now, both idealist and utopian, and consequently a reactionary delusion.

As I set out many years ago, even in Marx and Engels' time, they argued that it was necessary for worker cooperatives to combine their capitals, including cooperatives in different industries, as well as to plough their profits into a centralised pool to be used for a planned expansion of cooperative production.

“Then what is the only salutary basis for co-operative industry? A NATIONAL one. All co-operation should be founded, not on isolated efforts, absorbing, if successful, vast riches to themselves, but on a national union which should distribute the national wealth. To make these associations secure and beneficial, you must make it their interest to assist each other, instead of competing with each other—you must give them UNITY OF ACTION, AND IDENTITY OF INTEREST.

To effect this, every local association should be the branch of a national one, and all profits, beyond a certain amount, should be paid into a national fund, for the purpose of opening fresh branches, and enabling the poorest to obtain land, establish stores, and otherwise apply their labour power, not only to their own advantage, but to that of the general body.

This is the vital point: are the profits to accumulate in the hands of isolated clubs, or are they to be devoted to the elevation of the entire people? Is the wealth to gather around local centres, or is it to be diffused by a distributive agency?”

(Ernest Jones Letters)

Ernest Jones, who Marx and Engels, initially, saw as the future leader of the working-class, was writing, here, on behalf of the First International. His position, even nearly two centuries ago, is way in advance of those, today who, instead want to promote the idea of localism.

That combination, today, has to extend even further beyond the constraints of the nation state, and to utilise the kind of credit that Marx and Engels – and , here, Jones – refer to. It means mobilising the large pools of workers' savings in their pension funds that did not exist even 50 years ago, let alone in Marx and Engels' time. We certainly should have democratic control by workers over them, and certainly, as the repeated attacks by the state on pensioners shows, should not rely on the state to provide them. No wonder the ruling-class not only deny workers the right to control their collective property in the form of the socialised capital of the joint-stock companies/corporations, but also deny them control of their own money accumulated in the workers' pension funds!

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 19

A century later, it is even more apparent, and the scale of production is such that even that idea of nationalised industries in each nation state is consigned to history. The EU, 80 years ago, began as its original member states created the European Coal and Steel Community to regulate and plan production on a multinational scale. The atomic energy industry in Europe, from the start, was set up as a planned and regulated, European industry. The idea that a puny and rapidly declining British nation state can compete, globally, in steel production is risible. The British coal industry has already gone, but, similarly, if the British state seeks to continue a British steel industry, by nationalising it, separate from an EU steel industry, it will just throw potential money-capital down the drain that could have been better used in some other industry. British steel production could only continue if it was part of a large-scale EU steel industry, which itself requires EU wide planning and regulation of production.

“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.

But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.” (p 358)

Here, clearly can be seen the vision of Marx and Engels, and just how markedly it differs from that of the petty-bourgeois socialists and nationalists, including those who, for much of the last century, masqueraded as Marxists. In contrast to the “anti-capitalists”, and opponents of globalisation, Marx and Engels, as well as their early adherents such as Kautsky, Pannakoek, Plekhanov, Lenin and Trotsky, saw this development of ever larger-scale capitals, and the consequent destruction of nation states by this “imperialist” capital, not just as inevitable and unstoppable, but as, partly for that reason, also progressive. Today's “anti-capitalists”, “anti-globalists”, and “anti-imperialists” are like the petty-bourgeois moral socialists and Luddites who responded to the form and not the content of that development.

The Luddites saw machinery destroying their petty-bourgeois, handicraft production, and responded by breaking into the factories and breaking the machines, or setting fire to the factories, much as previous peasant rebellions responded by burning the barns and manor houses of the landlords. But, Marx and Engels point out in The Communist Manifesto, it was not the machines that were the cause of that misery but the social context in which those machines were employed, as capital, not simply as means of production. The machines were actually a powerful basis upon which the lives of the labourers could be hugely improved, if they were used as means of production, instruments of labour, not as capital. It is what the labourers in the Lancashire textile cooperatives and the agricultural cooperative at Ralahine discovered.

Of course, as described previously, the centralisation of the means of production and the development of machine production itself could not have arisen without the existence of the private industrial capitalists. The first conscious response to that, of course, is, therefore, the creation of worker cooperatives, such as those described above. In Marx's Inaugural Address to the First International, in 1864, he not surprisingly highlights the huge significance of the cooperatives. But, he, also, sets out the constraints on their ability to simply expand without the working-class doing what the bourgeoisie had previously done, which is to wage a political struggle to remove all of the political fetters on their continued expansion. In Capital III, Chapter 27, he sets out, in that regard, also, the role of credit, in facilitating the extension of this cooperative production.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 18

Engels notes, as he and Marx, also, describe in Capital III, Chapter 27, this process whereby even the planning and regulation of production by these oligopolies breaks down, and leads to even greater socialisation of production.

“They determine the total amount to be produced, parcel it out among themselves and thus enforce the selling price fixed beforehand. Since such trusts usually go to pieces as soon as business becomes bad, for this very reason they push towards a still more concentrated socialization. The whole branch of industry is converted into one big joint-stock company, and internal competition gives place to the internal monopoly of this one company; this happened as early as 1890 with English alkali production, which, after the fusion of all the forty-eight large works, is now carried on by a single company, under centralized direction with a capital of £6 million.” (p 358)

It became part of ICI in 1926, which, in turn, was taken over by Tata Chemicals, as part of the Indian Tata industrial empire.

Nearly 40 years ago, Simon Clarke wrote,

“Indeed it would be fair to say that the sphere of planning in capitalism is much more extensive than it is in the command economies of the soviet bloc. The scope and scale of planning in giant corporations like Ford, Toyota, GEC or ICI dwarfs that of most, if not all, of the Soviet Ministries. The extent of co-ordination through cartels, trade associations, national governments and international organisations makes Gosplan look like an amateur in the planning game. The scale of the information flows which underpin the stock control and ordering of a single Western retail chain are probably greater than those which support the entire Soviet planning system.”

(Capital and Class, Winter 1990)

In “The Poverty of Philosophy”, Marx makes the same point against Proudhon. Bourgeois commodity production engenders competition, which “breaks down the Chinese walls” of feudal monopoly. That competition, then, leads to a huge expansion of production, as the bourgeoisie become the ruling-class and create bourgeois nation states, which they use to remove the remaining fetters on bourgeois production. Competition means winners and losers. The winners get bigger, the losers disappear. The advantages of the winners increase, as they get bigger, because of economies of scale etc. They become monopolies, but not like the those of the feudal regime, based on patronage and protection. They are monopolies arising naturally out of the process of competition, and laws of capital accumulation.

The capitalist nation state is, then, led to involve itself, not as the feudal state did to create monopolies, but, now, to regulate them in the interest of capital as a whole. But, Marx notes that this, then simply raises this competition to a higher level. It becomes a competition of national capitals backed by capitalist nation states. Even by WWI, this became apparent, as Trotsky put it in The Program of Peace.

“Capitalism has transferred into the field of international relations the same methods applied by it in “regulating” the internal economic life of the nations. The path of competition is the path of systematically annihilating the small and medium-sized enterprises and of achieving the supremacy of big capital. World competition of the capitalist forces means the systematic subjection of the small, medium-sized and backward nations by the great and greatest capitalist powers... The war uncovered and accelerated this process by introducing the factor of open violence. The war destroys the last shreds of the “independence” of small states, quite apart from the military outcome of the conflict between the two basic enemy camps.”

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 17

Even in Marx and Engels time,

“It is this counterpressure of the productive forces, in their mighty upward growth, against their character as capital, this increasingly compulsive drive for the recognition of their social nature, which forces the capitalist class itself to treat them more and more as social productive forces, as far as this is at all possible within the framework of capitalist relations. The period of industrial boom with its unlimited credit inflation no less than the crash itself operating through the collapse of large capitalist establishments, drives towards that form of the socialisation of larger masses of means of production which we find in the various kinds of joint-stock companies. Many of these means of production and communication are so colossal from the outset that, like the railways, they exclude all other forms of capitalistic exploitation. At a certain stage of development this form, too, no longer suffices; [the large-scale producers in one and the same branch of industry in a country unite in a “trust”, an association for regulating production.” (p 357-8)

Within the confines of capitalism, even this increasing regulation, planning and monopoly of production continually, and cyclically hits the buffers, because commodity production implies continued competition, even if it is, now, monopolistic/oligopolistic competition. To overcome that requires an ever larger single market, regulated by an ever larger state. Either the nation state annexes other nation states – resulting in imperialist wars – or else those states voluntarily associate. In Theories of Surplus Value, Marx noted that private industrial capital was the inevitable means, the historically necessary condition for the centralisation of the means of production, because, although considered abstractly, there was no reason why the independent commodity producers could not have done so, by forming a cooperative, in reality, no such development was possible.

There was no reason such producers would do so, and their individual relation to their own means of production engendered a powerful, individualist and competitive mindset within them that precluded it. Kautsky found the same thing. It is only when wage-workers, who have developed a collectivist ideology emerge that they are able to bring about the creation of such producer cooperatives. When peasant farmers create cooperatives, faced with competition from large capitalist farms, they usually establish marketing cooperatives and cooperatives for the shared use of very expensive machinery, rather than voluntarily turning themselves into an agricultural cooperative.

Fairly equal nation states are unlikely to voluntarily merge for similar reasons. Each one believes it will come out on top in the global competitive struggle, including when it becomes a military struggle. Only when a series of smaller nation states realise that their only hope is to combine, if they are to compete with larger states, are they likely to do so, as with the creation of the EU. Even then, formerly dominant nation states seek to assert themselves within the bloc. One reason the EU has not moved more quickly to the creation even of a centralised federal state is the continued protection of existing interests by national elites. The working-class has no reason to constrain its voluntary association across existing national borders, which have become an outdated anachronism, not just holding back human progress, but threatening humanity itself, as those national borders form the basis around which wars are fought, wars which, now, lead to thermonuclear destruction.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 16

But, of course, Marx and Engels did not end their analysis of capitalist development at the point of the dominance of the private industrial capitalist (the monopoly of private capital), and the nation state. Those were simply moments in the process of development of capitalism as a necessarily global system in which, also, the free market competition it had been based around becomes a regulated and planned production, even within the capitalist system itself. They set out how capitalism itself evolved in the 19th century, so that what had once been a progressive development in the form of the private industrial capitalist and the nation state, became a fetter on its further development, and that fetter was burst asunder, by the development of large-scale, socialised capital, state-monopoly capitalism/imperialist capital.

In other words, all of those things that the moral socialists and petty-bourgeois nationalists see as an evil that must be resisted in the name of their “anti-capitalism” and “anti-imperialism”, Marx and Engels saw as the fundamental, progressive signs of the metamorphosis of this mode of production into Socialism. Moreover, as I have set out, elsewhere, Lenin, also, makes this point, as against the petty-bourgeois, ultra-Lefts of his time.

“This is precisely the case with our “Left Communists”, who in words (and of course in their deepest convictions) are merciless enemies of the petty bourgeoisie, while in deeds they help only the petty bourgeoisie, serve only this section of the population and express only its point of view by fighting—in April 1918!!—against . . . “state capitalism”. They are wide of the mark!

… the continuation of the anarchy of small ownership is the greatest, the most serious danger, and it will certainly be our ruin (unless we overcome it), whereas not only will the payment of a heavier tribute to state capitalism not ruin us, it will lead us to socialism by the surest road. When the working class has learned how to defend the state system against the anarchy of small ownership, when it has learned to organise large-scale production on a national scale, along state capitalist lines, it will hold, if I may use the expression, all the trump cards, and the consolidation of socialism will be assured...

To make things even clearer, let us first of all take the most concrete example of state capitalism. Everybody knows what this example is. It is Germany. Here we have “the last word” in modern large-scale capitalist engineering and planned organisation, subordinated to Junker-bourgeois imperialism. Cross out the words in italics, and in place of the militarist, Junker, bourgeois, imperialist state put also a state, but of a different social type, of a different class content—a Soviet state, that is, a proletarian state, and you will have the sum total of the conditions necessary for socialism.

… socialism is inconceivable unless the proletariat is the ruler of the state. This also is ABC. And history (which nobody, except Menshevik blockheads of the first order, ever expected to bring about “complete” socialism smoothly, gently, easily and simply) has taken such a peculiar course that it has given birth in 1918 to two unconnected halves of socialism existing side by side like two future chickens in the single shell of international imperialism. In 1918 Germany and Russia have become the most striking embodiment of the material realisation of the economic, the productive and the socio-economic conditions for socialism, on the one hand, and the political conditions, on the other.

“… socialism is merely the next step forward from state-capitalist monopoly.

“. . . State-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediate rungs ”.

(Lenin – Left-Wing Childishness)

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 15

Globalisation has been a powerful and progressive development that reduced circulation costs and so raised profits, without the need for a corresponding investment of capital. The creation of large single markets, like the EU, is integral to that process. But, the large growth of the petty-bourgeoisie in the same period, as part of that process, engendered all of those old reactionary, individualist ideas of the past. It not only fuelled the reactionary notions of trying to turn the clock back to the days of the nation state, but, inevitably, was forced to go beyond that to a return to the old provincialism and regionalism.

However, each time petty-bourgeois populism attempts to implement these utopian and reactionary schemas, as with Brexit, Trump etc., they quickly fail, and are forced to confront the reality, just as much as the ruling-class owners of fictitious-capital have been forced to recognise the reality that their dividends/interest are a deduction from profits, and, in the end, profits only grow by an expansion of capital, an expansion of the quantity of labour exploited.

“... the ultimate causes of all social changes and political revolutions are to be sought, not in men's brains, not in their growing insight into eternal truth and justice, but in changes in the modes of production and exchange. They are to be sought, not in the philosophy, but in the economics of each particular epoch. The growing recognition that existing social institutions are irrational and unjust, that reason has become unreason, and kindness a scourge, is only a sign that changes in the mode of production and exchange have silently been taking place with which the social order adapted to earlier economic conditions is no longer in keeping. From this it also follows that the means of eliminating the abuses that have been brought to light must also be present, in a more or less developed condition, within the changed relations of production themselves. These means are not to be invented out of one's brain, but discovered by the brain, in the existing material facts of production.” (p 343-4)

Marx and Engels set out, already, in Capital III, and, here, in Anti-Duhring, what these changed conditions were, and that had become dominant by the end of the 19th century.  I have set them out again, in summary. But, I have also set out, here, how the most recent development of those, now, over-ripe conditions means that the irrationality has reached a crescendo.

The ruling capitalist class is, now, the immediate, mortal enemy of capital.

Engels sets out the state of play at that time.

“It is now pretty generally conceded that the existing social order is the creation of the ruling class of today, of the bourgeoisie. The mode of production peculiar to the bourgeoisie, which since Marx has been called the capitalist mode of production, was incompatible with the local privileges and the privileges of estate as well as with the reciprocal personal ties of the feudal system. The bourgeoisie shattered the feudal system and on its ruins built the bourgeois social order, the realm of free competition, of freedom of movement, of equal rights for commodity owners and all the glories of capitalism.” (p 344)

For petty-bourgeois socialism, it is as though Marx and Engels analysis ends there. This bourgeois development created all those bourgeois rights and freedoms and created the bourgeois nation state. They want to leap from there to Socialism, treating the modern economy and bourgeois society as though it is essentially no different to this era of private industrial capitalism. It justifies their hostility to imperialism both in the form of state-monopoly capital, and its concomitant the destruction of the old bourgeois nation states.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 14

The role of the boards of Directors, is to represent the interests of shareholders, not the company. As set out before, shareholders, as owners of interest-bearing capital/fictitious capital, seek to maximise their revenue in the form of interest/dividends. The interest of the company, however, is to maximise its profit of enterprise/retained profit, and so to minimise all other deduction from profit, such as rent, interest/dividends and taxes.

A company that simply borrows money from a bank, or in the bond market, pays only the going, competitive rate of interest on the money it borrows, though, as Marx describes, the worker cooperatives always found they were charged higher rates of interest. But, precisely because shareholders have control over companies, and appoint the boards of directors that set the dividend payments, they are able to pay themselves more than any such competitive market rate of interest. The consequence is that, where a company agrees a higher dividend pay-out, other owners of loanable money-capital seek to obtain it. By buying the company's shares. That causes the market price of those share to rise, and consequently the dividend yield (dividend/share price) to fall back towards the average.

But, in the same way, the speculative money that flows towards these shares flows away from other shares (and other speculative assets). The market price of those shares/assets then would fall, and so on. Speculative money moving to buy shares would cause bond prices, property prices etc., to fall, with a corresponding rise in bond yields, rental yields and so on.

Shareholders, therefore, simply by assigning to themselves a larger amount of interest/dividends than would represent a competitive market rate of interest, bring about changes in all asset prices and yields. But, as Marx sets out in Capital III, Chapter 23, it is still constrained by the laws of capital.

“It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists.”

Shareholders cannot simply continue to pay themselves more out of profits as interest/dividends. On the one hand, the process described above creates a vicious circle. Dividend/interest payments rise, asset prices rise, yields fall, but, also, if more and more profit is simply shelled out as dividends/interest, less is available as profit of enterprise/retained profit, so, at some point, the actual industrial capital that creates the profit out of which that interest is paid does not grow. If industrial capital does not grow, i.e. if the social relation it represents does not expand, so that more labour is exploited, surplus value does not grow, and so the profit out of which all those revenues (interest/dividends, rents, taxes and profit of enterprise) are taken does not grow.

It is those laws of capital that have imposed themselves on the ruling-class over the last thirty years. They, also, found nuance, reflection and contradiction in the political sphere. The drawing of ever greater interest/dividends from profits, in the old imperialist state, showed up as deindustrialisation and asset stripping, but the other side of that was a combined and uneven development of large-scale industrial capital in China/Asia, Latin America, and later Africa. The globalisation of production, of which this was part, itself facilitated the continuation of the delusion in the West. It reduced unit costs, and facilitated trade, raising profits. In the same way that Britain, in the 19th century, used its surplus money profits to provide credit to those countries that used it to buy British exports, so China and other countries, now, ploughed money into western credit markets. They loaned money to he US, buying US bonds and so on, pushing up their price and reducing yields.

In the West, the US and UK in particular, the process of deindustrialisation led to a resurrection of the petty-bourgeoisie. It is most noticeable in the UK where, since the 1980's, it has grown by 50%. Napoleon called Britain a nation of shopkeepers, but, since the 1980's, it has been a nation of precarious, self-employed traders, symbolised by “white van man”. That includes those traders involved in the growing trade in illicit substances, home-made porn etc. The majority of adverts on Youtube etc., now assume that their audience are all involved in some kind of small business activity.

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