Part 4 – (Digression) – The Era of Speculation and Gambling (1)
In the 1980's, conservative social-democracy encouraged workers to buy shares, houses and private pensions. As the prices of those assets rose, whilst the surplus of labour meant that wages grew slowly, it was not too hard to sell. As many workers also found themselves unable to get decent full-time jobs, and were encouraged into precarious self-employment, leading to the growth of the petty-bourgeoisie referred to earlier, this kind of individualist, mentality was further reinforced, even though it was delusional and self-destructive.
And, self-destruct it did. In 1987, as a debt spike, in the US, caused interest rates to rise, asset prices crashed around the world, including the prices of all those privatisation shares workers had been encouraged to buy etc. (An example of the delusion and hysteria was shown when, just prior to the BP privatisation, in October 1987, the market price of BP shares dropped significantly below the privatisation offer price, and yet retail speculators insisted on buying the overpriced shares.)
In Britain, workers who had lived comfortably in their council houses for decades were encouraged to take on debt to buy them. As interest rates spiked, and they could not meet the mortgage payments, they were evicted. Large proportions of the council housing stock passed not to former tenants, but to private landlords, who picked them up cheap.
But, unlike previous asset price crashes, the fact that so much of the ruling class's wealth and power was, now, tied up in this paper form, and that so much had been put into selling the delusion/lie that wealth could be created out of thin air (the same delusion is purveyed by MMT), the state was led to intervene not to rescue real industrial capital, but to prevent the collapse of those asset prices. Every time it did so, it simply intensified the underlying contradiction, which, as Marx describes, in Capital III, comes down to the antagonistic interests of interest-bearing capital (fictitious-capital) and industrial capital.
The interest of interest-bearing capital is to maximise the revenue it obtains as interest/dividends, as a deduction from industrial profit. The interest of industrial capital is to maximise the profit of enterprise/retained profits, so as to maximise the potential for capital accumulation. The collective owners of industrial capital, in the era of imperialist capital, are the “associated producers” within each company, as Marx describes them, i.e. the workers and managers. That imperialist capital is “socialised capital”, which replaced the monopoly of private industrial capital, in the process described by Marx as “the expropriation of the expropriators”.
But, other than in the worker cooperatives, the “associated producers”, i.e. the collective owners of this socialised industrial capital, are legally prevented from exercising control over that capital! The ruling-class, as it abandoned its functional role in production, and became a class of merely parasitic coupon-clippers, ensured that its state created company laws that continued to enshrine control over that capital in their hands, rather than in the hands of its collective owners.
It was this “property question” that workers had to address, but, instead, the political leadership of the labour movement, in the 20th century, ignored Marx and Engels analysis and advice, instead simply organising the workers to continue an unwinnable struggle to just improve the price of their labour-power. Consequently, when the process, described earlier, led in the 1980's and after, to asset prices rising faster than profits, the natural response of the ruling-class, as a class of rentiers, was to use that right of control to increase the share of profits that went to interest/dividends, and so reduce the share available as profit of enterprise/retained profits to fund capital accumulation.
Moreover, the same process extended to the rents extracted, and to the taxes appropriated by the capitalist state. Asset prices, be it the price of shares, bonds, property/land rose, but, as profits rose more slowly, yields, be it on financial assets or rental yields, fell. They fell, even if the actual level of interest/dividends, rent etc. did not, simply because of the rise in the price of the assets.
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