Anti-Duhring, Part III – Socialism, II – Theoretical - Part 29

In other words, central banks and bourgeois economists, after 2008, defended QE on the basis that they were seeking to prevent deflation and depression, but it is quite clear that their actions were only intended to prevent a deflation of astronomically inflated asset prices, following the bursting of the latest speculative bubble, and were only concerned to prevent a prolonged depression of those asset prices. Their actions, in fact, created a deflation of commodity prices, and acted to severely impede economic expansion of real economic activity, for the reasons I have set out above, and that Marx sets out in Capital, Theories of Surplus Value, and elsewhere. A farmer, miner or builder, who must pay out £1 million to the landowner, for land, rather than £100 thousand, before they can even employ their productive-capital, sees that as £900,000 of their money-capital that cannot be used productively. It is £900,000 of potential money-capital that does not get used productively, but just goes as revenue/absolute rent to the landowner.

As I have set out, elsewhere, the same is true of all of the other inflated asset prices. Inflated share and bond prices, mean that the costs of providing pensions rises astronomically, because the monthly contributions into the funds, now buy far fewer shares and bonds. So, if wages rose so that workers could pay the required higher monthly contributions, in line with the value of their labour-power, that would mean a reduction in surplus value/profits. In fact, in the 1990's, as this began to manifest, in conditions where workers were still weak after their defeat in the 1980's, their wages did not rise accordingly, and rather, as asset prices rose spectacularly, inflating the money value of pension funds, this was sold to workers as meaning that there was plenty of money to pay their pensions, and companies, as well as public sector employers, even reduced or stopped making their contributions to the funds.

This sums up the delusion, and why it had to end. The idea that there was plenty of money in the pension funds was based on these inflated asset prices, and so the fantasy that rather than paying pensions out of the revenues accruing to those assets (interest/dividends, and rents), they could be paid by simply, instead, cashing in some of the assets, and so realising the huge nominal capital gains they had produced. It is referred to as “taking profits”, which again confuses profits with capital gains, a delusion encountered previously, and exposed by Marx, in relation to Ramsay and the use of historic pricing. As I have set out before the TSSI, makes precisely this same mistake. In my response, I set out the difference between capital gain and profit, as Marx does, and the reality that lower asset prices facilitate increased capital accumulation. (See also: this post)

Of course, having, in the 1990's, told workers that this inflated value of the assets in their pension funds meant there was plenty of money to pay their pensions – again confusing money with the actual commodities it has to buy to sustain workers in their retirement – when those asset price bubbles burst, and huge black holes in the pension funds appeared, all of the narrative about the inadequacy of pensions being due to “gold plated public sector pensions”, or workers daring to live a little longer, began to appear.

Rather than QE accelerating economic growth, and combatting a deflation of commodity prices, it caused a deflation of commodity prices, and artificially reduced economic growth, as the other side of the coin to inflating asset prices, and sucking potential money-capital into the purchase of those assets. The proof of that can be seen in the fact that, after 2010, far from acting to stimulate growth, and despite interest rates being at the lowest levels in history, they actively sought to reduce growth by introducing measures of fiscal austerity! There was a simple reason. Increased economic activity, rising demand for labour and capital, in the early 2000's is what had caused interest rates to rise, and sparked the 2008 global financial crash.

Its true that they rose to levels, which, historically, were still very low, but they rose from even lower levels that meant that, in relative terms they rose significantly. It was this big relative increase in interest rates, in conditions where asset prices were at such astronomical levels that caused them to crash in 2008. As with the situation with land prices discussed earlier, the price of these assets is a function of the capitalised revenues they produce. Lower interest rates cause asset prices to rise as simply a consequence of the capitalisation of the revenues. But, in conditions where revenues – be it profit of enterprise, interest, rents, or even wages – go into a speculative frenzy of buying of assets, more than into an actual investment in real capital accumulation, the consequence must be that the asset prices can only be maintained, by ever lower interest rates. So, we ended in the madness of huge amounts of debt – around $20 trillion, worldwide - with a negative yield!

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Burnham's Dead Cat Bounce - Part 5 – (Digression) The Era of Speculation and Gambling (2) – Capital, Profit and Capital Gain

Part 5 – (Digression) The Era of Speculation and Gambling (2) – Capital, Profit and Capital Gain

If share X costs £1 to buy, and pays a dividend of £0.10 per share, that is a yield of 10%. If the dividend remains £0.10 per share, but the price of the share rises to £2, it is a yield of only 5%. Speculators – which is what the ruling-class, today, are – can simply move money to where a higher yield is available. So, they might sell the shares of X and buy the shares of Y, or else buy bonds, land or property. The consequence of that, however, is, then, just to raise the prices of these other assets, and, thereby, to reduce the yield on those assets. The speculators that bought early, get both the higher yield, and a capital gain, when they sell.

A problem for the ruling-class owners of fictitious-capital, and its ideologists, in this respect, as Marx describes in Capital I and III, is that they do not really understand what capital is, and so, also, do not understand what profit or interest is. In Capital I, Marx goes into great detail in examining the claims of the bourgeois economists who, in the 19th century, simply represented the arguments of the private industrial capitalists. Those arguments never explained what profit was, or where it came from, but amounted to just a moral justification of its existence and appropriation by the capitalist.

In other words, even after the ideas of the Mercantilists were superseded, the bourgeois theories that replaced them were no better. The Mercantilists argued that “profit” came from “unequal exchange”. Marx notes that the Mercantilists were not as stupid as some of their later critics claimed. The Mercantilists like James Steuart, described profit as “profit on alienation”. In effect, profit arises as a consequence of the exchange of commodities, so that the seller makes a profit by selling commodities above their value. Marx sets out why this cannot be true for profit as a whole. Sellers are not only sellers but also buyers. If all sellers sell commodities at, say, 10% above their value, then, those same sellers, in aggregate, as buyers of commodities, likewise, pay 10% above their value. In aggregate, what sellers gain as sellers, they lose as buyers.

Marx points out, however, that its no coincidence that the ideas of the Mercantilists arose, and became predominant in the Netherlands and Britain, in the 17th Century, when those countries were the leading mercantile powers, and were establishing their colonial empires. As Marx notes, Mercantilists, such as Steuart, realised the limits of the idea of profit on alienation, but it could quite clearly be seen that, if you are a major colonial power, like the Netherlands or Britain, you could buy “low” from producers of food and materials, in the colonies, process those commodities, and, then, sell them “high” back to those colonies, the balance of trade being made up in money (gold or silver).

This “unequal exchange” would amass large amounts of wealth in the coffers of colonial powers. But, there was, clearly, a limit to that as well. In the period after WWII, as anti-colonial struggles spread across the globe, Stalinists and Third Worldists sought to utilise this Mercantilist theory of profit to describe the “development of underdevelopment” in the economies of the Third World. As a consequence of “unequal exchange” between the “imperialist” centre, and the third world periphery, value was incessantly dragged away from the latter and towards the former, thereby, denying the latter of the surplus value required for capital accumulation and development, whilst, supposedly, explaining the continued growth in the imperialist heartlands, rather than its predicted decline and crisis.

As an explanation of imperialism and imperialist capital, rather than as an explanation of colonialism and merchants capital, it was nonsense. Industrial capital does not make profit from “unequal exchange”, but from the creation of surplus-value in production, and imperialist capital is industrial capital par excellence. Large-scale industrial capital (imperialist capital) does not make profit from unequal exchange, but, similarly, from an ever-expanding scale of production, an ever-expanding exploitation of labour, on a global scale (i.e. capital accumulation and development, rather than underdevelopment), and the need, thereby, to create a global capitalist economy.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 28

As I have also set out, without that huge rise in existing house prices, there would, also, have been no rise in new house prices, because, as with every other commodity, over time, rises in social-productivity leads to falling unit values. The process with houses is that set out by Marx, in relation to average industrial profit and rent. The large majority of property transactions – around 70% - are in relation to existing houses. It is the price of these houses, therefore, that determines the market price of all similar, new houses. Suppose, the cost of building a house, of a given type, breaks down as follows. Materials and wear and tear of equipment used in construction £10,000; Wages £5,000; Profit £6,000. Suppose the average industrial rate of profit is 33.3%, so that, the builder makes a surplus profit of £1,000, and this is rent appropriated by the landowner, here, capitalised as a one-off payment forming a capitalised rent/price of the land.

In this case, the house sells for £21,000. The land price accounts for >5% of the price. Now, suppose that speculation drives up existing house prices, which, as noted, determine the market price of all new, similar houses. In the 1980's, we noted that, in Britain, as a result of such speculation, house prices quadrupled. So, existing houses of this type, would now be selling for say £90,000. Even if we assume no change in social productivity, so that the values of materials, equipment, and labour-power do not fall, as, in reality, they would, the builders clearly have a huge incentive to build, because, now, the cost of building is £15,000, whilst the house sells for £90,000, giving a profit of £75,000, as against the average industrial profit of £5,000, a surplus profit, now, of £70,000, as against £1,000, previously. The builder, however, cannot build, unless they have land to build on, and so, the landowner, now appropriates this £70,000 of surplus profit as capitalised rent, in the price of the land. Its not higher land prices that lead to higher house prices, but higher house prices that lead to higher land prices, just as higher surplus profits lead to higher rents.

For the capitalist builder, the incentive to build, becomes severely dented, once this process results in all of their surplus profit being appropriated by landowners, in the form of higher rents/land prices.. In their calculation, they see that, now, before they can build any houses, they must lay out this hugely inflated price of land to the landowner. Economically, as Marx describes, rent is not a cost of production, just as interest and taxes are not a cost of production, they are all deductions from industrial profit/surplus value. But, the capitalist does not see it that way. The builder, sees that, they could sell a house of the given type at a current market price of £90,000, but, now, must first lay out, £70,000 to buy the land. They must lay-out a further £15,000 for the construction of the house, leaving them with a profit of £5,000. Instead of seeing this in terms of making the average industrial profit of £5,000, on the productive-capital they lay-out (£15,000), the builder looks at having laid out, £85,000, in order to get a profit of just £5,000. As Marx noted, this is the pernicious role that rent plays in holding back production.

This also explains why so many builders sought to keep down the selling price of the houses they built, by not buying the land, and so selling houses, leasehold rather than freehold. The attempts, now, to limit the amounts that can be charged, each year, for leasehold properties, will only further deter, new house-building on that basis.

Using potential money-capital to build new houses, rather than using it to just bid up the price of existing houses, by inflating speculative, monetary demand, would, also, have employed more construction workers, increased demand for bricks, cement and so on, as well as for workers in those industries. In short, the liquidity that central banks injected to inflate asset prices that had crashed, as bubbles burst, starting in 1987, would have flowed into real economic activity, and would, then, have led to higher commodity prices, rather than higher asset prices. The major caveat to that, of course, is that, the use of this money, as money-capital to increase supply of commodities, does not lead to a rise in their price, if the increase in their supply, is at least equal to the increase in the quantity of currency/credit thrown into circulation, as Marx sets out in A Contribution To The Critique of Political Economy.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 27

If workers had control of their money paid into their pension funds, they would be far more likely to see the benefit of using that money to actually invest in real capital accumulation, the use of the money to buy additional machines and buildings, and to employ additional workers, rather than to simply inflate existing asset prices.

They might, of course, use that money to finance the expansion of worker-cooperatives, especially as the shareholders that control corporations have been more concerned to inflate their own share prices, and to use that control to hand money to themselves than to invest in real capital accumulation. So, its no wonder that the ruling-class has created a legal structure that prevents workers from exercising their legitimate, democratic right to control their own pension funds, blatantly in defiance of even basic bourgeois norms of property law. Now that would be a struggle to “take back control” that would be worth supporting.

Its not just that workers having control of their own pension funds would expose all of the things described above of the vast sums siphoned off as fees and commissions, of the fact that shareholders have preferred to inflate asset prices rather than invest in real capital accumulation and so on. Even without control of our pension funds, a basic democratic demand, here, should be to “open the books” of those pension funds, and all of the banks and finance houses that control them. A Workers Inquiry would itself be a mobilising process, because we all know what kinds of practices would be uncovered by it, as even the Panorama investigation all those years ago lifted the lid on.

Workers, in a large company, might, of course, begin to ask the question why, when that money is available, the company directors do not use it for such expansion, but even if, at first, they don't ask that question, a labour and cooperative movement utilising such funds, of itself, exposes the reason. As I have set out elsewhere, one reason that the vast amounts of money tokens/credit thrown into circulation by central banks, to prop up asset prices did not lead to commodity price inflation is precisely that all this liquidity was diverted, directly, into the purchase of those existing assets. Indeed, the very fact of those inflating asset prices, over the last forty years, and actions of central banks to maintain it, created not just moral hazard but, also, a fear of missing out, in which currency was drained from general circulation into this speculation.

If all of the additional liquidity that found its way, for example, into a demand for existing houses, and so hugely inflated their prices had, instead, been directed into the building/supply of additional houses, so raising the supply rather than the demand, the astronomical rise in house prices would not have happened. In fact, analysis shows that contrary to popular belief – which also fuels racist claims about migrants taking houses – the number of homes per head of population is greater today than it was in the 1970's, before house prices began to soar.

As Moneyweek point out,

“The population has gone up, of course. But the housing stock has risen too. In fact, according to an interesting report from economic research group Fathom Financial Consulting, while the rate of building decreased over the last decade, the quantity of ‘housing per person’ has risen by nearly 50% since 1970, and is still increasing.!"

The astronomical inflation of house prices is not the result of physical supply not rising enough to meet population growth, or new household formation – and is certainly not caused by migrants taking up these already overpriced homes – it is the result of speculative demand for existing houses, driven by the huge liquidity injections that central banks have made since the late 1980's. House prices did not rise because the value of houses, as a commodity rose. Indeed, as with all commodities, on average, the unit value of them falls over time, as a result of rising social productivity. Nor, indeed, as set out above, did they rise because the physical supply did not rise in the same proportion as the physical demand from population growth. They rose, because of a huge rise in the monetary demand – as Marx notes in Capital, the only effective demand is monetary demand – a demand that was inflated, by repeated depreciation of the currency/standard of prices. The price of houses rose, not as a commodity, but as a speculative asset, just like money flocking to the purchase of shares, bonds, Bitcoin, or paintings.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 26

Engels, a century before had pointed out.

“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

(Condition of The Working Class in England p 243)

Similarly, Marx had confirmed,

“I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. ... the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerrilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market.”

(Value, Price and Profit)

Trotsky had based himself on that same analysis.

“... a boom is a boom. It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production.

Prolonged unemployment following an epoch of revolutionary political assaults and retreats does not at all work in favour of the Communist Party. On the contrary the longer the crisis lasts the more it threatens to nourish anarchist moods on one wing and reformist moods on the other. This fact found its expression in the split of the anarcho-syndicalist groupings from the Third International, in a certain consolidation of the Amsterdam International and the Two-and-a-Half International, in the temporary conglomeration of the Serrati-ites, the split of Levi’s group, and so on. In contrast, the industrial revival is bound, first of all, to raise the self-confidence of the working class, undermined by failures and by the disunity in its own ranks; it is bound to fuse the working class together in the factories and plants and heighten the desire for unanimity in militant actions.)

(Flood Tide)

This could equally have been written in relation to the 1980's, as the 1920's. I remember, in the early 1980's, speaking to a member of the SWP, who confidently predicted that the stagnation and rising unemployment being experienced would never lift. He clearly had not read Marx's analysis of capital, and his statement that “there are no permanent crises.” Moreover, as Marx, Engels and Trotsky set out above, the “economic crisis”, of the 1980's, in other words, the start of a period of slower growth/stagnation, and the related unemployment, did not represent a crisis for capital, but for labour! The period of crisis for capital arose in the 1970's, as it became overproduced relative to labour, resulting in relative wages rising, and relative profits falling. (Workers & The Profits Squeeze, as Glyn and Sutcliffe described it).

The continual catastrophist dream of a never ending, and deepening economic malaise, in which booms are responded to, not as Trotsky does above, but as being a temporary nuisance, as they look forward to “The Next Recession”, which they hope will be different from all the ones that went before, and somehow bring on the revolution, is a delusion, and simply reflects the impotence of those that cling to it, as an alternative to them actually formulating any adequate Marxist strategy of real class struggle, to take the movement forward.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 25

For the SWP, the political extension of this strategy, which amounts to Economism/Menshevism, did not apply, because, unlike Militant and the Bennite Left/CP, it had no orientation to the Labour Party. The ironic consequence was that, its petty-bourgeois, Third Campist, moral politics meant that, come elections, it was led into a bankrupt “lesser-evilism”. It not only called on voters to just passively "vote Labour", to avoid the Tories winning, no matter how bad Labour's politics had been, and were likely to be, but they, also, were left proclaiming, that “for the next six weeks of the election, we will be the best supporters of Labour.” A bit like the Brexit/Lexit position they adopted later, they excluded themselves from the political struggle within, but then had to simply go along with the rules and decisions that came out of that struggle anyway!

The SWP, instead, pursued its Luxemburgist strategy, by which this mounting wave of industrial struggle – which for the reasons already described, was, by this time, on the wane and undermined by the growing relative surplus of labour – would, somehow, mystically transform itself into a spontaneous, political, revolutionary, class consciousness of the workers, who would, then, storm the barricades and seize state power.

The reality of the Militant position, was, in fact, not too different. Although, they propagandised week after week for the reformist idea that a Left Labour Government could, “nationalise the 200 top monopolies”, its leaders, who had been around in the Trotskyist movement for several decades, must have known that such an idea was preposterous, and had been shown on numerous occasions, when tried, to simply lead to the ruling-class and its state, destroying the government, and, if necessary doing so by means of extreme violence. The example of the coup against Allende's government in Chile, in 1973, was fresh in everyone's minds, were they to have forgotten, all the previous examples. Sections of the ruling-class had even discussed a coup against Wilson's social-democratic government, for goodness sake, so what would they do to a Left Labour government?!

The leaders of Militant must have known that, at the very least, even a Workers Government, would, as Trotsky described, baulk at breaking with the bourgeoisie, requiring a mobilised revolutionary proletariat, already organised in workers' councils/soviets, to control the streets and workplaces, to already be a workers' state in waiting – a condition of dual power. The trouble is that, it was no good the leaders of Militant knowing that, if even their rank and file members did not, let alone if the working-class they sought to lead was not schooled in that reality. Anyone who argued day after day with ordinary members of Militant could see that those members did not understand that reality, and they would try to give chapter and verse from Marx, Lenin and Trotsky on why a “parliamentary road to socialism”, was possible, and so sounding more and more like, simply more militant versions of the CP, and Bennites.

As Trotsky noted in relation to the German Revolution and the Chinese Revolution, in the 1920's, when it comes to revolutionary strategy and tactics, timing is crucial. Calling for General Strikes or for the creation of soviets requires that the workers are on an upward path of struggle, and that, revolutionaries have been preparing the advanced sections of the class for the raising of such demands, so that the workers know exactly what the implications of them are. If you continually call for a General Strike, in conditions where the working-class is not strong enough or confident enough, it will be mere revolutionary phrase-mongering, and demoralising. At best, the workers will not respond, at worst, they will respond in a weak and confused manner and the state will suppress them. All-out General Strikes are political strikes, they are revolutionary acts, which directly pose the question of which class rules in society. Trotsky described the mistakes made in that regard in Germany, in the 1920's.

But, as he set out in relation to the Chinese Revolution, it is pointless to refuse to call for the creation of soviets, as the Stalinists did, until such time as the condition of dual power exists. The soviets implies a revolutionary situation, and the workers need to be armed to defend those soviets, and ensuring that those arms are available and go to the revolutionary workers, not their opponents requires time, planning and organisation.  In other words, instead of leading, the Stalinists ended up “tailing” the working-class, and even the peasantry. The Stalinists, who had adopted the Menshevist “stageist” theory, in which the proletarian revolution could only come after the bourgeois-democratic revolution had been completed, were forced to adopt this stance, because they had tied themselves to the bourgeois-nationalists, of the KMT, and this Popular Front required that the interests of the workers were subordinated to those of the bourgeoisie and petty-bourgeoisie. Stalin repeatedly denounced Trotsky and his supporters – including some Chinese Communists, who did not even know they were supporting the line of Trotsky – for creating conditions in which the KMT and the Chinese bourgeoisie would split with them.

Stalin was still promoting that line just days before Chiang Kai Shek launched his coup in Shanghai, and slaughtered thousands of Chinese Worker Communists. The Communist Party and its fellow travellers have pursued the same Popular Frontist strategy ever since, with just the brief interlude of the period of sectarian madness of The Third Period. But, the strategy of the SWP has followed the same Popular Frontism, in search of building the widest possible coalition of forces on one issue after another, as their answer to everything sank into the idea of building the next ever bigger march or jamboree. The same souffle politics was adopted by the Stalinists and their periphery backing Corbyn, via Momentum, and it suffered the same fate as all the other such ventures, deflating on contact with the slightest external pressure.

The conditions, by the early 1980's, had already turned in favour of capital, as it had responded to the crisis of overproduction of capital relative to labour by carrying through the new technological revolution, based around the microchip. In industry after industry, technology replaced labour, particularly skilled labour, such as in the printing industry. Those that had thought that the old Economistic strategy of industrial struggle could simply continue, and would become even more radicalising for workers, as it sharpened, were guilty of the same kind of catastrophism of Sismondi, and of the Stalinists of the 1920's. Rising economic stagnation, and unemployment acted not to turn workers into class conscious revolutionaries, but to undermine even their ability to maintain wages, to keep their organisations together. Increasingly, it turned workers not against capital, but against each other, as they competed for work.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 24

I have set out why there has been that change, elsewhere. It is symptomatic of the fact that the ruling-class during the last century became entirely a class of owners of fictitious-capital. The state, as the state of the ruling-class, acts to protect their interests, and its ruling ideas are those of that class, even when those ideas are based on a delusion that falls apart as each day passes. As capital became increasingly imperialist capital (large-scale, socialised, state-monopoly capital), from the end of the 19th century, the ruling-class itself, in proportion, became a class of coupon-clippers.

As coupon-clippers, dependent on the interest on bonds, and dividends on shares, they continued to have a direct interest in the growth of the profits of the companies which paid out those revenues. The state acted accordingly to ensure the growth of those profits, and accumulation of industrial capital. The heyday of that came in the period after WWII. It actually began in the 1930's, as on the one hand, the 1929 financial crash ruined many of the speculators, and created the conditions for the dominance of an accumulation of industrial capital, of its reflection in a corporatist, progressive social-democratic ideology, and a significant extension of economic planning and regulation by the state. In the US, The New Deal, but, in Europe, Nazi Germany, Nordic Social Democracy, etc. As economies geared up for WWII, that process was accelerated, and it continued after the end of the war.

That heyday ended in the 1970's, for the reasons I have set out earlier, and elsewhere. The period since, then, in particular since the mid 1980's, is the first time when the nature of the ruling-class, as a class made up entirely of owners of fictitious-capital, increasingly divorced from the interests of industrial capital, and, indeed, as Marx describes, antagonistic to it, has asserted itself. Initially, the defeat of the working-class, resulting from the technological revolution of the 1970's/80's, which resolved the crisis of overproduction of capital, and created a huge relative surplus population, and a massive rise in the general rate of profit, caused a fall in interest rates. The supply of additional money-capital from these higher profits, rose significantly. At the same time, the technological revolution, created a huge moral depreciation of the fixed capital stock, and the rise in productivity, also cheapened materials and energy, as well as labour-power. In other words, it created a huge release of capital.

By the time the 80's became the 90's, asset prices had risen significantly. House prices in Britain had quadrupled, and similar rises occurred across the globe. In addition, money that did not find a home in real capital accumulation, found its way into other forms of speculation. In the US, the Dow Jones and S&P 500 rose by around 230%, between 1980 and 1990, whilst US GDP rose, just 108%. In 1987, a global financial crash set the scene for the following 40 years. It is the first time that the consequence of the ruling-class having become a class of owners of fictitious-capital becomes apparent.

The period of social-democracy, in its ascendancy, had been one in which real industrial capital accumulated, profits rose and out of those profits, were paid increasing amounts of interest, rent and taxes. The fact that demand continually expanded during this period, meant that every industrial capital was forced to seek to grab its share of the market, by increasing its output/accumulating capital – the intensive accumulation of the 1930's/40's, turned into the extensive accumulation of the 1960's/70's. The owners of fictitious capital, were subordinated to the needs of capital accumulation, but content in conditions where the mass of their revenues, in the form of interest/dividends and rent, continued to rise, even if, as a proportion of profits, they declined. When that period culminated in a crisis of overproduction of capital, in the 1970's, there were only two options. Either the constraints of capital itself had to be smashed, or else the working-class would be smashed.

The first required that the working-class had a fully conscious political leadership that understood the real basis of struggle. No such leadership existed. Instead, one of two strategies pervaded the labour movement. The most significant of those strategies was that which simply saw the period ahead as being a more intense continuation of the period that was, now, gone. In other words, it was a strategy based on a bourgeois, trades union consciousness of bargaining within the system for a bigger slice for labour. That had worked since the 1950's, as capital expanded, profits were high, and as the period progressed, labour became increasingly in relative short supply. It was precisely the success of workers in that period – more to do with the expansion of capital than effective trades union militancy – that brought about its demise, for the reasons I have set out, and that Marx describes in Wage-Labour and Capital, and Value, Price and Profit. It was an impossible strategy, at the point that capital had already responded to the overproduction of capital/shortage of labour, by revolutionising technology, and creating a relative surplus of labour!

That strategy was one pursued by the Stalinists in the Communist Party, and their fellow travellers in the Labour Left. In conditions where the historic dominance of those forces was being effectively challenged by the likes of the SWP and Militant, they, also, pursued that strategy. In the case of the Communist Party, Bennite Left, and Militant, the extension of this strategy took the form of a process in which mounting industrial struggle would lead to increased pressure on the Labour Party, via its Left-wing, to, in some form, “take the power”, meaning, in reality, that a Labour government would respond to opposition from bosses, by supporting trades unions, nationalising companies that were closing down, and by continuing the process began in the 1970's, of increased planning and regulation of production. In short, to become a Workers' Government. Unfortunately, not only was such a strategy, at this point, doomed, but, it was also, thoroughly confused and nationalistic, including elements that were inherently racist.  It was a modern version of the Moseley Memorandum, put forward by Oswald Mosely, when he was a Minister in the Labour Government, and which became the basis of the economic strategy he adopted for the New Party, and the British Union of Fascists.

So, elements of this Alternative Economic Strategy, called for import controls, which, of their nature, as with Trump's tariffs, not only lead workers to the conclusion that the source of their problems is not capitalism, but “foreigners”, who are, in some way, doing them down, by producing goods more cheaply, and exporting them to Britain, it also means that, as domestic prices rise, the consequence is either falling real wages, or, to the extent real wages are protected, falling domestic profits, and so less new money-capital available for capital accumulation, causing higher interest rates, a tie-up of capital, slower growth etc. That at a time when the solution for workers across Europe, and indeed across the globe, was to unite, across national borders, against their common enemy capital. Indeed some elements of that strategy not only called for import controls, but also immigration controls, immediately and visibly blaming foreign workers for the problems of British workers.

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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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