The Economic Content of Narodism, Chapter 4 - Part 33

Marx demonstrated, in Volume II, that the expansion of wealth, production and capital is quite possible without resort to foreign markets, or third persons to absorb any supposed surplus production. Of course, having done so, Marx also sets out why the existence of foreign markets facilitates such expansion, because it brings with it a wider range of commodities that can be exchanged, thereby broadening the market and enabling its more rapid development. And, in Theories of Surplus Value, Chapter 17, he sets out how, in practice, a surplus of goods not only can but inevitably does arise, because of overproduction, under-consumption and disproportion, as well as crises of overproduction of capital, where capital accumulates faster than labour supply/social working-day. 

That Struve falls into this error is surprising Lenin says, because he points to the overwhelming significance of the home market in Russia himself. He also notes the development of a strong, i.e. bourgeois peasantry, in Russia, which is an indication of the development of capital in agriculture, and along with it the consequent proletarianisation of the mass of peasants, which is the basis of the growth of the home market, as those workers now had to meet their needs from the market rather than their own production. 

In his concluding remarks, Lenin returns to the points raised at the beginning, in relation to what exactly was it of Marxism that Struve adopts, and what that he rejects. The main feature, Lenin repeats, is Struve's objectivism rather than materialism, which leads him to argue at the level of abstraction rather than an analysis of the facts. In attempting to demonstrate inevitability in this way, he fails to identify the creation of actual social classes, and the antagonistic relations between them. The Marxists too, Lenin says, sometimes argue with the Narodniks at the level of objective principles but always in the context of a different understanding of the available known facts. Struve, by arguing at the level of abstraction, put forward propositions that were open to misunderstanding and framed the argument in the way the Narodniks and Legal Marxists did, in terms of an academic debate about the future, rather than an analysis of current reality, and the existing classes, and class struggle taking place. It was on that basis, Lenin says, that a critique of his work and the provision of this additional analysis was required.

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The Popular Front - Part 6 of 7

The owners of fictitious-capital have two contradictory sources of revenue upon which their wealth and power is based. On the one hand, they can obtain large revenues in the form of interest/dividends on their shares, bonds and other financial assets. On the other they can obtain large capital gains as a result of significant rises in the prices of these assets, and they can then convert these capital gains into revenues, by selling a proportion of those assets. A rise in the price of assets, unless it is a reflection of the increased revenue produced by the asset, results in a lower yield, i.e. ratio of the revenue to the price of the asset. If yields fall, the owners of shares can compensate, by having their representatives on company boards increase the proportion of profits going to dividends, but this then reduces the amount going to real capital accumulation, and so undermines revenues and fictitious capital in the longer-term.

If interest rates rise, then asset prices fall, and so yields also rise. The owners of revenue producing assets see their revenues rise, but they see the price of their assets fall. The total return might then also fall, as the capital loss outweighs any increase in revenue. But, ultimately, it is the real productive capital that dominates, because it is the source of profits, and thereby of these other revenues and capital gains. The owners of fictitious-capital, as ruling-class, seek to protect themselves from this contradiction. They have central banks print money tokens to buy up assets, to reflate their prices, when they crash and so on. They seek to have the state regulate the economy to a greater extent and on a wider geographical basis, so that the profits that are accumulated as real capital, can be more effective and produce greater profits and so on, But, eventually, the prices of assets cannot continue to rise at a faster pace than the growth of revenues, and revenues can only grow if surplus value grows, which requires the accumulation of real capital, and so the employment of additional labour.

Ultimately, this question of the accumulation of real capital has to be addressed. That was the property question that imposed itself in the 1920's, and again in the 1930's. It requires a restructuring of real capital on the basis of a technological revolution that qualitatively raises productivity, and, thereby, the rate of surplus value and rate of profit. The owners of fictitious-capital are forced to accept a large-scale write down of their paper wealth, as interest rates rise, and financial and property markets crash, but their main concern then becomes to retain control over the real socialised capital, which now becomes the focus of their wealth and power.

In the 1920's and 30's, it is when they see a threat to this control, as workers and sections of the professional middle-class, who are the personification of this large-scale socialised capital, begin to rationally demand control over it that the ruling class now turns to the fascists to protect its interests. The ruling-class is tiny. To protect its interests as against the old landlord class it looked to the proletariat. To protect its interests against a revolutionary proletariat it can only look to the petty-bourgeoisie, and lumpen proletariat in addition to its state. The interests of these elements are contradictory to the interests of large-scale socialised capital, and so, therefore, the long-term interests of the ruling class, but the ruling class is immediately concerned with its own survival, and is forced to think about its longer-term interests only after having dealt with the proletariat.

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The Economic Content of Narodism, Chapter 4 - Part 32

Vorontsov himself puts forward an essentially Malthusian/Sismondist theory of overproduction as under-consumption. He says that capitalist production inevitably leads to a “surplus of goods” in the home market that then requires foreign markets to absorb it. Malthus' solution to the problem was that the landed aristocracy could simply consume the surplus, and Keynes puts forward essentially the same solution a century later. But, the idea of this surplus of goods is based on an error, that flows from Adam Smith's “absurd dogma” that the value of commodities resolves entirely into revenues, which is also the basis of Say's Law; it fails to distinguish between productive and personal consumption, and between the new value created by labour, and the value of congealed labour preserved in the value of the commodity. 

Its true that the value of output is greater than the value of income/revenues, and, thereby, personal consumption. Total income/revenue is equal to the new value created by labour during the year. This equals National Income/GDP. The new value created by labour divides into v + s, i.e. one part reproduces the variable capital consumed during production, and the other constitutes surplus value, divided into profits, rent and interest. The variable-capital is the wages paid to workers out of the new value they have created, and enables them to reproduce their labour-power for the year ahead. The surplus value divides into profit of enterprise, interest, rent and taxes, each of which provides revenues so that landlords, money-lenders, capitalists and the state can consume during the year. However, the total value of output is not just v + s, but c + v + s. On this basis, it appears that consumption can never be equal to production, so that there must be a surplus of goods. But, this fails to notice that not all consumption is personal consumption. Industry itself, in the shape of Department I, must also productively consume output in the process of producing means of production, if reproduction is to occur on the same scale. The surplus of goods, therefore, does not exist. 

This is clear in Marx's examples of simple reproduction, but, as Marx demonstrates it is also true in relation to expanded reproduction, where a portion of surplus value, instead of being used for personal consumption, is used to buy additional labour-power and means of production. Its in this latter regard that Vorontsov, and thereby Struve, falls into his Malthusian error. Struve writes, 

““Each worker,” says Mr. V. V. in his article “The Excess in the Market Supply of Commodities,” “produces more than he consumes himself, and all these surpluses accumulate in few hands; the owners of these surpluses consume them themselves, for which purpose they exchange them within the country and abroad for the most varied objects of necessity and comforts; but however much they eat, drink or dance (sic!!)—they cannot dispose of the whole of the surplus-value” (Otechestvenniye Zapiski, 1883, No. 5, p. 14), and “to be more convincing” the author “examines the chief expenditures” of the capitalist, such as dinners, travelling, etc. We get it still more vividly in the article “Militarism and Capitalism”: “The Achilles’ heel of the capitalist organisation of industry is the impossibility of the employers consuming the whole of their income” (Russkaya Mysl, 1889, No.9, p.80). “Rothschild could not consume the entire increment to his income ... for the simple reason that this ... increment constitutes such a considerable mass of articles of consumption that Rothschild, whose every whim is satisfied as it is, would find himself in very great difficulties,” etc.” (p 498) 

That particular variant of the Malthusian argument also found expression in the so called Permanent Arms Economy Thesis. The whole argument is nonsense, because it assumes that the whole of the capitalists' consumption is personal consumption, whereas an increasing proportion of surplus value goes instead to accumulation, whilst an increasing proportion of total output goes to productive consumption, i.e. to the replacement, on a like for like basis, of the means of production consumed in production. This productive consumption/accumulation is required not only because the population increases each year, which itself requires output to expand, but also because living standards themselves increase, which requires output to increase further. Moreover, this rise in living standards is manifest not simply in an increase in the quantity of commodities consumed, but by a continual expansion in the range of commodities produced, and range of new industries created for their production, each of which absorbs vast amounts of this surplus value – the civilising mission of capital. 

“All these arguments, as you see, are based on the naïve view that the capitalist’s purpose is only personal consumption and not the accumulation of surplus-value, on the mistaken idea that the social product splits up into v+s (variable capital+surplus-value) as was taught by Adam Smith and all the political economists before Marx, and not into c+v+s (constant capital, means of production, and then into wages and surplus-value), as was shown by Marx. Once these errors are corrected and attention is paid to the circumstance that in capitalist society an enormous and ever-growing part is played by the means of production (the part of the social products that is used for productive and not personal consumption, not for consumption by people but by capital) the whole of the notorious “theory” collapses completely.” (p 498)

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Northern Soul Classics - The World Column - So Is The Sun

 

Friday Night Disco - I've Been Born Again - Johnnie Taylor

 

What An Idiot!

Here is an example of just what idiots the Tory Brexiters are, and why its no wonder they came to support such a ridiculous policy of Brexit.  I couldn't believe it when I read it.

Talking about the proposed tariff free deal between the UK and Australia, under which British livestock farmers will be wiped out by the much larger-scale, and so lower cost Australian producers,

"Conservative MP Neil Parish, chairman of the Commons Environment, Food and Rural Affairs Committee, said UK farmers could succeed in the beef market by exporting more "higher-end" cuts, such as sirloin, to Australia."

(BBC)

Now, of course, small economies, like Britain, can attempt to offset some of the disadvantages of their size, and inability to obtain the benefits of economies of scale that comes to producers based in large single markets, like the EU, by shifting their production into high-value areas of production, into niches in which price becomes less important than quality, perceived or real, in being able to capture markets.  For example, an economy might focus on the production of high-value sports cars, or luxury cars that might be produced in relatively low volumes, but find ample markets, for their production, even at high prices, as a result of consumers being concerned to buy a high quality, luxury product.

The problem of that, for a country like Britain, is that although its a minnow compared to the EU, US or China, nor is it a Norway or Finland, able to sustain all of its population in employment in such niche industries.  The idea of employing Britain's 30 million workers producing Aston Martins, or Rolls Royces is not viable, for example, and even these companies are now foreign owned, with the brand and technology easily being transferred overseas, when those owners choose to do so.

But, the idiocy of Parish's comment is even more obvious than that.  For the Chair of a food and agricultural committee, he doesn't seem to understand even the basics of the subject.  He doesn't seem to understand that you can't simply grow high end cuts, like sirloin, or at least you can, but only artificially, now, in a laboratory.  producing sirloin, or any other cut of meat, involves producing all of the rest of the cow too!

The Popular Front - Part 5 of 7

Meanwhile, the development of that large scale socialised capital, which eclipsed the monopoly of private capital that preceded it, had also brought another transformation with it, which was that the former owners of that private capital had been transformed into a class of rentiers, coupon clippers, whose wealth was held in the form of fictitious capital, of shares and bonds. As Marx describes in Capital III, and Theories of Surplus Value, the objective interests of this class now diverge from the objective interests of industrial capital.

Their immediate interests depend not upon the accumulation of real capital, but on the appropriation of interest/dividends out of the profits produced by industrial capital. In order to ensure that, they made sure to use their political power to pass corporate governance legislation, when limited liability companies were made possible, that gave shareholders control over those companies, and their capital, even though they were mere creditors of those companies. The old alliance between the landed aristocracy, and the financial oligarchy that was represented by the Tory Party, and which is increasingly manifest in the merging and intermarriage of these exploiting classes, emerges in a new form. These conservative parties, which can be seen across the world, become the representative of that ruling class, whose actual objective interest is now at odds with the interests of the dominant form of property, large-scale socialised capital, whose accumulation is the determinant of the fortunes of the state itself. In other words, this represents a transitional state, in which the contradictions have been sharpened and raised to a new height.

The heightened contradiction is manifest in the fact that, the short-term interest of this fictitious-capital, the property form of the ruling-class, is contradictory to the interests of the real socialised capital, and, thereby, the long-term interest of the state itself. But, the long-term interest of the fictitious-capital, and of the ruling class is itself dependent upon the development of the real socialised capital, which is the source of profits, and thereby of the interest/dividends and rent that provides the revenues, and underpins the capital gains on the fictitious capital. The long-term interest of fictitious capital, is only possible on the basis of the continued development of large-scale socialised capital, and so the interests of the ruling class are only furthered, by the continued advance of the socialised property, and development of the new ruling class – the working-class and middle class collective owners of that socialised capital. The ruling class's short-term interest contradicts its own long-term interest!

Social-democracy, thereby, reflects this contradiction. The social-democratic parties represent a popular front in which the owners of these two contradictory forms of capitalist property are combined. On the one hand, they contain the conservative social-democrats who represent the interests of large-scale fictitious-capital, and, thereby, its owners, the top 0.01% of the population that owns and controls the majority of fictitious-capital. On the other hand, they contain the progressive social-democrats who represent the interests of the large-scale socialised capital itself, and, thereby, the professional middle class that is its personification. And, they contain the reformist socialist representatives of the working-class, whose own interests are tied to the development of this large-scale socialised capital, so long as they are not able to go beyond it to their own direct control over the means of production.

The conservative parties, as opposed to the conservative wings of the social-democratic parties, then become not conservative at all, but reactionary. That is best seen with the Tory Party in Britain, and the Republicans in the US. Their membership becomes dominated by the most numerous components of the bourgeoisie, which increasingly becomes indistinguishable from the petty-bourgeoisie. In other words, it is dominated by the plethora of small private capitalists which linger on as a relic of capitalism's earlier development, prior to the development of socialised capital, and also of all those new small private capitals that are constantly being brought into existence, and as constantly going out of existence, unable to compete with large scale socialised capital.

As parties seeking governmental office, these conservative parties, however, are forced to recognise the reality that the fortunes of the state itself depends upon the fortunes of large-scale socialised capital. The conservative parties themselves, therefore, are racked by their own internal contradiction. In their ideology and programmes they must reflect the interests of their own core membership and voter base amongst the petty-bourgeoisie, in opposition to large scale socialised capital, whilst, in government, they have to act in the interests of that large-scale socialised capital, because on it depends the future of the state.

In the end, the social-democratic elements of these conservative parties, together with the conservative wings of the social-democratic parties are led to the same position of seeking to protect the interests of the owners of fictitious-capital, but, in the longer-term that can only be done by advancing the interests of large-scale socialised capital itself. That requires that greater regulation and planning occurs, to ensure that capital accumulation can take place in a more secure environment; it requires that larger single markets be developed, as the minimum size of operations of these larger capitals and so on. But, what the owners of that fictitious-capital cannot allow is that this occurs, on any meaningful basis, outside their own continued control of the real socialised capital.

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