Blue Labour Will Fail, Prepare For It Now - Part 10 of 10

Over recent days, the media, and those that have delusional ideas about Starrmer, somehow, turning sharply Left, in government, have noted his meetings with Macron. This is the same Macron, of course, who is currently attacking the rights of French workers, who have taken to the streets in their millions, in mass strikes to defend their pensions. All that Starmer has presented is the old cakeist fantasy that Labour could, somehow, renegotiate with the EU, the Brexit deal, to achieve a “Labour Brexit”, in which Britain would obtain a better deal than were it an actual member of the EU. That is just fantastical British exceptionalism, jingoism, and petty-bourgeois nationalism summed up. 

A renegotiation of Brexit is not possible, and any closer relation to the EU, will simply involve Britain subordinating itself to the EU even more, in order to obtain the quid pro quo of that closer relation. That just amounts to what I said two years ago that the economic reality draws Britain back closer to the EU by a series of individual deals to re-enter various institutions, like Horizon etc., all of which, then, cost Britain more than were it a member, and give it fewer rights and privileges. The only meaningful closer relation, would be membership of the Single Market, but that is not possible, unless Britain accepts all of the things that go with it, such as the restoration of free movement. That would be a progressive development, in itself, but, of course, Starmer, as he has collapsed into petty-bourgeois nationalism and jingoism, has ruled it out! Moreover, if you are going to re-join the single market, and accept everything that goes with it, what kind of idiot would not, then, also want to have a say in formulating its rules, which requires re-joining the EU itself?!

Starmer's petty-bourgeois, nationalist agenda cannot meet the requirements of the ruling-class for an end to Brexit, so as to restore the benefits of being a part of that larger single market. Its backing Starmer, because it has even less chance, currently, of obtaining that from the Tories, who are still wracked by their contradictions, with Truss's reactionary petty-bourgeois wing still fantasising over a new coup to remove Sunak. The ruling class may, itself, be deluding itself that Starrmer might once again perform another flip flop, once in government, just as he previously abandoned his pro-Remain position, and lied through his teeth about sticking with the various progressive social-democratic elements of the Corbyn agenda. More likely, it is preparing to just replace him, before or after the election, with a pro-EU, Blairite, more under its control.

In that respect, a much better and more reliable option, for the ruling class, would be the conservative social-democrats of the Liberal Democrats. But, their chance for that more or less disappeared with the attempts to forge such a new grouping in 2019, which suffered not only from the contradictions inherent in such a group, but also from the abominable political leadership given to it, by the likes of Swinson, Umunna, and Soubry. Yet, the fact that Starmer has abandoned even the ground of conservative social democracy for that of petty-bourgeois, reactionary nationalism, gives an incentive for the ruling class to seek such a solution.

At the moment, Labour, superficially, has a massive opinion poll lead, but as I have set out before, that may not reflect what happens in an election. The results of by-elections where Labour has massively underperformed, whilst Liberals and Greens have significantly outperformed, at its expense, illustrates that. The Liberals, in particular, look set to be the main beneficiaries of a collapse in Tory votes, in the so called Blue Wall, whilst in many Red Wall seats, Liberals and Greens will pick up large numbers of votes from younger, progressive, working-class voters, appalled at Starmer's collapse into petty-bourgeois, reactionary nationalism. In most places, it will not be enough to win those parties the seats, but will be enough to prevent Labour winning as many of them as the polls currently suggest. Given that the Labour candidates hand picked by Starmer to fight those seats will be the worst representatives of that reactionary nationalism, any failure of them to get elected, will be no great loss, in the overall consideration.

As stated at the start of this series, in the period between 1945 and 2015, the failure of one conservative social-democratic party, simply resulted in its alternate taking its turn in government. Pretty much the same could be said for other developed economies. The collapse of the material conditions that underpinned the model of conservative social-democracy, during the period from 1982 to 2008, made that no longer possible. In conservative parties, dominated by the petty-bourgeoisie, that petty-bourgeoisie was able to assert its interests, demanding a turning back of progress, be it in respect of a nationalist agenda (Brexit, Trumpism, Le Pen), or in broader social policy. That petty-bourgeoisie was more successful in doing that, by creating new parties, like UKIP, that acted as a goad on the existing conservative parties than was the working-class, in doing the same from the opposite direction.

Starmer, himself, is a drag on Labour's electoral chances. Currently, many voters still don't even know him, but those that do, know that he can't be trusted, given the way he lied himself into the position of Labour Leader, and the way he has been called “Mr. 180 degrees”, for the way he changes his position overnight. In Red Wall seats, particularly, that is a problem, because, in an election, the Tories will highlight that, and consequently, reactionary voters will not believe his Brexitism, whilst progressive voters, will not believe his sudden reconversion to seeking a closer relation to the EU, especially one, itself, based on a cakeist fantasy. In Britain, its no longer a question even of elections being between a conservative social-democratic party and a petty-bourgeois, reactionary nationalist party, but of the two main parties both squabbling over who can claim the latter mantle.

Worse, for the ruling-class, the contradiction that led to that situation still exists. That is the old model upon which conservative social-democracy functioned for 30 years has collapsed. The only way to increase profits, now, is via capital accumulation, and employment of more labour, to produce more surplus value. But, that will mean the demand for capital grows relative to its supply, causing interest rates to rise, and asset prices to crash. As I have set out, before, that may occur in a variety of ways. Its likely to involve another nominal crash in asset prices, as with 2008. Indeed, last year, as interest rates rose, we already saw a significant drop in asset prices, though they subsequently recovered some of that drop in 2023. Property prices are continuing to fall, and, when compared to the rise in commodity prices and wages, over the last two years, they have dropped even more, in real terms.

This latter, a fall in asset prices, in real terms, over a prolonged period, is the most likely form in which the crash will occur, as central banks continue to try to cushion the effect, by increasing liquidity, and further trashing currencies. A look at the process, in the last similar period, between 1965-85, shows the way that, although asset prices rose, slowly, in nominal terms, they fell in inflation adjusted terms. The ruling class certainly will not want to see a significant fall in their paper wealth, but cannot avoid it. Their ideologists continue to fantasise that rising costs of living will cause workers to rein in consumption, bringing a slow down in economies, and reduction in employment, wages, and demand for capital, so reducing interest rates, and boosting asset prices. That is not happening, and will not happen. Increasing costs of living, simply results, now, in higher wages, and a greater squeeze on profits, causing interest rates to rise further, and asset prices to fall further.

Blue Labour will fail on all these counts. It cannot produce its cakeist Labour Brexit fantasy. It cannot meet the needs of the ruling class for that closer relation to the EU, whilst remaining outside the EU. It cannot put the required investment into UK infrastructure, on the basis of Britain's small economy, especially in conditions of rising interest rates, and certainly not on the basis of its current pledges not to raise taxes. Higher taxes, would simply make British based capital less competitive with the EU, and lead to a further drain of capital from Britain to the EU, heightening the problems it faced. Blue Labour will, undoubtedly look to square that circle in the way such reactionary, petty-bourgeois parties always do, which is to seek to exploit labour even more, and to push even more reactionary policies. It will find itself goaded in that direction, in the absence of any progressive alternative, by pressure from the Tories, and others to their Right. That offers no solution, either, but, as witnessed in 2022, with Trussonomics, is capable of causing even greater chaos and misery, in the process.

Workers need to prepare for that failure, and the danger of it leading to an even greater lurch in the direction of petty-bourgeois, nationalist reaction, now. Already, reactionary nationalism plays a pernicious role in the labour movement, as seen with Lexit, and support for economic nationalism from the likes of Corbyn et al, as well as in the role of social-imperialism, in relation to Ukraine, and support for reactionary nationalist ideas, about national self-determination/defence of the fatherland. The role of those reactionary nationalist ideas, in the labour movement, is one reason that the working-class has failed to provide its own progressive alternatives to conservative social-democracy.

Back To Part 9

Western Social Democracy Is Breaking

Eighteen months ago, I asked the question whether western social-democracy could survive its economic war against Russia and China? The answer appears to be no. Western social democracy is breaking on the wrack of its own internal contradictions, exacerbated by its war on Russia and China.

In the US, the failure of Biden and the Democrats has shamefully opened the door once more to Trump, despite the fact that the US ruling-class and its state has done all it can to put Trump and his fascistic supporters in the dock. But, even behind bars, Trump looks attractive to a large swathe of the US petty-bourgeoisie, and backward layers, in a way that Biden does not to the US working-class. Biden, desperate for their votes, in Michigan, did manage to turn up on UAW picket lines – something that would have got him sacked from Starmer's hard Right, Blue Labour – and even to support their claim for higher wages. But, it was simply short-term opportunism, that contrasted starkly with his previous interventions to block the strikes of US dockers and rail workers, and to impose pay deals on them.

But the actions of the Democrats typifies the reasons that western social-democracy is breaking apart. In large part its down to its own internal contradictions of the antagonism between conservative social-democracy and progressive social democracy, the former representing the short-term interests of the ruling class owners of fictitious capital, the latter, objectively, representing the interests of large-scale, socialised, industrial capital. But, in part, it also reflects the fact, as described by the quotes provided from Trotsky, in my posts from 18 months ago, the fact that a large part of the “Left”, has itself subordinated itself, and, thereby, the working-class, to the interests of imperialism, sinking into a reactionary campist support for NATO imperialism, in its unfolding war against Russian/Chinese imperialism.

In the US, for example, it is apparent in the fact that the Democrats were willing to sacrifice the shut down of government, in order to try to avoid stopping providing yet more billions of Dollars in funding for the war it is fighting against Russia, in Ukraine. The Democrats, in other words, were prepared to sacrifice the interests of US workers, most directly all those workers employed by the US state, all those dependent on contracts from it, not to mention all those dependent on government programmes, in order to continue sending billions to Zelensky's, corrupt, anti-worker regime in Ukraine!

In the end, it couldn't do that either, because, not only did the deal to continue stop-gap funding for the US government, not contain funding for the imperialist war in Ukraine, but the Republicans themselves, then, have sacked House Speaker Kevin McCarthy, the first time in history, which now looks set to paralyse the operation of the House of Representatives. It is, itself, an indication of the decomposition of US Social Democracy, that is fracturing and crumbling like RAAC concrete. The US has never been an example of even healthy bourgeois-democracy. Much like Russia or Ukraine, it is really an oligarchy, in which votes are literally bought and sold by a tiny number of billionaires, much as happened with the buying of votes, in Britain, prior to the 1832 Reform Act, to obtain seats in the “rotten boroughs”.

Legislation in the US system is always in the form of omnibus bills that attempt to secure enough votes to pass by offering up fairly open bribes to the representatives of different constituencies – so called “pork barrel politics”. This is necessary, because US political parties are not actually parties at all, but simply electoral machines designed to get politicians elected. The parties lack even the kind of internal democracy, and cohesion that European parties display, itself dissolving, and rather being just loose associations of individuals, gravitating around vaguely defined class interest.

Much as with Brexit, in Britain, Trump has been able to bring together a sufficient coalition of the petty-bourgeoisie and lumpen elements, to secure a sizeable core vote. But, Biden and the Democrats, as with social-democracy, elsewhere, is still trying to prop up the collapsed model of conservative social-democracy of the last 40 years, based upon the interests of the ruling-class, and its need to inflate the prices of its assets. Not only is that, now, impossible, but, in seeking to do so, it has turned away the votes of millions of workers, undermining its potential to secure an electoral majority.

The same picture is repeated across North America and Europe. In France, the two main social-democratic parties – Socialist Party and Republican Party – collapsed. On their ashes arose Macron, who then created his En Marche, as a supporting band. But, it represented only a change of names and faces, and as Macron has proceeded to attack French workers, so the same consequence is seen, of a further strengthening of the reactionary forces of the petty-bourgeoisie, as symbolised by Le Pen.

In Germany, as the US blew up the Nordstream pipelines that provided cheap Russian gas, the government has tried to deny that responsibility, given that it also acted to implement NATO sanctions against Russia that have hugely increased the costs of energy and food in Europe, as well as having a significant dampening effect on European, and so, German economic growth, in the last year. The German social-democracy, is also, thereby, crumbling, and pushing thousands of voters in the direction of the fascists and ultra nationalists.

That picture was played out in last week's Slovakian elections too, where a reactionary, pro-Russian party was able to win. Despite labelling itself as social-democratic, SMER is a petty-bourgeois, nationalist, and socially conservative outfit, which indicates the way, such nationalism infects politics, as can also be seen with Blue Labour.

In Britain, this collapse of social-democracy is acute, as the Tories, like the Trump Party, in the US, are irredeemably lost to the ideas of reactionary, petty-bourgeois nationalism, but Blue Labour has also abandoned the ground of social-democracy, as it chases after them, in a goose chase after the votes of a minority of bigots and racists. The best hope, of the ruling-class, for social-democracy, would be the Liberals, but the behaviour of the Liberals, together with their attendant gaggle of opportunists, in 2019, in opposing Corbyn, destroyed any such possibility.

This is a picture seen on numerous occasions, as I have set out in the series of posts on Lessons of The Chinese Revolution, but is also described by Trotsky in his writings on events in Germany, leading up to the victory of Hitler, and drive to WWII, as well as in his writings on Spain. In the year of the 50th anniversary of Pinochet's coup in Chile, the same lessons could be observed, and, yet, the “Left”, many of whom continue, no matter how ludicrously, to continue to claim lineage from Trotskyism, are again repeating the mistakes of the social-chauvinists in WWI and II, and of the Stalinists and centrists in China, in the 1920's, and Europe in the 1930's.

Having created the conditions in which large sections of society were driven into the hands of fascists and nationalists, the social-patriots, Stalinists and centrists compounded the problem, by seeking to oppose fascism via a subordination of workers interests to those of the liberal bourgeoisie, in the rotten blocs of the Popular Front. 

In China, Stalin repeatedly held back the spontaneous actions of the revolutionary workers and poor peasants, in order to retain the “bloc of four classes” with Chiang Kai Shek. Trotsky warned it would lead to disaster, and, when, in April 1927 that disaster came, in the form of a coup by the KMT, and the slaughter of thousands of Chinese workers, the Stalinists, simply brushed it off, claiming they knew it was coming all along, because they knew that the bourgeoisie was only supporting the revolution “for its own interests”. Those same Stalinist arguments are presented, today, by the likes of the AWL's Jim Denham, as they defend their Popular Front with the Ukrainian oligarch's, and NATO, which Denham claims “defends workers interests”.

In Spain, the Stalinists repeated the error forming a Popular Front with liberal politicians who did not even, any longer, have the support of the bourgeoisie, which had itself gone over to Franco, despite the fact that the Stalinists again demanded the Spanish workers subordinate their own interests to it. Having failed to provide adequate leadership for the working-class, therefore, as in China, the revolution was lost, and the counter-revolution triumphed. It was the same errors that led to the overthrow of the Popular Front government of Allende, in Chile, in 1973. And, throughout the 1930's, that Stalinist strategy of the Popular Front, demobilised the working-class, misled it, and subordinated it to the interests of a bourgeoisie that simply utilised it for its own ends, before discarding it.

So, the arguments put by, for example, the pro-imperialist, Paul Mason, that we need such a Popular Front, today, fly against all the lessons of history, a history, which, as a former member of a Trotskyist sect, he should know. He writes,

“The Popular Front is the easy bit: the left and the centre, including truly centrist Republicans, have to construct a political alliance - at the top and the grassroots - to defend democracy.”

(Democracies don't have to die - but the USA is on the critical list)

He says, this after having set out the extent to which Biden and the Democrats have failed to win support for their own, such wishy-washy liberal politics! He doesn't seem to have understood the lesson repeated countless times through the history of the last century that the reason they failed to mobilise support from workers, was precisely the wishy-washy nature of those politics that gave no solution to the working-class, and, instead, subordinated their interests to those of the bourgeoisie, for the sake of this illusory unity of the Popular Front. Instead, much as with his own trajectory from “Trotskyist”, to left social-democratic cheerleader for Corbyn, to pro-imperialist cheerleader for Starmer, his solution is to liquidate the working-class even further, and subordinate it even further to the immediate interests of the bourgeoisie.

The reason for the rise of Franco, apparently, was not the contradiction of the class interests of Spanish workers and the Spanish bourgeoisie, but that the Popular Front between the workers and bourgeoisie was so successful that it provoked a violent response.  The lesson to that is presumably, don't be so successful, don't be so adventurous in the demands you seek to achieve!

“When you do it right - as the French liberal, socialist and communist parties did between 1934 and 1937 - the ethos of the whole of society changes. But sometimes the ethos of the far right is so strong, and so well-rooted, that the success of the Popular Front simply triggers violence. That's what happened in July 1936 in Spain and, in a smaller way, on 6 January outside the Capitol”.

(ibid)

That is nonsense on steroids. The French Popular Front demobilised a rising, revolutionary strike wave, and paved the way for fascism. The Spanish Popular Front openly attacked workers' strikes in Spain, and, yet, despite all of that the Spanish bourgeoisie threw its weight behind Franco, because its class interests were still threatened, much as the German bourgeoisie threw its weight behind Hitler, in 1933, and the Italian ruling class behind Mussolini in 1922. That is quite different to the condition, currently, in the US, or Europe.

The ruling class is not throwing its weight behind fascism. On the contrary, the fascists and nationalists are based upon, and representing the interests of the reactionary petty-bourgeoisie, which is, itself, antithetical to the interests of the ruling class, currently. Mason says,

“It will not matter that the majority of American voters and business want and need the rule of law. It will be rapidly eroded. The book burning and abortion bans that characterise Republican governance at state level will move to the next level: the nature of American capitalism itself.”

(ibid)

This is bourgeois liberal cretinism. It accepts without question, the liberal bourgeois idea that the state is synonymous with government, which clearly it isn't, as Allende could attest to were it not for the fact that that delusion resulted in his murder by the forces of the state! Nor, as some of those that have been discussing the 1973 coup, in Chile, recently, seem to think, could that simply have been avoided by having the Popular Front government backed up by extra-parliamentary mobilisation. Firstly, in respect of Chile, that requires understanding the relation between the actions of the government, as a Popular Front, on the consciousness of the workers, themselves, which is fundamental to whether and how they can be mobilised.

Secondly, it depends upon the nature of any such mobilisation. If their role is merely as walk-on, support for the government, that will inevitably act to demobilise them, and would, in any case, be insufficient. The reason that the soviets worked in 1917, is precisely because, they held the real power in society, as against the Provisional Government. Finally, the organised armed power of the soviets still has to contend with the established and significant armed power of the state. Again, the soviets succeeded in 1917, because, for months they had been eroding the armed power of the state itself.

The same is even more true in respect of any such petty-bourgeois rebellion.  The petty-bourgeoisie is amorphous and individualistic, making organising it like herding cats.  It lacks the economic and social weight of the proletariat, because it does not have the latter's relation to production.  Even more, then, does it rely for the success of any rebellion on a network of well established organs of alternative power.  A few bands of survivalist militia nuts in the woods, and spontaneously produced "flash mobs", simply don't cut it.

The whole of Mason's analysis is liberal superficiality, devoid of any class analysis. Take, for example, his comment,

“All this after Biden has wowed the business world with an agenda-setting industrial strategy, got inflation down below 4% and has regularly added upwards of 150,000 jobs to the economy per month.”

(ibid)

Its not Biden that has got inflation down below 4%, but the Federal Reserve, though the policies of Biden during lockdowns, of handing out huge sums of helicopter money to households, were responsible for that inflation surging in the first place. Whether that inflation – which is actually likely to be higher than 4%, for workers – stays down, as the Federal Reserve responds to the demands of capital to protect profits from rising wages, is another matter. Nor is it Biden that is responsible for the US economy generating 150,000 jobs per month, which is a function of the long wave cycle.

And, its that same fact, that we are still in an early phase of the long wave uptrend, resulting from the fact that, after 2010, global economic growth has been deliberately slowed, which means that the rate and mass of profit remains high, with no immediate reason that capital needs to resort to fascism, to protect profits against wages. That is what is fundamentally different to the 1930's, or even the 1970's. The biggest threat to the ruling class, comes, not from workers, requiring it to utilise fascism against them, but comes from the reactionary petty-bourgeoisie, and the fascists associated with it. That is precisely why, contrary to Mason's argument, the ruling class and its state will crush, by whatever means necessary, those fascist elements, as it did in Germany in the 1920's.

In fact, in the US, we can see that the ruling class, and its state, already is doing just that. The coterie around Trump have been hauled before the courts one after another, and demeaned, no matter how high and mighty they might have been, as with Giuliani. Now its happening to Trump himself, whilst the foot soldiers of the fascists have been rounded up and given more or less life sentences. The likelihood is, given the way US “democracy” operates, that there is, somewhere, a bullet with Trump's name on it, ready for if he does become President again, and does challenge those interests.

Chapter 1, A Scientific Discovery, 3) Application of the Law of the Proportionality of Value, A Money - Part 5 of 7

Marx sets out the argument, using wheat rather than gold, and says assume the king decrees that one muid of wheat will henceforth be called 2 muids. He would be a swindler, and all rentiers would immediately lose out, because their nominally fixed rents would be halved in real terms. However, this could not change economic realities, determined by social relations and supply and demand. What was once exchanged for 1 muid of wheat, would, henceforth, only be exchangeable for 2 muids of wheat, i.e. the wheat price of all other commodities would double, not, now, because of any change in their own value, or even the value of wheat, but, solely, due to the standard unit of measure of wheat having been halved.

The present day equivalent is “shrinkflation”, whereby producers of commodities, such as chocolate bars, do not raise their nominal price, but, instead, reduce the actual size of the commodity being sold.

“By changing the name we do not change the thing. The quantity of corn, whither supplied or demanded, will be neither decreased nor increased by this mere change of name. Thus, the relation between supply and demand being just the same in spite of this change of name, the price of corn will undergo no real change. When we speak of the supply and demand of things, we do not speak of the supply and demand of the name of things.” (p 80)

So, if, previously, suppliers of wheat demanded 100 litres of wine, and handed over 100 muids of wheat, in exchange for it, this physical relation would remain. Calling 50 muids 100 muids would not mean the owners of wine would accept 100 of these new muids, which amounts to only 50 of the old muids. That is the error that MMT, which repeats that of John Law, and others, of thinking that they can simply print money tokens and impress a value on it, and then have it act as though it can continue to be exchanged as though its value is determined by this impress, and not by fundamental economic laws.

“Philip I was not a maker of gold and silver, as M. Proudhon says; he was a maker of names for coins. Pass off your French cashmeres as Asiatic cashmeres, and you may deceive a buyer or two; but once the fraud becomes known, your so-called Asiatic cashmeres will drop to the price of French cashmeres. When he put a false label on gold and silver, King Philip could deceive only so long as the fraud was not known. Like any other shopkeeper, he deceived his customers by a false description of his wares, which could not last for long. He was bound sooner or later to suffer the rigour of commercial laws. Is this what M. Proudhon wanted to prove? No. According to him, it is from the sovereign and not from commerce that money gets its value. And what has he really proved? That commerce is more sovereign than the sovereign. Let the sovereign decree that one mark shall in future be two marks, commerce will keep on saying that these two marks are worth no more than one mark was formerly.” (p 80-81)

And, this is why these devaluations of the currency, via increases in liquidity, lead to inflation only after “long and variable lags”, as Friedman described it, of around 2 years. Those closest to the initial debasement, i.e. increase in liquidity, are able to benefit from this fraud, because they throw these tokens into circulation, and they are accepted at their nominal value. So, the state, obtaining currency directly from the central bank or mint, to pay for wages, purchases of commodities, services, infrastructure and so on, or, more recently, to hand out as furlough payments etc., gets away with this fraud, initially. So too might the commercial and investment banks, and they use it to lend out for whatever purposes, including speculation in financial assets. But, as this liquidity continues to gush forth, and spread out into the economy, in the form of demand for goods and services, whose supply has not increased, and whose value has not changed, so the fraud becomes apparent, and the money tokens are seen to have been devalued, so that, in every exchange, more of them must be handed over.

Back To Part 4

Forward To Part 6

Blue Labour Will Fail, Prepare For It Now - Part 9 of 10

As Marx sets out in Capital III, the socialised capital is the collective property of the associated producers (i.e. the workers in each enterprise), and so consequently, the ruling class owners of interest bearing capital stand in an antagonistic relation to them, not as, in the past, capital – labour, but as owners of interest bearing capital to collective owners of industrial capital, of interest to profit of enterprise. 

The interests of workers, as collective owners of that socialised capital, is to minimise the amount going to interest/dividends, but in the joint stock companies, they do not exercise control over that capital. It has been legally vested in its non-owners, i.e. the shareholders, and they have used that control, as yields on their assets fell, to compensate by devoting an increasing portion of profits to dividends, as described by Haldane, from 10% in the 1970's to around 70% today. A truly progressive social-democratic policy, therefore, would seek to change that.

The obvious means of doing so is that the unjustified position of shareholders exercising control over property they do not own should be ended. But, to demand that shareholders lose their control over companies, and that, instead, companies should be democratically controlled by their collective owners, the workers and managers in the company, is tantamount to demanding the socialist revolution, because the ruling class would not simply give up such control voluntarily.

That does not mean Marxists should not advocate it, as part of our programme, of socialist revolution, just as we do not have to immediately raise the demand for soviets, whilst noting their necessity for the success of the revolution. In the meantime, as I have suggested, elsewhere, in place of the petty-bourgeois attack on large-scale capital, represented by demands for increased taxes on corporate profits, Marxists should advocate lower, or no Corporation Tax, but much higher taxes on dividends, so that encouragement is given for companies to retain profits/maximise profit of enterprise, for capital accumulation, rather than paying them out to cover the revenues of shareholders.

It is not only as collective owners of socialised capital, however, that workers have an interest in maximising the profit of enterprise at the expense of interest/dividends. As Marx describes in Wage-Labour and Capital, under capitalism, the best conditions for workers exist, where the economy is growing and capital is accumulating more rapidly. Its in those conditions that more labour is employed, where greater stability for workers is created, and where this increased demand for labour makes possible higher wages. But, so long as capitalism, and commodity production and exchange persists, the underlying contradiction between capital and labour also persists, as Marx sets out, whether that capital is owned by a private capitalist, or collectively by the workers themselves.

“The co-operative factories of the labourers themselves represent within the old form the first sprouts of the new, although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour. They show how a new mode of production naturally grows out of an old one, when the development of the material forces of production and of the corresponding forms of social production have reached a particular stage.”

(Capital III, Chapter 27)

The workers, must still maximise the production of surplus value/profit, so as to maximise their own ability to accumulate additional capital, and thereby, to gain market share, and retain efficiency.

The ruling class also has an enemy in the petty-bourgeoisie, because the petty-bourgeoisie represents the remnants of the old petty commodity producers, and private capital. It clings to all of the outmoded facets of that past society that large-scale socialised capital has grown out of, such as the attachment to the nation state, as witnessed in the petty-bourgeois campaign for Brexit. So, although the working-class, as the collective owners of socialised capital, stands in opposition to the ruling-class, as owners of interest-bearing capital (fictitious-capital), whilst the petty-bourgeoisie also stands in opposition to that ruling class, there is no basis for the working-class, in any way, seeing the petty-bourgeoisie as its friend or ally against the ruling class.

The working-class stands in opposition to the ruling class because the latter has become conservative, and a fetter on further rational development of capital. It wants to move beyond the constraints that the ruling class place on that development. The petty-bourgeoisie, on the other hand, stands in opposition to the ruling class, from the opposite perspective. It sees the development of that large-scale capital, upon which the ruling class and its state ultimately depends, as already having gone too far. It wants to turn history back to a more primitive condition, of private capital, and the independent nation state, a condition which is a reactionary delusion, and impossible to achieve, which is why Brexit, in whatever format it is presented, is reactionary and doomed to fail.

All of Starmer's and Blue Labour's perspective, which is based upon that petty-bourgeois perspective, and attempts, purely for opportunistic and electoral considerations, to appease and appeal to those reactionary petty-bourgeois sentiments, is equally doomed to fail.

Back To Part 8

Forward To Part 10

Confusing Inflation and Prices

I read this article, at Social Europe, yesterday, and wanted to briefly respond to the fundamental confusion contained in it.

Many ordinary people confuse, inflation, manifest as a change in prices, with prices themselves. These are two quite different things. If prices are at an index level of 100, for example, and there is inflation of 100% p.a., then, after a year, prices will be at an index level of 200. If, in the subsequent year, inflation disappears, i.e. no increase in the level of prices, at the end of the year, the index level of prices will still be at 200, it will not have gone back to 100! It is understandable that ordinary citizens might get confused about this, and, as reported, frequently, hear that inflation is falling, and take it as meaning that prices themselves are falling. That economists make that mistake is not understandable. Yet, that apparently is what Ronald Janssen has done, in this article.

He writes,

“Inflation is instead driven by the supply side. Pandemic-linked disruptions—bottlenecks in global supply chains, the invasion of Ukraine, production shifting from services based on human interaction to consumer goods and back—are in the process of reversing. Global supply chains are being repaired and workers moving into sectors where labour is in higher demand. Inflation is thus coming down of its own accord, without much need to push unemployment up by squeezing demand.”

In other words, Janssen confuses a change in prices for the level of prices itself. If, as he claims, the “inflation” is a result of an imbalance of aggregate demand an supply, with aggregate supply having been curtailed as a result of the various supply-side shocks he lists, then, likewise, as those supply constraints disappear, not only should that “inflation” disappear, but it should be followed by an equal counteracting “deflation”, to reduce the price level to its former equilibrium level. If we take the price of ice-cream on a hot day, rising demand that exceeds supply may cause the price to rise from say £1 to £2, a 100% “inflation”, in Janssen's terms. When the weather cools, and demand subsides, to at least its previous level, prices would fall back to £1, a 50% “deflation”. But, does anyone seriously expect to see the same thing with the general level of prices? Of course not! Even if “inflation” falls to zero, rather than the 2% target of most central banks, we will not see prices, overall, falling back to where they were in 2020, or indeed falling at all.

According to Janssen, inflation arises from one of the two above situations.  Either I, aggregate demand rises, or II, aggregate supply falls.  He claims, currently, its due to II, not I.  But, in either case, this is not the cause of inflation.  If as Janssen claims, the inflation is a result of supply-side constraints (a shift of the supply curve to the Left from S`S` to SS), then the removal of those constraints, bringing a shift of the supply curve back to the Right, S`S`, would not only result in inflation disappearing, but in prices as a whole falling!

A simple supply and demand chart illustrates the problem with Janssen's argument, which fails to take into account that prices are measured by something, i.e. a standard of prices, whose own value affects that index. Suppose, on this chart of demand and supply, both are in balanced equilibrium at 1 million units, and a price of 10. (Say, in II, the intersection of S`S` and DD).  We have to ask the question 10 what? If we define this standard of price as £'s, its obvious that, if, instead, we used $'s, with an exchange-rate of $1.20 per £, then the equilibrium price would move to 12, even though there is no change in the level of aggregate demand and supply, no imbalance arising between them. Indeed, if we simply used UK pennies as the standard of price, the equilibrium price would rise to 1000!

But, similarly, as Marx describes, just because the nominal standard of price remains constant, at say £1, does not mean that this £1 has the same value. If that £1 actually only has a value of £0.80, compared to a year earlier, as a result of an excess of these £1's being thrown into circulation, it would be the same as if prices were measured in $'s rather than £'s, or as Marx also demonstrates, silver being used as the basis of the currency rather than gold. Without any change in the level of aggregated demand and supply whatsoever, no imbalance of one with the other, prices would rise from 10 to 12.

Janssen confuses form and content, and is transfixed simply by the impress on the standard of prices, much as Marx describes was the case with Proudhon.

“Philip I was not a maker of gold and silver, as M. Proudhon says; he was a maker of names for coins. Pass off your French cashmeres as Asiatic cashmeres, and you may deceive a buyer or two; but once the fraud becomes known, your so-called Asiatic cashmeres will drop to the price of French cashmeres. When he put a false label on gold and silver, King Philip could deceive only so long as the fraud was not known. Like any other shopkeeper, he deceived his customers by a false description of his wares, which could not last for long. He was bound sooner or later to suffer the rigour of commercial laws. Is this what M. Proudhon wanted to prove? No. According to him, it is from the sovereign and not from commerce that money gets its value. And what has he really proved? That commerce is more sovereign than the sovereign. Let the sovereign decree that one mark shall in future be two marks, commerce will keep on saying that these two marks are worth no more than one mark was formerly.”

(The Poverty of Philosophy, p 80-81)

The Chinese Revolution And The Theses of Comrade Stalin - Part 23 of 47

Trotsky sets out all of the things that the Chinese Communist Party did that led up to the catastrophe. Knowing the fact that Chiang Kai Shek had launched a coup in 1926, they even hid this fact, as part of trying to continue the bloc with the KMT; they attempted to use the Right, but were used by it; they failed to exercise independent organisation and politics; they sacrificed the interests of workers in practice; so as to maintain the bloc with the KMT, they failed to seriously try to win over the soldiers, and allowed the KMT to establish a “military dictatorship of the centre”, i.e. of the counter-revolution.

“On the very eve of the coup d’état we blew the trumpets for Chiang Kai-shek. We declared that he had “submitted to discipline”, and that we had succeeded “by a skilful tactical manoeuvre in forestalling an abrupt turn to the right that threatened the Chinese revolution”. We remained behind the events all along the line. At every step we lost in tempo to the benefit of the bourgeoisie.” (p 39-40)

The same disastrous results flowed from every such Popular Front, and, repeatedly, we see those same kinds of practice of denying the right-wing, corrupt, anti-working-class nature of the bourgeois regime or forces that are being supported, in the name of maintaining a broad front, for peace against imperialism, or against fascism, and so on. Indeed, against all sorts of things, rather than ever for Socialism.

The Stalinists tried to cover their mistakes by even claiming that Chiang Kai Shek had been provoked by the ultra-left excesses of the workers of Shanghai!

“The “mistake” of the Chinese workers lies in the fact that the critical moment of the revolution found them unprepared, unorganized and unarmed. But that is not their mistake, it is their misfortune. The responsibility for it falls entirely upon a bad leadership, which let every interval pass.” (p 40)

There is also a lesson, here, in relation to the experience of the “Left”, in Britain with Corbynism. Corbyn, and his supporters, again guided by these same Stalinist principles, at every stage, failed to separate themselves from the Right, entrenched in the PLP, and the party bureaucracy, and local councils. In the story of the Chinese revolution, they occupy the same role as the Left Kuomintang.

The “Left”, inside the LP, is engaged in a Popular Front. The Labour Party is a party whose membership is comprised of workers, the large majority of whom are progressive social-democrats, but whose leadership, in parliament, is comprised of conservative social-democrats. In other words, the party members are still dominated by the ideas of bourgeois-democracy, but have some vague notion that it can be used to win some significant improvements for workers, both in terms of living standards and position in society. The conservative leadership has no such illusion, and sees its role solely in pro-capitalist terms, in which it is there to advance the interests of capital, which it can't distinguish from the interests of shareholders etc., and, only as some possible side effect, might that, then, benefit the workers it hopes will continue to get them elected.

In 1917, the Bolsheviks raised the demand “Down with the capitalist ministers”, in relation to the Provisional Government, as they sought to pressure the reformists within it to transform it from a Popular Front into a Workers Government, comprised of reformists and centrists. The equivalent would be, in relation to the Labour Party, to demand “Down with the capitalist MP's”, meaning 90% of the PLP! But Corbyn, and his backers, when he was Leader, made all the same mistakes as the Stalinists, in China, in 1925-7. Instead of driving forward with a democratisation of the party, to get those right-wing, pro-capitalist MP's deselected, they pulled back on the reins of party members seeking to hurry that along.

At each stage, they attempted to maintain that bloc with the Right-wing MP's, who simply used that to launch their coup against him, and, even after that, they still failed to move against the Right, instead accommodating the Right further, as it shifted its strategy to undermining Corbyn's supporters, in the membership, by launching, first, its abortive claims about “intimidation”, and infiltration, aimed at Momentum, before latching on to its successful tack of its fake war on “anti-Semitism”. In the latter case, the failure of Corbyn and the leadership to stand up to the Right was compounded by the fact that they were complicit in witch-hunting thousands of party members, the consequence of which was the witch-hunting of Corbyn himself.

Back To Part 22

Forward To Part 24

Blue Labour Will Fail, Prepare For It Now - Part 8 of 10

What we have is a good example that the mantra “My enemy's enemy is my friend”, is nonsense. The ruling class has two enemies. Its main enemy is the working-class, but, as Marx describes in Capital III, the basis of that is no longer that which it was in the early days of the monopoly of private capital. At that point, there was an objective contradiction between the interests of the private owners of industrial capital, and that of workers. The former sought to maximise surplus-value/profits, and that meant keeping wages to a minimum.

However, by the latter part of the 19th century, that condition had changed, and those private capitalist expropriators had themselves been expropriated by large-scale socialised capital. The private capitalists retreated to become owners of fictitious-capital, i.e. interest bearing capital, in the form of shares, bonds, and their derivatives. The contradiction was no longer between the ruling class and workers on the basis of the antagonism between profits and wages, but between the ruling class as owners of interest-bearing capital, and real industrial capital itself, i.e. between the maximisation of interest/dividends, and the maximisation of profit of enterprise.

“interest-bearing capital as such has not wage-labour, but productive capital for its opposite. The lending capitalist as such faces the capitalist performing his actual function in the process of reproduction, not the wage-worker, who, precisely under capitalist production, is expropriated of the means of production. Interest-bearing capital is capital as property as distinct from capital as a function. But so long as capital does not perform its function, it does not exploit labourers and does not come into opposition to labour.”

(Capital III, Chapter 23)

In other words, the interests of interest-bearing capital, are antagonistic to the interests of real, industrial capital. But, the expropriation of the expropriators, described by Marx, i.e. the expropriation of private capital by large-scale socialised capital, be it in the form of cooperatives or joint stock companies, and transformation of the ruling class into a class of coupon clippers, owners of fictitious capital/interest-bearing capital, means that this ruling class is imminently antagonistic to the capitalist system which created it!

Yet, this contradiction is also detailed by Marx, and shows the problem faced by the ruling class and its state, currently. The superficial appearance of this fictitious or interest-bearing capital, is that it produces interest, naturally, in the same way that a pear-tree produces pears. But, that is impossible, because interest is a deduction from profits, and profits are a function of surplus value, produced by labour.

“The idea of converting all the capital into money-capital, without there being people who buy and put to use means of production, which make up the total capital outside of a relatively small portion of it existing in money, is, of course, sheer nonsense. It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists. But we repeat that it is a fact for the individual capitalist.”

(ibid)

This is the problem that the ruling class and its state has had to confront for the last 30 years, and particularly the last 15 years. As asset prices inflated, when money-capital did suffer a “frightful depreciation”, as its supply from surging profits in conditions of stagnation and intensive accumulation, meant that interest rates fell, so there comes a point, where, for some owners of money-capital, the fall in the yield/rate of interest, is not compensated by the rise in the mass of capital. That is apparent for someone who just, has, say £200,000 in a savings deposit. With a 10% rate of interest, they obtain interest of £20,000 a year, which may be enough for them to live on. As interest rates fall to 2%, their interest falls to just £4,000 a year, and not enough to live on. Hence the shift of such savings to the purchase of buy-to-let property, or alternatively to shares, in which the amount of dividends might rise, as company profits rise.

But, if we, then, take these shares, profits and dividends, if the same £200,000 is used to buy 200,000 shares of a company that produces £200,000 of profit, and pays out £20,000 in dividends that again is a 10% return. If, however, the profits rise to £300,000, and it pays out £30,000, but the price of the shares rises from £1 to £2, so that the 200,000 shares are now equal to £400,000, this £30,000 only represents a yield of 7.5%. To begin with, the person who only paid £1 for the shares will see their yield as being, now, 15%, but for anyone, now, coming to buy the shares, the yield will be just 7.5%. Indeed, the original purchaser will see that they have an asset with a current value of £400,000 that only produces a 7.5% yield, and compare that to the yield they could obtain elsewhere. As interest rates fall and asset prices rise, this becomes more acute. But, what Marx could not have foreseen was that, as this process unfolded, over the last 40 years, with a ruling class that now owns its wealth in the form of this interest-bearing capital, it would begin to focus on the total return, and specifically the capital gain, rather than on the actual revenues produced by the assets.

If the share price rises to £10, buyers of these shares, who have the original £200,000 to spend, will only be able to buy 20,000 shares. So, even if the profit per share rises from the original £1 to £3, and the portion of profit paid as dividends remains 10%, the dividends on these 20,000 shares falls to just £6,000. That was the problem faced by workers' pension funds that had more or less the same amount of money in contributions paid into them, but saw the quantity of shares and bonds those contributions could buy slashed, as bond and share prices soared to astronomical levels, in the 1980's and 90's, relative to the profits produced by the underlying industrial capital. It was worsened by the fact that, to compensate, those funds looked to realising capital gains, resulting from those soaring prices, rather than from increased revenues.

There is a limit to which the small scale owner of such assets can simply sell a portion of the assets they own so as to convert the capital gain into revenue, because, at some point, all of their assets are sold. But, the ruling class has such a large mass of such assets that, even with its extravagant consumption, it can fund that consumption by a combination of the revenues from them, with partial liquidation of assets to realise capital gains. But, that depends upon those capital gains continuing, i.e. on asset prices not crashing as happened in 1987, 1994, 2000, and 2008, and as Jim Rickards records, nearly happened in 1998, at the time of the collapse of LTCM.  The ruling class has, therefore, used central banks to ensure that whenever such falls occur, liquidity is injected to purchase assets and raise their prices. But, that does nothing to increase the revenues produced by those assets, so that the yields on the assets fell further, as the asset price rose, even resulting in the ludicrous position of negative yields on assets.

To avoid that, the ruling class needed to avoid economic growth exceeding what could be funded without causing interest rates to rise, and asset prices to crash. Hence austerity, lockdowns and so on. But, despite its best efforts, it has failed to achieve that, in the long run. The interests of real industrial capital, is to minimise the amount paid out in interest/dividends, and so to maximise profit of enterprise, as the means to accumulate capital, and so, produce more profit. But, the immediate interest of the ruling class, is to maximise the amount of dividends/interest it receives, or else to maximise capital gains via perpetual rises in asset prices, which requires it to use its control over the state to hold back economic growth, and, thereby, interest rates!

Back To Part 7

Forward To Part 9