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floreal79 · 3 years ago

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The Evanescence of Bourgeois “Democracy”

Part 1: A Modern Marxist Analysis of History from 1789 to the Present

Two and a half years after the coronavirus pandemic first shook the world, capitalism internationally is facing a slew of crises, both economic and political; of course, the latter are mainly driven by the former, although the ways this happens are often complex. The crises facing the United Kingdom are particularly severe and, as ever, it is the poorest members of society who will suffer the most. This harsh reality for the UK can, as will be argued here, be traced to the extreme degree to which that country has adopted the “laissez-faire” model of capitalism (otherwise known as neoliberalism - the term that will be mainly used from here on) over the last forty years. In this time, the UK has lost much of the manufacturing core that once made it the strongest economy on the planet, and its economic activity now is dominated by a “rentier” class of stock exchange dealers, insurance companies, property developers and bankers, and the much of the workforce is no longer employed in large, trade unionised, but in the precarious “gig” economy of fast food outlets, distribution centres, “zero-hour” contracts and so on. Indeed, in these respects the modern UK economy probably has more in common with that of the ancient feudal system than it does with the society of late nineteenth- and early twentieth-century industrial capitalism.

When Marx and Engels wrote that “the history of all hitherto existing societies is the history of class struggle” they summarised a scientific theory (“historical materialism”) that remains to this day unsurpassed as a tool for analysis of political developments. Briefly, this says that whatever the ruling group, the wealth of society is created by the work of the masses and all history is of class struggles that revolve around how to distribute that part of this created wealth remaining after allocating to the the workers just what is needed to keep them alive and continuing work. Yet the way these struggles have played out since Marx’s time has not been as he had expected. This is perhaps because, while the analytic tool, “historical materialism”, was good, the interactions between the forces it described (“class forces”) have varied in ways that neither he nor most of his successors had not, and could not have, foreseen. To use an analogy of physical forces, the character of the forces were correctly described (“historical materialism”), but the estimates of their powers were inaccurate, so the outcome of the interaction between them differed from what had been predicted.

Before Marx’s time, class struggles had almost entirely been between different classes of actual and would-be rulers, while the majority of the populace, those who make up the working population and are the true creators of wealth, rarely acted as an independent force. During the seventeenth century English Revolution the dominant struggle, although often framed in religious terms, was very definitely one between two groups who wished to rule and to distribute society’s wealth in the way that suited their particular class: the established nobility and the newly-emerging bourgeoisie. Those at the bottom of society played little role other than providing the foot soldiers for when the struggle became an armed one: even if the period did see the emergence of such embryonic groups of militant workers as the Diggers and Levellers, these played a marginal role at most.

A little over a hundred years later, in 1789, the great French Revolution marked the beginning of a similar struggle between opposing ruling or would-be ruling classes in France, but now the masses now showed a clear determination to act in their own interests, not just a to play a supporting role on behalf of the bourgeoisie. For the first time, the “ordinary people” held, if only briefly, a considerable agency in the running of their own lives. The “sans-culottes” may not have been “proletarians” in the classic Marxist sense, but they were certainly largely composed of people form the least wealthy sections of urban society, people whose working lives were spent creating wealth for others. They were “les damnés de la terre”, the “wretched of the earth”, every bit as much as the later workers, now truly proletarianised, of the great and tragic Paris Commune. For a short time, between 1789 and 1794, working people had a huge direct influence on how society was run.

Although after Thermidor (July 1974), the masses were suppressed, the bourgeoisie had gained enough power to ensure that a return to old feudalism was now impossible. Succeeding decades saw the bourgeoisie and the rentier class jostling for dominance in France, and occasionally the “wretched” (who, as manufacturing capitalism gained strength, increasingly became truly proletarian) flexed their political muscles in significant ways, notably in 1848 and 1871: on both of these occasions they were again ruthlessly suppressed, but, as in 1789, the actions of the oppressed were useful to the manufacturing bourgeoisie in its struggle against the rentier class. Writing about the class struggles in France during the tumultuous period from the Revolution of 1848 to the establishment of the Second Napoleonic Empire in 1851, Marx focused much attention on the conflict between the “real industrial bourgeoisie”, a relatively young class at the time, and the more-established rentier class of “finance aristocracy”, made up of “bankers, stock exchange kings, owners of coal-mines, ironworks and forests, landed proprietors”. Bonaparte came to power by jtaking a position that balanced between the two forces. After the fall of the Second Empire, with its defeat in the Franco-Prussian War of 1870-1, the bourgeoisie held sway and over the next period the struggle between bourgeoisie and proletariat became the dominant feature of politics in France as elsewhere., But the rentier class never left the scene, as finance remained essential to capitalist development. As Michael Hudson put it:

“Marx expected increasingly capital-intensive production to require more credit.. (and) asserted that the destiny of industrial capitalism was to modernise finance, tuning usurious lending into productive industrial banking… (but he) proved too optimistic”.

In the above, France has been used to illustrate the rise of the bourgeoisie in the face of opposition from the rentier class; although the processes varied greatly in other countries (notably the UK, where capitalism had become established earlier, and the USA where there was never a powerful indigenous rentier class) a broad pattern can be discerned in the events of the century or so that began in 1789. The bourgeoisie fought against the aristocracy by aligning themselves with the aspirations of the oppressed masses although all the while maintaining their own ways of oppressing these in their turn (“wage slavery”). But, if the demands of the working class were never allowed to challenge the overall dominance of the ruling class, some accommodation with them was expedient, both politically and economically, and this accommodation gave rise to a form of politics that became dominant in the western capitalist countries during the first eight decades of the twentieth century in the form of bourgeois “representative democracy”, embodied in such ideas as those of “One Nation Tories” in the UK, Roosevelt’s “New Deal” in the USA, and numerous “social democratic” regimes in Western Europe (between “social democrats” and the traditional parties of the bourgeoisie only fine distinctions could be made in that era), with increasing living standards (including welfare provision) for the working class. After 1980, or thereabouts, things started to move in a different direction.

In the third decade of the twenty-first century, the world of western capitalism looks very different. Manufacturing is now only a small part of the economy of the UK, and the trend towards this can be seen, less extremely but still very clearly, in other major western economies. Alongside this, trade unions have lost much of their power. Social inequality has reached gross extremes: billionaires’ wealth is rising almost exponentially, while ever more people depend on food banks. Homelessness is widespread and destitution is desperately evident on the streets of all our cities to an extent that would have been unimaginable forty years ago. After many decades of gradual increase, the life expectancy of the less wealthy sections of the communities is now in decline (this is perhaps one of the most objective measure of all of the changes taking place). The long-term benefits of expanding the productive aspects of the economy have been relegated below the interests of the financial sector and its rentiers. This sector has been described as the “FIRE economy” by Michael Hudson, “FIRE” being an acronym of Finance, Insurance and Real Estate. This group has evolved out of the “finance aristocracy” that Marx refers to in his writings on mid-nineteenth century France; as Hudson points out, Marx thought this sector would become peripheral to the major struggle between capital and labour, but on the contrary it has now risen to dominate the major capitalist economies, but it is perhaps simpler to just use the term“rentier class”. To understand the current class struggle, and thus the dynamics of modern international politics the historically shifting nature of the relationship between the three elements manufacturing capital (“the bourgeoisie”), finance (the ‘rentier” class) and labour needs to be appreciated; the appreciation that it has always been an interaction between THREE rather than two classes is the clue to understanding why history has not followed the path that Marx foresaw.

When the bourgeoisie needed to shake itself free of the old rentier class, it needed to enlist the help of labour with promises of freedom (“Liberté, Égalité, Fraternité” a prime example), although on gaining power these were usually wound back - but not always entirely. During the peak of western industrial capitalism (“The Golden Age of Capitalism”), concessions were made, as described above, and the rentier class was relatively quiescent. But the globalisation of production, which developed rapidly during the latter part of the twentieth century, strengthened the rentiers and weakened the working class. Although the rentiers and the bourgeoisie have different agendas over what to do with their profits in the long-term, they both want to maximise these profits, so their interests overlap, and indeed the different roles merge, so that any individual bourgeois or rentier can be seen as having a foot in both camps. As the manufacturing base of the western economies declined and the working class became weakened by globalisation, the bourgeoisie of the old capitalist states came increasingly to identify with the rentier class as the neoliberal agenda advanced. While tensions between the two persist, neither can now escape the symbiotic relationship that exists between them. The relative balance of power has shifted very much towards the rentier class, which now increasingly dominates the bourgeoisie, and the extent to which this has happened varies between different “advanced” economies. The UK is probably where the rentiers’ power is at its greatest, especially since Boris Johnson roundly defeated the pro-European element of the Tory party.

And by now the other side of globalisation has seen the national bourgeoisies of less wealthy nations often at conflict with the international rentier cartel, and we are seeing on international scale, struggles that have many parallels with the national struggles described in France by Marx nearly two hundred years ago.

Part 2: The International Three-Sided Class Struggle of the Twenty-first Century

To briefly recapitulate the argument of Part 1:

Historically, although the English Civil War of the seventeenth century was the first major armed struggle between manufacturers and rentiers, it was in France in 1789 that the poorest sections of productive society first acted as a major independent force. The sans-culottes may not have been proletarian in the true Marxist term, but their evolution was in this direction historically. The bourgeoisie, in its struggle to establish the capitalist form of production in place of feudalism, recruited the working people to its cause with promises of democratic reform using slogans such as “Liberté, Égalité, Fraternité”, but became frightened when the masses took these seriously, and the repression of Thermidor ensued. But the bourgeoisie had by this time made gains against the feudal rentier class. This three-way struggle between workers, bourgeois and rentiers continued through he nineteenth century, as Marx described. As capitalism became established, the struggle between bourgeois and workers overshadowed all else, but the rentiers (now “finance aristocracy” and landowners) continued to influence the bourgeois, and this influence has - contrary to Marx’s expectations, but as so well described by M Hudson - gradually increased, and the bourgeoisie of the older industrialised countries has largely become an arm of the rentier class. But tensions exist between all classes, both within countries, and, very strikingly today, between the globalised interests of the rentier class and the national bourgeoisies of countries where capitalism is younger. Over the whole period since 1789 (even before), the bourgeoisie has shifted from alliance with workers to alliance with rentiers and back with the winds of changing economic circumstances, and different sections of the bourgeoisie have shifted at different times. This three-way class struggle is more nuanced that the two-sided battle between capital and labour that seemed to Marx to be the emerging pattern at the end of the nineteenth century (and which actually did dominate for nearly 100 years).

Examples

The “Bad Samaritans”

“Bad Samaritans” is the title of a book by Ha-Joon Chang; it is suggested (as follows) that his economic arguments accord with the class-based analysis outlined above.

Chang has shown how the economic power of the international rentier class is exerted internationally by the neoliberal-dominated IMF, World Bank, World Trade Organisaton, “The Unholy Trinity” he calls them. These bastions of “free market” thinking, he argues, impose policies that effectively prevent low and middle income countries (LMICs) from developing their own manufacturing base.

In class terms (not used by Chang), these policies usually means effectively suppressing the aspirations of the national bourgeoisie - just as in earlier centuries, within individual nations, the rentier class attempted to suppress the development of national capitalism.

The consequence of this enforced neoliberal agenda is that the economies of countries across the “Global South” remain undeveloped and their populations remain in poverty. Chang quotes the example of his native South Korea as an example of a country that escaped this by adopting the very practices that the “Unholy Trinity” enforce these days, using import tariffs and other “protectionist” measures, and was thus able to achieve an “economic miracle” (Korea was able to do this in the era before “Bad Samaritan” economic enforcement began to be vigorously imposed). At the end of the Korean War, the majority of its population was barely at subsistence level, by the beginning of the twenty-first century a car worker in a Hyundai factory in Korea was earning more than his counterpart in the Ford factory in South Wales. (And today, in 2022, the Hyundai worker is still employed whereas the Ford operation in Wales has closed down).

The “globalisation” of the latter part of the twentieth century that both stimulated and was stimulated by the rise to dominance of neoliberal economics with the consequent re-established power of the rentier class has , by contrast to South Korea, been disastrous for most LMICs, as Chang demonstrates. But in a few cases, the national bourgeoisie has wished to develop its own form of capitalism not subservient to the demands of the neoliberal West, and this has sometimes led to retribution, especially if the country concerned was one with large petrochemical resources, resources viewed as so vital to the advanced industrial economies.. Examples of this are Iran, Syria, Iraq, and Russia. In all of these countries a national bourgeoisie has evolved that does not wish to be subservient to the US neoliberal hegemony; Iran is constantly threatened, Iraq was militarily attacked, Syria attacked indirectly, and the war in Ukraine is effectively a proxy war of the US against Russia.

2) Russia

The Ukraine War has resulted in unprecedented levels of hostility to Russia in the bastions of neoliberalism. No attempt is made by any of the mainstream media to present a balanced view, and pro-Russian opinions are suppressed in a way that was never seen before even during the height of the Cold War against the Soviet Union. But this antagonism has not arisen recently, it long pre-dates the Ukrainian conflict, and Vladimir Putin has long been portrayed as an authoritarian anti-democratic tyrant, despite his repeated success in elections that are quite as democratic as those of most self-proclaimed “democracies”. (Real tyrants, such as the leaders of many Middle Eastern countries, never receive remotely such opprobrium from the reptile press of the West).

With the collapse of the Soviet Union, the leaders of the West had high hopes of an “amicable” relationship with the new Russian government, and early signs, while Russia was led by Boris Yeltsin, suggested that this would be so. But the accession of Vladimir Putin to the Russian Presidency marked the beginning of a sea change in the relationship. Why was this?

Of course, the western narrative is to attribute the change to Putin’s personal characteristics (“failings” in their eyes, some might see it differently). A “class analysis” in Marxist terms gives a better explanation.

Despite the economic disaster of Yeltsin’s time in power, Russia retained a large industrial base, as well as possessing huge natural resources. Control of all of these was, of course, what international finance capitalism hoped for after the collapse of the Soviet system. But within Russia, the melting pot of the 1990s quickly gave birth to a group of national capitalists, who saw their interests in themselves taking control of Russia’s resources, and developing them in the fashion of traditional manufacturing capitalism. It is the interests of this group that Putin represents, and their interests conflict starkly with those of international finance. The “rentier” characteristics of the neoliberal financial class now make them resemble the feudal landlords of pre-capitalist Europe more than the manufacturing capitalists of earlier days in the western “democracies”. The struggle between the national bourgeoisie of Russia and the international financial class of rentiers has clear parallels with that between that between the industrial bourgeoisie and the “finance aristocracy” described in Marx’s writings on mid-nineteenth century France.

3) China

From its earliest days, the leaders of the Chinese Communist Party always understood the importance of the national bourgeoisie, both in the early struggle against the Kuomintang and the Japanese invaders and later in the economic miracle that was launched by Deng Xiaoping fifty years ago. But under the leadership of the CCP, the bourgeoisie in China has not taken control of the state, and so continues to perform a useful role in expanding productive capital and hugely increasing the wealth of the country. How long such a position can continue, as there are inevitable pressures on the ruling cadre of the CCP to acquiesce in “financialisation”, is a topic for discussion elsewhere; an interesting analysis of Xi JinPing’s position was recently published by Branko Milanovic (https://branko2f7.substack.com/p/the-rule-of-nihilists?utm_medium=email&amp%3Butm_campaign=cta&amp%3Baction=share&utm_source=substack)

4) The UK - and Brexit

The Conservative party, formerly the Tory Party, has always been the bastion of reaction, but the political interests it represents have actually shifted as the relative positions of the rentier class and the bourgeoisie have shifted, and these shifts can often be discerned as tensions between different sections of the Conservative party. The Brexit issue is a recent very good example of this.

In the early nineteenth century as the transition from feudalism to capitalism was not fully completed, the Tories generally represented the old aristocracy rather than the new “middle class” (this is nicely portrayed in Walter Scott’s novel “Waverley”, widely regarded as the first-ever “historical novel”). As capitalism flourished, the aristocracy on a personal level became entwined and inter-married with the wealthier manufacturers, and the politics of the Tories came increasingly to represent the interests of the bourgeoisie. This “merged” ruling class nevertheless continued to encompass conflicting interests: the “rentier” tendency, always wishing to cream off the profits of manufacturing for use in further speculative ventures (property and finance being attractive, just to take some) whereas the “manufacturing” group were more inclined to put this money into achieving capital accumulation by means of increasing wealth production. This latter, as discussed previously, entailed conceding to material and welfare demands of the working people. But, since about 1980, as the power of organised labour has diminished (largely as a result of globalisation), the “rentier” elements have increasingly dominated over the “manufacturers”. This has not been without some resistance, a good example of which can be seen in the struggle between the “pro-Europe” and “Brexit” wings of the Conservative Party. Although much of the structure of the European Union has become increasingly tied to neoliberal agenda, the fact remains that it retains a solid manufacturing hub, especially in Germany, and has policies that protect this. Such regulations are anathema to neoliberals, although of course, their opposition to them was expressed in jingoistic flag-waving terms. By way of an illustrative example, on the “Brexit” side, one of the most prominent public figures was the Conservative politician Jacob Rees-Mogg. Not so many years ago, this foppish character would have been laughed off as a modern version of PG Wodehouse’s fictional comedy character Bertie Wooster. Just as did Wooster, Rees-Mogg derives his income from property owning (hedge funds in the latter case; it would not have been considered polite to enquire closely into the details of Wooster’s income). But in modern Britain, Rees-Mogg has been a very serious player in the Brexit debate as a leading proponent of the “Leave” campaign. By contrast, the Confederation of British Industry (CBI), a bastion of earlier Conservative politics, and which can be regarded as a voice piece of “old” manufacturing capital, was staunchly in favour of remaining with in the EU.

This struggle within its ranks was at times very harmful to the Tories, but eventually was settled with the routing of the pro-Europeans by B Johnson in one of his first acts as Prime Minister. The rentier class is now in total control in the UK more so than in any other major country, and this has potentially disastrous implications for the future of the British economy.

It is widely claimed that the UK “is one of the wealthiest countries in the world”. But can we define exactly what this means, on what metrics is such a claim made, and how stable are these metrics? These are questions that need addressing - but perhaps elsewhere.

Part 3: Historical Résumé

As already remarked, the class struggle of the 20th century has not developed in the way that Marx anticipated. Marx had expected that the struggle between proletariat and bourgeoisie would eclipse all other issues. But history has shown, as has been outlined here (and more exhaustively by Hudson) that the rentier class has continued to be involved and in much more than the minor way that Marx had expected.

The proletariat has never had common interest with the rentier class (just as, in earlier periods the French sans-culottes had no common interest with the aristocracy, nor Russian serfs with the landowning nobility) but at times the bourgeoisie did have common interest with the proletariat against the rentiers.

At other times, notably in the current period, the bourgeoisie tends to align with the rentiers and then the effect on the working class can be disastrous, as seen in the UK in recent years6.

In its struggles against the rentiers (nobility) of earlier times, as it established the capitalist mode of production, the bourgeoisie usually enrolled working people to support it, using appeals for freedom, democracy and so on. Working people were able to achieve some gains as a result of this. The bourgeois democracy and welfare gains of the first half of the twentieth century are manifestations of this. At the same time, the power of the working class meant that the demands of the rentier class were held in check, and capitalist accumulation led to increasing wealth for most sections of the population.

But the rentier class has been able to insidiously regain control, now by merging its interests with the short-term ones of the bourgeoisie, with globalisation playing a large role in both making this possible and in itself being driven by it. We now have an alliance of rentiers and bourgeois that is increasingly confident in its ability to suppress working class aspirations, and has been increasingly doing so for forty years. And as well as the attacks on living standards and welfare, the ruling elite now sees little need to retain the democratic values that they temporarily espoused, and pretended to value so highly, in the preceding period. These values were put forward to enrol the workers into the early struggles of the bourgeoisie against the rentiers, but as common interests of the bourgeoisie and rentiers become dominant, the veneer of democracy becomes increasingly dispensible.

In the social - or “liberal” - democracies of the mid-twentieth century the bourgeoisie realised that its long-term interests, alongside increasing overall wealth through capital investment, were served by making concessions to the working class, and many great gains were made in the living conditions of working people, as outlined previously. But control of the state never passed into the hands of the working class in any of these places and the current fusion of bourgeoisie with the rentiers threatens the complete erosion of these gains..

The rentier class is always keen to minimise anything that diminished their financial gains, so opposed any concessions to the working class that reduced the level of profit that they could take for use in their financial speculations. While the working class was strong, the bourgeoisie saw that its best interests lay to some extent in recognising their demands, but as globalisation weakened the power of the workers (the miners’ strike of 1984 in the UK being emblematic of this), the bourgeoisie moved towards the rentiers. This is the emergence of neoliberalism: its devastating impact on the societies where it has taken hold are multitudinous. Beyond these social effects, as the rentier class again exerts its power the process of “financialisation” has a far-reaching deleterious effect on the economy. The “surplus value” that might have been reinvested in capital accumulation is diverted to financial speculation inevitably leading to a gradual weakening of overall productive capacity. A mode of production where the surplus value of its workers is all siphoned off into financial speculation not only harms the conditions of the workers: it fundamentally weakens the productive, wealth-creating development of the society. Capitalism replaced feudalism because the accumulation of capital was used to expand the “working” capital that increased the total of wealth created. Under feudalism - and now under “neoliberal capitalism”, accumulation of productive capitalism is relegated again to a secondary position, behind the need to maximise financial returns

Unlike the rise to dominance of the bourgeoisie over the old renter class, the the transition to a renewal of rentier dominance has taken place without major social upheavals. It has also only been partial,, as the process has been one of absorbing the bourgeoisie into the neoliberal rentier class and the extent to which rentiers control a country varies from place to place. In general, though, it can be seen that the more power the rentier class has gained, the worse the impact on the country’s overall economic performance; the UK probably is probably the extreme example of near total dominance by neoliberal economic policy: the nation’s whole economy has come to be dominated by financial and service sectors with and a dramatic manufacturing decline accompanied by minimal infrastructure investment over four decades. As previously mentioned, Brexit, leaving the EU on terms acceptable to the “European Research Group”, a collection of “free market” (neoliberal) right-wing Tories, has removed the largest obstacles to further continuing this course. Other western countries have moved along the same road, but few if any have travelled as far.

The bourgeoisie overthrew the rentier class of old because their manufacturing capitalism was far superior in wealth creation (creation of “value” in classical Marxist and Ricardian economics), Now that rentiers again control economic policy in the old capitalist countries, wealth creation is suffering while those countries, especially China, where the international rentier class have no hold, are already rising to dominate the world economy.

In effect, the rise of neoliberalism in its most extreme form, as in the UK, might be seen as the emergence of a new form of feudalism: wealth is concentrated in the hands of a few obscenely wealthy people who play no role in productive industry - the rentiers. There is only a vestigial manufacturing base as increasing numbers of working people are employed in service industries, usually with very poor working conditions: no unions, “zero-hour” contracts, etc. The thin veneer of bourgeois democracy is already showing signs of being peeled away. The course of history, which Marx saw as one of continuous progression, metaphorically as a straight line, turns out to be a circle - or perhaps a spiral?

The rise of modern capitalism and the emergence from feudalism was accompanied by the sound of the then newly-invented piano, in a period that saw perhaps the greatest flourishing of music of all time, the “classical” era when over just fifty years (1780 to 1830) Mozart, Beethoven and Schubert were working in Vienna. Now, a return to feudalism is also being played out during another great musical period, that of the blues and rock, again to the sound of an invention of its time, the electric guitar.

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floreal79 · 3 years ago

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2040

Here is a dystopian vision of a possible future in the British Isles. Perhaps some of what is imagined will prove not to be too far from reality, but one thing that I certainly don’t expect to see by 2040 is a coherently functioning EU as envisaged here.

Some parallels will perhaps be seen between these fanciful visions of the future and certain ongoing current events. These might be misleading at first; the intended parallels are these:

- for Scotland, read Donbass (Donetsk and Lugansk)

- for England, read Ukraine

- for EU, read Soviet Union (or Russia)

The year is 2040. The war in Scotland is entering a new phase with final defeat of the English army foreseen as imminent by most military experts.

The “United Kingdom” is now a hideous caricature of its former self: poverty and destitution are rife, unemployment rampant, good quality health care is only available to those who can pay, welfare benefits are almost non-existent. Trade Unions, of course, were proscribed over a decade ago, and the leaders of several of the more militant ones were publicly executed in Trafalgar Square (a return to “old fashioned values” was how the then Prime Minister, Lord Rees-Mogg, described the reintroduction of such barbarities). Inflation is out of control, pollution and associated disease is ubiquitous, and zero-hour contracts are the only opportunity to make an income for the majority of the population. Even in the City of London decay is everywhere: most financial services long ago decamped to centres such as Paris, Amsterdam, Frankfurt and further afield as the UK economy accelerated on its downward spiral. Gangs of neoNazi vigilantes roam the streets and scenes of people with Scottish accents being publicly maltreated by are commonplace. Corruption is endemic, and the country is now widely derided as a laughing stock internationally.

The “illegal” independence referendum which the nationalist Alba government staged despite threats from Westminster and which gave an overwhelming majority in favour of severing ties with England, was rapidly followed by violence. The troops sent by Westminster to “reestablish order” met unexpectedly fierce opposition, and in any case showed very low morale and were not able to defeat the separatists, although their vast superiority in armaments did give them some advantages. As the Westminster forces massed for what they expected to be a final push against the Scots, the Scottish government (which) asked for military assistance from the now well-established and formidable EU Army. (The Scots had always been keen to return to EU membership, while enmity between the UK and the EU has escalated continuously since their separation a few decades earlier).

The military struggle is is now widely regarded as one between English and EU armies, although this rather underestimates the role of the Scottish militia, who have fought valiantly all along and have led the battle to lift the siege of Glasgow. Final defeat for the English army, with its expulsion from all Scottish territory now seems imminent. The question now arises of whether large parts of Northern England will see their future as linked more to an independent Scotland within the EU than to a moribund “United Kingdom”. Mass demonstrations have already taken place in Liverpool in favour of this. Wales has seen similar events, and of course, Northern Ireland left the UK to become part of a United Ireland during the 2030s. Discussions are reputedly underway for Scotland and Ireland to from a Celtic Western British Republic.

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floreal79 · 4 years ago

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1851 to 2021: “Plus ça change..”

“The history of all hitherto existing societies is the history of class struggle” wrote Marx and Engels in 1848 (in “The Communist Manifesto”). This sentence provides the essence of what has become known as historical materialism, a theoretical framework that can still today be considered the most scientifically sound method yet described of analysing historical processes. Marx employed this method in his writings about the events in France at around the time of publication of the Manifesto, and these works are still widely regarded as having laid bare the mechanisms of the social forces at work.

But over the nearly 200 years that have elapsed since that time, society has not evolved at all in the way that Marx, with his understanding of historical materialism, predicted. In retrospect, it could be argued that where Marx was wrong was not in his underlying theory, but in his calculation of the power of the forces that he described, the interaction of which has thus taken a very different course from the one he foresaw.

The American economist Michael Hudson has described how, from the latter part of the last century to the present time, the economies of the major capitalist countries have become “financialised”. He describes a “FIRE Sector” (“FIRE” is an acronym for Finance, Insurance and Real Estate) whose interests have come to dominate all other economic activity, with devastating economic consequences for much of the populace. Hudson frequently alludes to the “One Percent” to whom the remaining 99% are economically subjugated. This group (also known as the “rentier” class) has its historical antecedents in the “finance aristocracy” described in Marx’s writings.

In mid-nineteenth century France, prior to 1848, industrial capitalism was still in its infancy, and the political power of its leaders was harshly curtailed by the reactionary grouping centred around the Orleanist king, Louis-Philippe. This group, according to Marx, was made up of “bankers, stock exchange kings, owners of coal-mines, ironworks and forests, landed proprietors”, and he used the generic term “finance aristocracy”. The overthrow of Louis-Philippe in February 1848 was by a popular revolt, when the working class of Paris came onto the streets to demand reforms of a “democratic” nature, but which promoted the aims of the “real industrial bourgeoisie” (Marx’s term). As the working class continued its demands for democracy, however, the two arms of the bourgeoisie (“finance aristocracy” and “real industrial bourgeoisie”) combined to suppress them, in the bloody event of July of that year. The events that unrolled over the period from then until Louis Bonaparte’s coup in 1851 were analysed in detail by Marx, and described in terms of a struggle between the “finance aristocracy” and the “real industrial bourgeoisie”. Marx held the view that the industrial bourgeoisie were bound to gain and retain the upper hand, and that the struggles that would determine the course of subsequent history would be between the industrial bourgeoisie and the working class.

As industrial capitalism spread across the world in the nineteenth and early twentieth centuries, Marx’s expectations were correct, in that the main social conflicts were indeed between capital and labour. But expansion of capital regularly required recourse to the funds of the finance sector, which thus continued to exert power, and the tension between this group and the industrialists has not disappeared, rather contrary to Marx’s expectations (see M Hudson).

The essence is that while manufacturing capitalism aims to increase the total of surplus value, financial capitalism aims to squeeze as much monetary profit as it can from current surplus value, and in doing so restricts the processes that enlarge the totality. While the manufacturing bourgeois will accept some diminution in his share of wealth created if the result is an increase in the total created (just as two-fifths of a large sum can be greater than three-fifths of a small one), the banker/rentier/financial bourgeois just wants the largest immediate payment out of any given enterprise, with no regard for future wealth creation, as “investments” are moved around the stock market. (A semi-mathematical representation of this conflict is attached as an Appendix).

The conflict between these short-term and long-term strategies, embodying the competing interests of manufacturing versus financial capital, can be seen as important in the political developments over the one and three quarter centuries since Marx’s writings on mid-nineteenth century France, and especially so since the rise to dominance, in the last quarter of the twentieth century, of what is called “neoliberalism”. It can be seen as a continuation of the conflict between industry and finance in nineteenth century France that Marx wrote so eloquently about, but which he expected to diminish in importance as the struggle between capital and labour came to dominate politics.

Marx anticipated that the demands of the finance aristocracy would become subservient to those of the industrial bourgeoisie, and that the struggles of the future would be two-sided contests between capital and labour. He expected the working class eventually to win in this two-sided struggle, and to bring the forces of production under public control and ownership. That history has not followed the path Marx anticipated can be related to his miscalculation of the class forces at play.

During the late nineteenth century and for approximately the first three-quarters of the twentieth (up to about 1980), manufacturing capitalism in the West underwent fairly steady expansion (albeit in a the classical cyclical way described by Marx, but at the start of each cycle the capitalist economy was almost always larger than at the start of the preceding one). During this period, organised labour could usually reach an accommodation with the bourgeoisie as increasingly productive industry created wealth that could be used in part to improve workers’ conditions (both by paying better wages and by social reform, as in welfare and health). The term “Fordism” is sometimes used for this (purist economists might differ on this use of the term), and this model was the one that achieved the “Golden Age of Capitalism” during the third quarter of the twentieth century. During this period, as Marx had anticipated, financial capital took a secondary role to the successful industrialists. However, Marx had failed to fully foresee the way in which the unionised working class would be able to claw back some share of surplus value.

An analogy for the relationship between manufacturing capital (“Marx’s “real industrial bourgeoisie”) and labour that held sway over that time can be found in the natural phenomenon of symbiosis between two different species of creature, for example a sea anemone perched on the shell of a hermit crab: the two creatures compete for the same source of food, but by working together (moving around on the crab’s legs, catching prey with the anemone’s tentacles), the supply of food is enhanced, and both get a better share than either would achieve alone. Of course, the analogy cannot be taken too far: the class struggle between the proletariat and the industrial bourgeoisie remained intense during these years, and the finance sector took a back seat, but were always aligned with the more those sections of manufacturing that were most aggressive in opposing the claims of the working class. Newspaper proprietors such as Murdoch gave rallying points to their views.

Yet, while it was constantly in struggle with the industrial bourgeoisie, the working class of the “West” almost never staged a serious threat to its control of the state: as long as it could continue to improve its material conditions within the capitalist system, it could be placated. By using part of ‘surplus value” to improve living standards and to support healthcare and welfare, the bourgeoisie could do this, and advancing technology meant that greater wealth could be created. In this way, Keynes thought he could foresee a time - in the not-too-distant future - when the fifteen-hour week would become normal.

Keynes also recognised that, as well as funding welfare, the industrial capitalist state needed to steer a long-term strategy for capitalist accumulation with such areas of expenditure as education and research (including universities and research establishments). In this, Keynes’ thinking represented of the long-term interests of the industrial bourgeoisie.

On the other hand, the finance sector, always eager to achieve immediate maximum profit, always opposed increased workers’ pay, expenditure on health and welfare, indeed any expenditure that reduced the amount of profit that could be reaped. Nearly all government expenditure is seen by them as wasteful and “big government” is one of their most most notable bêtes noires. A consequence of this is that almost all infrastructure spending is curtailed, a glaring example being railways: development of high-speed rail in those countries, the US and UK, where the neoliberal values of the finance capitalists are most firmly entrenched, lag far behind that in most other advanced industrial economies.

The essence of the conflict between “industrial” and “finance” capitalists lies in the need of the former to increase the total wealth produced by society whereas the latter needs to maximise the share it takes of existing wealth. In this conflict, the industrialists can ally themselves with the working class, for reasons just outlined; a strong working class is not only a product of capitalism but, in certain conditions, a powerful support to one section of the capitalist class. But when the working class becomes less powerful, the financial capitalists increase their power, a process that can be seen to have been taking place since about 1980, to varying degrees, across the capitalist world (i.e. almost the whole world outside China).

Marx had obviously seen the “finance aristocracy” as a distinct class (in the strict historical materialist sense of the word) in the nineteenth century, one that he saw as a continuance of feudal power (based originally on land rent). His expectation was that this class would become subordinate to the industrial capitalists, to the point of almost ceasing to have independent existence, and that from then on, the dominant class conflict would be between capitalist and worker. But nearly 200 years later, this class (as the “FIRE Sector”) is stronger than ever, and the relationship between it and the industrial bourgeoisie again dominates the political scene, a scene in which the proletariat, demoralised and with its organisational powers having been all but eradicated, can exert only minimal influence.

Thus the dynamic of class struggle in the world of the twentieth century has a distinct resemblance to that of France in the mid-nineteenth century, one in which there are three, not two, mutually antagonistic classes with the industrial bourgeoisie occupying some middle ground between the workers and the “rentiers”. They have exploited this hitherto by adjusting their stance to accommodate the stronger of the others, but by 2021 it is the “rentier” class who have the upper hand and are threatening to reduce both the working class and the industrial bourgeoisie to impotence. What they fail to see is that their short-term emphasis on financial profit threatens the long-term creation of “real” (manufactured) value.

Appendix: “Manufacturing” vs “Financial” Capitalist Accumulation

Let’s consider a “bourgeois” about to embark upon a new capitalist venture. It starts on “Day 0”, and we take a hypothetical first “cycle” up to an arbitrary “Day n”, after which the further cycles (slightly-different, as will be outlined) take place (athough in reality the process is more continuous than cyclical)

On “Day 0”: Bourgeois invests some capital, to value “C” for capitalist production up to “Day n” (the origins of this capital to be discussed later)

Days 0 to n

(first cycle): “C” is expended on:-

Fixed assets (machinery, etc): “F”

Recurrent expenses (fuel, rent, etc) to "Day n”: “Rn”

Wages of employees to "Day n”: “Wn”

Then: C = F + Rn + Wn

By “Day n”: - The labour of the employees has created commodity of value “Vn”

- Fixed assets have depreciated by “∂Fn”

- In a successful enterprise, Vn>>Wn, and Vn = Wn + Sn

where “S” corresponds to Marx’s “Surplus Value”, “Sn” being its quantity at day n

- The bourgeois’ assets now have a value of (F-∂Fn) + Vn

- Also, if Sn > (Rn + ∂Fn), then Vn - (Wn + Rn + ∂Fn) is “profit” (Pn), so that for the period from Day 0 to Day n:

Pn = Vn - (Wn + Rn + ∂Fn) - Equation #1

To put this in words, the profit is the value of the goods produced less the combined total of wages, recurrent expenses and depreciation of assets.

The cycle can then repeat with further increments of profit. The above equation for Day 0 to Day n can be rewritten in a general form as:

P = V - (W + R + ∂F) - Equation #2

As profit accrues, it can be expended in various ways:

#1) Increasing “capacity” by investing in further fixed assets (with corresponding increases in the wage bill etc , but increased output and profit eventually). Renewal of old equipment can be included in this. If a major project is undertaken, additional capital may need to be brought in from outside. (The term “∂C” will be used for this, below).

#2) Investment in R&D (“D”)

#3) The bourgeois may hand some of the profit to the workers in increased wages. Organised, unionised labour makes this more likely, although capitalists such as Henry Ford, while a bitter enemy of trade unions, saw the wisdom of increasing wages. Such a “sharing” of profit was a feature of the “Golden Age of Capitalism” - the third quarter of the twentieth century - during which time working people saw real improvements in their material conditions, BUT it essentially came to an end in about 1980. (“∂W” will be used for increased wage rates).

#4) Tax - civilised society requires infrastructure and welfare (some overlap between this and #3) (“T”)

#5) Some capital may be used for speculative investment in further ventures (as this is a from of money lending, the term “U” as in “usury” is used).

#6) The original capital to create the business, plus any further tranches, as in #1 above, may have been raised from the rentier class in which case it needs to be repaid (“X”).

ISo, the total profit, “P” can be divided between these six possible options as the bourgeois

decides (under pressure from other directions, of course: see below) and another equation for “P”

describes this:

P = ∂C + D + ∂W + T + U + X - Equation #3

(It might be noticed that no terms in the equation is used to cover such things as shareholders dividends, bonuses to senior managers, etc, but as these are generally dependent upon the value of “U” achieved, they can be considered as a potion of that, and not covered separately).

The manufacturing bourgeois’ wishes to continue “capital accumulation” will often at some point mean using more than just the already-accumulated “∂C”” and “D”, and may necessitate obtaining outside funding for his investments, which will often entail conversion to a “joint stock company”, such as through a sale of shares in an “initial public offering” (IPO). But now our manufacturing bourgeois allows an important new voice to enter the discussion about how the distribution of “P” is made between its carious components.

From then on, usually posing their demands as “in the interests of the share-holders”, the “finance aristocracy” begins to exert its influence, and the word “investment” now undergoes a subtle change of meaning. Beforehand, “investment’ was what was understood as falling within #1 above: spending on research, new equipment, etc; under the “finance aristocracy”, most available money is “invested” in further speculative ventures - the quickest way to maximise profit. For the finance aristocracy, its “investments” must turn the biggest profit most rapidly.

So there are now three groups competing for their share of the profits of capitalist industry:

#1) The workers: they have to be paid a certain sum (“W”) to survive and continue to generate surplus value (“S”). Beyond this, they also want to improve their material conditions by receiving a share of “P”; they also tend to favour social measures that improve their lives , favouring the use of part of “P” (tax, “T” in the equations) by society the form of taxation to improve communal functions - health, education, social security, infrastructure etc.

#2) The manufacturing bourgeoisie: this group has an interest in long-term capital accumulation, so appreciates the need to accommodate some of the workers’ demands above, and also the need for long-term investment in modernisation; in the past this has included paying tax to support government-run research institutes (universities and other), as well as for expenditure on such infrastructure as transport and telecommunication (and so on..).

#3). The finance aristocracy, in the present day in their new guise as “FIRE”: for these people, “S” needs to be used to make further profit by speculative investment. They have no interest in long-term development of industry through R&D, and certainly no interest in maintaining living standards for the workers. For government to take part of “S” as tax and use it for such things as healthcare, education, welfare, infrastructure (etc) is abhorred. “Down with Big Government” is one of their mantras.

To return to the earlier equations, we have:

P = V - (W + R + ∂F) - Equation #2

and

P = ∂C + D + ∂W + T + U + X - Equation #3

Removing “P”, as the common factor, can combine these two equations to give:

∂C + D + ∂W + T + U + X = V - (W + R + ∂F)

And rearranging this:

U = V - (W + R + ∂F + ∂C + D + ∂W + T + X) - Equation #4

For the financial sector, maximising “U” as quickly as possible is the main aim, in order to have capital to “invest” in further speculative ventures (and also to fund their exorbitant lifestyles). Long-term growth of manufacturing is of no interest to them, whereas the manufacturing bourgeoisie, aiming to accumulate capital, will not necessarily wish to maximise “U” at the expense of long term investment in industry (another illustration of how “investment” means different things to the financial and manufacturing bourgeoisies).

So, from Equation #4, the finance sector aim to maximise “U” by minimising the other items on the right side of the equation, while the manufacturer sees a long-term gain for his particular capitalist venture by “investing” in expansion, in R&D, and in some measures to promote the material conditions of the workers.

The essence is that while manufacturing capitalism aims to increase the total of surplus value in the long term, financial capitalism aims to squeeze as much monetary profit as it can from current surplus value, and in doing so damages the mechanisms that enlarge the totality. While the manufacturing bourgeois will accept some diminution in his share of wealth created if the result is an increase in the total created (just as two-fifths of a large sum can be greater than three-fifths of a small one), the banker/rentier/financial bourgeois wants the largest immediate share out of any given enterprise, with no regard for future wealth creation, as “investments” are moved around the stock market.

The conflict between these short-term and long-term strategies, embodying the competing interests of manufacturing versus financial capital, can be seen as crucial to the political developments over the one and three quarter centuries since Marx’s writings on mid-nineteenth century France. The conflict between industry and finance, that Marx wrote so eloquently about, has, contrary to Marx’s expectations, remained a major feature of the ongoing struggle between classes.

#Marxism Rentier class history

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floreal79 · 4 years ago

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May 2021: 150 years since the defeat of the Paris Commune

Along with fellow socialists around the world, I took part yesterday (1st May) in a May Day Rally. But sadly, May 2021 sees socialist politics in disarray in those parts of the world where industrial capitalism first developed and which the early socialists felt would be where the proletariat would first seize power. Many saw the short-lived Paris Commune of 1871 as the first flickers of a flame that would rapidly become all-consuming. One hundred and fifty years on, such hopes remain unfulfilled.

The Commune was defeated and its supporters, particularly in the eastern working class suburbs of Paris, viciously suppressed during the “journées sanglantes” of that year. This blog gets its name from these horrors - the basilica of Sacré-Coeur was built in celebration of their achievements by the butchers of the Versailles government.

In commemorating the Commune this year (as indeed in the past, right from the time of its defeat), many socialists have struggled with the questions of what went wrong and why the defeat occurred. I suggest these are the wrong questions! After 150 years during which no comparable advance has been made in any of the advanced industrial countries where socialist revolutions were anticipated (Petrograd 1917 is an exception), should we not recognise the Commune as a high-water mark, and be asking why its SUCCESS has never been emulated since? (The previous blog entry, “The Three Body Problem” is a tentative step towards an explanation).

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floreal79 · 4 years ago

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The “Three Body Problem”: a Neo-Marxist Viewpoint

“The history of all hitherto existing society is the history of class struggle”: this is the opening sentence of Chapter 1 of The Communist Manifesto, written by Marx and Engels in 1848. This statement neatly describes the basis of Marx’s “scientific socialism”, a scientific tool for understanding how society evolves (and how to change it!), and it does so in a way that has yet to be surpassed. Yet, grasping the nature of the forces at work is not the same as being able to predict how they will interact, and Marx’s vision of the inevitability of the struggle between proletarians and capitalists eventually leading to the revolutionary overthrow of all exploitation has not materialised in nearly two centuries since these words were written. This does not mean, though, that the methodology was wrong, a different interpretation is possible, that Marx figured the correct forces into his calculations, but miscalculated their relative strengths. This is summed up well by Michael Hudson in his book “Killing the Host”:

In his writings about the class struggle in France, 1848-51, Marx often referred to the “finance aristocracy” as distinct from, and often antagonistic to, the “real industrial bourgeoisie”. But, as Hudson points out, Marx failed to see how they would not only continue to be a powerful force (he expected them to wither with the vestiges of feudalism?), but actually become ever-more powerful, and eventually the dominant class, with evolution of large parts of Western society into what Hudson refers to as the “FIRE” (Finance, Insurance, Real Estate) economy.

Most of Marx’s followers over the last 150 years and more have continued his misapprehension: everything is seen as a battle between two classes, the proletariat and the bourgeoisie, while the antagonism between “FIRE” and the manufacturing bourgeoisie has been neglected. A clear example of this is the recent Brexit issue in the UK: the proponents of Brexit have been those representing the interests of FIRE, whose voice is exemplified most clearly by the Murdoch press, while its opponents have been the “old establishment” of the manufacturing bourgeoisie, as in the “Financial Times”. For reasons outside our current scope, the majority of the proletariat have taken the side of the FIRE group in this; on the other hand, in the past, when the manufacturing bourgeoisie dominated , the proletariat achieved some degree of accommodation with them, giving the “New Deal” and “welfare” systems that were prominent during the middle of the twentieth century and during which time the proletariat was able to steadily improve its material conditions.

If we consider the evolution of capitalist society since 1848 in terms of a continued interaction between these three class forces (finance, bourgeois and proletarian), rather than just two, history can perhaps be better explained than by the “traditional” Marxist view that takes the struggle of labour against capital as paramount, almost to the exclusion of all else.

If the class struggle is almost entirely between just the bourgeoisie and the proletariat, its resolution by a transition to socialism seems the only possible resolution, as Marx anticipated. (Marx’s intellectual baggage of adherence to the Hegelian dialectic - “thesis” vs “antithesis” - may have contributed to his taking this view). The way in which capitalism remained in place in those countries where Marx expected it to disappear first certainly suggests that the “two class” model is flawed. A three-sided struggle is much more complex and difficult to predict and, perhaps gives a better “fit” to historic events of the past 150 years. (A good analogy might be the “Three Body Problem” much discussed by physicists!). Its implications for the struggle to emancipate the oppressed need much further thought.

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floreal79 · 5 years ago

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I Have Resigned From The Labour Party

Dear _______

I am writing to you in your capacity of Secretary, _____ CLP,to formally announce my resignation from the Labour Party. In case my reasons for doing so might be of interest, they are as follows.

Since I became old enough to vote, over half a century ago (voting age was 21 back then), I have voted Labour in every local and national election, and I have been a member of the Labour Party for nearly all of that time.

I began life in the little town of Abertillery in the South Wales coalfield, a place rich in its history of working class struggle, and I cannot believe that anybody with an ounce of compassion for his fellow man could grow up there and not be a socialist. My relationship with the Labour Party has reflected my assessment of where it stands in the battle for socialism: my unwavering commitment is to the cause of socialism, my support for Labour depends on it being an agent, or at least a potential agent (sadly, more often the latter than the former!) for socialist transformation. Recent developments within the Labour Party have forced me to conclude that, as it stands, it cannot now be seen as other than an obstacle to socialism, as I outline below, and for this reason I am resigning.

A cause for which I campaigned (along with others) from my earliest days of political life (1960s onwards) was the Anti-Apartheid movement. All socialists abhor racism; many of us understand that the only way to finally defeat it will be through defeating capitalism. While Apartheid in S Africa may be no more, racism remains a huge problem in many parts of the world. Like many other comrades, I take the view that the treatment of the Palestinians by the Israeli state has often been racist, but that this has escalated in recent times with overtly racist policies being espoused by the Netanyahu regime.

Under Jeremy Corbyn's leadership, Labour stood firmly against Israel's racist policies, but this position has been rapidly reversed since Keir Starmer became leader. With the rightward move of the Israeli government and at the same time a move towards ever-clearer support for it in many ways, a tipping point has been passed, and sadly it must be said that the Labour Party now supports a racist endeavour. I have seen this "tipping point" coming, and although it has been difficult to define a precise moment when it occurred, we have clearly passed it.

I have been agonising for some time over whether I could remain a member of an effectively racist party; the "last straw" has now come from a slightly different direction: I learnt recently that my friend and comrade _____ has had his application for readmission to membership rejected.

_______ was in 2015 both CLP Secretary and ______ Branch Secretary. He worked indefatigably in those roles and enthusiastically supported Jeremy Corbyn. As a result, he was targeted in a coordinated campaign of false allegations instigated by two local members, and reinforced by officials at the East MidlandsRegion and the Compliance unit. This led to 10 suspension in Rushcliffeand _____’s eventual exclusion for two years. Throughout all that time, he has continued to energetically support the Party. When after two years he reapplied to join he was told his insistence of innocence “demonstrated a contemptuous non acceptance of the Labour Party’s constitution, rules and procedures.” Furthermore, by presenting people with a counter narrative to the official Party line it was claimed that he was “damaging the Party”. A ridiculous allegation like this, that by offering defence he was committing a further crime, would not have been out of place in a Moscow Show Trial, or in the Spanish Inquisition!

He has posted a more detailed account of the appalling saga on FaceBook, at: ______________________________ . This despicable treatment of a good comrade, coming at the same time as the lurch towards racism, makes continued membership impossible for me. Indeed, I am not sure that I shall even be able to vote Labour again.

Yours in sorrow and solidarity

Dave Morgan

Membership No. A180952

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floreal79 · 5 years ago

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Review of David Sainsbury’s “The Race to the Top”

In the Summer 2020 issue of the journal “Innovation Policy”, David Sainsbury, who among other distinctions, served as a minister for science and innovation in Tony Blair’s government from 1998 to 2006, has written an article (pp81-6) entitled “The Race to The Top”, examining the relationship between economic growth and technical innovation.

I have written some informal comments on this from a broadly Marxist perspective.

Comment #1 - is David Sainsbury a Marxist?

We talked about this, but I'd like to go over it again.

On "p82", near the top, we find:

"The value-added per person of a firm is the

selling price of the products produced per person less the

total material purchases used. It is an important measure

of the performance of a firm because the value-added

per capita of a firm is the money that is available to pay

the wages and salaries of employees and the dividends of

shareholders."

Let us say:

Selling price = "p" (per person employed)

Total material = "m" (per person employed)

Wages and salaries = "w" (per person employed)

Dividends = "d" (per person employed)

Then, what he is saying is: p = m + w + d "Equation 1"

Now, he uses the concept "value-added". Let's call this "v", and he defines it as:

v = w + d "Equation 2"

I think it's better to look at this differently, as "w" has much in common with "m", and important differences from "d": unlike a "dividend", but like "material", "wages" can never have a zero value (using "value" here in a mathematical rather than economic sense). Dividends can. The precise value of "w" is of course negotiable - but the same is true for "m", whereas the value of "d" is usually (if I understand these things), "discretionary". It is possible for "d" to have a value of zero - neither "m" nor "w" can usually ever have this.

(Incidentally, is there not a further quantity that he has missed from Eq 1 - a sum put aside for maintenance and investment [including R&D?], and which would reduce "d").

So, I think it would be better to look at "w" as having two component elements, one the "bare essential" required to keep the workforce capable of staying alive and fit to work, and the second a "discretionary" element that gives the workers some "disposable income"; so, let's say:

"Bare essentials" work payment = "w1" per person employed

"Discretionary" work payment = " w2" per person employed

and: w = w1 + w2 "Equation 3"

I think this is important, because "Equation 1" is now expandable to:

p = p = m + w1 + w2+ d "Equation 4"

BUT now "Equation 2" becomes:

v = w2+ d "Equation 5"

This is pretty much the Marxist concept of "surplus value", so important to everything else in Marxist theory. The employer ("capitalist") generally strives to reduce the value of " w2" in order to increase that of "d"; the worker ("proletarian") strives for the opposite. The "discretionary" nature of " w2" makes it subject to negotiation, industrial action, etc. This is the essence of the "class struggle" inherent to capitalist society.

The manufacturing capitalism of the mid-twentieth century appreciated the need for a good degree of accord with its workers, and was prepared to allow " w2" to take a larger share of "v"; this clearly means some diminution of "d". In the modern neoliberal capitalism, maximizing "d", and doing so in the shortest possible time, takes precedence over everything else, and a weakened "proletariat" has been unable to resist, and to maintain the level of " w2".

(The "post-industrial" economy has removed the mass work force of "old fashioned" industry, which in turn led to the falling power of collective bargaining. I also think that the collapse of Soviet Communism facilitated this weakening of the position of the proletariat)

Comment #2

Near the start of the second page ("p82") we find:

"But almost all these new jobs (26.7 million) were created in the

low-value-added service, or nontradeable, sector, including

6.3 million jobs in health care and 4.1 million jobs in

government service."

Further down that page:

"The United Kingdom’s economy over the period 1999–

2015 shows a very similar picture, with manufacturing

gradually becoming a smaller part of the economy and

low-value-added services becoming a larger part. And

because in 2016 the value-added of manufacturing was

£49 (roughly $66) per hour and that of low-value-added

services was £23 (roughly $33) per hour, the impact of

this shift on the UK’s economic rate of growth was very

considerable."

I'm confused! Where does the figure of £23 per hour come from when so many "low-value-added" jobs are in health care and government service? (I'm sure there's a good explanation, but I'd like an outline of it).

Comment #3

Bottom of p82: what is "spillover of knowledge in clusters"?

Comment #4

Also p84, second column:

"The third institutional failure leading to an erosion

of the ability of US firms to innovate and move into new

higher-valued technological sectors is the increasingly

short-term horizons of the nation’s financial institutions.

This has forced firms to concentrate on short-term profits

and financial engineering."

I certainly agree with this; in fact, I think this problem is probably also the cause of the first two problems he identifies, and this goes back to the comment above ("Second Problem", discussion of "d" versus "w2")

Comment #5

p85:

"No country that has gone from poverty to wealth has

done it through market forces alone. At the other end of

the spectrum, most economists who have studied national

economic growth policies would agree that countries that

have depended on picking specific firms, technologies,

or products have not been successful. Picking products

that are likely to be commercially successful, or picking

companies that are going to be profitable, requires deep

insights into market dynamics, competitive conditions,

and customer needs. These are capabilities that even the

best civil servants do not have. And once such decisions

are in the hands of government, they become subject to

the distortions of the political process, including pressures

from special interest groups and political constituencies".

I think this is what Deng Xiaoping was saying. But Deng, as a Marxist, could see the dangers of allowing the entrepreneurs to take control of the overall direction, which is what they have done, and created the problems that Sainsbury alludes to below. Deng's "Leninist" policies (vanguard party as the surrogate agency of the proletariat) has so far dealt with this quite well. My concern though is contained in that word "surrogate": how is continuity of this "surrogacy" to be maintained? There is always the risk that the "vanguard" will simply merge with the entrepreneurs and "neoclassical economics" will then take over. I am worried that no mechanisms can be seen to safeguard against this in China.

Comment #6

p. 86, penultimate paragraph:

"...policy-makers in these countries have to find

a way of remunerating the managers of their firms so that

they are incentivized to compete over the long haul. If

they are rewarded only for short-term movements in the

share prices of their companies, it should not be surprising

if they spend time manipulating those share prices with

share buybacks, rather than making long-term investments

in research and innovation."

The Marxist response to this is that for these rational arguments to hold sway, a change in the power balance of the class struggle will be needed. The "neoclassical economists" (if I have understood the term correctly) represent the interests of the modern "rentier" class of capitalists (hedge fund managers, etc). These people favour Brexit. The more traditional, manufacturing, capitalists find their viewpoint more closely expressed by the FT, and were opposed to Brexit. They are the old "one-nation" branch of the Tory Party that were so effectively vanquished by Johnson/Cummings in 2019[1]. The working class is now, in post-industrial, "gig economy" Britain, lacking any effective organisation, and negotiating power, and is being seduced by the sirens of populism, nationalism and worse.

Comment #7

(Referring to the same text as Comment #8) Sainsbury draws attention to the "manipulation of share prices .... rather than investments in research and innovation". In Comment #2, I referred to the omission of such "true" investment from Equations 1 and 4. Equation 4 (my preference) should be further expanded to:

p = m + w1 + w2+ d + r (where "r" is investment in R&D etc) "Equation 6"

Obviously, to increase "r", "d" must fall, and vice versa, leading to the situation that Sainsbury abhors in this text

[1]"One-nation Tories", the political expression of manufacturing capitalism, had learned that it was wise to allow "w2" to expand, to some extent, at the expense of "d". The reasons for this are complex, but the power of unionized workers was certainly part of it (see "Comment #2)

#neoclassical economists

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floreal79 · 5 years ago

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Neoliberalism faces a virus, and it’s wheels come off!

A cardinal feature of neoliberalism is the drive to minimise the economic activity of the state in every area other than the military. The underlying reason is the drive of the "rentier" class to use all available money as an "investment" for greatest financial profit in the shortest possible time. Taxation on the wealthy must be kept as small as possible. Long-term investments of any sort are described as "a burden on the taxpayer". The false analogy is made between the national exchequer and a family budget, with the former being treated as would the household finances of a petit bourgeois grocer's daughter.

Several consequences follow:

1) Firstly, investment in "manufacturing", which might be expected to have a long-term benefit, is seen as a poor use of money that can be used for "quick" profit in speculative investments. The economy is dominated by "FIRE" (finance, insurance and real estate). Domestic industries are not subsidised when cheaper "products" (a term, incidentally, that now extends to all sorts of unlikely things) can be purchased from abroad. With no manufacturing base (in the broadest sense), the UK economy has been woefully unable to provide the ventilators and biological tests necessary to tackle the corona virus crisis.

2) All state expenditure is seen as "increasing the financial deficit" (a specious argument, many would say, well argued by the proponents of "Modern Monetary Theory"). In the context of the current crisis, the NHS is a particularly notable victim of such policies, and every news bulletin vividly illustrates this.

3) Private companies that operate supply chains and transport are begging for subsidies because the services they provide are "vital". These vital services should never been put in the hands of private companies, by definition subject to the laws of a fluctuating market, in the first place. The same can be said of the work of some "vital" charitable organisations: "vital" services should be provided by the government, not hived off to "charities" and "trusts".

The UK was the first country in which industrial capitalism flourished. It is probably for reasons related to this that it ahs also been the country where a neoliberal post-industrial economy has almost completely replaced the older capitalism. The dire consequences of this are as outlined above. The wheels are truly coming off the neoliberal juggernaut. It now stands before us clearly revealed as the monster that some have been describing it as for a long time. But what can be done about it? That is THE big question.

#covid19 #neoliberalism

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floreal79 · 6 years ago

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“Unfettered capitalism isn’t working” - can we put the “fetters” back?

"Unfettered capitalism isn't working" said Joseph Stiglitz in a recent television interview. Stiglitz, along with an increasing number of other commentators, takes the view that the deregulated, market force driven, monetarist, low tax, economic policies that have dominated the advanced capitalist world for the last four decades ("neoliberalism" for short) have not only been harmful to the majority of the population, while concentrating obscene wealth in the hands of a tiny minority, but have also failed to provide a stable basis for economic development. The quarter of a century following the Second World War, by contrast, is seen as a "Golden Age" of capitalism, when steady growth[1] was accompanied by a rise in living standards for all sections of the community, and of a relatively equal distribution of wealth (and much higher taxation levels for the rich). Although there was wide variation both in time and geography in the political complexions of the governments in the "capitalist world" over this period, all can be described as functioning with a more "regulated" form of capitalism than is seen at present. Top rates of income tax were much higher, government investment in infrastructure was higher, in many cases major industries were brought under direct government control ("nationalisation"), elaborate welfare and health systems were maintained, and inequality was much lower than it is today, with far fewer people living in destitution. In fact, this can be described as "regulated capitalism" or, as was it was explicitly described in many countries, as "democratic socialism". Advocates of a return to such policies are these days widely portrayed as "left-wing extremists", clear examples being Jeremy Corbyn in the UK and Bernie Sanders in the US. But Stiglitz is not alone among respected commentators in regarding the return to such policies as the way to "save capitalism" (a phrase I first heard used in this context by Rutger Bregman).

So, those who favour a return to "regulated capitalism" and those who advocate "democratic socialism", have, very largely, the same goals in mind. My preference for describing myself as a "democratic socialist", lies in my perception of the processes that gave rise to the societies of the "Golden Age". While many "manufacturing" capitalists like Henry Ford[2] saw the benefits of rewarding workers with rather more of the fruits of their labour than just the amount needed to keep them alive and able to continue working (or, to use classical Marxist terms, by returning to them some share of the "surplus value" created by their labour), much of the material gains that workers made were as a result of direct action, or even just the threat thereof. To put it briefly, capitalism became "fettered" by regulations imposed at the instigation of the working class. This is true whether looking at the New Deal in the USA or the actions of Social Democratic parties in governments in Europe. Even Western European countries where the Socialists remained mainly in opposition saw the governing Christian Democrats (or similar) introducing comparable legislation. Whether any particular country could at that time be described as an example of "regulated capitalism" or of "democratic socialism" might perhaps be a matter for prolonged debate, but the point is surely that in all these countries the working class gained a foothold on state power, and by use of appropriate measures ("regulations") enforced a distribution of wealth that benefited nearly every section of society. The loss of power of organised labour can be seen as a critical factor in the shift away from this model towards "neoliberalism" that has taken place over the last few decades of the twentieth century, and which has continued to date. (The collapse of the "socialist block" of the USSR and Eastern Europe can probably be seen as another contributing factor in this change in the balance of forces?).

It needs to be appreciated that a return to some form of "regulated capitalism" (or democratic socialism) requires the force of the working class to bring it about. So far, the signals that the working class of the twenty-first century has a stomach for this fight have not been not strong, but there are some indications that this is now changing with the popular groundswell of support for the socialist policies of Jeremy Corbyn in the British Labour Party and Bernie Sanders in the US, and the emergence of number of left-wing governments such as those of Spain and Portugal (Greece on the other hand, provides a rather discouraging recent episode).

But if our goal at the moment is to recreate the sort of "democratic socialist" or "regulated capitalist" societies of the middle of the twentieth century, we need to ask what can be done to consolidate the gains that were made, but have been gradually (but increasingly rapidly) lost over the past 40 years, and that we now hope to reclaim. At that earlier time the working class was strong enough to gain a degree of control of the mechanisms of the state, but its grip was not strong enough to maintain this hold when economic forces shifted. One way of looking at this is to see the initial regulation as having been a step towards socialism in that control was taken by a democratically elected state power. In the earlier "social democracies", the state acted "on behalf" of the working class in some ways: nationalisation of industries, creation of the welfare state, and so on. But the direct power remained in the hands of a state bureaucracy, which was only indirectly responsive to direct democratic influence. Over the decades of the “Golden Era”, one can see that such regulatory bodies became less and less responsive to such influences, gradually paving the way for their almost total annihilation in the era of neoliberalism. The road to socialism, by contrast, should have been to increase the power of the working class over its working conditions.

If and when socialist parties again win electoral success and hope to make real change (many so-called "socialist" parties fall short of this!), they will need urgently to take steps to strengthen the grip of the working class on the mechanisms of state power - and of control of their working lives. Forms of direct "workers' control" are the way to maintain the socialist momentum but imagination will be needed to establish these while also allowing privately-owned enterprises to flourish, at least in the short term.

[1]"Steady" - maybe not continuous, as there were certainly fluctuations, "boom and bust", but a clear overall trend can be seen

[2]"Fordism" has become a term used to describe this

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floreal79 · 6 years ago

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“Immiseration” of the working class?

Marx wrote: "poverty forms the condition of capitalist production and of the capitalist development of wealth... in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse". This, in essence, is what is often referred to as the "immiseration of the working class". In the seemingly endless economic recession that has followed the banking collapse of 2007 this phenomenon can again be seen clearly and, moreover, it can be seen to be affecting not just the traditional "proletariat", but almost all levels of society other than the very few richest people, the people who despite their tiny numbers own far and away the greatest part of society's overall wealth. (This, by the way, provides a very good justification for saying that socialism would be in the interests of the great majority of society, not just of its poorest members).

But, if Marx was right, why is it that for much of the preceding century this "immiseration of the working class" was not apparent? In fact, there can be no arguing that at least during the "Golden Age of Capitalism", from about 1945 to 1975, almost all sections of society in advances capitalist societies saw real improvements in living standards. From about 1980 onwards, this trend was clearly changing, at first affecting only the weakest members of society, but gradually and unevenly spreading with even occasional reversals, but a general trend towards affecting more and more people as mentioned above. Thomas Picketty has given a lengthy account of why the tendency to "immiseration" is, as Marx said, inherent in capitalist society. If we ignore the period 1945-75, Marx doesn't look so completely wrong.

I think even the "Golden Age of Capitalism" can be reconciled with Marx's "immiseration" economic theory, but to accept this it is necessary to point out that Marx erred in other respects. Marx saw the capitalist system at inevitable and irreconcilableconflict with the workers, a conflict that could only be resolved, quaHegelian dialectics, by the replacement of capitalism with a new society. What Marx could not foresee (I regard this as only a minor flaw in his genius) was that, perceiving the threat that it faced, capitalism would be able to adjust. Instead of forcing ever worse conditions on the workers, it was perfectly able to allow some of the vast wealth that they created to go, not into profit for Capital, but back to the workers themselves, thus fuelling the general prosperity of the era '45-'75.

Of course, the capitalist system could perfectly well, in theory, do the same thing now, and allow all sectors of society to share the wealth that is currently mainly enjoyed by a tiny few (remember that if these tiny few have over 50% of the wealth, just to take half of it off them would, put crudely, provide enough to be shared around the whole of the rest of society giving an across-the-board increase of wealth for everybodyelse of 50%!). But why does it not do so whereas it did in '45-'75? Why was there this period (so strong in the memory of those that, like me, were born in the early post-war years) different, a period where "immiseration" was reversed.

I suggest there are two main contributing factors that explain the period of "aberration", firstly the very power of the workers, secondly the perceived threat of "communism" as represented by the Soviet Union. Of course, these two things are strongly connected, and could almost just be described as "fear of communism", but they are different in most ways.

Firstly, the "threat" of the workers themselves: this is, of course, as described by Marx and alluded to already. What is particularly important is that in the age of industrial capitalism ('45-'75 roughly marks the last phase of that age in the West), industry itself imposed mass organisation on its workforce, but thus in turn giving the workers opportunities to organise themselves into defensive structures, particularly Trade Unions. The power of the industrial Trade Unions in late industrial capitalist society was considerable, and the leaders of capitalist society were usually keen to placate them rather than risk a confrontation that might risk the very existence of the system - as had happened in Russia

The example of the Russian Revolution and the existence of the Soviet Union made the capitalist class in the West even keener to "placate" their workers.

But, in the later years of the 20th Century, both these factors that had influenced capitalism to move away from its natural "immiseration" tendency, weakened (collapsed in the case of the Soviet Union). The heavy industries that had been the backbone of the economy gradually lost their importance, and the influence of the Trade Unions based on them dropped accordingly (hastened in some cases by such things as Thatcher's treatment of the miners). "Post-industrial capitalism", as we now know it, has no industrial proletariat. (Instead we can regard over 90% of the population as a new type of proletariat, but one that is inchoate in expressing its common needs!). "Immiseration" has emerged with terrifying new force! Marx was not far wrong.

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floreal79 · 6 years ago

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Roads to Socialism

It's Good Friday in the Christian (western) Calendar as I write this; people on Twitter are asking whether Jesus was a socialist. My instinctive reaction, as a lifelong atheist with a leaning towards Marxist concepts, is: "nonsense".

But, stopping to think, it does make me ask myself again what does it mean to be a socialist in the 21st century? I don't think there's an easy answer to this question, but I'd like to write down some of my thoughts about it (I'll say in advance that none of these thoughts leads me to the conclusion that Jesus was indeed a socialist!).

Marx, the greatest socialist writer of all, was always wary of trying to lay down prescriptions for a future socialist society, as indeed have (rightly) been other greats, such as Rosa Luxemburg, from whom I take a favourite quote:

"..the practical realization of socialism . . . is something which lies completely hidden in the mists of the future"

What Marx, and nearly all his followers, did predict was that the preliminary steps in establishing socialism would be the revolutionary overthrow of capitalism, with the working class taking control of the means of production. But these preliminary steps down the road to socialism have never been taken in the very countries where Marx thought they would be most likely to occur: the countries where industrial capitalism had become fully developed. "Socialist revolutions" in backward economies such as early twentieth century Russia, mid-twentieth century China and Cuba were not what Marx foresaw. As discussed in other posts on this blog, in most capitalist countries during

the twentieth century the capitalist class was able to accede to many of the demands of its workers, to some extent even conceding a degree of state power to them, the post-1945 Labour Government in the UK being a prime example of this. The capitalist mode of production, in essence, despite large-scale nationalisation, remained in place, but workers reaped more of the rewards of their labour than the pure "value of labour" described by Marx, and the state regulated and organised society so as to look after the great majority of its citizens. For a good quarter of a century this model worked very well, and this "regulated" form of capitalist production was (generally) highly successful. Working people lived in good quality, often state-owned, property, were inconceivably affluent by the standards of their grandparents, attended a well-run state education system and had a health service that looked after them free of charge when they fell ill... and so on.

The ongoing destruction of the fabric of such society that is taking place under the neoliberal economic policies of the post-industrial "financialised" capitalism of the present day, and how it reflects a change in the balance of class forces, is something I have also discussed in other posts. The question I ask here is whether we should regard the "gains" made by the working class during the "Golden Era of Capitalism" as being some sort of step along the road to socialism. I suggest that this period was one when the working class had wrested a degree of power from the capitalists (and that the effect on capitalist production was actually beneficial), and this should be regarded as a step on the road to socialism (this reflects the "revisionist" thinking of the early twentieth century German Marxist Eduard Bernstein). But it was a step forward that has been and is being steadily reversed in the current state of world capitalism.

Happily, recent years have seen something of a resurgence of socialist movements, notably in the UK and USA, and the leaders of these movements clearly identify as "democratic socialists". The road towards socialism, as a first step, will need the rolling back of the neoliberal, market force dominated economy. Working people need to reclaim the gains of the mid-twentieth century, and this will be done while permitting the continuation of capitalist production in many areas. The essence of this is that the working class (in the broadest sense of the term) needs to re-establish the sort of balance of class forces that characterised that earlier era, not to totally annihilate the capitalist system. Lessons need to be learnt about how such gains slipped away in the past, and it is to be hoped that the grasp of the working class on power will strengthen, rather than be weakened as happened in the last forty years, but the ways in which this will be achieved lie hidden in Luxemburg's "mists of the future".

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floreal79 · 6 years ago

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Is Socialism “Inevitable”?

Marx's description of how the nature of society is driven by the interaction of class forces (a "class" being defined by its relationship to the forces of production) can arguably be placed alongside Darwin's description of natural selection, the force that drives the evolution of species, as among of the great scientific advances of the 19th century. But while Darwin never tried to predict what future the forces of natural selection would produce Marx, a committed socialist, did attempt to use his theories to make predictions for the future of society.

Marx argued that the replacement of capitalism by socialism is an inevitable consequence of the analysis of class forces. The conflict between "bourgeoisie" and "proletariat" was seen as only being resolvable by the complete victory of the latter, with the accompanying abolition of the capitalist mode of production. He envisaged the establishment of the common ownership of the means of production, imposed by the "dictatorship of the proletariat", with this being only achievable through violent revolution. Prior to this, under capitalism,"immiseration", the ever worsening of living conditions, was seen as inevitable for the proletarians, and would be a major cause of their taking the revolutionary road.

The history of the last 150 years (since "The Communist Manifesto" was published) shows that these predictions were inaccurate. A rational scientific examination of the argument can suggest why this should be, even though we accept the validity of the "class-based" method of analysis. By analogy, we do not reject the scientific methods used by meteorologists just because their predictions are occasionally wrong.

There have been no successful revolutions in any advanced capitalist societies. At least in part this can be attributed to the fact that for long periods nearly all sections of these societies saw real improvements in living conditions. (Although this was so for approximately the first three quarters of the twentieth century, while in recent decades the position has changed, with sustained attacks on living standards of the great majority of members of society, while the very small numbers of the most wealthy have dramatically increased their wealth further).

Marks and Engels open their 1848 Communist Manifesto with the words "'all history is the history of class struggle". The argument that this is what ultimately leads to the inevitability of socialism starts from this position. In Marxist theory the driving forces of this historical change are primarily the conflicting interests of different classes, a class being defined by its relationship to the forces of production. But, as scientists in many other fields are well aware, there is a huge gap between identifying and understanding the forces at work in a given situation and predicting what the outcome of the interaction of these forces will be. Marx's failure to accurately foresee the future does not mean that his analysis of the nature of the essential forces at play was wrong, where he failed was in is prediction of how their interaction would play out. This has been discussed in an earlier post on this blog ("Historical Materialism and Economic Developments in the twentieth and Twenty-first Century"), but another question needs to be asked about the inexorability of a socialist transformation of society. The question that arises is this: what is it that the working class hope to achieve in their struggle with the ruling class: to what extent is the common ownership of the means of production really what they are striving for?

"Common ownership of the means of production" has been a mainstay of most socialist programmes in the 150 years since the publication of the Communist Manifesto (and many before), and socialist parties that have achieved a degree of governmental power (whether "Social Democrats" in the West or "Communists" in the East) have usually taken large sections of industry into public ownership. Yet, in the day-to-day struggles of the working class demands for these goals have not been prominent, the struggles have rarely gone beyond the demands of the trade unions. In Marxist terminology, the "class in itself" has rarely transformed into a "class for itself". Can it be that the concept of public ownership is in many ways too abstract a goal? History suggests that it is.

Instead of striving directly for the complete overthrow of the capitalist system, during the first three quarters of the twentieth century, the working class in the advanced industrial societies was largely content to wrest a larger share of the fruits of its labour from the employers. These in turn were not altogether reluctant to concede to this, as the result was generally to achieve an overall expansion of the economy and all sections could benefit from this (some more than others, of course). The last quarter century of this era, lasting from the end of WWII until approximately 1980 was generally a very successful period for capitalism internationally, sometimes referred to as "The Golden Age of Capitalism". Ha-Joon Chang has written most eruditely about this.

As well as allowing the working class to achieve better material conditions, in the UK this period was characterised by the development of the Welfare State, ensuring that health care was available "free at the point of provision" to all, and the less fortunate members of society had state-provided safety nets to protect them from destitution. Alongside this, most public utilities were in public ownership, albeit more in the form of "state capitalism" than of any sort of workers' control. The Scandinavian countries were very similar, and most other Western European countries had social structures that were similar in many ways. Even the US had a fairly well-developed "safety net".

The corollary of the state providing welfare services is, in classical economic terms at least (MMT theorists see this differently), the need to impose higher taxes on profit, and this was the usual case during the "Golden Age". Even under the Republican administration of Dwight Eisenhower, top rates of income tax were far higher than anything seen in 21st century capitalist countries.

So, although the underlying conflict of interest between "bourgeois" and "proletarian" continued to exist, as reflected by varying degrees of industrial, and sometimes other (e.g. France in 1968) unrest, the mid-twentieth century can be characterised as a period when the two classes achieved a balance between their forces, and with rapidly increasing productivity, both experienced material gains. A capitalist system functioned to the benefit of both the capitalist class and the working class - but this required active regulatory intervention.

But, in society, as in the universe generally, no system that is in equilibrium from the interaction of disparate forces remains so indefinitely.

The last quarter of the twentieth century (as an approximation) saw the countries where capitalism had been most successful undergo something of a transformation to what is called "post-industrial" societies. While the process of this transformation merits some attention, here the point about it is that it resulted in a change in the "equilibrium" just referred to. "Post-industrial" society entails major changes in the features of the two main protagonist classes. For the working class, the decline in "heavy" and manufacturing industry has resulted in the loss of what gave them most of their power in the class struggle, a powerful trade union base, which very adversely affects their position in the "equilibrium". On the other side of the coin, there have been accompanying changes in the features of the capitalist class. These are complex, but one to highlight here is the rising dominance of the financial sector (bankers, stock brokers, hedge fund managers, etc), described as the "financialisation" of the economy in some quarters. This group differs from the traditional "captains of industry" in its total disdain for anything that reduces the size of the financial profit that can be made quickly from any capital sum. Investment in infrastructure in order to achieve long term greater efficiency is seen as merely as a reduction in immediate profit, so is deprecated. The rule of the "market" is the only rule they acknowledge, their orthodoxy is the neoliberal teachings of such as Milton Friedman. Whereas the older "manufacturing" capitalists could se the advantages of allowing some share of "surplus value" be given to the workers, there is no such perception from these hyenas. A quick profit takes priority over everything. "Deregulation" is key and all forms of state expenditure are wasteful - these are the mantras that serve the goal of financialisation.

So the balance of class forces, which had worked quite well for a long part of the twentieth century, has been drastically upset. This has happened more dramatically in some countries than others, with the UK being probably the most extreme example. The concentration of wealth in the hands of a very small number of people and the driving of huge numbers into poverty is perhaps more marked here than anywhere (but other countries such as Greece might argue otherwise).

Again, the UK gives one of the most striking examples of this, in the debate over membership of the EU. The conflict between pro- ("old style", "manufacturing" class) and anti- ("financiers") EU factions in the Conservative Party is a direct reflection of this. What we are witnessing in the Brexit crisis inthe UK is a struggle between opposing factions of the ruling class. One might even consider whether the new "financialist" grouping represents an entirely new class, although this is perhaps more a matter of Marxist semantics than anything. But, they certainly have clear different economic interests from those of the old capitalist class, and therefore the two groups are at conflict politically.

In this conflict, the interests of the working class are reflected by neither side, but the gains made historically by the workers against the "traditional" capitalists are more under threat from the new group than from the former. To some extent then, the struggle for socialism has become a struggle to re-establish the balance of class forces that characterised an earlier form of capitalism, one where the working class had at least a hand on state power. Is this what socialism means for the twenty-first century? In the short term, the answer seems to be in the affirmative; in the longer term, well surely the questions faced by future generations are theirs to address?

As Rosa Luxemburg said: "Far from being a sum of ready-made prescriptions that have only to be applied, the practical realization of socialism . . . is something which lies completely hidden in the mists of the future."

In the century and a half (nearly) since the death of Marx, we have seen industrial capitalism rise to world dominance, and then starting to give way to a "post-industrial" capitalism in Western Europe and North America. Yet Marx's vision of the overthrow of the capitalist state by the proletarian revolution with the abolition of the private ownership of the means of production has never occurred in any of these "heartlands" of capitalism. Socialists should perhaps take heed of this Rosa Luxemburg's message and realise that a more just society will be achieved in a different way, and that the lessons of the success of the "Golden Age of Capitalism" need to be applied to our present condition.

The first goal of socialists at the present time should be to reclaim the ground that has been lost to the neoliberal capitalism of recent decades. This would involve reintroducing strict regulations without generally abolishing private ownership - a return to the "regulated capitalism" that was so successful in many respects in the mid-twentieth century in Western Europe and North America, and which has parallels in the huge success of the Chinese economy since the "reform and opening up" of Deng Xiaoping. The structure of socialist society beyond this remains, as Rosa Luxemburg said, "hidden in the mists of the future".

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floreal79 · 7 years ago

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War in the Tory Party - a class analysis of the Brexit crisis

As well as changing the balance of class forces in favour of the ruling class (outlined in an earlier post on this blog), the transition from a predominantly industrial society to a "post-industrial" one results in tensions between different sections of the ruling class itself. Neoliberal economic ideas have pushed aside the old Keynesian ideas that dominated the middle of the twentieth century. It should be remembered that the "Keynesian period (also sometimesknown as “Fordism”) was one of consistently higher growth than has ever been seen since, and when the consequent increasing prosperity was shared by nearly all sections of society. The neoliberal model, despite empty phrases such as "trickle-down", increasingly concentrates wealth in fewer and fewer hands, and these hands are increasingly those of the stock market speculators and other financiers and of businesses other than manufacturing (we might call them"financialisationists" to refelct the “financialisation” of the economy, but the old term “rentiers” is one I prefer). In the UK, the country with the longest established "old-style", manufacturing-based ruling class, these changes have produced a long-standing tension between, on the one hand, such traditional elements and, on the other, the new rentiers, a tension which has been crystallised into the long-standing and bitter division of the Tory Party into pro- and anti-European factions. The former tend to be pro-, the latter anti-European, a reflection of their rather different economic interests.

The rentiers are opposed to any form of regulation that might interfere with their predatory transactions; the “traditional manufacturers” recognise that a more “regulated’ capitalism works better for them in the long run (see above). The EU structures are seen as imposing undesriable restrictions by the “libertarians” of the ERG (and allies, such as the Murdoch press). For them, a “No Deal” Brexit offers the greatest freedom from such control. It would also (among other things) open the NHS up as a very tasty meal to the vultures of the insurance world (whether seen as US or UK based is immaterial, these people are “global”). The potential value they see in a privatised health system in the UK is enormous - think of the huge size of the US private health sector, sometimes quoted as larger than the entire GDP of France!

So, there are strong underlying reasons why the EU has been such a battleground within the Tory Party! Socialists can and must try to take advantage of this schism between the opposing forces - and the Corbyn leadership of the Labour Party is showing every sign of doing so hitherto. Collaboraation with the “moderates” in the fight to prevent a No Deal Brexit will hopefully lad to a General Election. A labour Government should then recognise that the intersts of the working class are not identical with those of the “manufacturer” capitalists, and the negative side of EU regulation - that has itself moved in a strong neolberal direction - indicates that a socialist programme can be better pursued outside the EU.

#brexit #marxism

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floreal79 · 7 years ago

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Historical Materialism and Economic Developments in the 20th and 21st Centuries

Knowledge of the forces that influence change and understanding how they interact is the basis of many scientific activities. It is suggested that understanding the nature of class forces, as described by Marxian historical materialism, is key to understanding changes in society, but that because of the complexity of these forces and the constant changes that occur in other important areas (e.g. technology), accurate prediction of change is impossible. As previously mentioned, an analogy can be made between the analysis of class forces in society and the study of meteorological forces in determining the weather (or indeed with many other areas in which "mathematical modelling" is applied). But whereas in weather forecasting, the forces at play are subject to reproducible methods of measurement, no such measures exist for assaying the strength of the class forces that form the basis of historical materialism. So, although historical materialism may be the best way to understand the forces that drive history, it's ability to accurately predict exactly the outcomes of the interactions between these forces is inevitably weak - much weaker than Marx foresaw.

Marx's prediction of the inevitability of proletarian revolution was based on an analysis that looked at the two dominant social forces, took them to be diametrically opposed, and foresaw that the resultant conflict needed to be, and could only be, finally resolved in one direction: the dictatorship of the proletariat. Until and unless this happened, as the bourgeoisie drove to expropriate the entire "surplus value" of the labour of the proletarians the living standards of the latter would always be under downward pressure. The reality of the last 150 years has been different. That the future has been different from how Marx foresaw it is not proof that his historical tools of analysis ('historical materialism") were wrong, I suggest that they were essentially correct, but that the interplay between them was not as simple as Marx had expected

The fundamental "contradiction" between bourgeois and proletarian, while being by far the most important aspect of the interaction of class forces in any capitalist society, is nuanced in many ways, and even in the most developed capitalist societies there are large segments of the population occupying intermediate positions between the two "basic" classes. It is often pointed out, and correctly so, by many left-wing commentators that the current way that capitalism operates favours a tiny fraction of the population ("the few", often quoted as making up as little as 1% of the total) at the expense of the overwhelmingly more numerous others ("the many"), and that "the many" share much in the way of a common interest in redistributing economic power and wealth. Yet, within this large group of "the many" there are many different sectional interests. Indeed, groups that by classical definition might be regarded as "bourgeois", such as owners of small and medium enterprises (SMEs), have interests more (currently) aligned with "conventional" proletarians than with the ultra-rich few who really hold the reins of economic power. Many more examples could be given, but one particular development of capitalism not foreseen by Marx needs to be mentioned here. Marx thought that as capitalism became more evolved, living conditions of workers would relentlessly be driven down: "the immiseration thesis"[1].Yet, on the contrary, in the most advanced capitalist countries over the hundred years that followed Marx's death, there was a clear trend of improving living conditions (such things as shorter working hours, holiday entitlement, healthcare and social security, etc as well as higher pay) for nearly all inhabitants of these countries. One clear demonstration of this is the clear improvements seen in all measures of the health of all sections of the populace - life expectancy, infant mortality, etc, etc. What occurred was that, instead of appropriating ALL the "surplus value" created by the toiling masses and leaving them with the bare minimum subsistence income, the capitalist class, faced with a strongly organised working class (and perhaps the perceived threat from Soviet power in Russia), accepted the need to give the workers a greater share of the produce of their labour. Alongside this, many leaders of the capitalist class had already realised that "sharing" their prosperity with their workers in the short term led to increased consumption of the products of labour which in turn needed to be fed by an increase in production, and thus to greater profits in the long term (see Henry Ford's statement "Why I favour five days' work with six days' pay" made in 1926).

In the years before and up to the end of World War II, the effects of the international economic downturn, followed by the war itself, make it less easy to discern these trends, but in the post-war era workers were clearly and demonstrably able to achieve substantial improvements in their conditions (including all those things mentioned above) in all advanced capitalist economies.

These reasons that improving the lot of the workers would be in the best overall interests of capital certainly continued to be applicable during the post-war period, when industrial mass production was still the mainstay of the Western economies and it was during this period that material conditions for nearly all sections of society showed a sustained improvement. The rising life expectancy of all sections of the population are good evidence that this was so.

But now, in the "post-industrial" capitalist society of the 21st century when the Western economies are much less centred on heavy industry and manufacturing, the balance of class forces has changed. A substantially smaller number of workers are employed in large units as mass workforces, and this in turn has led to considerable loss of power for organised labour as expressed primarily through the trade unions.

The sort of considerations that led Henry Ford to advocate better working conditions for his employees also no longer apply, so the time was ripe in the last quarter of the twentieth century for the right wing governments that came to power in many places at that time to start moving away from the politics of the "welfare state" and towards asserting the need to allow free play of "market forces". This is the era of neoliberalism.

The USA and the UK have seen the most extreme adoption of neoliberal economic policies, reflecting the current weakness of the working class movements in these countries: historically this has always been the case in the USA, whereas in the UK it was the violence of the Thatcher government of the 1980s (notably in its attack on the coal miners) that achieved it. Looking at these two countries, there has been little or no growth in the real income of many sections of the population for many years, and certainly since the crisis of 2008. In fact, since that time, there has been clear evidence that ever larger numbers are having their living standards driven down and many are being forced into severe poverty. These effects are already being seen in falling life expectancy for the poorer members of society.

Even if Marx's prediction of a proletarian revolution remains unfulfilled, then, it can be seen that his scientific method of analysing society, historical materialism, still offers a coherent understanding of the changes that are occurring.

[1]In the "Communist Manifesto" Marx seems to forecast an absolute decline in workers' wages whereas later, in "Das Kapital", the implication is more that the deterioration will be in "conditions". Either way, if using any objective metric, "immiseration" is wrong.

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