Karl Marx’s Alternative to capitalism part 25 – forces and relations of production 8

For Marx in the 1859 Preface “the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution.”

At this stage, it is useful to let Marx’s writings themselves set out what he means.  Explaining the nature of this conflict in Capital Vol III: “the contradiction in this capitalist mode of production consists precisely in its tendency towards the absolute development of productive forces that come into continuous conflict with the specific conditions of production in which capital moves, and can alone move.”

“On the other hand, too many means of labour and necessities of life are produced at times to permit of their serving as means for the exploitation of labourers at a certain rate of profit. Too many commodities are produced to permit of a realisation and conversion into new capital of the value and surplus-value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosions.”

“Not too much wealth is produced. But at times too much wealth is produced in its capitalistic, self-contradictory forms.”

“The limitations of the capitalist mode of production come to the surface:

“1) In that the development of the productivity of labour creates out of the falling rate of profit a law which at a certain point comes into antagonistic conflict with this development and must be overcome constantly through crises.”

“2) In that the expansion or contraction of production are determined by the appropriation of unpaid labour and the proportion of this unpaid labour to materialised labour in general, or, to speak the language of the capitalists, by profit and the proportion of this profit to the employed capital, thus by a definite rate of profit, rather than the relation of production to social requirements, i.e., to the requirements of socially developed human beings. It is for this reason that the capitalist mode of production meets with barriers at a certain expanded stage of production which, if viewed from the other premise, would reversely have been altogether inadequate. It comes to a standstill at a point fixed by the production and realisation of profit, and not the satisfaction of requirements.”

The barriers to development of the forces of production that would threaten its continued existence are explained.

“The rate of profit, i.e., the relative increment of capital, is above all important to all new offshoots of capital seeking to find an independent place for themselves. And as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out. The rate of profit is the motive power of capitalist production. Things are produced only so long as they can be produced with a profit. . . . Development of the productive forces of social labour is the historical task and justification of capital.”

“At any rate, it is but a requirement of the capitalist mode of production that the number of wage-workers should increase absolutely, in spite of its relative decrease. Labour-power becomes redundant for it as soon as it is no longer necessary to employ it for 12 to 15 hours daily. A development of productive forces which would diminish the absolute number of labourers, i.e., enable the entire nation to accomplish its total production in a shorter time span, would cause a revolution, because it would put the bulk of the population out of the running.”

“This is another manifestation of the specific barrier of capitalist production, showing also that capitalist production is by no means an absolute form for the development of the productive forces and for the creation of wealth, but rather that at a certain point it comes into collision with this development. This collision appears partly in periodical crises, which arise from the circumstance that now this and now that portion of the labouring population becomes redundant under its old mode of employment. The limit of capitalist production is the excess time of the labourers. The absolute spare time gained by society does not concern it. The development of productivity concerns it only in so far as it increases the surplus labour-time of the working-class, not because it decreases the labour-time for material production in general. It moves thus in a contradiction.”

Marx contends “that the bourgeois mode of production contains within itself a barrier to the free development of the productive forces, a barrier which comes to the surface in crisis and, in particular over-production – the basic phenomenon in crisis.”  (Theories of Surplus Value Vol !!)

“In world market crises, all the contradictions of bourgeois production erupt collectively; in particular crises (particular in their content and in extent) the eruptions are only sporadical, isolated and one-sided.  Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay . . . “

back to part 24

Karl Marx’s alternative to capitalism part 24 – forces and relations of production 7

Not only do increases in production often require machines to replace living labour but the increase in productivity necessarily increases the share of materials purchased and incorporated into the increased number of products produced.  Materials which pass only their own value into the final product and no new surplus.

Marx is explicit on this general point – “Moreover, it has been shown to be a law of the capitalist mode of production that its development does in fact involve a relative decline in the relation of variable capital to constant, and hence also to the total capital set in motion.” (Capital Volume III p 318)

Of course, there are often efficiencies created in the use of materials and also in the value and cost of machinery, which again is also a result of increased productivity in the industries that produce them. As Marx says “We see here once again how the same factors that produce the tendency for the rate of profit to fall also moderate the realisation of this tendency.” (Capital Volume III p 343)  And, of course, while the number of workers may reduce, the time they spend creating value purely for the capitalist will increase.

These all offset any fall in the share of surplus value in the total value of production but irrespective of this, the compulsion to increase productivity and reduce the employment of labour and its cost, impels individual capitals to seek these improvements because individually they will be able to undercut costs in relation to rivals, while perhaps selling at the same or slightly lower price than competitors while making a more significant profit.

Should their new methods of production become generalised among the majority of capitalists in their sector of production, or the less productive ones fail and exit production, then the overall share of labour in that sector of production will fall and so will the share of surplus value and of profit.  What makes sense for an individual capitalist reduces the share of profits for everyone in the sector – the development of the forces of production conflict with the relations of production which are based on seeking the greatest possible expansion of surplus value.

Such a fall in the amount of living labour in production can be offset by increased levels of exploitation but a rise in level of exploitation can check but may not cancel the fall in the rate of profit, and this is particularly so at high levels of organic composition of capital; although the latter assumes technological development that can do this across more and more industrial sectors, and increasingly so to new sectors and any new independent capitals thrown up.

A falling rate of profit may also be compensated by growth in the absolute size of surplus value although augmentation of this would decline if the absolute amount of living labour (variable capital) declines, or much more likely, its augmentation declines relatively if the quantity of living labour fails to grow at the relatively high rate commensurate with the growth of constant capital – machinery and materials etc.

While the rate of profit may fall, it may thus be the case that the mass of profit still rises, indeed given that capitalism involves the accumulation of more and more capital this mass must increase.  Marx allows that the absolute size of variable capital and surplus value may rise – in fact it “must be the case . . . on the basis of capitalist production.” (Volume III pp 322 – 324) This is certainly the reality of capitalism since Marx developed his analysis.

“Capitalist production is accumulation involving concentration of capital is simply a material means for increasing productivity.  Growth of the means of production entails growth in the working population and creation of a surplus population. (p324 – 325)

“As the process of production and accumulation advances, therefore, the mass of surplus labour that can be and is appropriated must grow, and with it too the absolute mass of profit. . . The same laws , therefore, produce both a growing absolute mass of profit for the social capital, and a falling rate of profit.”  (p 325) “A fall in the profit rate, and accelerated accumulation, are simply different expressions of the same process, in so far as both express the development of productivity. . .” (p349)

“Thus, the same development of the social productiveness of labour expresses itself with the progress of capitalist production on the one hand in a tendency of the rate of profit to fall progressively and, on the other, in a progressive growth of the absolute mass of the appropriated surplus-value, or profit; so that on the whole a relative decrease of variable capital and profit is accompanied by an absolute increase of both. This two-fold effect, as we have seen, can express itself only in a growth of the total capital at a pace more rapid than that at which the rate of profit falls.” (p329 – 330)

It will also be the case, to a greater or lesser extent, that new industries develop that require large amounts of living labour for their production, labour that can only be displaced by technology and machinery over a future, longer or shorter period of time.

New industries widen the range of commodities that capital can produce, and that can be used to produce them, which can create profit, i.e. that can become capital.  The mass of material labour that capital can command depends not only on the value of capital but on the mass of use values that can act as consumption for workers or as means of production and materials of production.  If the latter grows so can the quantity of labour employed, and therefore the accumulation of capital that can proceed, allowing capitalism to continue to develop the forces and relations of production.

It is argued that the growth of these new industries, increasingly ‘service industries’ involve higher relative amounts of living labour than the more mature manufacturing or other industry.  Increased productivity in service industries does not generally involve increased consumption of raw materials even as productivity is increased, or at least not nearly to the same extent.  Increased consumption of circulating constant capital (materials), which simply has its value transferred into the final product and does not add any surplus value but must be advanced as capital, does not occur to the same extent and so does not lead to a reduction in the rate of profit on that account.

Of course, it must be understood that many industries are described as service industries that actually produce physical commodities and these are subject to the same tendencies of development as classical manufacturing industry.

Infrastructure industries are sometimes considered as service industries but the water and sewerage industry for example produces a physical product and then transforms it.  I recall visiting a new sewerage works that had a large bank of electronic equipment.  When I asked the manger how many staff worked at the plant he said there was five, but these were all going to be transferred elsewhere because the plant could work remotely and required only a regular visit by one member of staff to check everything was ok.

Even health services, which in the UK has traditionally had a budget in which over 60 per cent is spent on staff salary and wages, relies more and more on expensive drug treatments and the use of high-tech equipment.

No contradictions are therefore escaped by the development of new industries, even some ‘service’ industries, they are simply reproduced, but then any expansion of capitalism must by definition reproduce its essential nature, which is riven by contradiction.  However, it is not that nothing has thereby changed. The effect of these industries that develop upon a lower average organic composition of capital and higher rate of surplus value is to raise the average of both across the wider economy.

Marx at one point quotes six reasons why decline in the profit rate does not reduce accumulation. “Jones emphasises correctly that in spite of the falling rate of profit the inducements and faculties to accumulate are augmented; first, on account of the growing relative overpopulation; second, because the growing productivity of labour is accompanied by an increase in the mass of use-values represented by the same exchange-value, hence in the material elements of capital; third, because the branches of production become more varied; fourth, due to the development of the credit system, the stock companies, etc., and the resultant case of converting money into capital without becoming an industrial capitalist; fifth, because the wants and the greed for wealth increase; and, sixth, because the mass of investments in fixed capital grows, etc.”

At a recent meeting on Marx’s Capital, one speaker supported the view that the rate of profit did exhibit a tendency to fall and cited, among other reasons for this view, that such a situation confirmed the temporary character of the capitalist system in an objective way.  This, even if it were true, would not thereby equally confirm the inevitability of socialism or even that the seeds of socialism had grown equally as strongly as capitalism was gripped by its objective contradictions.

There are no absolute, predetermined limits which set the boundaries on the development of capitalism such that the contradiction between the development of the forces of production and relations of production just described can be said to lead to a terminal crisis or ending of the capitalist system.  The release of the forces of production from the fetters to their growth, arising from the requirement that such growth requires sufficient profitability that capitalism can no longer deliver, is not something that Marx foresaw as the resolution to the contradictions of capitalism.

The point rather is that the tendency for the rate of profit to fall is a fundamental one within capitalism that is inevitably associated with its equally fundamental drive to increase productivity through increasing relative surplus value.  Both stem from the combined development of the forces of production and relations of production and from the need for capital to accumulate by increasing the appropriation of surplus value. This includes new production with new sources of human labour as well as both increases in absolute and relative surplus value.

It is not necessary for a fall in the rate of profit to be evident at all times, the process by which it falls proceeds regardless and is important in this respect.  If the tendencies that counter this fall outweigh its effects this does not entail its unimportance, since the law exhibits the fact that new value is created only through labour power and the tendency for the fall in the rate of profit reflects this.  The expansion of capitalism, both in terms of the forces and relations of production, requires masses of additional labour, in other words expansion of the numbers and social power of the working class, the gravediggers of the system as Marx saw it.

Back to part 23

Forward to part 25

Maybot’s latest speech – the Devil isn’t in the detail

Let’s start at the very end of Theresa May’s speech, the bit where she says “So let’s get on with it.”

The EU negotiators could have been forgiven if they rolled their eyes in derision – they’ve been waiting for the British Government to decide what it wants for well over a year.  And despite an earlier ‘agreement’ that needed ‘only’ legal drafting, it has failed to make any drafting of its own available. Indeed, the level of expectation created over the past 20 months is such that none was ever anticipated.

If Brexit was such a brilliant idea, the British would have been pushing the door to get out; the EU would have been rushing to convince them to stay in, and the negotiations would have been driven by British position papers – putting the EU on the spot on just exactly what it intended to do to mitigate the damage to it from UK withdrawal.  But this whole idea is fanciful.

The dilatory and confused approach of the British faithfully reflects their predicament.  The UK has decided on a course that weakens it economically and politically and risks the default position of no deal that is the worst possible outcome.  It is in a time-limited process in which this default position is constantly staring it in the face.

The EU has driven the process while looking as if it has been trying to save the British from themselves.  It has therefore done what the British were tasked to do so but didn’t, and come up with a solution to the question of avoiding a hard border inside Ireland.

Given all this, it shows how fatuous and vacuous the BBC is that its main political reporter claims that we can now ‘forget about all the cake jokes.’  A little bit of detail on the irreconcilable – the claims to both “want as frictionless a border as possible between us and the EU” and a cast-iron commitment that “we are leaving the single market”-  is supposed to efface the glaring contradictions of this position, through some mealy-mouthed admission that “no-one will get everything they want.”

We are supposed to be impressed by this detail and change of tone, and by such messages as “we will not be buffeted by the demands to talk tough or threaten a walk out”.  This from the Maybot who declared that Jean-Claude Juncker would find her “a bloody difficult woman” in the “tough” negotiations, and who month after month repeated that she was prepared to walk away with “no deal rather than a bad deal.”

Such is the shallowness and ignorance of the journalism at the BBC that smug and dismissive reporters can tell us that all this is to be forgotten on foot of a supposed new-found seriousness and coherence to the British position.

But the speech revealed nothing of this at all.  What it did do, was not put the cake back in the cupboard but show us the ingredients to demonstrate just how ridiculous the idea of having it and eating it is, by going through case after case in which this was being demanded.

So, she wants the UK to have access to the EU’s internal energy market; wants British hauliers unrestricted access to the EU; access to the digital, science and innovation markets; continued membership of various EU bodies such as the European Medicines Agency, the European Chemicals Agency, and the European Aviation Safety Agency; and mutual recognition of qualifications.

She wants “measures to ensure the requirements for moving goods across borders are as simple as possible”, and while she doesn’t want passporting of financial services into the EU by British companies she wants to have the ability to “access each others’ markets.”  This to be achieved with an agreement that is without precedent, one with “a collaborative, objective framework that is reciprocal, mutually agreed, and permanent and therefore reliable for businesses”.  Oh, and she also wants the UK to be able make its own rules for the finance industry.

She rejects the charge that this is cherry-pickig, or rather admits that it is, but says that “if this is cherry-picking, then every trade arrangement is cherry-picking.”  And she’s right.  It’s just that she seems oblivious to the fact that, given the balance of power and the circumstances noted above, it is the EU by and large that will be picking the cherries.  The EU has made this perfectly clear already by repeating ad nauseam that it will not accept the British approach.

The British wish list is supposed to be achieved by tariff arrangements through which goods entering the UK and bound for the EU will see UK customs levy EU tariffs on these goods and then hand over the money.  It will require a comprehensive system of mutual recognition within which the UK will make a strong commitment that its “regulatory standards will remain at least as high as the EU’s”.

This commitment would mean that UK and EU regulatory standards would remain substantially similar in the future.  “Our default is that UK law may not necessarily be identical to EU law, but it should achieve the same outcomes”.  The UK wants that, as now, products “only need to undergo one series of approvals, in one country” to show that they meet the required regulatory standards.

Since the EU has fined the UK for not effectively implementing EU trade arrangements while it has still been inside the EU it seems strange that there would be no problem imposing the rules when it isn’t.

As for mutual recognition; the whole point of EU development of a single market is not recognition but harmonisation.  Even since Brexit was announced the UK has been signing up to harmonised rules i.e. the same rules – as in identical rules.  Not the same as in similar, not the same as in equal, and not the same as in the same outcome.

What Maybot is asking for is not only that the UK leave the single market while keeping its benefits, she is asking that the EU goes back in time to when mutual recognition was enough, and before it decided a single set of standards was the way to go.  It is inconceivable that the EU would seek to protect itself from Brexit contagion by giving near frictionless access to the EU while undermining the basis of its current and future development.

All this is having your cake and eat it, set out as a shopping list, that Laura Kuenssberg of the BBC now thinks is an old joke.  And it’s a joke alright, but rather like listening to a best man’s speech at a wedding where he goes OTT slagging off the groom. It leads to the audience starting to wonder – what the hell is she marrying him for?  In this case, if all this is so necessary to leaving the EU why the hell are you leaving?

Among the supposed reasons is the claim by the Brexiteers that the EU is creating a super-state, which is supposedly not what the British signed up for.  But it’s rather like what I said about some Scottish nationalists claims for independence.

These were that Scotland was an oppressed country, while in reality achieving separation was more likely to make Scotland an ‘oppressed’ country than remaining part of the UK.  If the Brexiteers think that the British can remain sovereign, independent and totally autonomous, while the rest of Europe unites politically, the planet they live on is further away than anyone previously thought.

On one thing Kuenssberg is correct, if only because, like the rest of the media, she sees politics as a game played at Westminster.  This was a speech aimed more at the rest of the Tory Party than the EU.  Negotiations have been going on for months but we are to believe that only now is the British position being put forward, and not in the negotiations themselves but in yet another hyped-up speech.  And with proposals that Maybot knows will not be accepted.

Kuenssberg is also correct in a more significant way.  The triumphalist tone is gone even if the stupidity hasn’t.  The recognition of British weakness shines through even though it isn’t admitted.  And the direction of travel has become clearer even if it’s not the one that is being touted.  The message coming out from the speech is that Britain needs the EU, and for Brexit to seem tolerably sensible needs the EU to fall over backwards to accommodate British needs.  The EU will decline to fall over backwards or forwards, and Brexit will more and more be seen to make no sense.

The negotiations and the legal text that will be negotiated will make this clearer and clearer.  The ‘detail’ that has eventually been extracted from the Tories simply defines in more granularity the contradictions of their position, while making explicit the impossible grounds on which they are expected to be resolved.

In this sense, it exposes Brexit and the Brexiteers, which is why Rees-Mogg has declared that “this is not the time to nitpick”.  It leaves them more and more naked in espousing their ridiculous claims about British fortunes outside the EU and the benefits of no-deal.  Unfortunately, if such ‘detail’ is the expected content of the eventual outcome, no-deal is ironically a possibility.

However, if the speech indicates a different direction of travel, to recognition of the constraints on British options, the Maybot speech was not the first this week to signpost the new direction.  Jeremy Corbyn was forced to slightly dismount his Brexit horse, through which he has disingenuously pretended to represent working class Leavers and Remainers, by signaling that he wanted a customs union, in opposition to the Tory red-line that Britain was leaving it.  This, it was claimed, would prevent a hard border in the island of Ireland.

Again, the media was full of praise for this political stroke.  For these Westminster-obsessed ‘journalists’ the only game in town is the party-political personalities and games in this venerable institution – Corbyn had upstaged Maybot and put clear water between Labour and the Tories.  It didn’t matter that his policy was also nonsense; that it is simply not possible that Britain alone could negotiate a new progressive customs union, or that a customs union by itself could prevent a hard border in Ireland.

But like the Maybot speech, but more so, it indicates the direction of travel.  What matters now is the speed.

These shifts demonstrate that Brexit is ripping an enormous tear in the nationalist consensus that underlies British politics. Those that can navigate beyond its illusions will survive.  Those that don’t will shipwreck on the rocky coast of their beloved island, falling victim to the enchanting music and singing voices of its nationalist Sirens.  It’s an old story.