Category Archives: Marxism

Marxism and the State

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In a previous post I said that I would be looking at the Marxist view of the State and in this post I will look at some aspects of Karl Marx and Frederick Engels’ original view.   For them the possibility of socialism was not that it best met some general principles of justice or equality but that it was based on the actual social and political development of the existing capitalist system.  If there were no developments within capitalism that might form a real foundation for achieving the former ideals then these ideals were practically worthless.  The question however is on what developments within capitalism is the potential for socialism based?

It is undoubtedly the case that the state plays a greater and greater role in capitalist society and that as this system has developed so has the role of the state.  That this has been so despite decades of rhetoric by the most ideologically rabid supporters of capitalism against the state ranks as only further proof of its central role.  The state also played a major role in the creation of the capitalist system although its importance may be subject to historical debate.

On this basis the majority of the socialist movement has come to identify socialism with this state either through state ownership, regulation, taxation or state expenditure on ‘public’ services.  In the form of Stalinism it has taken the shape of the most gargantuan forms of state power which has assumed prerogatives in social life that have associated the liberatory content of socialism with the totalitarian nightmares of Orwell’s 1984.

This has nothing to do with Marxism.  In fact the intellectual journey by which the young Marx came to ‘Marxism’ involved an utter and complete opposition to the state, as formulated by the German philosopher Hegel, which Marx carried out through his ‘Critique of Hegel’s Philosophy of Right’.  Marx’s view of socialism was not an ideal state which society must seek to achieve but the movement of a class to achieve political power as the means by which to ensure its own and humanity’s social liberation.  Socialism is therefore the movement of the working class to achieve power, not the actions of a state and especially not a capitalist one!

For Marx therefore the active germ of socialism is not expressed under capitalism by the growth of the state but by the growth in the social and political power of the working class, which itself is based on the objective development of the capitalist system.  The growth of the state does not in itself herald the new society because Stalinism has demonstrated that a society based on even the state of a superpower is not a historically viable social formation.

The Marxist view of the increasing role of the state was explained by Engels in relation to his native Germany under the Chancellor Bismarck:

“. . . only when the means of production and distribution have actually outgrown the form of management by joint-stock companies, and when, therefore, the taking them over by the State has become economically inevitable, only then — even if it is the State of today that effects this — is there an economic advance, the attainment of another step preliminary to the taking over of all productive forces by society itself. But of late, since Bismarck went in for State-ownership of industrial establishments, a kind of spurious Socialism has arisen, degenerating, now and again, into something of flunkyism, that without more ado declares all State-ownership, even of the Bismarkian sort, to be socialistic. Certainly, if the taking over by the State of the tobacco industry is socialistic, then Napoleon and Metternich must be numbered among the founders of Socialism.

If the Belgian State, for quite ordinary political and financial reasons, itself constructed its chief railway lines; if Bismarck, not under any economic compulsion, took over for the State the chief Prussian lines, simply to be the better able to have them in hand in case of war, to bring up the railway employees as voting cattle for the Government, and especially to create for himself a new source of income independent of parliamentary votes — this was, in no sense, a socialistic measure, directly or indirectly, consciously or unconsciously. Otherwise, the Royal Maritime Company, the Royal porcelain manufacture, and even the regimental tailor of the army would also be socialistic institutions, or even, as was seriously proposed by a sly dog in Frederick William III’s reign, the taking over by the State of the brothels.”

In the development of capitalism increased socialisation of production that anticipates and presages socialism is reflected in the increased role of the state and in this sense only is it progressive in that it signals the development of society towards socialism.  This does not mean that socialists should give any political support to this increased role of the state never mind put it forward as socialist in itself.  The development of capitalism has created and continues to create massive misery and exploitation through driving people from the countryside to cities and is progressive because it creates a working class which is the bearer of a new society but no one thereby claims that socialists should support this process politically.

This again is presented by Engels:

“But, the transformation — either into joint-stock companies and trusts, or into State-ownership — does not do away with the capitalistic nature of the productive forces. In the joint-stock companies and trusts, this is obvious. And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”

Support for nationalisation as a socialist measure is a short-cut, a short-cut to nowhere:

“It is a purely self-serving falsification by the Manchesterite [laissez-faire] bourgeoisie to label every intervention into free competition as `socialism’: protective tariffs, guilds, tobacco monopoly, statification of branches of industry,…, royal porcelain factory. We should criticize this, not believe it. If we do the latter and base a theoretical argument on it, then it will collapse along with its premises” (Engels quoted in Draper, Karl Marx’s Theory of Revolution, 1990,p.96)

From the glorification of the power of the state comes the betrayal of socialism in the form of nationalism which is why it is so apt that this is often expressed in the demand for nation-alisation, as if the more of this demanded the more radical is the socialism.

This type of ‘socialism’ is often also associated with ethical considerations of justice and equality and the view that this can be achieved through state action.  This opens up the possibility of the latter becoming prettified beyond all recognition.  So vast bureaucracies become socialist institutions and means tested, inadequate benefits dispensed through pipettes become a whole new model of society.

If statisation is the advance of socialism then reforming this state is inherently the way forward and electoral success to reach the ‘pinnacle’ of this society becomes the most natural means to its attainment.  Calls for widespread nationalisation, defence of the welfare state without the least criticism of it, demands on the capitalist state to do things it simply will not and cannot do and rank electoralism are all consistent with each other and hallmarks of many of today’s ‘Marxists’.  As Marx was himself compelled to say of some of his ‘followers’, if this is Marxism I am no Marxist.

In his career Marx came across this approach to politics, which is all too familiar today, in the shape of the German Ferdinand Lassalle, who sought state aid for workers cooperatives as the germ of a future socialism, of which the workers were not yet ready to openly fight for.  Today some demands for nationalisation and state redistributive policies are designed to manoeuvre workers into a movement for socialism without even mentioning the word never mind traducing its real content.

Frederick Engels and Eduard Bernstein penned a critique of this sort of approach:

“If the masses could not yet be interested in the actual end of the movement, the movement itself was premature and then, even were the means attained, they would not lead to the desired end. In the hands of a body of working-men not yet able to understand their historical mission, universal suffrage might do more harm than good, and productive co-operative societies – with State-credit could only benefit the existing powers of the State, and provide it with a praetorian guard. But if the body of working-men was sufficiently developed to understand the end of the movement, then this should have been openly declared. It need not have even then been represented as an immediate aim, to be realised there and then. Not only the leaders, however, but every one of the followers that were led ought to have known what was the end these means were to attain, and that they were only means to that end.”

Today calls on the state to do good are presented as the means to win workers’ votes, which will ultimately lead to socialism, while the goal is considered too advanced to be put forward clearly, put to them as something that they must do and only they can achieve.  The avoidance of socialism and its real content today goes under the name of anti-capitalism or under the banner of broad left parties and alliances which hide what its sponsors claim they really stand for.

Let’s be clear about what the nature of Marx and Engels’ argument was.  It has been compared to their attitude to reforms.  Thus while they were in favour of many reforms to the capitalist system, the purpose of such reforms was to place the working class in a better position to carry out the revolutionary overthrow of capitalism.  It was not because such reforms of themselves were the means to bring socialism into effect.

So today socialists should not reject demands on the state or recoil from calls for nationalisation where these might be appropriate.  These proposals should not however be considered the basic mechanism for the transition to socialism; the all-encompassing framework for the programme that becomes its heart, body and soul and the all-embracing grounds on which the socialist argument takes place.  However as we have noted before this is exactly the role that the capitalist state plays today in the politics and programme of the left.  In a number of posts this has been explained; from the demands that the state tax the rich to investment to create jobs and nationalisation as if this were socialism itself.

The difference can quite easily be seen,on the one hand, in opposition to austerity, cuts in public services and opposition to privatisation, which should all be supported, and, on the other hand, putting forward as the socialist solution massive state investment  as the answer to unemployment, economic insecurity, inequality and low standards of living.  While such a policy by the capitalist state might be better for workers in that it provides some protection and better grounds for workers’ own organisation it is not itself the workers’ own alternative.  Nationalisation, state investment and taxation are not solutions and certainly not socialist ones.  All this has been explained in previous posts.

One other thing must also be explained.  Opposition to austerity must be supported, be part of the Marxist programme, because this is something to be carried out by workers themselves.  Keynesian programmes of state-led investment hand everything over to the state to achieve.  It remains in control, dictates how much and what is to be done, when, where and how.  It is precisely to remove all this from state control that is the task of the working class.

This is what Marx meant when he said that “every step of real movement is more important than a dozen programmes” which has been re-translated today so that state reformist electoral programmes are mistaken for real movement.  This denial of the primary role of workers’ own activity is reflected also in these organisations sectarian organisational practices and electoralism which are simply the everyday practical out-workings of a programme that signals dependence on the state for solutions that should come from the workers themselves.

Thus for Marx, support for workers cooperatives in ‘Capital’ is distinguished from Ferdinand Lassalle’s state aid for producers’ co-operatives  – “as far as the present co-operative societies are concerned, they are of value only insofar as they are the independent creations of the workers and not protégés either of the governments or of the bourgeois.”

For Marx and Engels “the emancipation of the working classes must be conquered by the working classes themselves.”  This is the starting point for today’s struggle for socialism, not faith in the benign actions of the capitalist state.

Thoughts on the class struggle in Greece (part 2) – Towards a Revolution?

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As I remarked in the first post, the views of both sides in the debate over the way forward for socialists in Greece share the view that there exists in the country the potential for a workers’ revolution.  This is not one that I share and the Greek Marxists provide the evidence that this is so.

First, Andreas Kloke notes the temporary defeat of the movement resisting austerity.  The slogan “Elections Now” by the two biggest left parties Syriza and the KKE “represents a strategic failure.” No big change took place in these elections between the right and the left and the electoral majority for austerity “reflects the real balance of power between the main classes in Greek society.”  Austerity continues to intensify and the fascists of Golden Dawn have grown to represent a real force.  The Greek Marxists are keen to emphasise that no one voting for the fascists can be under any illusion any more about what they represent.  On the other hand the vote for the coalition of which these writers are a part collapsed.  In presenting the fascists and revolutionary socialists as being in a race, he says “the fascists clearly have a considerable head start.”

Syriza does not represent a growth in the collective strength of the working class movement but rather “a collective mood” of opposition to the two traditional parties.  The memorandum imposing austerity is opposed by two thirds of society but only about one third support the left.  There is thus plainly a crisis of a left alternative.  This is a simple reflection of the low level of class consciousness and weak organisation of the working class in no respect fundamentally different from that in many other countries including Ireland.

Manos Skoufoglou notes that the organisations of the Greek working class are not prepared for a radical alternative to the various options that the Greek capitalist class and the EU may choose from.  In the most significant observation he says that “the working class is not questioning directly its (capital’s) economic power.  Workers don’t yet see the left as the political branch of their own class struggle, but as a body on which they “invest” their hopes.”  The fundamental problem is therefore the consciousness of the working class but this also exposes the utter bankruptcy of those on the left who argue that the basic problem is one of working class “representation” and needing to build an electoral vehicle to solve this problem. In the later view the problem is creating a means to represent working class consciousness not in recognising the weakness of this consciousness in the first place.

The real problem is that we are not facing a possible Greek workers’ revolution because, as the Greek Marxists say, “the working class is not questioning directly capital’s economic power”.  Until it does this all talk of revolution is empty rhetoric, not to mention the basis for seriously wrong perspectives.  This is illustrated by a big majority not actually wanting new elections.  So while many wanted to vote for Syriza many didn’t want the only means to achieve this.   A class breaking its chains to achieve political power would never row in behind such anti-political conceptions.

Yet other commentators on the revolutionary left in the Fourth International make the mistake of believing that the basic problem is the need for the left to take the lead in the struggles of the working class with a political programme of breaking with capitalism, one that becomes credible in the eyes of the working class.  But as I pointed out in two earlier posts here and here, political struggles against austerity including general strikes have not led in the past to revolutions.  In fact the Greeks have a record of such strikes that dwarfs the experience of others.  In this post I reported on an academic study that looked at 16 countries including Ireland, which recorded 72 general strikes of which 33 occurred in Greece alone!  Clearly this is not enough to build the material foundations for a revolutionary working class.

And this is the problem.  It is not the weakness of the Marxist Left that is the issue, for this itself can only be explained by the political weakness of the working class but the commentators from the Fourth International have nothing to say about this.  The transformation of capitalism into a new society becomes a question of political struggle only and becomes narrowly focused on one event which acts as a magic wand.  This magic wand is called revolution.  The comrades have no real understanding of revolution as the culmination of a long struggle by the working class to build itself up as a countervailing force in society, in utter opposition to its current class rulers and their state, in which revolution is the final decisive act of rupture inexisting society and birth of the new.  Everything involved in this extended process becomes invested in a single event that is expected to achieve what only decades of struggle, organisation and advances in consciousness can achieve.

Thus for these organisations revolutionary politics becomes believing in the immediacy of revolution, even when it is not immediately on the cards.  Everything else is reformism, to be supported of course, but only in so far as it quickly can become exhausted.  Because socialist revolutions are only possible given a prior development of the working class, and the political situation more widely, their politics become sterile and redundant.  They either collapse into pitiful reformism while talking revolution to their new recruits or they become dogmatists insisting on the necessity of revolution, which isn’t untrue, but which in the form expressed only confirms that it must be 12 midnight before we can move into the new day.  Not much use the rest of the time.

This is the choice presented in this debate and as we saw in the first part it leads to the raising of political demands which are predicated on their being a revolutionary situation when there isn’t.  The demands raised, such as who shall form a government, are thereby either wrong ,by claiming certain political forces like Syriza are more politically advanced than they really are, or are too abstract because they reflect an unacknowledged recognition that the perspectives offered have little traction in reality.

Many on the Marxist left put forward demands such as general strikes as if these on their own will raise workers consciousness and lay the basis for revolution, but they fail in Greece to learn a very obvious lessons that these strikes teach us.   For example Marxists see general strikes as posing the question of who rules society, the workers or the capitalists.  Through stopping society by laying down their tools they challenge the power of the bosses and question their right to decide what happens. Since general strikes cannot stop everything from working they involve workers in deciding just what is allowed to continue to work and what doesn’t and on what terms things like hospitals, power, water, emergency and other services continue to operate.

Yet Greece has seen dozens of general strikes.  If these posed the question of power the question has been answered repeatedly in favour of the capitalists.  The strikes therefore on their own teach this lesson and become very large protests, and protests are not an alternative but merely an objection to what already exists.  The idea that a frontal assault on capitalism today in Greece could be successful seems to fly in the face of this experience but that does not mean revolutionary politics have no role to play.

The alternative perspective of building up the independent economic, social and political power of the working class while recognising that this power does not yet exists is today what revolutionary politics is about because it relies solely on the workers themselves and does not lapse into the short cuts demanded by the perspective of those who see revolution as the only immediate answer to everything.  This need for immediate global answers leads many who call themselves Marxists to demand that the capitalist state do what these Marxists know in their bones the workers are not yet ready to do.  So we have calls for nationalisation as if this were socialist instead of workers ownership and control because the former is seen as more practical and realistic.

This failure to build a real workers’ alternative bursts open when capitalist crises erupt and it is clear that the Marxist movement has no real material, as opposed to theoretical, alternative.  This is why we get incredible admissions of political and general programmatic nakedness such as the following from one of the Greek contributors to the debate.

“The transitional program we describe is a quite sufficient counterweight to reformist projects of the virtually and possibly actually “governing” parliamentary left. However, it is not yet concrete enough. In order to convince against “realistic” arguments, which SYRIZA seems already to succumb to, if not actively spreading itself – that a unilateral termination of the memorandum would lead to international isolation, that expropriation of banks would provoke partners in the government to withdraw their support – we have to prove that a revolutionary counterproposal could also be applicable in practice. We have to study further examples and historical experiences of revolutionary struggles of the oppressed and the exploited: revolutionary measures in Russia, Cuba or China, autogestion in Algeria and in Latin America etc, even progressive measures applied by Chavez.  If anything, so as to depict in our own conscience the real potential of utopia. How can international solidarity practically eliminate pressures inflicted by the international vindictiveness of bourgeois classes? How can we achieve expropriations with no compensation without the universe to collapse? What exactly is workers control and how does it work? Particularly this last question is a key in order to conceive which is the essential difference between a radical left government and a revolutionary workers’ government.”

If the Marxist left cannot prove that its revolutionary politics can be concrete and will work in practice then no wonder it does not have the confidence of the working class.  For the latter to exist the working class would have to prove it in practice to itself through successful example of workers ownership and workers control in the here and now, not promises of utopias tomorrow after the revolution.  Yet the idea of workers ownership and control prior to the revolution is routinely dismissed by many of the Marxist groups.

Manos Skoufoglou states that “The maturation of objective and, what’s more, subjective preconditions for a revolution is not accumulative.”  While the class struggle can rise and fall in favour of the working class which may have to retreat or advance as changing circumstances dictate this statement is surely wrong.  Marx believed that social systems are born, grow, mature and decline.  That this is accumulative proves that the germs of the alternative society must develop and mature within capitalism and appear more and more in its life.

The increasing socialisation of production within capitalism, the increasing specialisation of production forcing greater planning within and cooperation between enterprises, comes into contradiction with the private appropriation of this production.  This is an accumulative process pointing in the direction of the end of capitalism.  The increasing division of labour and the increasing need and actuality of its coordination is constantly upset and destroyed by the pursuit of private profit which leads to periodic economic crises.  The new society of planned production appears more and more in the life of the old capitalism.

But planning is not the essence of the new society but merely a description of the mechanism by which it must work.  The essence of the new society is its rule by the majority of that society and not by a minority ownership class.  In the new society the working class as the vast majority becomes the owners of the means of production and becomes the rulers of the new society.  Socialism is not a state of affairs defined by complete planning but is the movement of the vast majority of society in determining how the society works and achieves its collective goals.  For the new society to grow out of the old and not just be a utopian project this aspect of the new must be increasingly found in the old.  This is the importance of the growth of workers ownership and control in existing capitalism.

If this really were more and more the reality of capitalism then questions above, like how workers control would operate, whether Marxists had a real concrete alternative etc would not exist.  Instead revolution would be sought by the working class itself as the only means of securing and developing across the whole of society the advances in workers ownership and control already achieved.

It is clear therefore that the key to revolutionary politics today is building up this independent power of the workers and not in millennial pursuit of revolution for which the objective and subjective prerequisites are not present.  How this is done in Greece is primarily but not exclusively for Greek workers and Marxists to determine.

BBC ‘Masters of Money’ considers Karl Marx (Part 2)

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The BBC programme was called ‘Masters of Money’ and was ostensibly all about money but there was nothing said about Marx’s theory of money, which is fundamental to explaining the current economic crisis.

For mainstream economics money is essentially just paper that can be used to exchange commodities.  Provided it is not issued in too high a quantity it will maintain its value and is useful for this purpose.  Already we can see a problem.  What is the intrinsic value of pieces of paper or metal coins?  If it had an intrinsic value its issue would hardly be a problem. It becomes a problem because paper money cannot fulfil all the functions of money precisely because it does not have an intrinsic value.

The massive expansion of credit makes credit too look like money in that it is used to exchange commodities.  However at a certain point people want paid with money and not yet more credit.  When this happens credit stops being given to some people and we have a ‘credit crunch’ such as developed in the latest financial crisis when banks refused to lend to each other and Governments had to step in.

For Marx money is itself a commodity with an intrinsic value because it too is the product of human labour.  Historically it has taken the form of gold.  This is why commodity exchange is an exchange of equals because when money is exchanged for a commodity the money is either gold directly or indirectly if it is convertible into gold.  The end of such convertibility does not abolish exchange being one of equivalents.  Just as credit cannot become real money and this is proved during a credit crunch so paper money is exposed when it is over-issued and creates inflation and when in a crisis capitalist investors look to put their money into something that will preserve the real value of their wealth.

In fact this occurs during booms when speculation on one type of asset after another leads to bubbles – in high-tech company stocks, houses, commodities and now certain government bonds. The price of oil is one barometer of this activity.

Thus just as the massive expansion of credit is not a solution to the problem of capitalist crisis and the contradiction between a limited market and profitable production so also is the printing of money through quantitative easing not a solution.  Yet according to mainstream economics there is no reason why printing money should not be a solution.  The proof of the pudding is that while quantitative easing  has prevented collapse it has not abolished the crisis.

Many companies are sitting on piles of cash including US multinationals holding money outside the US and so evading US taxes.  There is an ‘investment strike’ because of the recession which has created unemployment, falling incomes, debt crises for many countries and austerity which promises not a recovery but continued recession.  All this is worse in Ireland because it is not mainly the policy of austerity which is the problem but a massive overhang of debt, which must otherwise be repaid, and shrinkage in demand due to lower wages, unemployment and emigration.

We are back to ‘solutions’ that are based on more investment and higher wagers but which ignore that it is the system based on profit which is the cause of the problems.

Two other issues occupied the last part of the BBC programme.  The first was whether capitalism would last more or less forever or would be temporary and replaced by something else. The programme accepted that Marx’s analysis of capitalism had a lot of sense to it but it did not, to no one’s surprise I am sure, think that he had any alternative.  In fact the very scarcity of his views on this was held up a number of times while recognising that no one else had much of a clue either.

This was more than a little disingenuous.  The programme started off with shots of the Berlin Wall being demolished and of pictures of Red Square in Moscow and of Stalin.  The presenter recalled that she was at university at the time the Berlin Wall came down and one thing she was aware of was that ‘communism’ had definitively failed. The programme she said would therefore not look at what Marx had to say about communism.  To return at the end of the programme and say that Marx had no alternative while excluding what he did say about an alternative is, well, not exactly fair.

Also unreasonable was the nonsense that Marx, although he had been poor, had towards the latter years of his life become a bit bourgeois.  This seemed to consist of such things as worrying over the future of his children and taking walks in the park in quite nice areas of London.  What a traitor!  He hadn’t even been down a coal mine, unlike the presenter who went down one for the programme.

That leaves me a bit conflicted as I worry over my children, like nice walks in the park (sometimes) but have been down a coal mine (once).

More importantly the programme argued that Marx had no alternative and implied that this explains the otherwise puzzling phenomenon, gleefully expressed by ex-Tory Chancellor of the Exchequer Nigel Lawson, that many people were not flocking to the banner of Marxism.  The latter is a fact, so is it the result of the former?

In an earlier post on the defeat of the opposition to the austerity referendum I asserted that the Left and the working class generally did not have a real alternative, as opposed to some theoretical one, and that this was fundamentally why many workers had voted for something that was against their interests and which some knew to be the case.  The programme actually expressed very well what is meant by an alternative, if I recall more or less accurately, it said that this would be when ‘a compelling alternative would appear.’  What is this ‘compelling alternative’?  If we are talking about the replacement of the political economy of capitalism we are also talking about its replacement by the political economy of the working class.  What is this?

Marx described the alternative to capitalism this way:

“But there was in store a still greater victory of the political economy of labour over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.”

(http://www.Marxists.org/archive/Marx/works/1864/10/27.htm)

The beginning of an alternative to capitalism arises only when the working class takes action, however small, and is not limited to creation of worker owned and controlled production.  The creation of its own organisations to defend itself against capitalism also foreshadows its future control over the whole of society.  The creation of its own workers party is the pinnacle of it being conscious of its tasks.  Many of the political organisations claiming the banner of the working class and the mantle of Marx replace the centrality of the working class itself with calls upon the state, the capitalist state, to take the action only the working class can take and only which if it does take, can it be considered any step towards socialism.

So the BBC programme on the alternative of Karl Marx got his essential teachings wrong but unfortunately, through empirical impressions, got the current weakness of the socialist alternative right.  The programme itself however is an indication that this alternative is as necessary as it ever was.

BBC ‘Masters of Money’ considers Karl Marx (Part 1)

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BBC Karl MarxAs part of its ‘Masters of Money’ series the BBC 2 programme, which looked at the ideas of John Maynard Keynes and Friedrich Hayek, finished by looking at the economic ideas of Karl Marx.  The overall verdict?  It could have been a lot worse.

There were of course huge simplifications that erased exactly what Marx was saying.  These could have been avoided, and the dismissal of communism and what Marx had to say about it was on a par with cold war contempt, but despite this there was a coherent argument through the programme.

It was very much the creature of a mainstream bourgeois economist albeit one who thought there were important insights to be found in Marx, particularly his perspective on the inequality of capitalism and its instability.  It avoided some cheap shots and pointed out that Marx appreciated the revolutionising of production achieved by capitalism and its dynamic development across the world.  The presenter Stephanie Flanders repeated the often made observation that Marx’s description of capitalism is more true now than when it was first made.  She also correctly observed that profit is the soul of capitalism and made some correct remarks about the compulsive nature of the drive for profit within the system.

There were some strange observations which tried to tie the relevance of Marx’s views to particular periods which excluded the post war boom and included the 19th century but excluded the great depression of the thirties.  The whole point of the programme however was to assert the relevance of his views today and if it did no more than this then it must be judged positively.

There were some problems that, had they been addressed, would have made for a much better exposition of Marx’s ideas.  The first is that the programme avoided what Marx thought was his greatest economic discovery – the nature of surplus value.  This is the discovery that the economic value created by capitalism is the result of human labour and can be measured by the labour time necessary for its production.  The source of capitalist profit is the result of the difference between what the capitalist pays for this capacity to labour and what this labour actually produces.  This explains how a surplus can be produced and a profit arise when the exchange of commodities, including labour power, is the exchange of equivalents. It is not a question of workers being cheated when they receive a wage in return for their labour power or of unequal exchange of commodities.

This is not a particularly difficult concept to explain but it does very clearly reveal the exploitation of the working class and exposes all the hypocritical justifications of the system.

The second problem is not what was left out but what was included, that Marx held that the absolute level of wages would be held down under capitalism.  This doesn’t sit well with the programme’s acknowledgment of Marx’s view that capitalism develops the forces of production.  Who did Marx believe would buy the goods created by the development of these productive forces?  This of course was the central tenet of the programme: that for Marx this was precisely the problem.

Marx’s argument was held to be that the tendency to lower wages reduced the ability of workers to buy the goods they produced.  Increasing wages would only reduce profits, the objective of the system, so this is not a solution.  As a temporary ‘fix’ the system expanded credit to make up the shortfall in wages and allow all the goods produced to be purchased.  The explosion of credit therefore explains the current economic crisis emanating within the financial services industry.  The programme was actually quite good when it cut to the right-wing talking heads who pooh-poohed the idea that low wages contributed in any way to the crisis.  They looked neither comfortable nor convincing, or maybe that was just me.

The programme argued that Marx’s criticism went much deeper than any other but actually the programme didn’t go deep enough.  Not altogether its fault since there is widespread debate among Marxists about the causes of the current crisis and even about the fundamental mechanisms of what might be called ‘classic’ capitalist crises.

What can be said however is that the description of the crisis given in the programme and the role of credit and wages is only how the crisis manifests itself, not how it is caused.  To explain the latter would require one to start with the idea ignored – surplus value.

If low wages restricting the market were merely the problem the question would not be so acute.  The capitalists who had diddled the workers could simply purchase what the workers did not.  Everything would then be sold.  The problem is worse because the workers create added value over and above what they are paid, over and above what is required to maintain production and also above the conspicuous consumption of the capitalists, and this additional value produced must find a market.  Why can’t this too be solved by the capitalists buying the difference?

The answer is that it can but the question then is what is the result of this?  Additional value appropriated by capitalists can expand their luxurious lifestyles but the driving force of the system is not this but profit.  To increase this means expanding production both to garner extra profit and destroy competitors.  This means the capitalist must employ the additional value produced by the workers to further invest in more workers and also machinery, raw materials etc to expand output.  The problem is intensified as production increases, new markets are sought for the things that are produced and the amount of surplus value (unpaid labour) created is expanded.

In the longer term the rate of profit comes under pressure as the capitalists replace workers with machines in order to produce more cheaply or even to produce some goods at all (some high-tech ones for example).  However because profit comes from workers the value of production comprised of workers labour declines and so does the proportion made up of surplus value, from which profit comes.  Fewer workers will create proportionately less surplus value while the cost of machines and raw materials etc increases relatively, so reducing the rate of profit.  The capitalists with the lowest productivity and lowest profitability can be forced into bankruptcy.  Of course to some extent this too can be offset by lower wages but the increasing sophistication of production means that paying peanuts will not allow the ‘monkeys’ to engage in the skilled labour required.  This is a long term tendency but one we can see in operation through the economic history of the west and in the rapid economic development of Asia.  It implies that profit plays a smaller and smaller relative role in production which calls into question a system in which this is the whole purpose of its existence.

The regular periodic crisis, including the current crisis, is the route by which this longer term tendency operates.  The compulsion to produce more and more surplus value also produces these more regular booms and busts.  The drive to expand the creation of surplus value means increased accumulation of workers, machines and materials and the expansion of markets to purchase the additional production.  In an economy dedicated to the needs of the population such increased production can be consciously planned and coordinated and its limits set by society as a whole.  Under capitalism no such limits are acceptable.

The limits on production of surplus value are therefore not set by the needs of society or by the limits of the purchasing capacity of workers and capitalists.  To break from these limits credit is expanded to bridge the limitations on consumption that are the result of the limits of production.  Through credit capitalism seeks to satisfy the capitalist desire to expand production through the accumulation of more and more surplus value.  Credit expands the market for increased surplus value production.

This can produce fantastic economic booms of the sort we have seen in the last decade or so in Ireland and across much of the globe, from China to Brazil.  The attempt to expand real production and to create an even larger market for it must at some point necessarily collapse for the same reason that credit is originally introduced.  Just as increased credit is an attempt to increase profit so the collapse of credit is the result of credit no longer being able to expand profitable production.

Workers must pay back debt at some level and beyond a certain point this becomes impossible because of the limits to their real incomes determined by real production.  The same is true of the capitalists.  Ever more convoluted attempts to expand credit beyond the capacity to pay it back – through creation of yet more credit – is doomed to collapse as the ever expanding amount of debt requires greater and greater repayments to keep it going.  The fantastic expansion of the financial services industry is testament to how big such an exercise can become. A glance at the size of the balance sheets of the Irish banks in comparison to the size of the whole economy reveals the scale of the overproduction and credit expansion that can arise.

In Ireland and the US the limits were reached when workers could no longer pay for inflated housing or capitalists pay for inflated office and other building construction.  A surplus of such properties is eventually created, overproduction appears, prices collapse, capitalists cannot sell except at a loss and those who built the houses and offices go bankrupt, workers in construction are made unemployed and the banks which financed it all go bust.  At such points it can appear that the problem is that workers wages are not big enough to buy all that has been produced and that this is the problem.  Solutions are proffered by Keynesians who say that what is need is yet more investment to take the place of that which has just collapsed.  But as we see, these solutions do not address the underlying problem and provide a ‘solution’ only by postponing the collapse and stoking up a bigger tsunami when the boom busts later.

In these circumstances blame is also placed on the institutions which created the massive credit explosion – the banks – especially since such booms inevitably involve hugely speculative, criminal and stupid behaviour during a time when everyone thinks they should be getting rich quick.   No one needs regulation during a boom when money is being made and afterwards the call is made that we have to have stricter regulation when again, but for opposite reasons, no one needs regulation.  Regulation becomes the alibi for the systematic failures of the system.  Left wing critiques which focus on the banks play into the hands of those who want to ignore or are simply ignorant of the system itself being responsible for the bust.  That the bust is so spectacular is simply a result of earlier failure to burst the bubble.  For a longer and bigger boom the price paid has been a longer and bigger bust but either way capitalismproduces booms and crashes.  Keynesian solutions to extend the boom can simply create bigger crashes.

Forward to Part 2

The State and Stockholm Syndrome – Part 2

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Today the State is inflicting attack after attack on working people but just like sufferers of Stockholm syndrome many people keep coming back to ask it to protect them.

It is not that this is an idea with no rational content at all.  It does have a basis in reality but not one that justifies the political positions of some of the Left.

Last week on RTE news some disabled people were interviewed protesting outside the Dail at cuts to personal assistance, without which they might be forced into hospitalisation or else left to suffer appalling neglect.  Their protest was a powerful demonstration of the enormous dependence some of the most vulnerable have on the State and the capacity of that State to mistreat them appallingly.  While the media and others basked in the achievements of Irish athletes in the Paralympics in London the Irish State was preparing to shaft disabled citizens at home.  The protests succeeded in getting a U-turn on the proposed cuts and a rare but welcome victory.

This is but one example of the welfare state which is what the Left has in mind when it defends the state.  Where the right wing scream private good and public bad the left has often responded by defending public services and with declarations of the evils of the private sector.

Opposition to welfare cuts and to cuts in education and health services should not however imply any wider defence or support for the state or ‘public sector’.  The public sector is a large bureaucracy that has no democratic content, often providing poor and inefficient services.  The state training agency FAS is just one outstanding example of the corruption and wastefulness of the provision of services by the State. These are run by a capitalist state, in the interests of capitalism, by bureaucracies totally unaccountable to working people.  Why on earth should there be any inclination to defend what we are not responsible for? What we have no control over? That should rightly be criticised by us for its often bureaucratic waste of our money?

And this is the point. It is working people who pay for the welfare state, not the rich and not capital.  In a paper written some years ago the Marxist economist Anwar Shaikh sought to examine the argument that excessive welfare provision caused economic stagnation and unemployment.  In the course of this he demonstrated for six major countries (US, UK, Australia, Canada, Germany and Sweden) that this was not the case.  His central finding has relevance to our own argument, which was “that social benefit expenditures were financed out of the taxes paid by recipients of these very expenditures: in other words, by and large, social welfare expenditures were self-financed.”

The capitalist state taxes workers and then bribes them with their own money while liberals loudly declare that taxation is somehow progressive, even left-wing, and should be increased to improve welfare servicers and boost the economy.  Workers are expected to uncritically support this as if ‘the State’ is paying for something when it is actually they that are doing so.  The key question of ownership and control of the services provided by the state is ignored and the debate is framed in terms of the supposed ‘socialist’ position of ‘tax and spend’ and the right-wing position of cutting taxes and privatisation.

This framework has been used by the right to push privatisation, presenting it as the only alternative.  But it isn’t, and opposition to privatisation is not itself an alternative to the failures of health system or education systems that consistently betray those most in need of their help.  Too often the woeful character of state services has been defended in some misguided belief that defending state ownership is defending the workers delivering the services.  Such an error is rarely made when the unsatisfactory nature of services or products produced by workers in the private sector comes under similar attack.  It is against this background that the State seeks to divide private sector workers against public sector workers and portray the trade unions, often accurately enough, as primarily interested only in the latter because that is where their own bureaucratic power base resides.

While socialists must oppose privatisation as a solution to the inefficient provision of services we should never confuse this with support for or excuses for poor State delivery of services.  Too often the attacks on the working conditions of those employed to deliver these services are made prior to privatisation, or prepared prior to privatisation, by the state itself.  Nor is it true that state ownership guarantees better delivery of services.  The appalling neglect of older people in care for example has taken place under both private and state provision.

So what we have then is the provision of welfare state services which workers pay for but which are delivered often bureaucratically, with no democratic control and often in oppressive ways, such as the means-testing of welfare recipients.  Many workers delivering the services conscientiously do their best but this is despite rather than as a result of how they are organised and managed.  Simply demanding more welfare ignores all this and ignores that it is workers who pay for it.

Many are happy to pay because they care about the services provided and have in the past or will in the future benefit from them.  The provision of unemployment insurance etc. limits the devastation to living standards consequent on redundancy or sickness.  It puts a floor under the minimum wages capitalists can demand, which is why they always want it reduced; but fundamentally it is necessary because a pool of unemployed is necessary for capitalism and this pool must be of sufficient quality to take up employment when it is available.  Welfare capitalism is necessary for the capitalist system as a cost effective way of preserving the quality of labour power.  It is not fundamentally about delivering on the human needs of people.

The large growth of the capitalist state sector, from an average in the OECD (advanced capitalist countries)  of 27 per cent of gross Domestic Product in 1960 to 42 per cent in 1988 (statistics from Shaikh paper), has been the material and ideological power base of social democratic ideas that the capitalist system has been or can be reformed, if not into socialism, then at least something ‘different’ or along vague lines of ‘another world is possible’.   The limited standards of the services provided and endemic insecurity under which welfare recipients live are one testament to the limits and precariousness of this social democratic vision of reform.

Workers expected to row in behind demands to defend a large state should be aware that this sector has grown in recent years because of the state’s role in preventing a financial collapse pushing the whole capitalist system over a cliff. In Ireland, as in many other countries, workers are having to pay for it through tax increases and service cuts.  The last thing workers need is the idea that the State is something neutral that can be captured to represent its interests.  Yet this is the present perspective of much of the Left who have diagnosed the current situation as first of all a ‘crisis of working class representation’.  That is, a crisis of the social democratic illusions that once had hegemony over many workers, although to a much lesser degree in Ireland, who have suffered mainly from capitalist populism.

This dependence on the State as part of the fundamental programme of the Left is the ideological explanation for the electoralist strategy now so much a feature of the Left.  It is no accident that the need for a United Left Alliance was suddenly seen before the general election.  Having made the electoral intervention the need for unity was then considered by some as no longer so strong and the promised progress to a real party has evaporated.  We know when it will come back, if it’s not too late.

If this is at least one of the ideological origins of the chronic electoralism of the Left it must still be explained why this has happened given the parallel ideological notion that what the Left organisations want is a revolution in which the working class seizes state power.[i]

Whatever about the belief in revolution this has not been a practical proposition for many years: during the Celtic Tiger boom or the social and political defeat of workers during the previous couple of decades.  So, while often preaching revolution in the future, as a matter of pure practicality it has done what is actually possible.  Given its ideological confusion on the role of the state and having no conception of revolutionary politics outside of a contest for state power the Left has degenerated into electoralism.

The contest for state power by the working class in a long period where the working class has not been interested in such a project has become a reformist contest for state power which resolves into just getting elected to parliament.

The real Marxist attitude to the state, as opposed to dependence on the state for solutions, which I have looked at here, here and here for example, will be the subject of future posts.

[i] I realise that the Socialist Party has political roots which eschew this traditional Marxist view in favour of a perspective of a Left electoral victory, leading to majority in Parliament passing legislation nationalising big industry with the support of mass mobilisations, this allowing the introduction of what they believe to be socialism. But this has always been a relatively hidden revision of Marxism that is disguised by what is presented as a rather rigid orthodoxy.

The state of job creation

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In my last post on the politics of the left I questioned proposals on state investment as the answer to unemployment.  In this post I want to look at this further.  The Nevin Economic Research Institute (NERI), an economic think-tank affiliated to the Irish Congress of Trade Unions has published a similar proposal to that of the United Left Alliance (ULA).

Its paper is entitled ‘An Examination of the Effects of an Investment Stimulus’ and its research shows that an investment stimulus of €1 billion would create about 16,750 short term jobs and between 675 and 850 long term jobs.    In the longer term the competitiveness of the economy is increased so that the economy grows, which increases taxation, which more than offsets the interest cost of any loan to fund the investment in the first place.  This means that “overall there is a long-term permanent decrease in the government deficit as a result of an investment stimulus.”  This is what has been referred to often as growing our way out of the crisis and debt problem.  NERI therefore proposes a phased investment stimulus of €15 billion over 5 years.

The net cost per job created, at around €34,500, is nearly the same for both the NERI and ULA proposals.  The paper by NERI sets out more fully its assumptions so it is fair to assume that these are not dissimilar to those of the ULA, which in any case we can also fairly adduce from the ULA proposals themselves.

In order to arrive at its estimates the NERI researchers use an economic model.  Like all models these require assumptions as to how the economy works and therefore how the parameters of various economic variables interact, e.g. how imports will increase given a certain increase in income as employment increases.  This is calculated from historic data from the Irish economy.  The HERMIN model used “combines Keynesian short term features with neoclassical longer term features.”

This is a problem, or rather there are two problems, not perhaps so much for the presumably Keynesian researchers at NERI but for the ULA, whose biggest components claim to be Marxists.  The Marxist analysis of the way capitalism works is very different from the Keynesian or neoclassical one.  Unfortunately, through the budget proposals of the ULA and their similarity to those of NERI, the policy proposals of the ULA display much affinity to Keynesian economics.  We have noted this already in their definition of the problem as being one of insufficient demand, which is also the view of Keynesian economists.

For Marxists this is indeed a feature of the current crisis, indeed of all crises.  Where the difference lies is that Keynesians think that this problem can be put right by state-led investment while for Marxists the lack of sufficient demand is really just one expression of deeper problems but not the fundamental cause of the crisis, which will not be put right by expansion of state expenditure.  This fundamental difference is invisible when the proposals of the ULA and NERI are compared.

For Keynesians the capitalist economy can reach equilibrium, where demand for investment funds and its supply are equal, in a situation where there is nevertheless massive unemployment, both of people and resources.  The autonomous action of the state in increasing investment can solve this problem and bring the system back into an equilibrium that resolves the unemployment problem.  For Marxists state investment can at most postpone the crisis but is not itself an answer.  By contrast the ULA present it as part of the answer.

For Keynesians the autonomous action of the state can provide a solution because the system can reach equilibrium and investment can be the driver of the economy to this equilibrium.  As the Keynesian Minsky puts it –“Investment and government spending call the tune for our economy because they are not determined by how the economy is now working.”  That a model shows state investment to be self-financing when that model contains Keynesian assumptions can hardly be called convincing. Keynesianism believes that “if entrepreneurs can only screw themselves up to do enough investment, it will eventually justify itself, since the income generated will absorb the excess capacity.” (Robin Mathews in ‘The Trade Cycle’)[i]

On the other hand Marxists see this type of statement as an example of bourgeois economists overwhelming tendency to assume that the capitalist economy works like a socialist one; that all production will more or less fulfil a useful role.  After a crisis based on massive construction expenditure that powered a phenomenal boom and then bust, this is just an incredible assumption.  The NERI and ULA proposals are based on further infrastructure spending by the same state that encouraged the last ‘stimulus’. That NERI believes this will lead to long term growth is again built into the neoclassical assumptions of the model.  Neoclassical economics assumes that capitalist markets are totally free and efficient.  A model built on such long term assumptions could hardly show anything else.

Neoclassical economics assumes that production is efficient and finds a market and that growth is the result.  Marxism makes no such assumptions but instead demonstrates the contradiction at the heart of an economy determined, not by autonomous investment, but by the pursuit of profit.  The recent massive overproduction of infrastructure was massively profitable, which is why it continued for so long.  The contradiction between this profitability and real need; the contradiction between the limitless expansion of capital and the limit of the market, was suspended temporarily and resolved temporarily by the expansion of credit.  When this expansion of credit can no longer continue the limits of the market are exposed and massive overproduction , which inevitably involves massive over-accumulation of capital, is revealed.  Keynesianism’s answer is to continue the accumulation because investment will find its own market and in any case can be autonomous within the system, as we have seen.  Marxists believe on the contrary that the accumulation of capital is determined by profit and lack of it may see accumulation shudder to a halt and collapse.

In a contest of economic ideas, between neoclassical economics where crisis are not supposed to happen and are self-correcting when they do, and Marxism, in which overaccumulation driven by super-profits is periodically inevitable, the real world has given a decisive confirmation of the latter. In a contest in which Keynesianism can assume investment creates its own demand and is self-financing and Marxism which points out the contradiction in production between use and profit, the empty office blocks and ghost estates are again striking confirmation of the truthfulness of the latter.  So why oh why would the left want to promote Keynesian solutions?

There is absolutely no reason to believe that a renewed burst of construction spend would not create new imbalances.  Perhaps the left believes that because the state carries out the spend it does not have to earn a profit but this is false for a number of reasons.

First it has to pay for the investment.  If it takes out a loan it will have to pay it back and if the investment does not create tax revenue by promoting further private capitalist investment it will not raise the necessary tax.  In these circumstances taxation would have to come instead from workers or business, which would remove the stimulus that has been created.  If the investment does stimulate or facilitate private investment then this only confirms ULA reliance on the state promoting capitalism as the way out of crisis.

Although the ULA does call for €5.3 billion of state investment in modern industry it calls for much more, €26 billion, to be invested in infrastructural investment.  In fact even some of the modern industry investment is in infrastructure.  Such infrastructural investment is normally not competitive with the main private capitalist industries but complimentary to it, facilitating it to make profits.  By making such spend central to its economic alternative the left, subconsciously no doubt, evidences the inadequacy of its alternative and subservience to capitalism.

An alternative is that state investment is directed to the production of goods and services that people actually need and want and are prepared to pay for.  This would indeed be competitive with private capitalist owned industry but this is not what is proposed by NERI or the ULA.  Instead either taxes or the promotion of private capitalist production through helpful infrastructure is proposed.

In our last post on this we questioned the policy of reliance on state investment given its history of incompetence, even in areas of no great complexity or requiring no great innovation.  The left sometimes excuses this (why?) as the result of subordination of the public sector to private capitalism.  And the answer to this is yes, that is what the capitalist state is for.  It is not for creating competition to private capitalism so why would the left demand that it does?

Even if the specific proposals of the left, in the particular circumstances that Irish workers face, are not practical this is not the main objection to them.  The main objection to them has possibly more force where they actually to work.  For if they worked, even if only temporarily, they would be both a diversion from creation of a socialist alternative and some evidence that this alternative is not needed.  The success of state industry would be the success (temporarily) of state capitalism.

The successful development of capitalism has been facilitated by the state many times and it may be argued that the more recent, and quicker, that development the more it has relied on the state.  This may be true going back through the development of every new major capitalist power from Holland in the 17th century, to Britain in the 18th, Germany and America in the 19th and 20th, the Asian Tiger economies of the late twentieth century and the Chinese of the 21st century.

The socialist alternative is something very, very different from this but the left’s fixation on the power of the capitalist state is strong and we shall look at the question some more.

[i] The quotations above are taken from a new paper that compares the Marxist explanation that the capitalist economy is driven by profit with the Keynesian alternative of the role of investment – ‘Does investment call the tune? Empirical evidence and endogenous theories of the business cycle’ See link.