Monday, 15 September 2014

The Scots Have A Right To Say Yes, But They Should Say No - Part 3

In the 19th century, Marx and Engels opposed the demand for self-determination by many small nationalities in central and eastern Europe. They defined these nationalities as “non-historic peoples”. In fact, there have been hundreds of such nationalities throughout history. It highlights the difference between a nation and a nation-state. A nation or nationality is a group which shares a common culture, language etc. and has developed from Man's earliest history, usually having colonised some particular geographical area, or else has continued to exist as a self-contained nomadic people.

Native Americans, for example, comprised a series of such nations, as well as there being tribes within those nations. The Scots themselves comprised a nation, whilst similarly being divided into clans. France comprised around two hundred nationalities, each with its own language and culture. What we now know as the French language was only spoken by the administrative elite. In effect, all of these various nationalities, in France, constituted “non-historic peoples” who were unable to form themselves into a nation state. The French nation-state developed by subordinating all of these individual nationalities within its borders. It was in fact, brought about by the domination of the Franks who were themselves a Germanic rather than Gallic tribe.

But, whilst in England a similar process unfolded, and was witnessed in the perpetual battles for domination by contending Royal houses, the creation of the British nation state, by the Act of Union of 1707, was no such act of domination by one nation over the other. The same could not be said, however, in relation to the subordination of the Welsh, by the English, some centuries earlier.

However, the reason that Marx and Engels opposed the calls for self-determination, by these small nations, was, because having failed the test of history, to be able to have already formed themselves into viable nation-states, their only remaining means of achieving that end was by appealing to some larger state to bring it about for them. In the case of these small European states, that was Tsarist Russia. Whenever such small states are reduced to looking for such support, from other states, the result must always be reactionary. 

Paul Mason in a recent blog has pointed out that some in Scotland are themselves already looking to the gangster regime in Russia, and/or the Stalinists in China to ride to their rescue with the provision of financial support. Paul correctly states,

“People who fantasise that Russian money would save an independent Scotland — or Chinese — have to understand they would then be a pawn in geopolitics.”

It is hard to see, therefore, how a small Scottish capitalist state, that already is led to offer sops to capital in the form of lower taxes, and that may be led to look for support from large reactionary states like Russia, can, in any sense, be presented as, in some way, holding out the potential of being a progressive alternative to the existing British capitalist state.

Sunday, 14 September 2014

The Scots Have A Right To Say Yes, But They Should Say No - Part 2

“In our draft Party programme we have advanced the demand for a republic with a democratic constitution that would guarantee, among other things, 'recognition of the right to self-determination for all nations forming part of the state.' Many did not find this demand in our programme sufficiently clear, and in issue No. 33, in speaking about the Manifesto of the Armenian Social-Democrats, we explained the meaning of this point in the following way. The Social-Democrats will always combat every attempt to influence national self-determination from without by violence or by any injustice. However, our unreserved recognition of the struggle for freedom of self-determination does not in any way commit us to supporting every demand for national self-determination. As the party of the proletariat, the Social-Democratic Party considers it to be its positive and principal task to further the self-determination of the proletariat in each nationality rather than that of peoples or nations. We must always and unreservedly work for the very closest unity of the proletariat of all nationalities, and it is only in isolated and exceptional cases that we can advance and actively support demands conducive to the establishment of a new class state or to the substitution of a looser federal unity, etc., for the complete political unity of a state.”


There is no conceivable basis upon which the demand for the creation of a new class state in Scotland could be supported by Marxists on the basis of there existing “isolated and exceptional” circumstances. Far from it. Scotland is not, and has never been a situation of an oppressed nationality trapped within the boundaries of a larger state. The Scottish bourgeoisie built the British capitalist state hand in glove with their English, Welsh and Irish brethren. The oppression that the majority of Scottish people face is not national oppression, but class oppression, no different to the class oppression that the majority of English and Welsh people suffer. The answer to that class oppression cannot be found in a nationalistic diversion, but only in building a working-class response to it alongside their English, Welsh and Irish comrades.

Instead, the demand for independence drives a wedge between Scottish workers and their English and Welsh counterparts. Part of the argument raised by some for independence has been that Scotland has no Tory MP's, and that an independent Scotland would, therefore, be more progressive than the UK. Besides the fact that this places the interests of the Scottish workers above the interests of workers as a whole, it is both parliamentarist and specious. It has not always been the case that Scotland had no Tory MP's. In 1955, the Tories won a majority of Scottish seats, with 50.1% of the vote; in 1970, they still had 38% of the vote; as late as 1992, they had 26% of the vote. The SNP itself, although it is currently characterised as left-leaning, were termed “Tartan Tories” by Willie Ross, and in the 1970's, as with the nationalists of UKIP today, most of the SNP's seats were won from the Tories. There is absolutely no reason why, in an independent Scotland, when the raison d'etre for a purely nationalist party has disappeared, why the SNP will not be replaced, once again by a Scottish Tory Party, or itself take on that role, especially as, for the same reason, many of its voters will simply turn to a probably more left of centre Scottish Labour Party.

There is no reason why Scotland, as an independent small capitalist state, would be any more radical or left of centre than is Ireland. In fact, already we see some of the extent to which the opposite is likely to be the case. The extent to which the SNP try to appeal to that same small business class mentality, that is appealed to by other nationalist-populist groups like UKIP, is indicated by their tax policy.  They propose 

“1) Lower corporation tax to 20% (currently 30%) to attract corporate HQ activity to Scotland and to make indigenous businesses more competitive

2) Lower business rates to below the English level (currently significantly higher than in England)

3) Reduce business burdens which have a severe impact on small businesses in particular

4) Refocus the business support network of Scottish Enterprise”

The lower corporation tax, mirrors the same policy as that adopted by Ireland. The SNP in its attempts to also appeal to big business plans to scrap the Air Passenger Duty

This is an indication of the way the division of the working class into separate competing capitalist states inevitably weakens the position of workers vis a vis capital, and facilitates the ability of capital to promote a race to the bottom for taxes on it, for the protection of workers rights and conditions, and for wages. In a global economy, even quite sizeable states like the UK and Germany cannot, even if they really wanted to, enforce tax regimes on very large companies, because those companies can always move, or threaten to move their operations to some other country, which will offer more conducive arrangements. The real answer to that is the replacement of capitalist competition with socialist co-operation, but, in the meantime, the ability of capital to escape taxes, and to promote competition, so as to lower wages and conditions, is best prevented by removing national borders, and developing common tax and benefit regimes within the context of a larger framework. We need a single United States of Europe, so that we can establish a common corporation tax, income tax and so on that applies in every part of Europe, and thereby ends the ability of these large companies to play one state off against another, in order to attract its favours. The creation of a small Scottish state is the complete opposite direction to the road we need to travel, and the extent to which the SNP already propose offering these sops to business, is an indication of it.

Saturday, 13 September 2014

The Scots Have A Right To Say Yes, But They Should Say No - Part 1

Fortunately, unlike the regime in Kiev, David Cameron's government is unlikely to start bombing and shelling the people of Scotland, if they decide to leave the United Kingdom. However, as the prospect that they might so decide now becomes a possibility, which until recently it never was, there is every chance that the British state will try to prevaricate, and obfuscate to make any such separation as difficult as possible. Marxists have a duty to oppose any such actions. The people of Scotland have the right to secede if that is what they so choose. Nevertheless, Marxists and particularly those in Scotland, have a duty also to argue that they should not do so. As Lenin put it, we are advocates of the self-determination of the working-class not of nations.

If the EU, were a single federal state, a decision of the Scots to separate from the United Kingdom would be insignificant. It would be no different to the regular administrative re-jigging of local authority boundaries within the UK, but which leave the integrity of the whole state intact. Under such a federal EU state, each such administrative area would be little different than the US states, or the County and Metropolitan Boroughs in the UK, the Spanish regional governments, or the German Landestag. Whether such areas are larger or smaller, and where the lines of their boundaries are drawn is of little, other than administrative, significance.

But, the EU is not such a federal state. Rather, it is a badly cobbled together assemblage of nation states, and as such, those nation states continue to be the defining political entity. On the one hand, the more reactionary sections of capital, within each of these states, usually the small capitalists, whose outlook is determined by the national market, continue to seek protection from their particular nation state, whether it be in the form of exemptions from labour regulations, on the working-time directive and other social measures, or other forms of protection via lower rates of taxation, action by the state to manipulate the currency and so on. These sections of capital are backed up in this narrow nationalistic view, by backward sections of the middle class, and working-class.

It is these sections of society that the right-wing populist parties appeal to, and, in the last period, these parties, whether it be UKIP in Britain, the FN in France or the Five Star Movement in Italy, have gained, as the policies of austerity, ironically implemented by less radical conservative parties, attempting to appeal to the same layers, have created increasing economic dislocation. So, within the context of the nation state itself, the requirements of bourgeois democracy, i.e. for parties to get elected, necessitate that conservative parties appeal to these kinds of nationalistic sentiments.

But, finally, although the state, as the Executive Committee of the ruling class, necessarily reflects the interests of the dominant section of capital, the big, multinational industrial capital, like every Executive Committee, it is not homogeneous, and not free from also developing its own particular interests, as against those of the class it represents. At various moments, the state may reflect the fact that financial capital is in the ascendancy rather than industrial capital, for example. As Marx, and later Trotsky's, analysis of Bonapartism demonstrates, at various moments, the state may itself feel powerful enough to press its own interests in preference to those of civil society, or the ruling class. At all times, the state, like any other bureaucracy will seek to represent its own interests, and, in the case of the EU, that manifests itself as the continual bickering and bartering between the contending national bureaucracies. In this respect its no different than the same kind of empire building that goes on within the Civil Service or Local Authority bureaucracies, as one department seeks to press its interests as against those of others. Its just given a twist in that instead of just competing departmental bureaucracies the main division is between national bureaucracies.

That approach, of national bargaining, is then itself extended to within the labour movement. In Britain, we do not hear the Labour Party or the Trades Unions ever talking about the interests of European workers. We only ever hear talk of the interests of British workers, as though these were in some way different to the interests of French, German, Italian or any other workers. But, of course, the interests of British workers can only be seen as different to those of German or French workers etc., if you believe that there is some national interest that these British workers share in, alongside British capitalists. In that way, the interests of British workers becomes a shared national interest with British capital, rather than a shared class interest with every other worker in every other country! It doesn't matter that sometimes this may be framed in terms of, “It is in the interests of British workers to be in the EU,” because that implies that if it were not, we should argue for leaving to protect the specific interests of British workers, at the expense of, and as though they were in some way separate from, and superior to, the interests of other workers.

But, what is true in relation to British workers vis a vis the EU, is true of Scottish workers vis a vis Britain, and indeed more so. To believe that there is some interest of Scottish workers that is best served by them either being in or out of a United Kingdom, is to believe equally that there is some separate interest of Scottish workers removed from the interests of workers in the rest of Britain, the rest of the EU, the rest of the world. It is to pose the question the wrong way around. The starting point for a Marxist is not what is in the interests of this or that group of workers, but what is in the interests of workers as a whole. The moment a socialist begins to view things from the perspective of particular groups of workers they are lost. They have ceased being a Marxist, or international socialist, and adopted the perspective merely of the national socialist, or trade union sectionalist.

“In individual concrete cases, the part may contradict the whole; if so, it must be rejected...

Let us assume that between two great monarchies there is a little monarchy whose kinglet is “bound” by blood and other ties to the monarchs of both neighbouring countries. Let us further assume that the declaration of a republic in the little country and the expulsion of its monarch would in practice lead to a war between the two neighbouring big countries for the restoration of that or another monarch in the little country. There is no doubt that all international Social-Democracy, as well as the really internationalist section of Social-Democracy in the little country, would be against substituting a republic for the monarchy in this case. The substitution of a republic for a monarchy is not an absolute, but one of the democratic demands, subordinate to the interests of democracy (and still more, of course, to those of the socialist proletariat) as a whole.” 

Northern Soul Classics - Little Latin Lupe Lu - Mitch Ryder and the Detroit Wheels

Its been ages since I put up a Mitch Ryder stormer, so here we go.

Friday, 12 September 2014

The Law Of The Tendency For The Rate of Profit To Fall - Part 39

The Rise In The Rate of Turnover (4)

In Part 38, the role of the Internet in speeding up the circulation of capital was examined in relation to much faster payments systems, and purchasing systems. The change in the nature of production and consumption in raising the rate of turnover was also examined. But, that change in the nature of production and consumption impacts the rate of turnover as a result of the role of the Internet in other ways.

For example, one aspect of the change in consumption patterns, is the growth of expenditure on things such as music, film, computer games and so on. Initially, a lot of this was conveyed electronically by use of CD's and DVD's, which then still had to be physically shipped. The media required for that purpose was continually improved, but the revolutionary shift arises with the Internet, which means that a piece of music, film, video game, can be transferred instantaneously from one side of the globe to the other, and at the same time, payment for that commodity can be transferred simultaneously into the bank account of the seller. Given the extent to which these new industries, and types of commodities play an increasing role, this revolution in production and distribution is even more significant. These are already low organic composition/high profit industries to begin with. By massively increasing the rate of turnover of the advanced capital employed within them, not only is the mass of capital hugely increased, but so is the annual rate of profit.

Its no wonder that the capital employed in these industries, can afford to pay high wages to workers for the complex labour they supply, and yet these capitals still make huge masses and rates of profit. As Marx points out, it is the fact of these new high profit areas, which act to raise the average rate of profit, which explains why the rate of profit itself, never falls by more than the rate at which the mass of capital expands.  An example of the huge extent of this new industry is illustrated by the launch in the last few days of Destiny.  The game is reputed to have cost around $200 million for development, nearly all of which is attributable to the complex labour of computer programmers.  A further $300 million has been advanced for other costs.  Yet, these costs are reported to have been recovered just on the first day of trading, when sales of the game worldwide, are said to have been around $500 million, all of which were delivered instantaneously via internet download.

To, the extent that these capitals are themselves industrial capitals that take on some of the functions of merchant capital – a restaurant has to sell as well as produce its meals, a football club must sell seats at its matches and so on – or else has to rely on specialised merchant capitalists for this function – for example, even computer software suppliers often transfer the function of providing downloads to third party merchants – Marx's analysis of the role of the rate of turnover in circulation, as it affects merchants capital, the rate of profit, and prices is significant, as I will show next.

Thursday, 11 September 2014

Capital II, Chapter 19 - Part 8

3) Later Economists 

Ricardo follows Smith in relation to the Trinity Formula. But, unlike Smith, Ricardo starts with a labour theory of value, in which the value of the commodity is determined by the labour-time required for production. So, the magnitude of value is determined before consideration of its division into different revenues.

Ricardo's error in omitting constant capital was noted by Ramsay.

“Ramsay makes the following remark against Ricardo: 

'... He seems always to consider the whole produce as divided between wages and profits, forgetting the part necessary for replacing fixed capital.' (An Essay on the Distribution of Wealth, Edinburgh, 1836, p. 174.) 

By fixed capital Ramsay means the same thing that I mean by constant capital: 

'Fixed capital exists in a form in which, though assisting to raise the future commodity, it does not maintain labourers.' (Ibid., p. 59.)” (p 394) 

Had Smith, or his followers, been correct, that national output equals national income, then the outcome would have been that the entire national output would have been consumed! Clearly, it is not all consumed, because a large portion of output is simply used to replace the machines and materials used up, i.e. to provide the constant capital to be used in the following period.

Smith never drew that conclusion, but some of his followers did.

“It is never the original thinkers that draw the absurd conclusions. They leave that to the Says and MacCullochs.” (p 394)

For Say, the difference between gross and net product is purely subjective. He says,

““thus the total value of all products, has been distributed in society as revenue.” (Say, Traitè d’Economie Politique, 1817, II, p. 64.) “The total value of every product is composed of the profits of the landowners, the capitalists, and those who ply industrial trades” [wages figure here as profits des industrieux!] “who have contributed towards its production. This makes the revenue of society equal to the gross value produced, not equal to the net products of the soil, as was believed by the sect of the economists” [the physiocrats]. (p. 63.)” (p 394)

Marx comments that this idea was also adopted by Proudhon.

Storch followed Smith, but recognised Say's error.

““If it is admitted that the revenue of a nation is equal to its gross product, i.e., that no capital” [it should say: no constant capital] “is to be deducted, then it must also be admitted that this nation may consume unproductively the entire value of its annual product without the least detriment to its future revenue.... The products which represent the” [constant] “capital of a nation are not consumable.” (Storch, Considérations sur la nature du revenu national, Paris, 1824, pp. 147, 150.)” (p 394-5) 

Marx points out that Storch should then have realised that this conflicts with his acceptance of Smith's view of price, which omits constant capital.

Sismondi had nothing useful to say, Barton, Ramsay and Cherbuliez failed to advance because they did not distinguish between constant and variable capital, and John Stuart Mill just pompously reproduced Smith, Marx says. All of these and more are discussed at much greater length in Theories of Surplus Value.

“As a result, the Smithian confusion of thought persists to this hour and his dogma is one of the orthodox articles of faith of Political Economy.” (p 395)

Unfortunately, that confusion over the equality of national output with national income continues today.

Wednesday, 10 September 2014

The Law Of The Tendency For The Rate of Profit To Fall - Part 38

The Rise In The Rate of Turnover (3)

An article, in The American Banker, last year, bemoaned the slowness of electronic payments in the US, pointing out,

“In the United Kingdom, you can send money to someone else's bank account within a couple of hours. In Mexico, the process takes no more than a minute or two. In Sweden, it happens even faster, via mobile phones.

Here in the United States, electronic payments move at a snail's pace by comparison. Times vary by bank, but it's common for three, four or five days to elapse before the cash arrives in the recipient's account.”

In fact, compared to the slowness of payments, discussed by Marx, even the US seems extremely rapid. The Internet has made possible, not only such almost instantaneous payments, direct from your bank account, or credit card account, it has established other money-dealing capitalists, such as Paypal, as means of transmitting money, from one place to another, more securely and quickly. It has also, of course, speeded up circulation, by making credit instantly available, over mobile phones, even if the circulation may later be sharply curtailed, as the consequent debts turn bad.

The Internet speeds up circulation in other ways too. In order for the circuit to be completed, the produced commodities must be sold, which means consumers having to go to stores to buy them. But, the Internet, via online shopping, speeds up that part of the circulation process too. The consumer may never see any money paid to them as wages, dividends, interest or rent, as it gets transferred electronically into their account. They may even have a standardised weekly shopping list, that gets filled by the supermarket, and delivered to them, and nor will they see the money paid for those commodities, as its electronically, and immediately transferred from their own account to that of the store. Not only does this hugely speed up the process of circulation, by increasing the velocity of commodity transactions, as well as money transactions, but it also hugely reduces the quantity of money that must be thrown into actual circulation, which represents a significant reduction in the costs of circulation for capital.

The role of the Internet, in massively increasing the speed of circulation, is manifest in another way too. That is related to the shift in the patterns of production and consumption. Not only is it the case that 80% of the economy, of developed nations, is today comprised of the production of service industries, but this shift in production is symptomatic of a corresponding shift in consumption. Although, the bubble in property prices in the UK, blown up over the last 30-40 years, has massively increased the proportion of household budgets that must be devoted to shelter – particularly for those in rented accommodation – the massive reduction in commodity values, that the aforementioned rise in social productivity has brought, alongside the shift of production, of many manufactured goods, to low wage economies, such as China, means that the proportion of the budget spent on such consumer goods has continually fallen in real terms, and often even in absolute terms – for example, the price of computers etc.

Similar improvements in productivity, and the increase in global agricultural land under cultivation, notably now also in Africa, means that food prices have also continually fallen in real terms, apart from short term price spikes caused by temporary failures to meet sharply rising demand. In fact, in Britain, food has become so cheap, that the average family is calculated to throw away a third of the food it buys. A significant proportion of the average family spending on food, is actually made up of what is really leisure activity, or entertainment, i.e. eating out at restaurants, rather than the actual purchase of food.

This shift also has a significant effect on the rate of turnover, both in terms of the time of production and of circulation. Take some manufacturing business. It advances labour-power, and materials, and sets them to work, with machines, to produce motor cars. Ford's Model T, production line brought the time for production of a car down to 93 minutes, whereas previously it took 12 hours.  Today a car requires around 30 man hours for production.  This might seem to suggest that productivity has fallen.  But, this is measuring different things.  If 1800 workers today expend a minute each on the production of a car that gives the 30 man hours per car.  So, on that basis the production time would be only a minute as opposed to the 93 minutes for the Model T.

At the Toyota plant, in Burnaston, a car comes off the production line every minute, an increase in the rate of turnover of capital of 93, in respect of the working period, since the 1920's! The average car transporter carries 12 cars at a time. So, if a working period is equal to the minimum time required for production of some minimum sized shipment, 12 cars today can be shipped every 15 minutes, whereas in the 1920's, even if 12 cars at a time could have been shipped, it would have required a day's production, before they were ready.

Even allowing for modern production techniques, the cars probably do not go from the initial arrival of engines, body panels, gearboxes and so on through to assembly, finishing, and transport to showrooms in less than a few days days, on average, given different times for delivery to various markets around the world. Trains take 2,400 cars per day from Volkswagen's Wolfsburg plant, every day.  As dealers place orders with suppliers for cars to meet orders in turn placed with them by final consumers it would take another couple of days, for the car to be detailed, to cover administration and so on.  In short, on average the capital advanced for car production can turn over on average around 52 times a year, although the Internet is changing this too, as it means increasingly, consumers will be able to order their cars directly from producers, and have them delivered directly to their home.   But, even assuming the average turnover period for such industrial capital, is a week, this compares badly with the situation for these new forms of capital.

Take a fast food restaurant. It advances productive-capital in the form of means of production (burgers, onions, salads, buns etc.) and labour-power, on the basis of orders received, just as does the car producer.   But, the order for a burger is completed, and delivered to the customer, and paid for, i.e. the circuit of productive-capital is completed, within a matter of just minutes, rather than days.  It is even likely to obtain the return of this capital, plus surplus value,  several times, before this advanced capital has even been paid for! Even if a certain amount of means of production are bought one day and used the next, this does not change anything, because this capital held as a productive-supply only counts as advanced when it enters the production process; what has been bought yesterday, does not have to be bought again today, if it has not been used. The produced output, as commodity-capital is also sold immediately to customers, who pay by cash or card, thereby completing the circuit of the capital within minutes.

In other words, instead of this new more prevalent form of capital turning over once a week, or 52 times a year, it turns over several times a day, or hundreds and thousands of times a year! The increase in the rate of turnover, and consequent rise in the annual rate of profit arise not just because of a shortened production period, but a much curtailed circulation period. As Marx points out, if two capitals of the same size are employed one in this sphere, and the other in the old form of manufacturing industry, then, although they have the same rate of surplus value, the annual rate of surplus value for the former will be greater than that of that of the latter, by the amount that the rate of turnover is greater, and all other things being equal the rate of profit will be that much higher too.

But, its not just in the realm of restaurants that such a transformation occurs. The growth of leisure and entertainment, to become a major component of household spending, means that capital employed in a range of such ventures, from cinemas to football clubs, from gyms to pop concerts, enjoy a similar high rate of turnover of capital, and rate of profit.