Tuesday, 6 December 2016

The Sleaford By-Election

After last week's Brexit influenced by-election in Richmond Park, we now have, on Thursday, the potential of another Brexit influenced by-election in Sleaford in Lincolnshire.  In many ways, they are mirror images.  Richmond Park, an urban metropolitan area that voted 70% in favour of Remain, Sleaford a rural backwater that voted 60% for Leave.  Yet, both had Tory MP's that stood down to cause the by-elections.  In the case of Sleaford, it is because the sitting Tory MP, who supported Leave, could not support the dictatorial stance of Theresa May, and her government, that is trying to deny Parliament the right to debate and vote on the terms under which Article 50 is triggered, and Brexit negotiated.  Its fitting that whilst May's legal representative is in Court, arguing for her right to utilise the dictatorial powers of medieval Monarchs, via the Royal Prerogative, that May herself, is visiting her friends the brutal feudal monarchs of Bahrain, Saudi Arabia and other Gulf States, to which she supplies weapons of mass destruction.

If Labour had any sense, they would have fought the Sleaford by-election on the basis of a vigorous pro-Remain campaign, but a campaign which stressed the need to defend workers rights interests whether Britain ended up, in or out of the EU.  The reality is that 35% o the electorate in Sleaford, voted to Remain in the EU, and as across the rest of Britain, the reality is beginning to sink in of just how bad for the interests of workers, Brexit will be.  On the other hand, whatever the supporters of Brexit might want to argue, and what the Brexit vote might seem to imply, the issue of the EU, and even immigration, ranked only around sixth or seventh in people's concerns, in all opinion polls.  Voters are far more concerned with the issues of jobs, wages, the health service and so on than they are with the EU or immigration.  And in fact, Both Brexit and a curtailment of immigration will be bad for all those other issues.

Brexit will cut off Britain from its main market in the EU, and the Tories will utilise withdrawal to push through the rest of their reactionary agenda to demolish workers rights.  A look at UK GDP, which the Brexiteers trumpet again shows that what growth has occurred is almost entirely due to immigration.  UK GDP per capita has risen by only around £2,000 since 2010, or about 5% over six years.  If it were not for the immigration of skilled workers that has taken place, large parts of UK business would not have been possible, leading to those businesses locating overseas, and without immigration services like the NHS would have collapsed.

Labour should have fought the Sleaford By-Election on this basis, arguing that it continued to be in workers interests to be in Europe, but a different kind of Europe forged by workers to meet their interests.  By presenting a strong pro-Remain argument, Labour could directly address itself to that 35% of the population in Sleaford that voted Remain, and which the Richmond by-election showed is now recognising the importance of standing up to fight its corner, because of just how historically disastrous for workers Brexit will be.  Unless Labour presents that case, the danger is that in other such by-elections, the Liberals, as they did in Richmond Park, will hoover up that vote.

Sleaford is not Richmond Park, however.  In Richmond, it had been a Liberal seat between 1997 and 2010.  The Liberals, despite being destroyed as a party in the 2015 General Election, were still the obvious party in Richmond to take advantage of the unpopularity of the Tory Brexit.  That is not the case in Sleaford, where Labour came second in 2015, with 17% of the vote, whilst the Liberals came a distant fourth behind UKIP, with just 5.7% of the vote.  Indeed, if the Liberals were serious about their bleating overtures for some kind of alliance to defeat the Tories and their Brexit plans, they would have stood down their candidate in Sleaford, in order to give Labour a clear run, as they and their supporters inside the Labour Party had done in calling for Labour to not stand in Richmond Park.

There is a possibility that Labour taking a vigorous pro-Remain stance in Sleaford, could increase its vote share, picking up that 35% of the electorate that supports Remain.  They could further enhance that position by adopting a far more radical, Corbynite position of opposition to austerity and wage cuts than voters in Sleaford have previously been offered by the Blair-right Labour Party of old.  After all, what has been seen this week is that whilst some people were prepared to express their bigotry in the EU Referendum, which was supposed to be on just the one issue of EU membership, but which, like all plebiscites, involved people voting to express resentment in a whole host of different and often unrelated issues, when it comes to a more general, parliamentary vote that bigotry gets dissipated, as other more pressing concerns predominate.

Farage, for example, promised 100,000 on the streets to object to the Supreme Court curtailing the dictatorial ambitions of May and her government.  Instead, it was pro-EU campaigners that were out on the streets.  It is time for Labour to be bold, to stick by its internationalist principles, and to defend workers interests across the EU, and resist the siren calls of reactionary nationalism.

Capital III, Chapter 51 - Part 9

In previous modes of production, the social relation between the producers and exploiters appears as an open political relation of subordination of the former to the latter. But, under capitalism the subordination of labour to capital develops as a purely economic subordination, which is produced and reproduced by the productive relations themselves.

In previous societies, the slave owners, the feudal aristocracy appear as a single political class, confronting the peasant producers. But, the capitalist appears as the personification of capital, just as the worker appears as the personification of labour, as the human representation of two agents within the productive process.

The capitalist appears in this social function as the organiser of production, as part of an hierarchy of authority, within the production process. This is why the social function of the private capitalist is replaced, during the 19th century, as capital bursts asunder the fetters imposed on it by the private ownership of capital. The joint stock companies sound the death knell of private capitalism, as it is itself subordinated and expropriated by this large scale, socialised capital, just as private capital had previously expropriated the direct producers.

At the same time, the capitalists themselves are removed from the production process completely, and turned merely into the providers of loanable money-capital, in return for shares and bonds – fictitious capital. Their social function, in the production process is increasingly taken over by professional managers, administrators and technicians, who organise production on a day to day basis, increasingly in line with scientific principles of management.

As capitalism develops public education, on an extended scale, these functioning capitalists are increasingly drawn from wider layers of society, including the working-class, so that their wages increasingly fall to more approximate those of other skilled workers.

As these functioning capitalists are the personification of productive-capital, and this conflicts with the interests of the owners of loanable money-capital, the shareholders and bondholders, so the interests of the latter are represented by the establishment of additional tiers of management over the functioning capitalists. Although the boards of directors, and their appointees, the executives of these companies, are presented as being the representatives of the interests of the company, in fact, they are only representatives of the money-capitalists, the owners of fictitious capital, charged with the responsibility of maximising shareholder value, boosting the share price etc. This is one reason these executives are as likely to use realised profits, and even additional borrowing in bond markets, to buy back shares, than to use this potential money-capital for the purpose of productive investment.

Under the regime of private capital, and unlike previous modes of production, each capital exists in competition with every other capital, and as the personification of this capital, each capitalist thereby appears not as a member of a single political class, confronting labour, but as an individual capitalist competing against others.

“... the capitalists themselves, who confront one another only as commodity-owners, there reigns complete anarchy within which the social interrelations of production assert themselves only as an overwhelming natural law in relation to individual free will.” (p 881)

In fact, as socialised capital supplants this private capital, the anarchy is itself reduced, as co-operation and planning, at an enterprise and social level increases, as one aspect of the introduction of scientific management. As Engels states,

“Capitalist production by joint-stock companies is no longer private production but production on behalf of many associated people. And when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”

(Critique of The Erfurt Programme)

Moreover, the owners of loanable money-capital, more notably form a single political class, because their wealth assumes a more liquid form, unattached to any specific productive-capital and able to move instantaneously anywhere in the world, to wherever the greatest total return (revenue plus capital gain) can be obtained. It provides a material basis for the creation of a truly global single, class of money-lending capitalists.

There is no necessary competition between these individual representatives of loanable money capital because their commodity, as Marx states, is homogeneous. Rather the interest of these money-lending capitalists is expressed in opposition to the interests of productive-capitalists, be they the remnants of private industrial capital, or of the ascendant socialised capital. The interests of these money lending capitalists is concentrated in the Stock Exchange, and the financial institutions.

Monday, 5 December 2016

Capital III, Chapter 51 - Part 8

The second distinctive characteristic of capitalist production is this fact that its direct aim is this production of surplus value, rather than the satisfaction of needs. Capitalism is forced to meet social needs, as expressed via the market, but only because, for each individual capital, the maximisation of the realised profit can only be achieved by meeting consumer demand. Moreover, this consumer demand is itself a capitalistically determined form of social need, because it only constitutes demand to the extent that it is a need backed by the ability and willingness to pay. That in itself is a function of production relations, which, in turn, determine distribution.

As Marx puts it in The Critique of the Gotha Programme.

“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labour power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one.”

It is ownership of an expanding mass of capital, in the hands of a diminishing number of people, which ensures that an increasing proportion of society's revenue goes to them, and which thereby enables them to exert a correspondingly large influence on demand, and their access to society's products. As Marx put it earlier,

“But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits.” (Chapter 15, p 244)

Capital is not organised so as to produce products or commodities but to produce capital and can only do so by producing surplus value, and to produce capital on an ever expanding scale, it must produce surplus value on an ever expanding scale. This indeed is why under capitalism labour is only productive in so far as it produces surplus-value, and thereby produces capital.

In order to expand surplus value, capital begins by extending the working day, so as to expand absolute surplus value, but runs up against objective barriers, represented by the normal working-day. Capital then finds a more effective means of increasing surplus value by the extraction of relative surplus value, resulting from rising productivity of labour. Each individual capital seeks to obtain competitive advantage, by raising productivity, through the use of additional fixed capital (extensive accumulation), as well as the use of more effective technology (intensive accumulation).

This increase in productivity of labour, arising from this technology, which is itself the product of labour, then appears to derive and be a product not of labour itself, but of this capital, which confronts it as an alien force.

“The pressure to reduce cost-price to its minimum becomes the strongest lever for raising the social productiveness of labour, which, however, appears here only as a continual increase in the productiveness of capital.” (p 881)

Sunday, 4 December 2016

Italian Referendum

It looks like the Italian Government of Matteo Renzi will lose today's referendum on constitutional reform.  It shows the problem of plebiscitary democracy, as also seen in the Brexit vote, and the election of Trump.  That is given a stark binary choice, voters may vote one way or the other for reasons completely at odds with the actual question being put to them.  In the case of Renzi, he made the mistake of threatening to quit if he lost, and so now, voters see the referendum as a means of kicking the government.

The actual basis of the referendum is to introduce constitutional reforms into Italy's Byzantine political system.  The aim is to reduce the power of Italy's second chamber, The Senate, which would give more power to the government to push through economic reforms, and to be able to provide state support for Italy's bankrupt and fast collapsing banks.

In part, Italy's experience shows the problems with the proposals of those in Britain who advocate a similar set up of elections based on proportional representation, along with an elected second chamber.  Proportional Representation tends to lead to a large number of parties in parliaments, which then have to engage in back-door deals to stitch up coalitions and alliances to form governments.  Add to that a second elected chamber, which then claims its own democratic mandate to frustrate or overturn any decisions eventually made by the first chamber, and you end up with the deadlock faced in Italy.

Its not surprising that the Italian government is then seeking these reforms to limit the power of the Senate.  That would be okay, were it not for the fact that in the Italian system, the Prime Minister has the same kind of powers that in other systems the President would have, the President in Italy being merely a figurehead, with limited powers, like the Queen in Britain.  Given that in the recent past, Italy has had technocratic Prime Ministers, imposed on it, like Mario Monti, therefore, its also clear why many Italians are also loathe to hand over too much power to the Prime Minister, given their memory of the past, and of Mussolini.

The real problem, in Italy, however, as in much of the EU, is the banks and financial system.  For thirty years, asset price bubbles have been blown up, giving the appearance of wealth, whilst all the time, they undermined the production of real wealth.  The inflated asset prices be it of bonds, shares or property, were used as the shaky foundation upon which to borrow ever more money to continue to finance consumption, whilst the same paper chase of speculation to push up those asset prices, diverted potential money-capital from real investment in productive capacity.  When 2008 globally, and 2010 more specifically in Europe, threatened to obliterate all of the paper wealth of the top 0.001%, held in these fictitious assets, central banks intervened to reflate them with massive money printing, whilst governments in Britain and across the EU, inflicted further pain via austerity measures.

That is the real problem facing Italy, just as in 2010 it faced Greece, Ireland, Portugal and Spain.  The ECB has printed money to lend to EU banks, who used it to buy the bonds of their governments, which led to the ridiculous situation whereby the yields on the bonds of countries like Spain, Italy and Portugal fell to levels even below those of the UK and US, which themselves has been manipulated lower by their own central banks printing money to buy them.  The debts have continued to grow, the inflated prices of assets have become ever more ridiculously inflated, whilst productive investment required to provide the profits to justify the payment of interest on those assets, was constrained.

Italy's banks are reported to have non-performing loans amounting to €360 billion.  If past experience is anything to go by, the real figure will be two or three times that figure.  Renzi wants the reforms so as to be able to bail out the banks in the same way that the US, Britain, Ireland and other EU countries bailed out their banks, and thereby bailed out that top 0.001% whose wealth is tied up in these paper assets.  Socialists should oppose such bail-outs.  It is a good thing for us if financial markets and the astronomical prices of these paper assets crash, so long as that is not allowed to interfere with the provision of credit and liquidity into the market, to enable the circulation of real capital and commodities to continue.  If the prices of bonds and shares tumble, it means that our pension fund contributions can buy much more of them, thereby reducing the cost of providing for our pensions; if the price of property collapses, it means we can again begin to afford to buy or rent houses at reasonable costs; if banks go bust, it means their workers can begin to take them over, and run them as co-operatives in workers interests.

The crisis in Italy, like the crisis caused by Brexit, and the potential crisis of a fascist winning the election in Austria, of Le Pen being in the running for President of France, and of a string of right-wing populists gaining support, comes down to the fact that conservative politicians across Europe have defended the paper wealth of that top 0.001%, whilst inflicting austerity and the real economy. The EU could have introduced a policy of fiscal expansion to stimulate economic growth across the EU, politicians like Hollande, came to power promising such policies, but instead they did the opposite creating the situation we have now.

The last thing the French socialists need is an equivalent of Blair, but at this late stage, even an equivalent of Corbynism sweeping the French Party might be too late to turn things around.  The EU might be forced into action, as the message seems to be getting through in global forums that monetary policy has hit the buffers, and fiscal stimulus is required.  But against, they may be too late to avert the imminent crisis.

The Italian banks look set to collapse next week if the referendum goes against Renzi, and he resigns.   Following Italy, the German banks look set to follow.  Its rather like I foretold some months ago.  In fact, the more 2016 has unfolded, the more its events have mirrored the scenario depicted in my novel 2017.

Capital III, Chapter 51 - Part 7

Marx once more makes clear that value exists in all societies, but merely assumes different forms in different modes of production. And, it is the specific nature of capitalist production and exchange, which determines the way that The Law of Value thereby appears in the form of prices of production, as opposed to its expression under other modes of production.

“In this entirely specific form of value, labour prevails on the one hand solely as social labour; on the other hand, the distribution of this social labour and the mutual supplementing and interchanging of its products, the subordination under, and introduction into, the social mechanism, are left to the accidental and mutually nullifying motives of individual capitalists. Since these latter confront one another only as commodity-owners, and everyone seeks to sell his commodity as dearly as possible (apparently even guided in the regulation of production itself solely by his own free will), the inner law enforces itself only through their competition, their mutual pressure upon each other, whereby the deviations are mutually cancelled. Only as an inner law, vis-à-vis the individual agents, as a blind law of Nature, does the law of value exert its influence here and maintain the social equilibrium of production amidst its accidental fluctuations.” (p 880)

This is in contrast to other modes of production, where the Law of Value operates directly and openly. In the primitive communist societies, it operates as the commune allocates its limited social labour-time, so as to consciously maximise its production of use values.

The peasant producer operates on the same basis in respect of their own direct production, and in respect of their production of commodities, these are again exchanged on the basis of their value, so the peasant organises their commodity production so as to maximise this value, rather than to maximise profit.

The same is true under communism, which consciously allocates available social labour-time so as to maximise the production of use values.

“... after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing all this, become more essential than ever.” (Chapter 49, p 851)

Saturday, 3 December 2016

Capital III, Chapter 51 - Part 6

The fact that under capitalism, production is characterised by the production of commodities, and so very little is characterised by direct production, for immediate consumption, itself implies that the worker appears merely a seller of commodities, because very little of of their production is to meet their own needs, and to meet their own needs, they need to sell in order to buy the commodities they require.

“The principal agents of this mode of production itself, the capitalist and the wage-labourer, are as such merely embodiments, personifications of capital and wage-labour; definite social characteristics stamped upon individuals by the process of social production; the products of these definite social production relations.” (p 880)

The product, taken individually or socially then takes the form of a commodity or commodity-capital, and is the product of capital, and these two conditions also determine the conditions under which this product is circulated.

That is, unlike under direct production, the product is sold into a market. The motivation of the producer is no longer to meet or maximise some particular need, but merely to maximise the amount of exchange value obtained for the commodity. If the producer can reduce the individual value of their product below its social value, they can thereby obtain a greater quantity of value (labour-time) in exchange than they have expended on its production. Competition, therefore, becomes implicit in this form of production and exchange. But, the fact of production taking the form of the production by capital, as opposed even to the production of commodities by peasant producers, results in capital also seeking to maximise the rate of profit.

The peasant producer seeks to obtain the value they have themselves expended for materials plus the value they have added by their own labour. If they can exceed this by obtaining the means of production cheaper than the average, or by themselves producing more efficiently than the average, they thereby benefit, and are able thereby to expand their own means of production. This is indeed one means by which a differentiation of the peasantry occurs, so that some are able to accumulate capital and become capitalist producers, whilst others are reduced to becoming wage labourers.

However, the capitalist producer is not just concerned to maximise this accidental excess of value, but to maximise the production of surplus value, and its relation to the advanced capital, i.e. the rate of profit. This means that the determining factor in the way society organises its production is no longer to meet those needs for consumption, but to meet the need to maximise the rate of profit.

Northern Soul Classics - You've Got To Pay The Price - Gloria Taylor

Brilliant vocal of the Al kent classic.