Friday, April 18, 2014

Letters to the Editors: Crises and collapse & Feasible socialism (2011)

Letters to the Editors from the November 2011 issue of the Socialist Standard

Crises and collapse
Dear Editors,

As a member of the Socialist Labor Party for 43 years I'm convinced that discussion with workers about the intractable calamity global capitalist society is facing can only logically start with the Marxian Law of Value: that commodities exchange value for value in the amount of socially necessary labor time invested in their production. The corollary to this is that human labor power is the source of all value.

As every socialist knows, lurking behind burgeoning unemployment, dire poverty, and a hopeless future is the fact that workers receive in wages only a small and diminishing fraction of the values that they produce. They cannot buy back those values when they appear as commodities in the market in their real value. Global capitalism is writhing in its death throes with this fact in its craw. Every worker needs to get this message before any meaningful discussion of socialism ensues. To discuss social issues that are only subordinate to this without a basic understanding of value, I believe is futile and will never make socialists.

What approach do you encourage socialists to take in initiating discussion of capitalist collapse and the necessity of socialism with workers?

Yours for a socialist society,
Bernard Bortnick, United States

Reply:
We are glad to hear you are keen to make more socialists but do not agree with your view that capitalism will collapse – either on past evidence or given our understanding of Marxian economics. As long ago as 1932 we published a pamphlet called Why Capitalism Will Not Collapse which pointed out the fallacy of such predictions at the time of the Great Depression. As Marx himself said, there are no permanent crises and every economic downturn creates the conditions for the next boom.

The view you put forward that the workers can’t buy back the entire product of industry is no explanation of economic crises in itself, and certainly doesn’t point in the direction of the collapse of capitalism. It was specifically repudiated by Marx in Volume 2 of Capital in Chapter 20 where he argued that the inability of the working class to buy back the entire product of industry is a permanent condition of capitalism and of itself explains nothing. He also pointed out that if the contention is really that the restricted consumption of the workers causes crises, then this is unconvincing too. Wages as a proportion of national income usually have a tendency to rise during booms so this would otherwise indicate crises should be averted.

The working class of wage and salary earners do not need to buy back the entire product of industry incidentally. (What use would workers have for producer goods like lathes and robotics equipment?) Much of the output of industry is bought by the capitalists i.e. producer goods like those just mentioned, and also those luxury goods that the working class can’t afford to buy.

The ultimate cause of all economic crises within capitalism is the system’s tendency to grow in an anarchic, unbalanced fashion in the relentless pursuit of profit (viz. the housing and construction bubble in large parts of the developed world that laid the basis for the recent financial crisis and recession). Our approach is to point out that crises and other social and economic problems are endemic to the way the market economy works. No reform of the system can ever solve these problems – only socialism represents a positive hope for humanity. – Editors

Feasible socialism

Dear Editors

The article, 'Russia – the myth of socialism', in the October Socialist Standard, well written though it is, does raise a fundamental question. It is claimed, not unreasonably, that in the mid-nineteenth century, capitalism ''had not economically matured to the point where Marx's vision of a classless society where free access to needs (sic) would be the mode of distribution could be realised'', whereas by 1917, this economic maturity had been achieved, albeit not in Russia itself (which begs questions as to what options a bona fide socialist party operating in Russia around this time would have had, and how a world socialist revolution might have played out had it occurred in 1917).

My query is this. On what grounds can such an assertion be made? What objective criteria or economic observations can be cited in support of the proposition that world socialism was feasible in 1917 (and not feasible in 1850)? I don't think it's sufficient simply to generalise that technology had advanced over the intervening 67 years. An empirical case surely needs to be made, though. For example, it might incorporate the notion of a 'tipping point' having been arrived at.

This is not a pedantic issue. If it can be convincingly demonstrated that socialism was feasible way back in 1917, then a fortiori, it is surely the case that it is far more feasible now insofar as technology has surged ahead beyond the wildest dreams of those who were around during  those ill-fated 'ten days that shook the world'. Nevertheless, the case still needs to be made – empirically – that the world could sustain a free access society, and this must mean taking account of current technology, and indeed of a valid representation of human nature (since these aspects are respectively integral to the 'give' and 'take' sides of any economical situation).
Andy Cox (by email)

Reply:
In the 1910 edition of his Woman and Socialism the German Social Democrat August Bebel produced evidence to show that at that time the world was capable of producing enough food, clothing, shelter and otherwise provide for everybody on the planet. He saw electricity, generated by steam turbines, as being the energy source that made this possible.

“Electricity”, he wrote, “has an advantage over every other form of power in that there is an abundance of it in Nature.” His explanation has a surprisingly modern ring: “Our rivers, the tides of the sea, the wind and sunlight provide untold horse-powers, once we learn how to use them rationally and to the full.”

He summarised Sir Joseph Thompson (winner of the 1906 Nobel Prize for Physics) as saying in 1909 that “the day was not far off when the use of sun-rays would revolutionise our life, would make man independent of the energy of coal and water”  and quoted “how great is the supply the sun lavishes upon us becomes clear when we consider that the heat received by the earth under a high sun and a clear sky is equivalent … to about 7,000 horse-power per acre.” Bebel concluded that “this removes the fear that we shall ever run short of fuel” and that “there is no human activity for which, if necessary, motive power would not be available” (section 4 of chapter XXI).

With regard to food production, Bebel cited the claim of the American economist Henry Carey (who had died in 1879) that “the 360-mile long Orinoco valley alone could supply sufficient food to feed the whole human race” and commented, “Let us halve this estimate and there is still more than enough. In any case, South America alone could feed several times the present world population” (section 4 of chapter XXX).

In 1850, on the other hand, the main sources of energy were coal, coal gas, the steam-piston engine and horses. Some time between then and 1910 a qualitative change in the productive forces at the disposal of humanity occurred which meant that the problem of producing enough for all had in principle been solved. At the same time capitalism came to dominate the whole world, which Marxists and others analysed using the term “imperialism” (today we might say “globalisation”).

So, yes, the wars, famines and general deprivation of the 20th century could have been avoided had world socialism been established a hundred years ago as was technologically feasible. As you say, every new advance in technology makes socialism all the more possible – Editors.

Fake economics (2014)

Book Review from the April 2014 issue of the Socialist Standard

Economics of the 1%. How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy. By John F. Weeks, Anthem Press, 2014

'The first man who, having fenced in a piece of land, said “This is mine,” and found people naïve enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not anyone have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody' (Jean-Jacques Rousseau, Discourse on Inequality, 1754).

The '1%' are the percentage of people who own the world and profit from it. Weeks's target is mainly the neo-liberal agenda of 'free' markets and reduced state intervention. He argues that this economics obscures the reality of capitalism and distorts the policies of governments. Weeks wants 'a capitalism fit for human life'. He defends 'markets as effective social mechanisms, if and only if they are regulated through a democratic process for the collective good, not when they are left “free” to concentrate riches in the hands of a few.' The result of following the neoliberal agenda is that 'workers lose and capital gains (it is a class issue)' (Weeks's emphasis).

Despite quoting Rousseau approvingly it is clear that Weeks does not really think that the fruits of the Earth belong to us all, and the Earth itself to nobody. He favours the economist JM Keynes's proposal for a capitalism 'wisely managed'. Keynes's General Theory was 'the greatest economics book of the twentieth century'. Like Keynes, Weeks believes that governments can 'end the recession by stimulating the economy through public spending. It really is that simple.' But as Oscar Wilde said, the truth is rarely pure and never simple. By focussing on the 'golden age' of capitalism – the 30 years or so after World War Two – Weeks presents a seriously distorted account of what capitalism is and what it can do. For a start, the 1 percent has existed during the last 200 years or so of capitalism. And there is nothing in Weeks's account of a 'wisely managed' capitalism to suggest the 1 percent would cease to exist. For a work of economics there is precious little on what drives capitalism – profit. His fix for what ails capitalism is essentially political – democratic accountability. He recognises that there can be class struggles between workers and capital but attributes this to a 'fake' economics rather than the minority ownership of the means of life.

The Socialist Party has a unique record with regard to Keynes and the economics he gave his name to. From the start we recognised that Keynes' solution to mass unemployment (increased government spending) failed to address the issue of profitability. Capitalism – the profit system – is built on the antagonism between profits and wages and economic crises are ultimately the result of a failure of profitability. As we have seen in recent years, an important factor in restoring profitability is holding down wages and attacking workers' standard of living. Weeks's own work obscures the reality of capitalism, but it may inspire in some the illusion that capitalism can be 'fit for human life'.
LEW