From America: Business week and the “Marxist assault” (1978)

From the October 1978 issue of the Socialist Standard

Business Week, Avenue of The Americas, New York City, should urge its writers to do their homework. In its issue of July 17, 1978, the Economics department does a review (or comment) on a new attack on Marxian economics, co-authored by four British self-styled Marxists (Barry Hindess, Paul Hirst, Athar Hussain, Anthony Cutler) entitled Marx's ‘Capital’ and Capitalism Today. The magazine’s caption reads: “A Marxist Assault on Marx” and the writer wastes no time in displaying his own ignorance of the barest essentials of the Marxian system.

Item: . . . the labour theory of value . . . holds that products are worth as much as the amount of labour that goes into producing them.

Stated thus the proposition is easy to refute. Why would a “product” (commodity) with more labour incorporated in it because of inferior production technique have more value in the market than a similar commodity produced with modern efficiency? It would not and Marx knew this. That is why he insisted upon using the phrase “socially necessary labour time” and explained it with thoroughness as the average labour time needed to produce an article under normal conditions of production and with the average degree of skill and intensity prevalent at the time. Commodities are not produced for some intrinsic pleasure in production but to sell and realise profit for their owners. Competition in the market place dictates that labour time in the factories be socially necessary.

But this is by no means the worst of the Business Week article. The writer, by an exercise of common horse sense, could nave attacked the credibility of the “Marxist” professors by exposing their naïveté. It does not necessarily follow that one must be pro-Marx to expose faults in anti-Marxist critiques.

Item: ‘There is no such thing as a general theory of prices or production,’ says Hirst of the University of London. ‘The way in which firms make calculations depends on each particular situation,’ he adds.

But of course individual firms must be concerned with one particular problem: achieving profitable increase in capital expended. A knowledge and understanding of general theories of the source of such increase is unnecessary to achieving one’s goal although factory managements succeed best that learn how best to milk their work force. Somehow, even without book knowledge, they realise that the source of their profits is not the prices of their commodities in the market place but the value over and above wages paid, created gratis by the workers.

Except that this seems to be what bothers the professors most about Marxian economics. Capitalism, they contend—according to Business Week—is not one enormous factory. Marxists, they say, neglect such areas of activity as the huge service sector and the vital banking system:

Item: But the most glaring error in Marxist economics, they say, has been to ignore the role that money, credit, and financial institutions play in the economy . .

For example, they point to the variety of financial activity in which companies engage, such as foreign exchange speculation, in addition to production. And they further argue that the expanded role of government monetary authorities and their influence on the banking system, as well as the availability of credit, play a key role in how much profits companies earn. Indeed, government now has the clout to bail out companies that would otherwise go out of business were competition to prevail.

Indeed! The most glaring error of the professors— and of such experts as are found in the Economics department of Business Week—is the ignoring of the role that class has always played in capitalism. The total national capitalist, from away back, and the total international capitalist, in this country, have functioned as the final arbiters in the affairs of individual companies and industries through their states and their international financial and political institutions.

But what has all that to do with the source of profits? Long before the times of Marx, certain economists (Benjamin Franklin among them), observed that what took place in the market was an exchange of equal values. Whence, then, came the profit? Having the clout to determine whether or not a business will survive is not the same thing as producing profit. Such is obviously not the function of banks and governments.

And then the confusion of Business Week and the British “Marxists” becomes confounded because, accepting the myth of socialist nations (Russia, China, Poland, Cuba, etc.) they blame the “marked slowdown in economic growth” of some, such as Russia and Poland, on a blind adherence to Marxist economics.

Item: ". . . By adhering to a narrow interpretation of Marx’s theories, these nations have pursued one-dimensional development programmes, pumping up production in such industries as steel and heavy machinery, while neglecting to improve agricultural yields, expand the production of consumer goods, or provide better cultural and recreational services. According to some Marxists, these countries have sacrificed the socialist ideal for the sake of rapid industrial growth.”

Now why should anybody believe that Marx’s Capital offers a programme or an understanding of how production can be organised within the relationships of wage labour and capital in a manner as to benefit all, or anything more than a minority, of the population? Certainly there were no nations professing to be Marxist or socialist in Marx’s time, no national propaganda machines teaching that wage-labour and capital relationships can be socialist as well as capitalist. He did not have that idiocy to contend with and there is nothing in Capital to indicate that he foresaw such a turn of events.

Yet the woods and streets are filled with true believers of that myth, from plain men and women on the street to economics professors and business magazine writers. The answer to the question of why these “socialist” economies fail to equal those of the more traditional capitalism is not nearly so important as why or how state capitalism gets tied to the analysis in Capital and touted as socialism.

The emphasis of most “socialist” nations on production of capital goods and heavy industry (China and Cuba are cited as exceptions where the “socialist ideal,” presumably, has not been “sacrificed for the sake of rapid industrial growth”—despite the overt attempts of both nations to overcome backwardness) indicates only that they are by very nature capitalist. What is the number one object of capitalist production? As Marx so well put it:

Accumulate, accumulate! That is Moses and the prophets! . . . Therefore, save, save, i.e. reconvert the greatest possible portion of surplus-value, of surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth. But what avails lamentation in the face of historical necessity? (Capital, Vol. 1, p. 652 Kerr Ed.)

Whether by traditional bourgeoisie or state bureaucracy functioning as bourgeoisie the primary object still holds.

And yet, out of this concentration on production for the sake of more production eventually must come a mass realisation that the floodgates of abundance for all—the socialist ideal—can be opened simply by abolishing the relationships of wage labour and capital and introducing a world wide system of production for use. That is the message of Capital and Marxism generally.

Harry Morrison

(WSP-US Boston)

Globalization (2009)

Book Review from the September 2009 issue of the Socialist Standard

Globalization in Question. By Paul Hirst, Grahame Thompson and Simon Bromley. Polity Press, 2009

Globalization is one of the key concepts of our time, accepted by both the right and left as the cornerstone of their analysis of the international economy. In both political and academic discussions, the assumption is often made that globalization of the past few decades is a qualitatively new stage in the development of international capitalism; that integration of national economies into the international economy is an inevitable process to which national governments are largely powerless. This book challenges these notions.

The authors, using detailed evidence, argue for the following conclusions. The present highly internationalised economy is not unprecedented. In some respects, the current globalized economy has only recently become as open and integrated as the regime that prevailed from 1870 to 1914. Genuinely transnational companies are relatively rare. Most companies are based nationally and trade regionally or multinationally on the strength of a major national location. There is no major trend towards the growth of truly global companies. Foreign direct investment is still highly concentrated among the advanced industrial economies, and the Third World remains marginal in both investment and trade. The emergence of India and particularly China has disrupted this picture, though it has not significantly shifted the centre of gravity from the already advanced countries. Investment, trade and financial flows are concentrated in the Triad of Europe, Japan/East Asia and North America, and this dominance seems set to continue. Supranational regionalization (e.g. European Union, North American Free Trade Agreement, Asia-Pacific Economic Cooperation) is a trend that is possibly stronger than that of globalization. The major economic powers, centred on the G8 with China and India, have the capacity, especially if they coordinate policy, to exert powerful governance pressures over financial markets and other economic tendencies. Global markets are therefore by no means beyond regulation and control, though this will be limited by the divergent interests of states and their ruling elites.

The authors show some awareness of the historical development of capitalism, though they view this largely as the history of technological innovation. As the above shows, the emphasis in this book is on the institutional arrangements (social, economic and political) and their interrelationships within capitalism, with no real comprehension of the underlying dynamic of capitalism. As a result they do not explain that it is the competitive accumulation of profits which is the driving force of capitalism’s inherent tendency towards globalization.

Lew Higgins

Won’t – or can’t? (1998)

From the November 1998 issue of the Socialist Standard

Does the globalisation of capital mean that national governments are powerless to control capitalism or is it just that they don’t want to?

Now they tell us. When Siemens closed its semiconductors factory in North Tyneside Peter Mandelson, newly appointed as Trade and Industry Secretary, declared: “This is a product of global changes, which are completely outside our ability to control” (Soapbox, Sunday Sun, 16 August). A month later when Fujitsu announced the closure of its factory in his own constituency nearby, Blair “admitted that the Government could do little about the ‘twists and turns’ of world markets” (Times, 17 September).

For once, Mandelson is telling the truth. The government is powerless to change world market conditions. Far from governments being able to control economic conditions, it’s the other way round: governments have to tailor their policies to fit in with global economic conditions. As the moment these conditions are difficult in that competition is much fiercer than it was until the early 1970s when the world market was expanding much faster than has been since. Governments have had to take this into account and bow to world market pressures to keep costs down by cutting back on their social spending. They have had no choice. To paraphrase a mad woman who was a Prime Minister in Britain in the 1980s, you can’t buck the world market.

There are some who disagree with this—the anti-Labour Left, amongst whom are to be found some of the most incorrigible defenders of reformist political action. They think you can buck the world market. According to them, it’s just a question of political will and mass pressure

As Robin Clapp put it in an article entitled “Global Myths” in Militant’s theoretical journal:

“National governments do have the power to maintain welfare systems, vary taxes and interest rates and set economic priorities. The problem today is that capitalist governments don’t want to resist international capital, not that they are incapable of it” (Socialism Today, April 1996).

The view is echoed by the SWP. In a review, entitled “No Place Like Home”, of a book that challenged the extent and consequences of the globalisation of capital (Globalisation in Question by Paul Hirst and Grahame Thompson), Chris Harman argued that radical action within a national framework could still overcome world market pressures:

“Capital may be able to shrug off attempts by government to control it using the limited techniques of ‘Keynesianism’ and social democratic intervention. But it can be challenged successfully by those prepared to take much more radical action—the sort of action open only to those who base themselves on the mass mobilisation of its workers” (Socialist Review, May 1996).

Harman may have been talking about trade union struggles as well as about reformist movements to put pressure on governments but, contrary to what he implies, trade unions have even less power to “successfully challenge” world market forces than governments. Not only have there not been any reforms, as improvements for workers brought about by government action, since the early 1970s, but all the big trade union battles in recent years have been purely defensive. Indeed, many such battles-Wapping, the Miners, P&O cross-channel ferries, the Liverpool Dockers—have ended in defeat. We are not saying that workers should not engage in such defensive, rearguard actions—there is some room to stop conditions worsening as much as the bosses would like or try on—but they should be recognised as such, as precisely battles to stop things getting worse, retreats imposed by current world market conditions.

That’s more like it

However, there does not seem to be unanimity within these organisations as to whether, and to what extent, capitalism in it current depressed sate can offer reforms.

Tony Saunois, of the secretariat of Militant’s international body the “Committee for a Workers International”, has put a somewhat different position from Clapp:

“The influence of the world market currently determines the policies pursued in each country. No country has been able to escape its influence. It has been one factor which has prevented the implementation of reformist policies. This is likely to be the case in the short to medium term.”

And.

” . . . the decisive feature is the dominance of the world market. This has rendered the application of distinct and separate polices within national boundaries impossible for any length of time. This is especially the case for policies of a reformist or left reformist character”.

And, after giving the example of the failure of the Mitterand government in France in the early 1980s and of a left-wing coalition in Venezuela in the 1990s:

“These examples illustrate the domination of the world economy and show that the material basis which allowed capitalism to implement lasting reforms in the post Second World War decades no longer exists. Temporary concessions may be given by a government threatened with massive social explosions. However, they will rapidly be taken away again because of the limitations of the resources of capitalism” (The Future for Socialism, second printing, January 1997).

This is a position we can endorse, indeed have been putting forward ourselves.

Similarly in the SWP, Peter Green (who wrote a passable pamphlet for them on The World Crisis of the 1980s) in a letter to Socialist Review (June 1996):

“We are now in a world where all talk of national reformism is fantasy—which was not true in 1945 or 1914. International socialism really is the only hope for us all.”

If international (or, as we would prefer, world) socialism is the only hope for us all—as it is—then the logical conclusion is that what we should be doing is campaigning in favour of this, not to try to pressurise governments to “maintain welfare systems, vary taxes and interest rates and set economic priorities”.

Adam Buick