Cooking the Books: AI, profits and Engels (2026)

The Cooking The Books column from the April 2026 issue of the Socialist Standard

City gents reading the business section of their Times (24 February) might have been surprised to come across a photo of Engels. Socialists would have been intrigued more by the caption ‘could AI create a new Engels pause, named after Friedrich Engels’. The term ‘Engels pause’ was not coined by Engels but by an economic historian, Robert Allen, to describe the course of economic development that led to the workers being in the situation described by Engels in his 1845 book The Condition of the Working Class in England.

Normally, a period of sustained capital accumulation should lead to some increase in working-class living standards, both because of employers bidding up wages as they compete for workers and because the increase in profits means they can afford to pay more. Allen noted that this had not happened in Britain during the period of rapid industrialisation from 1790 to 1840 as wages had stagnated. As in the period after 1840 wages did increase, Allen called this a ‘pause’ and named it after Engels.

Engels might not have regarded this as a compliment. He might have preferred the term ‘the Engels profit bonanza’ as, if wages stagnate in a period of economic growth, that means that profits will be more than they otherwise would.

The article in the Times, by its former business editor David Wighton, discussed two views of the possible economic impact of AI. He quoted a former Google executive as saying that ‘the most likely outcome is an economy in which corporate profits explode as labour costs fall, while workers’ share of output shrinks’. In short, another ‘Engels pause’. The opposite view was put by Jamie Dimon, the head of the bank JP Morgan Chase, who is quoted as saying that while AI will increase profits, ‘this isn’t like you’re going to build three points of margin and you get to keep it — you don’t’. Competition sees to that.

Who is more likely to be right? Critics of capitalism might be tempted to agree with the one-time Google executive as it would be another good argument against capitalism. However, Dimon has a point. His view reflects more accurately what happens when one capitalist enterprise makes extra profits by reducing its costs through some innovation and outcompetes its rivals.

‘An enterprise or industrial sector with an above average level of productivity (…) economizes in its expenditure of social labour and therefore makes a surplus profit, that is to say, the difference between its costs and selling prices will be greater than the average profit. The pursuit of this surplus profit is, of course, the driving force behind the entire capitalist economy. Every capitalist enterprise is forced by competition to try to get greater profits, for this is the only way it can constantly improve its technology and labour productivity. Consequently all firms are forced to take this same direction, and this of course implies that what at one time was an above-average productivity ends up as the new average productivity, whereupon the surplus profit disappears. All the strategy of capitalist industry stems from this desire on the part of every enterprise to achieve a rate of productivity superior to the national average and thereby make a surplus profit, and this in turn provokes a movement which causes the surplus profit to disappear, by virtue of the trend for the average rate of labour productivity to rise continuously’ (E. Mandel, An Introduction to Marxist Economic Theory.)

That’s the likely outcome of the spread of AI to production and business. A temporary increase in profits for the firms that are the first to use AI in their branch of activity but no ‘profit explosion’ in the sense of a general increase in profits for all firms which eventually adopt it.

Books Received (1971)

From the November 1971 issue of the Socialist Standard

• For Marx. L. Althusser. Allen Lane.
• The Rise of Fascism. F. L. Carsten. Methuen. 80p.
• Marx in His Own Words. Ernst Fischer. Allen Lane. £1.50.
• New Fabian Essays. Dent. £1.75.
• Mao Papers. Edited by Jerome Ch’en. OUP. £2.75.
• Europe versus America. E. Mandel. NLB. £2.00.
• Sexuality and Class Struggle. Reimut Reiche. NLB. £2.00.
• Social Consequences of Conviction. J. P. Martin and D. Webster. Heinemann Educational. £4.50.
• Suspended Sentence. Marc Ansel. Heinemann Educational. £1.50.
• The Enthusiasts. L. Thompson. Gollancz. £3.00.
• Ted Heath: A Latterday Charlemagne. Donald Johnson. Johnson Publications. 50p.

What’s all this Trotsky business ? (1977)

From the April 1977 issue of the Socialist Standard 

A professional revolutionary called Bronstein adopted the then fashionable idea of a nom de guerre (Ulianov became Lenin; Dugashvili, Stalin) and became the Trotsky who is now having such a mysterious rise to fame thirty years after his death at the hands of a thug employed by his former comrade Stalin. He must at least have had a sense of humour for he took his new name from his Tsarist gaoler at the beginning of this century. And before we finish with it, the new name did not quite succeed in rubbing out the old one. When he fell foul of Stalin, the latter used to see to it that '“Bronstein” used to appear in brackets after “Trotsky”. Thus, without laying himself open to the charge of anti-semitism, Stalin was able to inform ignorant readers of Pravda that his opponent’s real name was obviously Jewish. (The Trotskyists in turn used to refer to “that dog Dugashvili”. Much good it did them. The Bolsheviks inherited the anti-semitism of the Tsars. And cherish it to this day.)

At the time of the abortive 1905 revolution, Trotsky was an opponent of Lenin. In due course he changed his mind and by the time of the 1917 revolution was Lenin’s chief supporter in the seizure of power. Not of course from the Tsar. That job had been done six months before by risings in St. Petersburg and Moscow while Lenin was in Zurich (he not only had no hand in the overthrow of the Tsar; he did not believe it when they told him). The Bolsheviks overthrew Kerensky who stupidly tried to keep up the slaughter in the war with Germany. Trotsky himself never made any special mark while Lenin lived except as his faithful henchman. The only episode he stamped with his own brand was the massacre of the Red Sailors at Kronstadt — the very sailors who had enabled Lenin to smash Kerensky in the Winter Palace but had the audacity to ask: “What about some freedom and democracy now we have overthrown the Tsarist tyranny?” In opposing the modern Trotskyists, a Labour Minister called Mrs. Williams has dug up the Kronstadt story. She forgot to mention (or didn’t know) that when the anarchist Goldman tried to stir up the Labour Party about the massacre shortly after it took place, her party — the thuggish Bevin and the pacific Lansbury — turned their backs on her.

After Lenin’s death, Trotsky and Stalin fought for the crown. As to what the quarrel was about, all the pundits used to write incomprehensible twaddle about revolution in one country, permanent revolution, etc. etc. ad nauseam. The Bolshevik Stalin murdered his rival gangster in the same way that the Nazi Hitler murdered his rival Roehm in the same grisly era. And is there any real point in retelling the story now? Hardly. It is merely that when one wonders what all the Trotskyist splinter groups are doing in the current recrudescence, it is as well to see who the original Trotsky was. And then we might know the explanation of the current Trotsky epidemic? Quite the contrary. We merely know that Trotsky was just another Leninist opportunist and had no special theory to contribute to present-day thought whatever. That he twisted and turned like any Stalinist, right to the end. And that the .imbeciles who now proclaim themselves his posthumous followers (and would cheerfully murder the other Trotskyists who do likewise) have no more connection with Trotsky than they have with Socialism. They would be horrified to hear it but Stalin and Trotsky were just Tweedledumski and Tweedledeeski.

So who are the Trots? A number of groups (some a bit bigger than the Socialist Party, some a bit smaller) who seem to hate each other’s guts as much as they hate the Communists and Maoists. There was a hilarious piece in the Observer (16th Jan.) describing a meeting in Friends’ House at which Gerry Healy, of the Workers’ Revolutionary Party, was denounced, in his presence, for writing a book actually accusing the leaders of the American Socialist Workers’ Party (the babble of names of all these Trotsky splinters is quite bewildering) of a crime. What crime? Why, nothing less than being accomplices in the murder of the old villain himself way back in 1940!

As the police haven’t bothered to arrest anyone and as the victims of the alleged libel don’t seem to have sued, either, one assumes that this is all some idiot game in which these fools — having nothing to contribute to Socialism — re-enact the feuds in Moscow in the ’20s. Tariq Ali was in the chair on behalf of the International Marxists (who are neither international nor Marxist) and play-acted a silly drama in which a gang of young asses marched in front of Healy so Ali couldn’t see him from the floor and the chairman then took a motion (carried? You bet!) refusing to hear the enemy. And these are the types who join in parades with banners demanding “Keep the fascists out.” What on earth do they think they are themselves? The meeting had brought over another of their stars from Belgium, Ernst Mandel, complaining that Healy was rocking the boat just when they were “getting accepted as a genuine force in the working class movement”. Were they now? Somehow one hadn’t realized it.

Phrase-mongers of the world unite. You really all stand for the same thing. Reform of capitalism. However much some of them prattle about Russia being state-socialist (but Trotsky insisted it was worth defending every acre with working-class blood right to the end), they all stand for “involvement in the workers’ day-to-day struggles” and similar claptrap. And not only is it difficult to detect the difference between the various warring groups and tendencies; it is quite impossible to see where they differ from the older gangs of capitalist reformers masquerading as socialists — the Communist Party and the Labour Party. A Guardian ignoramus called John Cunningham attempted to define the various splinters (4th Feb.) but left us groping in the dark — for which the poor devil could perhaps be excused. What was, though, quite inexcusable was that he had the nerve to state that the Trots were adopting “entryism” — more phrases — into the Labour Party even though they did not hold with Labour’s Constitution of which “the Marxist part” was Clause Four — “the common ownership of the means of production”. Now that’s Marxist right enough. But only the SPGB has ever advocated it and even the Guardian creep must know that Clause Four refers to the means of production and exchange. The last phrase is the give-away. What the devil would you want with means of exchange if all was socially owned? What these fools refuse to see is that the epitome of Clause Four has long been achieved in Russia. Which even Trots will now admit is state-capitalist and has not the remotest connection with Socialism.

Only one thing is certain. In a few years, all these groups will have joined those of times past in “the dustbin of history” (favourite phrase of all these? lefties). New insects will emerge to take their place in lousing up the working class. Large or small, the only Socialist Party will still be there. Hasten the day when the workers will start to see the wood for the trees.

L. E. Weidberg

Marx’s Capital. (2004)

Book Review from the May 2004 issue of the Socialist Standard

Marx’s Capital. By Ben Fine and Alfredo Saad-Filho, Pluto Press, 2004.

This book was favourably reviewed in the Socialist Standard when it was first published in 1975 and again with the third edition of 1989. This fourth edition is substantially rewritten, doubling the text length, yet still coming in at under 200 pages. This is quite an achievement for an introduction to the thousands of pages in the three volumes of Marx’s Capital, as well as some of the multi-volume Theories of Surplus Value, the so-called fourth volume of Capital.

As the authors point out, “Marx is not interested primarily in constructing a price theory, a set of efficiency criteria or a series of welfare propositions; he never intended to be a narrow ‘economist’ or even a political economist”. Rather, they argue that Marx sought to challenge the assumptions that political economy (the older and more accurate term for economics) makes about capitalism:

  “the monopoly of the means of production by a small minority, the wage employment of the majority, the distribution of the products by monetary exchange, and remuneration involving the economic categories of prices, profits and wages”.

As an introduction to Marx’s Capital, this book offers a much more reliable guide than the late Ernest Mandel’s 1976 introduction in the current Penguin edition of Capital. Mandel, in common with other Trotskyists, defended the then USSR in the misguided belief that it had overthrown capitalism.

Lew Higgins

Karl Marx (1991)

Book Review from the July 1991 issue of the Socialist Standard

Capital, Volume 1. By Karl Marx, translated by Ben Fowkes. Penguin Classic. £10.99.

Penguins have just republished this modern translation that they first brought out in 1976 and which has since become the standard modern one to quote from. Ernest Mandcl, the Trotskyist leader, who even today still thinks that Marx’s theory of capitalism does not apply to Russia was of course a most unsuitable choice to write a 70-page introduction, even if he does provide some interesting historical material on the background to Marx’s major work.

They are not so ignorant (1978)

From the May 1978 issue of the Socialist Standard

“A socialist society requires an economy developed to the point where production for need supersedes production for profit. Socialist humanity will no longer produce goods to be exchanged for money on the market. It will produce use values distributed to all members of society in order to satisfy their needs”.  

Trotskyist leader Ernest Mandel in From Class Society to Communism, just published by Ink Links (p. 143).

Russia: Leftists in Dispute (1976)

From the January 1976 issue of the Socialist Standard

In 1968 was published an English translation of Ernest Mandel’s monumental work of Trotskyite orthodoxy, Marxist Economic Theory. This was reviewed in International Socialism and led to an exchange of pamphlets between I.S. and Mandel’s supporters in Britain, the International Marxist Group. IMG have republished this controversy with the title Readings on State Capitalism, which has a certain interest for Socialists as discussion centres on the view that Russia is State capitalist.

Mandel, Kidron and Harman (who took over the IS banner half-way through the controversy) agree that Russian society is not Socialist. Mandel, however, maintains that Russia is a very degenerate workers’ state, which has begun a transition towards Socialism with an economy “marked by the contradictory combination of a non-capitalist mode of production and a still basically bourgeois mode of distribution”. A capitalist mode of distribution on the basis of a non-capitalist mode of production is not only contradictory but, from a Marxist point of view, an absurdity; for it is the mode of production which in the end determines the character of all other aspects of society, including the mode of distribution (i.e. the way the social product is divided).

Kidron and Harman describe Russia now as state capitalist, but think that “Russia in the 10 years after 1917 . . . was not itself capitalist”. What then was it?

Discussion about the nature of Russian society is discussion about the meaning of both capitalism and socialism, and Mandel has well grasped the nature of Socialism as a moneyless, wageless, stateless society, with the “free distribution of goods and services”, existing on a world scale: “Socialism means a classless society. It therefore presupposes not only the suppression of private property of the means of production, henceforth managed in a planned way by the associate producers themselves, but it also calls for a level of development of the productive forces which makes possible the withering away of commodity production; of money, and of the state”.

Kidron, on the other hand, describes “socialism” vaguely as “workers’ control of production”, with the implication that this could be control of the production of commodities.

So we have Mandel denying Socialism properly, but saying that a world Socialist revolution is an impossibility and that instead the working class of each country should aim at establishing “a society in transition from capitalism to socialism”, based on nationalization under workers’ control; and we have Kidron saying correctly that no transitional society between capitalism and Socialism is possible (“socialism is a total system; it cannot grow piecemeal within the interstices of a capitalist society”), but defining Socialism wrongly and meaning by it precisely the same as Mandel’s impossible “transitional society”!

If Mandel were claiming that Russia cannot be described as capitalist, but some new form of exploitative society, then his argument would be stronger. But he is claiming that Russian society is better and more progressive than what exists in the West: basically a society which workers should support. This is dangerous nonsense. To suggest that Russia, where trade-union rights like strike action and democratic rights available in the west are denied, offers a precedent for future working-class development, is to mock the sufferings of the working class there.

But the main reason for saying that Russia is capitalist is the existence of the wages system there. As Marx pointed out, wage-labour and capital presuppose each other. Wage-labourers produce value, some of which returns to them in the form of wages, the rest going to those who monopolise the means of production as surplus value; this surplus value is re-invested in production and so becomes capital, wealth invested in production with a view to profit.

That capital accumulation out of the surplus value produced by wage-labour has never ceased in Russia since 1917 should be obvious enough, but Mandel puts forward the view that what has governed production in Russia has been “the consumption desires of the bureaucracy”. He paints Russia as a society where usurpers (the bureaucracy) have come to power and live off the workers who continue to produce under non-exploitative conditions. Mandel actually says that Russian workers, though paid wages, are not exploited at the point of production as in the West; but that they are robbed as consumers by a “parasitic and pilfering” bureaucracy

Mandel says the IS view is essentially a Menshevik one. According to Mandel the Mensheviks held that “a socialist revolution in a backward country is impossible and that whatever you do, capitalism, and only capitalism, can flower there,” and that “whatever one did, capitalism was on the agenda in that country (as long as it would not have been overthrown in all or most of the industrially advanced countries of the world)”. The Mensheviks may have held these views, but the fact remains that it is an analysis and in accordance with the Marxian materialist conception of history. Socialism can only be established on a world scale and on the basis of an advanced industrial economy; in the absence of the Socialist revolution all that can develop in so-called backward countries is capitalism.

We in the Socialist Party of Great Britain have always been logical on this point. Yes, we reply; Russia is state-capitalist and, yes, the Russian revolution was not a Socialist revolution, but a seizure of power by a political party which later came to form the nucleus of a new state-capitalist ruling class. This was inevitable, given the absence at the time of Socialist consciousness amongst the majority of the workers of the world. This is what we said at the time and subsequent developments in Russia have proved the soundness of the Socialist Party’s analysis.

Adam Buick

Inside the Bolshevik Cul-de-sac (1970)

From the April 1970 issue of the Socialist Standard

State Capitalism or not?
Those who still cling to the basic Bolshevik premise — that the Russian insurrection of October 1917 amounted to a Socialist revolution — are caught inside a trap of their own making. Whichever way they turn, they are landed with an uneasy antagonism between their theory and reality.

Those who faithfully follow Moscow, claiming that Russia today is Socialist, are in a ludicrous position, now that more information is available about Russia, and now that Russia is catching up with the West economically, so that East and West grow daily more similar. Therefore the British “Communist” Party is in catastrophic decline, its membership dwindling and ageing, brandishing their confusion now for all to see.

The Maoists, who assert that Russia has only recently become capitalist, are also in a fix. For it is difficult to believe that the changes in Russia’s economy since the death of Stalin are so profound as to amount to a change from Socialism to capitalism (terms which, though definitions vary, are universally held to describe diametrically opposed systems). It is also difficult to see any fundamental differences in the Russian and Chinese economies, except that China is more primitive and less centrally-directed.

Then, of course, our old friends the Trotskyists are still with us. After a bitter struggle between Stalin and Trotsky over which of them should have the privilege of directing the exploitation of the Russian workers, Stalin won. Trotsky became a fierce critic of the Stalin regime, yet he would still not admit that Russia was capitalist — which would have put a question mark over his own revolutionary career. But it wasn’t Socialist either. Instead, he came up with the formula that Russia was a “degenerated workers’ state,” basically a transitional society between capitalism and Socialism, with lots of deformities.

In practice this meant that Trotskyists always defended the Russian state against other capitalist powers, whilst at the same time criticising some of its “deformities.”

Trotsky and his followers took the view that Russia could not be described as capitalist because the bulk of Russian industry was nationalised. Overall state control, they said, was an advance on capitalism. Bolsheviks have always thought that state ownership was a step in the direction of Socialism, and have sometimes suggested that Socialism itself would be a form of state ownership.

There has long been confusion within Bolshevism on this point. Bogdanov’s Short Course of Economic Science (used by the Bolshevik government) as well as The ABC of Communism (written by two leading Bolsheviks in 1919), followed Marx and Engels in characterising Socialism or Communism as a wageless, moneyless society, and emphasising that mere nationalisation or “state socialism” really contained “no trace of Socialism.” After all, the Bolsheviks have always claimed to be Marxists.

Yet in 1917 Lenin had introduced a distinction between “Socialism” and “Communism,” which till that time all Marxists had given precisely interchangeable meanings. He also produced his famous definition of Socialism as “nothing but state capitalist monopoly made to benefit the whole people.”

In the 1970s, nationalisation is not the thrilling issue it once was. State ownership has grown in all the western countries, and it has been brought emphatically home to the great majority of workers everywhere that being employed by the state is in no way better than being employed by a private corporation. It is not even very different. And in Russia, the extreme of centralised direction reached under Stalin is widely seen to have been merely a phase of development, now a positive hindrance to further advancement.

As a result of this it has been borne in upon many radicals and left-wingers that Russia is state capitalist. The Socialist Party of Great Britain, once almost alone in taking this view, and heartily ridiculed for it, now finds itself in numerous company. Be warned. The “sectarianism” of today is the truism of tomorrow!

The IS Group
However most of the people who have recently come round to the view that Russia is capitalist have not adjusted all of their political views accordingly, but have merely corrected this one point, failing to notice the inconsistencies which then emerge in the remainder of their ideas. For example the group known as International Socialism (IS) is basically a Trotskyist group except that it holds Russia to be state capitalist.

The growth of working-class understanding is a contradictory process. With their emphasis on violence and minority action IS are peddling dangerous deceptions. Yet these are more advanced deceptions than those marketed by the “Communist” Party 20 years ago — more advanced in the sense that they recognise the impracticability these days of equating nationalisation and Russia with Socialism. True, the incorporation of the correct view that modern Russia is capitalist into the fundamentally mistaken and anti-working-class doctrine of Bolshevism, allows this doctrine to gain greatly in immediate appeal. But only at the expense of yet more glaring inconsistencies within the doctrine itself. For instance, the IS claim that capitalism sprang into being in Russia in 1928 after 10 years of transition towards Socialism is breathtaking in its lack of connection with any kind of reality. (1)

Even the Bolshevik leaders (with the exceptions, interestingly enough, of Trotsky and Stalin), conceded that state capitalism existed in Russia following 1917.

Kidron and Mandel
There has recently been a controversy (2) between Michael Kidron (IS) and Ernest Mandel (orthodox Trotskyist) which is interesting to Socialists since it shows Kidron failing to draw reasonable conclusions from his view that Russia is capitalist (in fact failing to fully understand what this means), and Mandel taking advantage of Kidron’s confusion to discredit the whole theory of state capitalism.

Mandel points out that if they were consistent, IS would adopt a position of hostility towards the “Communist” movement. If North Vietnam is state capitalist, how can IS support the Vietcong? If the “Communist” parties are capitalist parties, the potential nuclei of future ruling classes, and if these ruling classes would not be historically progressive, why do IS cooperate politically with them? Mandel might well ask.

Of course, he regards such a position of hostility as unthinkable. But this is precisely the standpoint of the Socialist Party of Great Britain. We have at no time combined with the “Communist” Party or ceased to expose it, and we have always adopted a policy of opposition to both sides in every capitalist war. Unlike IS, we unite theory and practice.

In order to combat Mandel’s argument that Russia is a “transitional society,” Kidron says that there can be no transitional society between capitalism and Socialism. Quite correctly, he states: “The only possible transition is a sudden, revolutionary one.” This promising statement (astonishing coming from IS) is somewhat undermined by the fact that Kidron hasn’t the foggiest clue what Socialism is:

  Socialism is a total system. It cannot grow piecemeal within the interstices of a capitalist society. How does workers’ control of production coexist with control by a ruling class when the means of production in dispute are one and the same? How does self-determination and consumer sovereignty (‘production for use’) coexist with the external compulsion and blind accumulation that results from capitalist dispersal?

This is one of several instances where Mandel (who has read Marx) has a field day demolishing Kidron (a mere Keynesian-eclectic mouthing misunderstood Marxist phrases). Socialism, of course, has nothing to do with “workers’ control of production.” Socialism means a classless world society, without commodities, without the state, without frontiers. It is therefore interesting to note that Mandel realises what Socialism is, but relegates it to the distant beyond, whereas Kidron wants “Socialism” as quickly as possible, but his “Socialism” isn’t Socialism at all! Mandel’s “transitional society” is basically similar to Kidron’s “Socialism,” and both are actually models of capitalism, since both envisage the retention of the wages system.

Marx argued that wage-labour and capital were quite inseparable. And in a reply to Mandel, C. Harman of IS comments:

  Nowhere … is there a single mention of the working class or a single reference to the wage labour/capital relationship. Now this is curious. For it was not Michael Kidron but Karl Marx who wrote ‘The relation between wage labour and capital determines the entire character of the mode of production.’ And this is not an accidental aside . . .

But later we find Harman flatly contradicting this, as he must because wage-labour is to remain a feature of the “workers’ state” which is the avowed aim of IS. Harman argues that Russian industry from 1917 to 1928 was not capitalist, though presumably he would not deny that it featured wage-labour.

Neither Mandel nor Kidron seem unduly aware of modern Russian realities. Both seem to believe the Russian economy is “planned” full stop.

What then, is the situation of the Russian worker? He is free to move from factory to factory, from town to town, or occupation to occupation, in pursuit of higher wages, or under pressure of unemployment. And he is forced to do so, since he owns no means of production (except a substantial but dwindling number who have small plots of land, and indeed, need them to keep starvation at bay). He is therefore “doubly free” in Marx’s phrase. He sells his labour-power to a state enterprise for a wage which is less than the price of his product. The surplus is mostly reinvested for his further exploitation, with a small proportion going to keep his rulers in the manner to which they are accustomed. In any circumstances (except general forced labour) it would be quite impracticable for the state to plan wages with any accuracy, but this is impossible in Russia where most workers are on piece rates (described by Marx as “the form of wages most in harmony with the capitalist mode of production”). It has been a pretty constant feature of Russian state capitalism that the actual total wages bill has exceeded (sometimes vastly) the amount foreseen by the plan. In Russia, labour power is clearly a commodity.

A popular view of the Russian economy is that a plan is devised at the top, orders are issued, and enterprises promptly fulfil the plan. The goals of the plan are, first, making an overall profit, second, catching up with the West. Yet to possess any effectiveness at all, the plan must be based on reports from the enterprises, which as well as being concerned to fulfil plans, also have their own profit and loss account, with plenty of incentive to get their profits up.

In fact, the long-term (five-year and seven-year) plans are always drastically modified in practice. They are merely guidelines for the annual (and quarterly and monthly) plans. Even so, several of the long-term plans could not be decreed until long after they were supposed to have started, and one (the sixth five-year plan) had to be abandoned altogether.

In the process of adapting the long-term plan year by year, all sorts of unforeseen factors have to be taken into account, many of which are even by Mandel’s account, unambiguously the products of market forces. Much of the Russian state’s “planning” is thus a matter of anticipating, or even subsequently conforming to, these market forces. It is, however, true that they can exercise considerably “arbitrary” influences. Any capitalist state can do this to some extent (development grants, SET, etc.). The Russian state has much more power, mainly because, with the state monopoly of foreign trade functioning as a protective tariff, and with prevailing internal scarcity, the Russian capitalists have a seller’s market. In relation to the peasants they have a buyer’s market. It is exactly in such monopolistic situations that commodities can sell consistently above or below their values. (3)

But what happens as the disappearing peasant reserve strengthens the workers’ bargaining power? As consumer goods production is increased to raise the workers’ productivity? As consumers (workers and capitalists) get greater choice in their purchases, so that enterprises must become more responsive to the market, hence freer of central direction? What happens as the era of telescope development passes, so that Russian industry must imitate less and innovate more? The Russian capitalists are compelled to abandon by degrees the system of planning with material targets, which served them well as a method of rapid industrialisation, but has now outlived its usefulness.

There are many defenders of western capitalism who assert chat “Socialism” has failed in Russia, which is therefore “returning” to capitalism. Mandel plays into the hands of these people by describing the current decentralisation of profit-seeking initiative as “degeneration” when it is clearly necessitated by advancement. He also thereby gives ammunition to those who argue that “Socialism” is suitable only for backward countries.

What has failed in Russia is not “planning”, much less Socialism, but the attempt to plan a capitalist economy. It is not impossible to operate a technologically advanced society according to a common plan, but it is quite impossible to do this if there are competing economic interests, and if all those working for the plan have to be provided with a monetary incentive for everything they do. In a Socialist economy, with all work entirely voluntary and the price system abolished, it will be entirely feasible to plan all production according to democratically decided criteria.

Between capitalism and Socialism there cannot exist a stable, lengthy transitional period. This point seemed to have dimly penetrated the brain of Trotsky, who recognised the silliness of a “transitional” society which stably maintained itself for generation after generation. He therefore described Stalin’s regime as a pyramid balanced on its head, and predicted it would be toppled in a major war. When the war came, it demonstrated the Russian system to be rather a pyramid stood firmly on its base. (4)

Far from Russia being on the road to Socialism, workers there still have to win the elementary political and trade union rights already gained by western workers. Capitalism continues to exist throughout the world because workers put up with it, and can be abolished as soon as the majority of workers desire Socialism, though this is most strikingly evident in countries which, unlike Russia, have effective workers’ suffrage. It is therefore quite wrong to believe, as Mandel does, that we should support Russia or China against America. It is not worth a single worker’s life or limbs to advance the interests of the Russian rulers against their rivals. Neither does it matter whether Russian enterprises remain formally, legally state-owned or not. This has no bearing on workers’ interests and is beside the point anyway— a nationalised industry can be as free from de facto central control as some “privately-owned” firms.

Mandel’s view would have slightly more plausibility if all his “transitional societies” were politically united under one state. But they compete economically and militarily, and if the whole world were owned by them alone, the danger of our species being exterminated in a war would be no less than it is today—”transitional” indeed!

Russia must of course be seen in its international context. It is here that the IS arguments against Mandel are strongest. As Harman rightly says, there is no such thing as the “inner logic” of a plan. The goals of Russian national planning have been fixed by international competition.

But the force of the IS attack here only throws into more startling relief their .position on the national question (especially now that they have taken-to-supporting, not only the Vietcong, but also the Chinese state which they admit to be capitalist). It is no get-out to proclaim, as Harman does, that they also supported the Kenyan anti-colonial movement, or “the Cypriot struggle led by the cleric Makarios and the fascist Grivas.” That is nothing to be proud of. Neither is this justified by calling it “the Marxist position.” What conceivable excuse can there be for people who claim to be Socialists supporting the slaughter of workers which is a side-effect of the rival capitalist powers’ perennial jostling for a place in the sun?

Steele.

———-

1 In case the point is missed, this is not only an exercise in labelling the past. So long as IS maintain that the 1917 revolution was Socialist they will be unable to seriously criticise all the garbage that comes in its train, Lenin’s ignorant theory of Imperialism; the concept of the vanguard party and “transitional demands,” etc. So long as they fail to do this, they are an obstacle to the establishment of Socialism.

2 Kidron in International Socialism 36; Mandel’s pamphlet The Inconsistencies of State Capitalism; Debate between Kidron and Mandel at Hull University, 4/11/69; Harman in International Socialism 41.

3 If Mandel’s reasoning were correct, and Russia lacked some of the essential features of capitalism, this would show not that it was transitional between capitalism and Socialism, but “transitional” between Asiatic feudalism (tsarism) and capitalism. The peculiarities of Russian capitalism are the outcome of an unprecedented combination of backward peasant production and advanced industry.

4 It is revealing that Mandel doesn’t dare use Trotsky’s long-since shattered argument that a state bureaucracy cannot constitute a ruling class. Trotsky was prepared to concede that state capitalism could in theory exist provided there was individual ownership of shares in the state.

Cooking the Books: ‘Transition period’ (2019)

The Cooking the Books column from the January 2019 issue of the Socialist Standard

One thing Brexit has done is to familiarise people with the term ‘transition period’. Dictionaries typically define it as ‘the process or a period of changing from one state or condition to another’. Socialists were already familiar with the term in the context of the change from capitalism to socialism. Of course the transition to Brexit – which Theresa May prefers to call an ‘implementation period’ – is a trivial change compared to the social revolution that the change to socialism will be.

Marx himself used the term in some private notes he wrote in 1875:

  ‘Between capitalist and communist society there lies the period of the revolutionary transformation of the one to the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat’ (Critique of the Gotha Programme).

This statement has been subject to various interpretations but its basic meaning is clear. The change from capitalism to socialism (or communism, the same thing), or ‘the co-operative society based on common ownership of the means of production’ as he called it elsewhere in the same notes, is revolutionary in two senses. It is a radical change in the basis of society, from class to common ownership of the means of production, and is brought about rapidly and decisively.

This second point is important in that some have imagined this ‘transition’ as lasting decades. However, once the material conditions for ending class ownership have evolved – once production has become ‘socialised’ in the sense of being the collective, co-operative effort of the whole workforce – then the change can be made rapidly. The contradiction between socialised production and minority ownership can be achieved by ending the monopoly control, whether in law or in fact, of the minority over the means of production. What is required to do this is a political decision to withdraw state protection (via the law, police, armed forces, and courts) for this monopoly. There is no reason why this should take any length of time. It just requires a political decision and its implementation; which of course assumes that the working class has won control of political power and is organised to implement its decision.

In this quote, Marx called this period during which political power would be exercised to abolish class society ‘the dictatorship of the proletariat’, a term that was current amongst revolutionary socialists of his generation, though perhaps unfortunate in today’s context as ‘dictatorship’ has come to have a different connotation to the exercise of full powers that it then had. In the quote Marx prefaced the term by the word ‘revolutionary’, indicating that its aim was to revolutionise the basis of society. This done – and socialist (or communist) society established – then this period of the revolutionary transformation of one society into another comes to an end together with its corresponding political form.

This was not how Lenin and the Bolsheviks came to see it. Having seized power in a country that was not ripe for socialism, they had to justify staying in power while the conditions for socialism developed. Lenin openly said that this period would be one of state capitalism and that dictatorship meant dictatorship in its modern sense. His follower, the leading Trotskyist Ernst Mandel, went even further and made it a new system of society which he called ‘transitional society’ and which he expected to last an ‘epoch’.

This was to move away from Marx’s conception of the ‘transition period’ as a temporary, short period of rapid change brought about by political means. Perhaps we should follow Theresa May and call it an ‘implementation period’. That way it couldn’t be misinterpreted as lasting an epoch.

Marxist Economics (1967)

Book Review from the April 1967 issue of the Socialist Standard

Marxist Economics in the Modern World. (Traité d'Economie Marxiste) by Ernest Mandel, René Julliard (Paris). 2 Vols. 516 & 550 pages. 46.25 Fr.

Ernest Mandel put an enormous amount of work into the writing of this two volume study of Marxian economics in its application to the modern world, published in 1962. With its nearly 1,000 pages of text, innumerable footnotes and quotations (the sources take up 65 pages, with another 50 pages of quoted works) it makes an invaluable book for students.

Mandel deplores, and offers an explanation for, the neglect and contempt of Marxian economics displayed in academic circles.

Starting with Marx's division of economists into the classical, in the period of the rise of capitalism and ending with Ricardo; then the post-Ricardian economists in the period when the capitalists were not yet finished with the elimination of the old ruling class but were becoming pre-occupied with their struggle with the working class; then the "vulgar" economists, after capitalism had consolidated its position. 

So far, says Mandel, the capitalist economists had still been concerned with economic theory even if in the later phase it was nothing more than the invention of shoddy theories to justify the position and actions of the capitalists.

But then came a fourth period, marked by the "Keynesian revolution", in which the economists have had little or no interest in theory and have been concerned solely with devising practical expedients to save capitalism.

But at the same time Marxian economics suffered a vulgarisation. Just when it was becoming obvious in the depression years that capitalist economic theory was bankrupt, Marxism was vulgarised by the apologists for Russia who turned it into a propaganda instrument for defending the political and economic policies of the Russian government; for bolstering up the fiction of Socialism in Russia; and for hiding from the workers in Russia that their standard of living was in fact below that of the industrially developed countries.

As well as going over the ground covered by Marx, Mandel examines a number of questions in detail, including the idea that Marx foretold necessarily increasing working-class poverty; Marxian and other theories about crises ; and the question whether the twentieth century has disproved Marx's conception on historical development.

While it would be too much to expect that Mandel would see everything from a standpoint identical with that of the Socialist Party of Gt. Britain, the present writer knows no other work which, from a Marxist standpoint, covers modern capitalism anything like so fully and so well. It is to be hoped that some publisher will get out an English translation.

Edgar Hardcastle

Capitalism's crisis cycle (1982)

Cartoon by George Meddemmen.

From the October 1982 issue of the Socialist Standard

Capitalism is a system of society in which the means of production take the form of “capital” or wealth used to produce other wealth with a view to profit. It is a system where wealth is produced to be sold profitably on a market. For capitalism to have come into existence (and to continue to exist) certain conditions have to be met, in particular the separation of the producers from the means of production. The producers must have been reduced to the status of a propertyless proletariat compelled to sell their mental and physical energies for a wage or salary to the minority who monopolise (own and control) the means of production. The essential features of capitalism are then: production for profit, buying and selling, wage labour, class monopoly of the means of production and distribution.

Capitalism differs from other systems of society by the fact that under it production is not carried on for use. Even under another class system like feudalism most production was for use; the peasants produced their own subsistence needs, the rest going in kind to maintain the barons, the church and other exploiters. It was the same in ancient slave society. Capitalism is different in that goods are no longer produced to be directly used but to be sold on a market with a view to profit.

Decisions about production — what to produce, how it is produced, where it is produced, and soon — are no longer simple decisions to produce what is needed, either by the producers or by their exploiters. Decisions about production become decisions to produce those goods which, at any moment, appear most likely to procure a profit when they are sold. In other words, production is governed by the search for profits, by the impersonal forces of the market which express themselves in the minds of the individual capitalists (or of their hired managers) as the "profit motive”.

As a matter of fact the situation is even more impersonal than this simplified description might suggest. For the individual capitalist does not seek profits just to satisfy their own personal needs. To stay a capitalist they are obliged to reinvest. rather than consume in riotous living, the greater part of the profits they make — in other words, to accumulate capital. It is this in fact — the accumulation of capital — rather than simply making profits that is the object of production under capitalism. The individual capitalist, just as much as the wage and salary earner, is a mere cog in this economic mechanism which is beyond human control and which operates independently of human will.

The accumulation of capital is not the mere amassing of greater and greater sums of money; it reflects itself as the expansion of the means of production, the growth of the stock of machines, factories, means of transport and communication and other means for producing wealth.

This growth, however, does not proceed smoothly and in a straight upward line. The general trend is upward — capitalism has immensely increased the stock of means of production since it made its historical debut in the 16th century and particularly since it entered its industrial phase in the 18th century — but this growth is in fits and starts. Illustrated graphically capitalism’s growth pattern would be an alternating series of peaks and troughs, with each peak normally being higher than the previous one. Or, more accurately, as a series of upward moving waves. Traditionally of course the metaphor that has been used is of a cyclical movement, the ups and downs of growth under capitalism being described as "the business cycle”, the "trade cycle” or the “economic cycle”.

Marx’s explanation, in a nutshell, is that growth under capitalism is cyclical due to the unplanned nature of production — what he calls the “anarchy of production” or the fact that production decisions are taken by a host of independent, profit-seeking, competing firms. This anarchy of production coupled to the search for profits, said Marx, leads to one sector of the economy over-expanding in relation to the others, so provoking by a chain reaction a more general slow-down or halt to growth.

Marx, towards the end of Volume II of Capital (published after his death by Engels from his notes and thus not a form Marx would necessarily have regarded as ready for publication) divides production into two main sectors, or departments:

Dept I: producing means of production or what academic economists today would call "producer goods" or "capital goods”.
Dept II: producing means of consumption or "consumer goods”.

If there is to be steady growth then these two sectors must grow in proportion. The necessary proportion is quite easy to work out. Thus Ernest Mandel in his Introduction (not at all bad apart from the occasional nonsense about Russia being "non-capitalist" or "post-capitalist") to the new Penguin translation of Volume II:

. . . the equilibrium formula of expanded reproduction . . . implies an identity of the rate of growth of demand for consumer goods generated by department I. and a rate of growth of constant capital in department II (p.67).

In a sense this division of production into only two sectors is a gross simplification but its logic lies in the fact that it brings out that capitalism is not a system of production for use and that the output of Department II is restricted in the end by the need to limit the consumption of the producers at the expense of profits and capital accumulation. All the same, there are in fact as many sectors as there are industries and, if growth is to be smooth, all these sectors, or sub-sectors, must expand proportionately. It is thus easy to see how, given the anarchy of production, crises are possible, in fact inevitable, under capitalism. As Mandel puts it:

the very structure of the capitalist mode of production, as well as its laws of motion, imply that the "conditions of equilibrium" are inevitably destroyed; that “equilibrium" and "harmonious growth" are marginal exceptions to (or long-term averages of) normal conditions of disequilibrium (“overshooting” between the two departments) and uneven growth, (p.31)

Crises are due not to simple disproportionality but come about because this happens in the context of a society where production is for profit and where consumption is restricted by the majority being exploited by a minority class. A crisis, as a more or less sudden stop to growth, is in fact only one phase of the capitalist economic cycle. In Volume I of Capital (which he did himself see to the press) Marx speaks of the “life of industry" being a "series of periods of moderate activity, prosperity, overproduction, crisis and stagnation" which are “recurring cycles whose successive phases cover a number of years and which always end in a general crisis, which is the end of one cycle and starting point of another".

The key factor governing the move from one of these phases to the next — from moderate activity to prosperity to overproduction and crisis to stagnation — is profits, short and medium term variations in the rate of profit.

In the period of moderate activity, which is the period of recovery just after the stagnation (the period Tory ministers have been saying for the past year or so is just round the corner!), industrial activity is beginning to pick up. This means that more workers are in employment and have more money to spend. More money to spend means a larger market for consumer goods, which means that capitalist firms in this sector will expand production ordering new factories, machines and raw materials from the producer goods sector. This interaction between the two sectors eventually leads to the period of prosperity and boom, with relatively full employment, rising wages, full order books. So it is the confirmation of the confidence that capitalist firms had in being able to sell profitably what they produced that leads from the period of "moderate activity" to that of "prosperity”.

But this period of prosperity does not last for ever. It inevitably ends in "overproduction", as capitalist firms become over-confident. This is because the competing firms in an industry all assume that they will sell their goods profitably on the expanding market. As a result the total amount produced comes to be more than enough to satisfy the market. In this sense, there is “overproduction” in one industry. This leads to lay-offs and cutbacks of production which affect other industries, and so to a generalised "overproduction” and an end to the boom.

In Marx's day, when most industry and trade was financed by trade bills, this led to a loss of confidence in credit and to a financial crash — or crisis in the sense Marx used it in this context. Then followed the period of stagnation: a fall in industrial output, mass unemployment — which is what we today more usually mean by crisis.

The evolution from "stagnation” to "moderate activity" is once again governed by a change in the rate of profit. As a slump continues the conditions are eventually created for a restoration of profit levels and a gradual recovery of economic activity. Profit levels are restored by a number of factors: (1) depreciation of capital, through bankruptcies, write-offs, takeovers, fall in the value of stocks and so on: (2) a fall in real wages; (3) a fall in real interest rates as the supply of capital for lending comes to exceed the demand. These three factors all work to increase the rate of industrial profit and eventually bring about a recovery, and so the cycle recommences.

This is our analysis of the current slump. It is one phase of the economic cycle which is repeated under capitalism and will in time give way to the next phases: moderate activity, prosperity and then another crisis and stagnation. In other words, capitalism will eventually recover from the present crisis.

So, to sum up, growth under capitalism is not smooth and steady but cyclical. Crises occur because of the uneven development of the various sectors of the economy which is inevitable given the anarchy of production which reigns under capitalism. The present slump is not the final crisis of capitalism, nor the beginning of a permanent depression, but simply one phase of the economic cycle which will sooner or later come to an end — even if this turns out to be later (say, the 1990s) rather than sooner.

Adam Buick

A new translation of Marx's "Capital" (1980)

Book Review from the April 1980 issue of the Socialist Standard

In 1976 Penguin published a new translation of Volume I of Marx’s Capital. In his preface the translator, Ben Fowkes, gives two reasons why he feels a new translation was necessary. First, that the English language has changed since the first English edition, translated by Samuel Moore and Edward Aveling under the supervision of Engels, was published in 1887. Secondly that, with the increased knowledge of Marx’s ideas since 1887, there is no longer any need to shield the reader from some of the more difficult passages which Marx left out, for instance, in the French edition. These, says Fowkes, can be restored despite their difficulty.

On the first point Fowkes is undoubtedly right. Today, nearly a hundred years later, the Moore-Aveling translation has become, due to changes in English usage, a bit stilted. The reader’s concentration on the particular point Marx is trying to make is made more difficult by having at the same time to transform certain old-fashioned phrases into their modern equivalents. But the ideas expressed by Marx in Capital ought to be available in as readable a form as possible since they provide a clear explanation of how the working class are exploited under capitalism and of how capitalism can only work to their detriment. Every class-conscious worker should have a go at reading Capital and may be pleasantly surprised to find that the economic theory alternates with historical accounts of the past sufferings and struggles of the working class in Britain. And the ideas expressed in Capital are of course also the basis of the economic analyses made in the columns of this journal.

Judged by this standard of making Capital easier to read, Fowkes’ translation by and large succeeds. To give an example of the sort of changes made, we can mention that the words productiveness and labourer have been replaced, in accordance with modern usage, by productivity and worker. In addition. Capital’s subtitle is translated as “A Critique of Political Economy” (instead of as “A Critical Analysis of Capitalist Production”), so making it quite clear that Marx was not simply criticising capitalism but also the categories used by economic theory generally.

However, there is one change of Fowkes’ which works in the opposite direction, making understanding more difficult. A key word used by Marx is the verb verwerten and its noun Verwertung. These are everyday German words which mean literally something like “putting to good/profitable/valuable use”. Marx uses them in a special sense, in relation to “value” and “capital”, to mean the use of value or capital in such a way that their size is increased-hence a good or profitable or valuable use. Moore, Aveling and Engels chose to translate Verwertung as “expansion”, “increase” and “augmentation”, so that their English translation speaks of “the expansion of value”, the “self-expansion of capital”, and so on.

Fowkes introduces a new word to translate Marx here: valorisation (and, for the verb, valorise). While not denying that it is sometimes necessary to introduce a new word to refer to a new concept, is it really necessary in this case? Valorisation is not an entirely new word since it does already figure in dictionaries; according to the Concise Oxford Dictionary it means “raise or stabilise the value of (a commodity, etc.) by government action”—hardly what Marx meant! But valorisation, in Fowkes’ sense, is a new word, the working out of whose meaning is only going to make the reading and understanding of Capital more, not less, difficult.

It is also a pity that Penguin did not let Marx speak for himself and considered it necessary to add an 80-page introduction by Ernest Mandel. Certainly, Mandel has a knowledge of some aspects of Marxian economics but, as a Trotskyist, he is quite unqualified to write an introduction to Capital. For instance, he refers to Russia, East Europe, China, North Vietnam, North Korca(!) and Cuba as “societies in which the rule of capital has already been overthrown” (p. 16). Really? Are we supposed to accept, then, that wealth in these countries does not “appear as an immense collection of commodities” as Marx says in the very first line of Capital is the case in “societies in which the capitalist mode of production prevails”? Again, Mandel talks of capitalism as being characterised by “production for private profit” (p. 11). So, production for state profit what might be called the self-expansion of state capital—as in Russia, apparently isn’t capitalism! Then, to cap it all, we are told that the working class needs a “revolutionary leadership” (p. 84)—doubtless Mandel and his Trotskyist supporters in the New Left Review who prepared this new translation for Penguin.

If all this is the price we have to pay for not having to buy editions of Capital from state capitalist Russia then it is almost too high.

Adam Buick

The Myth of The Transitional Society (1976)

From Issue Number 5 of Critique

Critique has recently published the translation of an article by Ernest Mandel, in which he develops his now familiar theme that, in the course of social evolution, there intervenes – and must intervene – between capitalism and socialism a transitional “society” with its own social base, relations of production, etc. This is a point of view worth discussing but, despite the Marxist terminology in which it is expressed, it is in fact not a view held by Marx himself. As the present article will try to demonstrate, Marx did indeed speak of a “political transition period” between capitalism and socialism but never of a “transitional society”.

What, then, did Marx mean when he spoke of this “transition period”? Contrary to what is generally supposed (largely as a result of decades of Stalinist and Trotskyist propaganda), for Marx this period was not that between the establishment of the common ownership of the means of production and the time when the principle “from each according to his abilities, to each according to his needs” could be implemented. Rather it is the period during which the working class would be using state power to bring the means of production into common ownership. In other words, the transition period is a political form between the capture of political power by the working class within capitalist society and the eventual establishment of socialism, a period during which the working class has replaced the capitalist class as the ruling class, i.e. as the controller of state power. The end of this transition period is the establishment of a classless society based on the common ownership and democratic control by the whole of society of the means of production, with the consequent disappearance of the coercive state, of the system of working for wages, of the production of goods for sale on a market with a view to profit, indeed, of buying and selling, money and the market altogether.

That for Marx the “transition period” was the period after the capture of political power by the working class and before the actual establishment of the common ownership of the means of production is clear both from his early and his later writings.

In 1852 he wrote to his friend Weydemeyer in America that one of the things he had proved was that “the dictatorship of the proletariat” (as he called the period of working class control of state power) “only constitutes the transition to the abolition of all classes and to a classless society”(emphasis added). Engels summarizes his own and Marx’s view in 1873 as follows:

“The views of German scientific socialism on the necessity of political action by the proletariat and of its dictatorship as the transition to the abolition of classes and with them of the state. . .” (emphasis added).

The transition period, then, is the period up to the establishment of the common ownership of the means of production. Again, in 1875 in his private notes on the Gotha Programme adopted by the unity congress of the German Social Democrats Marx wrote:

“Between capitalist and communist society lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat.”

Marx, we can note here, used the words “socialist” and “communist” interchangeably to refer to future classless society (if anything, he preferred the word “communist”, but we shall follow Engels’ later usage and employ the word “socialism” to describe future classless society based on the common ownership and democratic control of the means of production). The idea that “socialism” and “communism” were two successive phases of post-capitalist society is not to be found in Marx, but derives from Lenin. Thus, when Marx writes, in the above quote, of “communist society”, he means precisely the same as when he wrote of “classless society” in 1852.

It is true that Marx realised that, had socialism been established in his day, it would not have proved possible to implement immediately, or even for some years, the principle “from each according to his ability, to each according to his needs”, i.e. free access for all to consumer goods and services according to individual need. In the early years of socialism, established at this time, there would inevitably have had to have been some restrictions on access to consumer goods and services, some form of, if you like, “rationing” (if this word’s association with the war-time and post-war ration cards is forgotten, for although full free access according to need would not have been possible in 1875, the amount allocated for consumption could have been considerably higher than the workers were then getting under capitalism). Marx suggested as one such possible method so-called labour-time vouchers. It is important to realise that this was only a suggestion and, moreover, one open to serious objections. But Marx’s point was that, for some period of time, some method of rationing consumption would be necessary. He referred to the period of socialism during which this would be so, as “the first phase of communist society”, as compared with a “higher phase” in which free access to consumer goods and services could be implemented. Note that Marx is talking of different phases of the same society, society “based on the common ownership of the means of production”, i.e. a classless, stateless society with no wages or monetary system (Marx made it clear that the “labour-time vouchers” were not money, “no more ‘money’ than a ticket for the theatre” as he put it in Capital ). No doubt one could speak of a transitions from the “first” to a “higher” phase of socialism, but the fact remains that Marx did not employ the concept of “transition period” in this sense. For him, as we have explained, it was the transition from capitalism to socialism and not from one phase of socialism to another.

How long did Marx expect this political transition period to last? His opinion on this question changed over the period of his political life. In 1848, he clearly felt it would have to last quite some years. Thirty years later, he and Engels thought it could be considerably shorter, as a result of the tremendous development of modern industry in the intervening period.

The Communist Manifesto of 1848 speaks of the working class capturing political power and using

“its political supremacy to wrest, by degrees, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the state, i.e. of the proletariat organised as the ruling class; and to increase the total of productive forces as rapidly as possible” (emphasis added).

Marx and Engels go on to list various immediate measures which they and the other members of the Communist League felt the working class should take on coming to power, in order to make“despotic inroads on the rights of property”.

They conclude:

“When, in the course of development, class distinctions have disappeared, and all production has been concentrated in the hands of a vast association of the whole nation, the public power will lose its political character”. (emphasis added)

Clearly, in 1848, Marx and Engels expected the transition period to the establishment of common ownership and the consequent abolition of classes and the state to be fairly long. Engels, in his draft for the manifesto which was not used but was later published under the title Principles of Communism (and which is always a useful gloss on the Manifesto), stated this explicitly. Answering the question, “Will it be possible for private property to be abolished at one stroke?”, he wrote:

“No, no more than existing forces of production can at one stroke be multiplied to the extent necessary for the creation of a communal society. In all probability, the proletarian revolution will transform existing society gradually and will be able to abolish private property only when the means of production are available in sufficient quantity”.

It was not until later, after the wave of revolutionary enthusiasm of 1848 had ebbed, that Marx and Engels worked out the full implications of this. They had been saying, in effect, that the establishment of socialism was not possible in 1848. Engels, in 1895, in an introduction to some articles Marx had written, in 1850, on French politics, openly stated this:

“History has proved us, and all who thought like us, wrong. It has made it clear that the state of economic development at that time was not, by a long way, ripe for the elimination of capitalist production.”

Engels was clearly correct on this point. Capitalism, as Fritz Sternberg has pointed out, was then dominant only in one country:

“When Karl Marx and Friedrich Engels wrote ‘The Manifesto of the Communist Party’, – that is to say, about the middle of the nineteenth century – capitalism was dominant only in England; the United States was still a colonial country, in which the agricultural population far outnumbered the industrial; in Europe, the beginnings of capitalism were confined to the west – in Germany, for instance, pre-capitalist forms of production were still dominant; Russia and Japan were still feudal states; and there were relatively few points on the Asiatic coastline which were in contact with those occidental countries in which capitalist development had begun.To say that, at that time, perhaps 10 per cent of the world’s population were engaged in capitalist production is probably an optimistic estimate.”

If socialism wasn’t possible in 1848, this raises the interesting question (clearly relevant for later attempts to establish “socialism” in a single, backward country): What would the working class, or rather a determined group of Communists, have been able to do in the unlikely event of them having gained control of political power at that time? Surely, only to develop capitalism. In fact, the measures listed at the end of Section II (“Proletarians and Communists”) of the Manifesto, and referred to above, could accurately be described as being of a state-capitalist nature. Many of them have since been implemented in openly capitalist countries (progressive income tax, state bank, nationalisation of railways, free education, prohibition of child labour, etc.), thus indicating that there was nothing inherently anti-capitalist about them.

Neither Marx nor Engels went quite so far as to repudiate these measures, or to state that the Communists of 1848 were wrong to have imagined that they could even capture political power, let alone establish socialism at that time. But this is what Engels wrote in 1872 of these measures:

“. . . no special stress is laid on the revolutionary measures proposed at the end of Section II. That passage would, in many respects, be very differently worded today. . . this programme has in some details become antiquated.”

Also, writing in 1850, Engels discussed the fate of Thomas Munzer, as the leader of a communistic party coming to power before conditions were ripe for establishment of a communistic society. This passage is worth quoting extensively:

“The worst thing that can befall a leader of an extreme party is to be compelled to take over a government at a time when society is not yet ripe for the domination of the class he represents and for the measures which that domination implies. What he can do depends not upon his will but upon the degree of antagonism between the various classes, and upon the level of development of the material means of existence, of the conditions of production and commerce upon which class contradictions always repose. What he ought to do, what his party demands of him, again depends not upon him or the stage of development of the class struggle and its conditions. He is bound to the doctrines and demands hitherto propounded which, again, do not proceed, from the class relations of the moment, or from the more or less accidental level of production and commerce, but from his more or less penetrating insight into the general result of the social and political movement. Thus, he necessarily finds himself in a unsolvable dilemma. What he can do contradicts all his previous actions and principles, and the immediate interests of his party and what he ought to do cannot be done. In a word, he is compelled to represent not his party or his class, but the class for whose domination the movement is then ripe. In the interest of the movement he is compelled to advance the interests of an alien class, and to feed his own class with talk and promises, and with the assertion that the interests of that alien class are their own interests. He who is put into this awkward position is irrevocably lost.”

Marx himself had written something similar in October 1847 (a few months before he and Engels wrote the Manifesto) :

“If the proletariat destroys the political rule of the bourgeoisie, that will only be a temporary victory, only an element in the service of the bourgeois revolution itself, as in 1794, so long as in the course of history, in its ‘movement’, the material conditions are not yet created which make necessary the abolition of the bourgeois mode of production and thus the definitive overthrow of bourgeois political rule.” (Marx’s emphasis)

Is it too much to say that, had Marx and Engels and the others in the Communist League come to control political power in 1848, that, not being able to establish socialism, they would have been “irrevocably lost”, in that they would have had no alternative but to develop capitalism (even if in the form of a state capitalism)?

In any event, this situation never arose, nor was it even a remote possibility. In exile in London, Marx and Engels soon realised the futility of communists plotting to seize political power in the immediate future, and turned to concentrating on the long, hard task of preparing the working class to organise itself to capture political power.

After 1848, modern industry made great advances. In 1847, Engels had written of the means of production not being available in sufficient quantity to permit the immediate, or even rapid, establishment of socialism. A quarter of a century later, in 1872, he was writing :

“...it is precisely this industrial revolution which has raised the productive power of human labour to such a high level that – for the first time in the history of mankind –the possibility exists, given a rational division of labour among all, of producing not only enough for the plentiful consumption of all members of society and for an abundant reserve fund, but also of leaving each individual sufficient leisure so that what is really worth preserving in historically inherited culture – science, art, forms of intercourse – may not only be preserved but converted from a monopoly of the ruling class into the common property of the whole of society, and may be further developed.”

And six years later, in that part of Anti-Dühring later published as the immensely popular pamphlet Socialism, Utopian and Scientific :

“The possibility of securing for every member of society, by means of socialized production, an existence not only fully sufficient materially, and becoming day by day more full, but an existence guaranteeing to all the free development and exercise of their physical and mental faculties – this possibility is now for the first time here, but it is here.” (Engels’ emphasis)

In other words, it was Engels’ opinion that by the 1870’s, contrary to the situation in 1848, “the state of economic development was . . . ripe for the elimination of capitalist production”. While he might not have answered the question, “Will it be possible for private property to be abolished at one stroke?” with a ‘yes’, he would certainly have answered that it could be abolished (i.e. common ownership, and a classless society established) fairly rapidly. The principle is clear here: for Marx and Engels, the higher the level of development of the means of production, the shorter the political transition period needed to make them the common property of society as a whole.

Engels was exaggerating when he wrote in 1872 that the means of production could then have provided “enough for the plentiful consumption of all members of society and for an abundant reserve fund”. Certainly, they could have provided enough to completely eliminate material poverty and to raise the consumption of all well above the level they had to endure under capitalism, but it would not really have been possible to implement the principle of “from each according to his abilities, to each according to his needs”. Engels, or course, recognised this, and it was precisely Marx’s point as well in his notes on the Gotha Programme about the inevitability of some limitations on free consumption in the “first phase” of socialism.

Having discussed the question of how long Marx and Engels expected the political transition period between capitalism and socialism to last, we can now ask, how long did they think the transition (as one might want to call it) between the “first” and “higher” phases of socialism itself would take. This is something they don’t seem to have discussed, but it is clear that the same principle applies: the higher the level of development of the means of production, the shorter the period.

One thing is clear, though, that the development of the means of production during this period would be on the basis of the common ownership and democratic control of the means of production, and the consequent abolition of the market, money, buying and selling, wages, profits, etc, The “first phase of communist society”, like the higher phase, would be a non-market society in which production would be consciously planned to satisfy human needs. What would be produced would be useful things, for direct allocation to democratically-decided social uses (individual consumption, collective consumption, expansion of productive resources, reserves, etc.). What Marx called “commodity-production”, the production of goods for sale on a market, would not exist; indeed could not exist without the society ceasing to be socialist.

Marx repeatedly made it clear that socialism, in both its phases, was a non-market, production-solely-and-directly-for-use society. The Communist Manifesto specifically speaks of “the Communistic abolition of buying and selling”, and of the abolition not only of capital (wealth used to produce other wealth with a view to profit), but of wage labour, too. In Volume I of Capital Marx speaks of “directly associated labour, a form of production that is entirely inconsistent with the production of commodities ...”, and, in Volume II, of things being different “if production were collective and no longer possessed the form of commodity production. ..”. Also, in Volume II, Marx, in comparing how socialism and capitalism would deal with a particular problem, twice states that there would be no money to complicate matters in socialism: “If we conceive society as being not capitalistic but communistic, there would be no money-capital at all in the first place. ..”, and, “in the case of socialized production the money-capital is eliminated”. In other words, in socialism the production and distribution of wealth is solely a question of organisation and planning.

It is precisely Mandel who is the most influential and able opponent of Marx (and the others who have agreed with him, notably Bordiga) on this point about the entirely non-market nature of the “first” phase of socialism. In his essay Economics of the Transition Period, Mandel notes that,

“Immediately following the victory of the October Revolution, and especially in the period of War Communism, the Communist theoreticians saw the construction of a socialist economy primarily in terms of an immediate and general disappearance of the market and monetary economy.”

Significantly, he does not question why this should have been, since this would have led him to have to admit that, on this point, the Bolshevik thinkers were in the Marxist tradition.

Mandel goes on to state that in Russia it soon appeared that “maintaining money and market relations was best suited to maximising economic growth and to the best defense of the interests of the workers as consumers” and to conclude by formulating the following general law:

“The survival of market and monetary categories thus proves inevitable during the period of transition from capitalism to socialism.”

(Actually, what the experience of Russia under so-called “War Communism” proved was that isolated Russia was ripe at that time only for some form of capitalism – with its “market and monetary categories” – and not for socialism). Mandel accepts socialism as a world-wide, classless, stateless, moneyless, wageless society (to define it somewhat negatively). As he wrote in The Inconsistencies of State Capitalism :

“Socialism means a classless society. It therefore presupposes not only the suppression of private property of the means of production, henceforth managed in a planned way by the associated producers themselves, but it also calls for a level of development of the productive forces which makes possible the withering away of commodity production, of money, and of the state.”

and,

“The working class ... is not capable of building a socialist society in a single country, not even the USA (not to speak of Britain or Western Europe).”

All that can be established in the immediate future, says Mandel, is a third society neither capitalist nor socialist, which will have the aim of developing the means of production to the level where world socialism becomes possible as a society of abundance: a “transitional society” between capitalism and socialism, with its own social structure and economic laws different from those both of capitalism and of socialism. Mandel describes this so-called transitional society of his as follows:

“nationalisation of all the means of production under workers’ control, democratically planned economy, but still with commodity production of consumer goods, with the survival of money, with foreign trade, and with a workers’ army as long as the threat of strong bourgeois states subsists.”

This “transitional society”, like capitalism but unlike socialism, can be established on a national scale. In fact, says Mandel, it should be the immediate aim of each national working class (thus rejecting the Marxist view that the working class of all countries should be aiming at a more or less simultaneous world socialist revolution).

If Marx had really subscribed to this view, that there was another system of society –lasting for a whole “epoch” – between capitalism and socialism, it is curious, to say the least, that he never mentioned it. Nowhere, in fact, does Marx speak of any “transitional society” in between capitalism and socialism, or, to use some of the phrases employed by Mandel, “the epoch of transition from capitalism to socialism”, “a transitional-economy”, “the society in transition from capitalism to socialism”. He certainly spoke of a “political transition period” and of “a period of revolutionary transformation” between capitalism and socialism but, as we have seen, this was merely the period during which the working class would use its control of state power to establish the common ownership of the means of production, a relatively short political transition period, which would be shorter the higher the development of the means of production was at the time the working class won control of political power, and certainly not lasting an “epoch”.

Mandel tries to justify his position by identifying his “transitional society” with Marx’s “first phase of communist society” (despite the fact that the phrase “first phase of communist society” obviously means what is says: the first phase of communist, not some other, different, society). Marx, we have seen, did recognise the inevitability of some limitations on free consumption in the early stages of socialism (had it been established in the 1870’s), and did mention “labour-time vouchers” as one possible method of doing this. Mandel claims that whether these labour-time vouchers or money is used in these circumstances, is just a matter of choice. Money, he argues, is better because it allows workers, as consumers, more freedom of choice than would labour-time vouchers, or some system of physical rationing.

But, this is based on a complete misunderstanding of the Marxian theory of money. For Marx money was not a thing but a social relation, an economic category which existed on the basis of certain social relations between the producers, specifically, an exchange economy, reflecting the fact that production was not yet socialised but carried out by isolated individual producers – and later the fact that, despite socialized production, there was still private or sectional appropriation. He pointed out that “labour-time vouchers” were not money; they were simply pieces of paper entitling a person to draw so much from the stock of goods set aside for individual consumption. They did not circulate, nor did they reflect a relationship of private property. As Marx put it, in a passage in his notes on the Gotha Programme, – a passage incidentally quoted by Mandel in theCritique article – “within the co-operative society based on the common ownership of the means of production, the producers do not exchange their products.”

We do not want to defend the “labour-time voucher” system. Even for Marx’s day, it was inappropriate, suffering from numerous anomalies, only some of which Marx himself recognised. We would subscribe to the view that Marx’s criticism of schemes to introduce “labour-money” under capitalism, applies to some extent also to the scheme for “labour-time vouchers” in the early stages of socialism. But it is clear that Marx did not regard the use of money (a commodity that has come to be universally exchangeable with all other commodities) as an alternative form of rationing in the “first phase of communist society”. In fact, he would have regarded this as an absurd, contradictory proposal. We can imagine him lambasting Mandel in the same terms as he lambasted Proudhon for similar inanities!

Let us now return to the question of how long, after the establishment of socialism, some restrictions on free consumption would have to continue. Today, looking back, we can say that, had world socialism been established in the 1870’s, it might have taken about a generation before full free access to consumer goods and services, according to individual needs, could have been implemented. This estimate is based on the fact that it was by around 1900 that the effects of the so-called second industrial revolution – the application to production of the electric motor and the internal combustion engine – were beginning to be felt. Marx and Engels, remember, were judging the possibilities of socialism on the basis only of the first industrial revolution (the application to production of the steam engine). Marx, who died in 1883, never saw either an electric motor or an internal combustion engine. But of course every advance in technology made his case for socialism even more relevant.

By about 1900, thanks to this second industrial revolution, capitalism became the predominant world system. By “predominant” we don’t mean that capitalism existed all over the world, but merely that all the people of the world, even if they lived under pre-capitalist conditions, were decisively affected by the workings of world capitalism, 1900 marks, if you like, capitalism becoming a world system – a fact which some Marxist writers have described as its becoming “imperialist”. 1914, with the outbreak of the first world war in the history of mankind, was a bloody confirmation of this. To quote Sternberg again:

“Capitalist development had taken several hundred years to arrive at a stage at which perhaps 10per cent of the world’s population produced along capitalist lines, but within the two-thirds of a century which followed – approximately from the middle of the nineteenth century up to the outbreak of the first world war – capitalism became the dominant form of production not merely in one country, England, but all over the world, until perhaps between 25 and 30 per cent of the world’s population were producing along capitalist lines, whilst in Great Britain, the United States, Germany and Western Europe in general, capitalism held practically a monopoly of production. At the same time capitalist development had made considerable progress in Russia and Japan, although the remnants of feudalism still existed, whilst in the other Asiatic countries the pre-capitalist forms of production had been definitely undermined.”

We can, in fact, place the end of capitalism’s role in history – to create the material basis for a world socialist society of abundance – at this time. By 1900, capitalism had completely outlived its usefulness. From then on only the immediate establishment of world socialism has been “progressive”. From then on, in fact, world socialism – given, of course, the development of a majority socialist movement amongst the working class in the industrialised parts of the world –could have been established “at one stroke” by a more or less world socialist revolution.

Since 1900, the working class has still, it is true, needed to organise itself to capture political power in all the various states of the world, and, in this sense, a “political transition period” during which the working class uses state power to establish the common ownership of the means of production, is still necessary. However, since this period would be so short as to be negligible, the concept of a transition period has become outdated.

Similarly, though in the first few years of socialism, as the mess left by capitalism is cleared up, some restrictions on full free consumption may still be necessary, world socialist society could now move rapidly (i.e. in well under a decade at the most) to implementing free access to consumer goods and services according to individual need as the principle of distribution. To sum up, the concept of a “transition period”, lasting some years, between capitalism and socialism is today an obsolete 19th century concept, while the ideal of a “transitional society” between capitalism and socialism, as proposed by Mandel, was never to be found in Marx in the first place.

Adam Buick