Marx's conception of socialism - Part 1 (1983)

From the July 1983 issue of the Socialist Standard

(The following is a transcript of a talk given earlier this year.)

As Marx envisaged society moving forward from capitalism to socialism, anything he had to say about the society of the future is of interest, but it is important to notice two things about what he said. Firstly, he never set out a comprehensive outline of socialist society. Secondly, he made scattered incidental references to the society of the future at different times in his life and in dealing with different subjects, so a lot of these ideas are in the air, as it were, and we have to do our own thinking about them.

About never having set out a comprehensive view of socialism, one of his French critics of Capital asked Marx why he didn't write “recipes for the cook shops of the future”. Marx accepted that he was not doing so. Marx was not outlining future society and he explained what he meant about this. In The German Ideology he said this: communism (by which we mean socialism) “is not for us a state of affairs, an ideal to which reality will have to adapt itself. We call Communism the real movement which abolishes the present state of things, and the conditions for this movement result from the premises now in existence". What Marx meant by “movements” we find in what he set out in his introduction to Capital. This “movement" was the economic laws of motion of modern society and he explained that his purpose in writing Capital was to discover these economic laws. So the only worthwhile ideas you can have about socialist society have got to be related to what Marx insisted was the existing state of society. You cannot just pluck these ideas out of the air.

This introduces an immediate complication. You have Marx or Engels writing in 1848 or even earlier, producing ideas about the socialist future, but the existing state of affairs is very different now to what it was in 1848 and also different to what it was in 1875. In his 1867 preface to Capital, where he referred to the progress of the Trade Unions. Marx talked about “a radical change in the existing relations between Capital and Labour". They show that the present society (that is capitalism) is no solid crystal but an organisation capable of change, and is constantly changing. So whatever was in Marx’s mind in 1848, he would have thought differently in 1875, and we of course would have to think differently now.

One thing to notice about this in the Communist Manifesto is that Marx and Engels talked about the “spectre of communism haunting Europe”, but in fact they did not think that there was the slightest possibility of communism being established at that time. This is clear from a reference they made in the Communist Manifesto to the “utopians". They criticised the “utopians" on the ground that "the economic situation does not as yet offer to them the material conditions for the emancipation of the proletariat”. What was true of the “utopians" was also true of Marx and Engels. They were looking in the future in the light of the unready conditions of the time. So, in fact, socialism was not a practical proposition at that time.

In 1848 there was inadequate development of the productive forces, which is one of the things Marx meant when he said that the material conditions were not present for the establishment of communism. In addition to this, in Europe as a whole in 1848, the peasants vastly outnumbered the workers, so the working class was not in a position to do anything democratically anyway. They were outnumbered, and as well as this the working class were not socialists: they had not reached the level of maturity to make it possible to contemplate introducing socialism. This is what Marx and Engels meant when they criticised the “utopians".

I want here to throw in a suggestion of my own and in excusing doing it I would say that this whole field is speculative and therefore one person's speculation is as good as anybody else’s. You have the idea put forward by Marx of “the dictatorship of the proletariat”. They anticipated this in the Communist Manifesto and they also put it forward in 1875. I would say that the obvious explanation was that they were looking at a world in which the material conditions did not exist for the emancipation of the proletariat. As late as 1891 you will find Engels in a letter to Bebel, writing about the possibility that the working class might get power prematurely. He did not rule this out. He said that in the event that we might take power prematurely we shall have to use “terror". It was directed in this case against what he called the technicians, as he described the people with technical training. My own comment on this is that we should throw the whole thing overboard and have nothing to do with it in any circumstances. It does not matter how Marx or Engels may have later on tried to interpret or explain away "the dictatorship of the proletariat”, we do not contemplate that the working class shall take power prematurely to get socialism, so I think we should write the whole thing off and have nothing whatever to do with it.

I have mentioned the fact that, as Marx said, capitalism changes and conditions develop, but in the Communist Manifesto Marx and Engels wrote about some things which they said existed but which in fact did not exist. They talked about for example the world market being established and it had not. It has been a slow development for the world market to really become a world market. They also talked about society being divided into two great classes, the bourgeoisie and the proletariat. It was developing that way, and you could have said it about some countries, but they were anticipating something that would happen later.

In the Communist Manifesto you will find Marx and Engels putting the view, for which they have been often criticised, that average wages were nothing more than bare subsistence. This was a legitimate comment on capitalism at that time but it has long ceased to be true. Marx and Engels recognised this fact. You will find Engels in 1895 in the preface to the Condition of the Working Class in 1844 looking back and saying that there had been a remarkable improvement in the standard of living of the workers in the big trade unions.

Marx, of course, allowed for this to happen. In Value, Price and Profit he says that the division between wages and profit depends upon the "respective powers of the combatants". The fact that there has been a change in the distribution of the national income since 1865 when Marx wrote about it has a bearing on how you get from capitalism to socialism and I will explain later why I think this is important.

In coming to the question of production under socialism, in the Communist Manifesto, Marx and Engels said that the first task of socialist society would be "to increase the total productive forces as rapidly as possible". Marx returned to this again in the Critique of the Gotha Programme in 1875, where he attacked what he called "vulgar socialism” for thinking that the question of socialism turns mainly on the question of distribution. Marx developed his view on this in volume 3 of Capital and he also touched on it elsewhere. Marx described depressions in which a certain number of industries overproduce in relation to their particular market. Marx went out of his way to demonstrate that the fact that capitalists produce more than they can sell at a profit has nothing whatever to do with the quite different question: "Do they produce enough for the needs of the population?”

Marx said that capitalism never had produced enough to meet what he called the wants of the whole population "decently and humanely". It is still true that capitalism does not produce enough for the mass of the population. This is as true now as it was when Marx wrote about it. The point is that the first task of socialism would be as Marx and Engels said, to increase as rapidly as possible the production of socially useful consumption goods and services. Undoubtedly, powers of production have increased since 1848 and they have increased since 1867, but if we look at the fact that since 1867 the working class share of national income has

increased, the problem has not become less important, it has become more important, because there is less available for the working class to take out of the existing level of production.

There is another question here. Marx in his early life, and Engels in his later life, greatly exaggerated what the existing powers of production are. Marx corrected himself, more or less, but he still had an exaggerated idea. The relevance of this is that if you have an idea of the existing powers of production and the rate at which they are increasing which is greatly exaggerated, you are on very dangerous ground when you try to look at what has to be done in socialism. You are assuming that you have got productive powers which don't exist.

Getting the needle

In his early days Marx was quite wrong, but this was before he had worked out his labour theory of value. In The Poverty of Philosophy in 1847, he accepted a statement by Proudhon, that in the 70 years between 1770 and 1840, the average output of each worker had been multiplied 27 times. In fact it might have perhaps doubled. It is understandable that Marx should think like this because a whole lot of economists were in the same error. If any of you take the trouble to look up Adam Smith's fairy story about the pin factory in the first chapter of the Wealth of Nations you will find Adam Smith talking through his hat about productivity.

He was talking about the supposed increase of production that comes through division of labour. He goes through his pin factory and imagines pin workers, taking the wire and dividing the cutting and sharpening into 18 separate operations. Adam Smith ends up by saying that it will be seen that the output of the worker has been multiplied by 240 or possibly 4,800 times. If you were to ask somebody for a quotation for a job and he were to say. “Well, £240 — or perhaps £4.800," you would say that he does not know anything about it. and Adam Smith didn't know anything about it!

Where Marx went wrong in his early life, and Engels went wrong afterwards, was that they worked out productivity as Adam Smith did — that is, they worked on the assumption that pins are made in pin factories. But they are not. Pin factory workers started with wire and at a guess about nine-tenths of all the labour involved in making pins has already been embodied in the wire before it gets to the pin factory. Imagine that there are 100 workers producing millions of pins, and that ten of them work in pin factories. If you can cut the number of workers in the pin factories from 10 to 5, Adam Smith would say that this is a 100 per cent increase in productivity. But the real reduction in the number of workers is from 100 to 95, in other words it is an increase of about 5 per cent.

This is a vital question because if you are going into what socialism has got to do you have got to know what the productive powers are. Concerning the real rate of increase in production, taking 1970 to 1980, the official overall figure is that productivity per worker in those ten years increased at the rate of about 1¼ per cent per year. This is something that you can work with. The important thing to notice is that Marx, in Value, Price & Profit, explained the real basis for calculating productivity. He emphasised that in any production you must not only look at what he called the final process like the making of pins from wire. You have to look at the whole process from the beginning, the mining of the ore. the smelting, the transport, the engineering, buildings and therefore the whole lot. That was the way to look at productivity and its increase.

Arising out of this idea of how you are going to increase productivity, and what the powers of production are. Marx also looked at the question of work and leisure.

In Capital, Vol. 1, page 581 (Kerr edition), Marx emphasised that the capitalist had unlimited leisure, achieved by “converting the whole life time of the masses into labour time". He contrasted this with socialist society in which the time that society is bound to devote to material production is shorter. As a consequence, the time at its disposal for “the full development intellectual and moral of the individual" is greater. Under capitalism the workers work and the capitalists are idle, their time is leisure. With socialism everybody works so that the amount that each needs to work is less. But Marx did not look at this as a simple proposition, as some people would have it, that in socialism we will simply aim to work less and less and have more time for leisure. He did not take this view at all.

You will find that in the Critique of the Gotha Programme Marx used the phrase "when labour is no longer the means to live, but is in itself the first of vital needs". Marx is saying that labour is a vital need along with food, clothing and shelter and education. It will be remembered that with this phrase “from each according to his ability — to each according to his needs”, the original version had put the need first. Marx reversed it, and he did so because he attached great importance to "from each according to his ability" which is in line with this statement that “labour is in itself the first of vital needs”.

Marx also made some reference to the problem of the extent to which socialist society will have to choose between what in the capitalist world would be producing consumption goods and producing capital goods. In socialist society there will not be capital goods but the problem will still remain. Under capitalism, if you want to expand some industries you have to withdraw labour and material from producing consumption goods. It's true that later on you can increase productivity and get more consumption goods, but in the first place you have capital investment by withdrawing labour and materials from the production of consumption goods. Marx pointed out that the same problem will exist in socialism.

Socialist society will have the problem of deciding how much of its productive resources will be devoted to consumption goods and how much will be withdrawn from producing consumption goods to be devoted to long term projects designed to increase the production of consumption goods in the future. Marx used as an example the railways, which he said “do not produce any useful effect for a long time — a year or more.” Marx didn't know about modern capitalism, they would take far longer than a year if they were at it now. A similar idea was put in the Critique of the Gotha Programme where Marx points out the amount of annual production that has to be provided for the maintenance and extension of the means of production, and also the provision of reserves of goods to meet destruction arising out of natural catastrophes. He pointed out that capitalism always has to produce more of everything than actually reaches the market. Some of it gets destroyed by deterioration, there are earthquakes and floods and so on, and Marx is saying that with socialism you will have the same problem. You won't be able to abolish earthquakes by resolution. So society will have to set aside labour and resources for developing its productive forces and also to maintain a reserve against natural catastrophe.

Another remark made in the Communist Manifesto which has got a very modern ring, is that socialist society will have to devote some of its energy to bringing into cultivation waste lands and the improvement of the soil generally. Marx and Engels had already put on record in 1848. in the Communist Manifesto, that socialism involves the abolition of buying and selling, it involves the abolition of the wages system, and that in other words, socialism means what we would describe as having “free access". But in the Critique of the Gotha Programme Marx also put forward the idea that you could not go straight into what he called the higher phase of communism. Society, as it emerged from capitalism had to go into a lower phase, when as he said, it was suffering from what he called a narrow bourgeois outlook. He wasn't talking about the narrow bourgeois outlook of the capitalist, he was talking about the narrow' bourgeois outlook of everybody, including the workers. Marx said from this that you would have to have a labour voucher system.

Labour vouchers?

He said that in this "lower phase", because production wasn't enough for “free access" that is unrestricted free access, and also because people would suffer from a “narrow bourgeois outlook” and would not know how to run socialist society, you would have to have a labour voucher system. Every individual would work and would be issued with a labour voucher according to either the duration or intensity of the work. On the strength of whatever was marked on the paper the individual would withdraw consumer goods from the communal store.

My reaction is this, I know a lot of people treat it seriously, but I think we should throw the whole thing overboard for various reasons. We do not contemplate that the working class will take power for socialism while they are all suffering from a “narrow bourgeois outlook". In 1875, Marx and Engels knew that the material conditions for socialism did not exist, not in our sense of the word, nor in their long term sense of the word. Therefore they were saying that we would have a “dictatorship of the proletariat" which however way you interpret it means that you are basing it on the fact that there is a “narrow bourgeois outlook”.

Marx dodged all the real questions here. He says that you give people labour vouchers based either on duration or intensity of work. In spite of all the experts who deal with job evaluation and so on. I do not know for most industries any way at all by which you can measure the intensity of every individual’s work. There are some industries where you can look at the quantity produced in a day or a week or something like this, but Marx himself then goes on to say that this will result in some people having a higher standard of living than others because, to use his words, some individuals are mentally or physically superior to others and can therefore produce more in a given time or work longer hours.

I think we should reject the idea. Who is going to have the authority for issuing these tickets, how is it going to be done, and how is it going to satisfy these workers with a “narrow bourgeois outlook"? Imagine saying to half the workers, "of course you are going to have a higher standard of living than the other half".

Marx also mentioned that, apart from some people being mentally and physically superior to others, some would have larger families than others, so that as for 40 hours work, they both get the same, the ones with the larger families would all be on a lower standard of living. How did Marx contemplate making the dissatisfied workers accept this; how is he going to prevent them from raiding the food store or forging tickets or something like this? I would say that as we are not contemplating socialism coming when there is a "narrow bourgeois outlook”, we should have nothing whatever to do with it.

However, we do not get rid of one problem. This is the problem that in the early stage of socialism there will be not enough produced to have “free access" in our sense of the term. We have got to accept that there won’t be enough for free access all over the world.

We have also got to accept that sometimes there are big differences between the standard of living of some workers and the standard of living of others.

I read from The Times correspondent that he reckons that the highest paid craftsmen in this country are what he calls compositors working with obsolescent lino type machines who are getting £548 a week and they are working alongside people who are getting £70 or £80 a week. Well, imagine Marx with his labour voucher system going to these compositors and saying: “Well, of course, you will have to come down to some more realistic level for the time being".

I would suggest that as we don’t accept that there will be a “narrow bourgeois outlook” we are saying that the workers in the mass understand socialism, know what they are doing and know what their responsibilities are. That faced with the problem that there are 1,000 million people in the world in absolute poverty and that there are workers ranging from quite high standards of living down to a very low one, that with the advent of socialism, the obvious thing to do with the production problem is this. That it would be put to the workers that we are going to have free access, but the administrative organisation, whatever it is. appeals to the workers on a high standard of living: "Don’t take advantage of it”. In fact, ask them, in the early days of socialism, not only “don’t take advantage of it” but accept a lower standard of living and devote your energies, if necessary work longer, to try to help the people in the rest of the world who are on a standard of living far below you. This is the only socialist answer to this problem.

Edgar Hardcastle

(To be concluded next month.)

Where Was Britain Going? (1967)

From the August 1967 issue of the Socialist Standard

History is a weapon in the hands of a Socialist party. But for capitalist parties it is just an embarrassment, especially when the record of their own blunders and compromises is recalled. Apart from minor errors, our party's analysis of political events and social developments has been correct throughout the sixty odd years we have been working for Socialism. The pamphlets and the articles in the Socialist Standard which our early members were writing before the first world war still make impressive reading today. Take just one example, this appraisal of state-capitalism which some French social-democrats were advocating as a step towards Socialism years before Lenin seized power in Russia :

"They are for State capitalism or collective exploitation. We are not concerned with State capitalism. Consequently State capitalism cannot be the ideal of any Socialist. Ergo those who preach State capitalism or collective exploitation are not Socialists." (Socialist Standard, December 1906)

Reformist organisations, on the other hand, prefer to forget many of their earlier publications—simply because their theories and strategies now look ridiculous in retrospect. Thus the 'Socialist' Labour Party, which is currently denouncing the Soviet Union as a "bureaucratic despotism", published Lenin's State and Revolution back in 1919 under its subtitle of "Marxist teaching on the State and the task of the Proletariat in the Revolution." Another example is Trotsky's Where is Britain Going? which the 'Communist' party brought out in 1926, shortly before its author fell from grace. Palme Dutt's review of this book, written a few months before he became a rabid Stalinist, now makes amusing reading. He said: "A challenge may safely be issued to the critics to name a single book by a single English author or politician, 'bourgeois or Labour leader, which is as close to the essentials of the English situation as Trotsky's book. It can-not be done."-(Labour Monthly, 1926-quoted in B. Pearce's Early History of the Communist Party of G.B.)

Where is Britain Going? has been republished by the 'Socialist' Labour League because of its "remarkable" qualities. It is therefore interesting to see how the ideas expressed in it have, stood the test of time.

Certain of Trotsky's predictions are now only worth mentioning because of their period flavour. For example, he was anticipating an outbreak of hostilities between America and Britain on the grounds that "the fundamental antagonism of the world" was that between these two countries. In fact, there was nothing unorthodox about Trotsky's position on this point. At the time this was the official Comintern assessment and, when Karl Radek reported along these lines to the executive committee of the Communist International in 1923, his speech was reprinted by Communist parties under the title 'The International Outlook'.

What really interests us, however, are Trotsky's ideas on Socialism and the form which a Socialist revolution will take in Britain. Like the rest of Lenin's followers he was committed to the unscientific notion that "socialism is nothing 'but state capitalist monopoly made to benefit the whole people". He made it quite clear that, if the Communist party gained control in Britain, the military arm of the State would persist for "many years ahead" and that production would continue to be geared to the market, with "the exchange of goods, products, and services between . . . complementary countries . . . (our emphasis). For some reason, which he never got round to explaining, all this "would raise to an unheard- of height the material and mental well-being of the working classes …”

Trotsky wrote this book in April, 1925 when there had been only one Labour government in Britain. The sorry mess that MacDonald had made of things during 1924 convinced Trotsky that the rank and file members of the Labour party would push for more radical policies and that "a great deal less time will be necessary to turn the Labour Party into a revolutionary party than was needed for its creation." The first Labour government had been in the minority in the House of Commons and, since this prevented it from pushing through any major reforms, it mainly restricted its activity to threatening striking workers and 'building warships. Apparently Trotsky felt there was revolutionary potential in such a programme because he summed up the 1924 government in the following terms: "The first experience of the Labour Government with all its paltry lack of talent was none the less an important historic warning for the ruling classes." How much nearer the mark was Clynes, one of the right- wing Labour leaders whom Trotsky attacked, when he reminisced about the same administration: "There was nothing in: the Labour Government's record of 1924 to which any Liberal could turn with real disfavour ."

Trotsky mocked the Labour leaders also because they refused to use violent methods. This nonsense he was sure would be knocked out of the Labour Party when it found itself with a majority in Parliament and eager to push through the nationalisation of basic industries. It is obvious from what he wrote that he completely failed to understand the nature of nationalisation and even went so far as to imagine that it represented an attack on private property. He emphasised that there could be no peaceful takeover by the State because "only an utter fool may not comprehend that the bourgeoisie will bring into action heaven, earth and the infernal regions in the event of the' actual coming to power of a Labour Government." History, of course, has made Trotsky look the "utter fool."

The 1945 Labour government, with its massive majority, did enforce a number of state capitalist reforms of the type which Lenin himself had been demanding immediately prior to the October revolution (nationalisation of banks, coal etc.) The capitalist class, with a good deal more sense than Trotsky, recognised these for what they were — a reorganisation of property society which left its basis unaffected. In fact, Lenin had pointed this out years before in his The Threatening Catastrophe and How to Avoid It—written between September 23-27, 1917. There he talked about nationalisation in general and of the banks in particular: "If nationalisation of the banks is so often confused with confiscation of private property, the dissemination of this confusion of terms is to be blamed on the bourgeois press, to whose interest it is to deceive the public." Clearly it was not just the general public, the 'masses' of whom Lenin has such a low opinion, who were deceived but one of the top leaders of the supposedly omniscient, revolutionary vanguard itself.

Apart from wild predictions about the revolutionary prospects of the Labour party, the main task which Trotsky set himself was to wean the working class of its respect for bourgeois democracy. The limited democracy which workers have won for themselves under capitalism (the vote, freedom to organise trade unions and workers' parties) is dismissed by him as a mirage—"Between its own property and the revolutionary proletariat the bourgeoisie raises the screen of democracy." In his anxiety to emphasise this point Trotsky repeatedly contradicts himself; thus on page 89 universal suffrage is contemptuously dismissed as "the asses' gate erected . . . by the bourgeoisie", while on the previous page he admits that “in the period of Chartism and right down to 1868 the workers in Britain were completely deprived of electoral rights…" Significantly, he fails to explain why the capitalist class should wish to deprive workers of "the asses' gate" supposedly erected by itself.

The Communist party of 1926 was ready to publish Trotsky's work because at this time his name still carried the prestige of one who had led a successful revolution. But the question is--what sort of revolution? The Bolshevik uprising of October 1917 marked the final destruction of the remnants of feudal power in Russia and the ground was then cleared for the country to industrialise on a state capitalist basis. Trotsky's political experience was of a capitalist revolution and he looked at England through the eyes of the bourgeois revolutionary. His conception of political organisation was exactly that which Engels had dismissed as being already outdated in 1895—"conscious minorities at the head of unconscious masses".

His advice to the working class in Britain was that they should take on the capitalist state in an armed insurrection. The Socialist Party of Great Britain claimed that such a course would be suicidal. We argued that the first stage in a Socialist revolution is for workers to use their vote as a class weapon in order to capture political power. This done, and with the State in its hands, the working class can set about stripping the capitalist class of its wealth. The workers in Britain in 1926 were not Socialists, but the fact that they rejected the Bolshevik strategy of attempting a putsch proved that they had more political insight than Trotsky and adventurers like him.

Leadership grows out of ignorance. But, as Trotsky clearly showed, ignorant followers produce even more ignorant leaders.

John Crump

The Importance of Marxism—(continued) (1940)

From the May 1940 issue of the Socialist Standard

In last month's Socialist Standard we dealt in some detail with Marx's important discovery—the materialist conception of history. We showed that this conception was a scientific guide to the interpretation of historical events. In the light of this discovery, capitalism is depicted as a passing phase of social development and Socialists as pioneers of a new and more progressive order of society. This primary aspect of Marxism does not, however, exhaust the range of "Scientific Socialism." The extremely complicated internal structure of capitalism stands also in need of analysis, for unless we understand the working of this mechanism our demand for a Socialist society can rest only on historical foundations. It is Marx’s complementary discoveries in the realm of political economy that have ranked Socialist theory as an economic as well as an historical science.

Introduction

If the reader were to take a bird's eye view of our present economic system he would see it as an intricate network of establishments embracing industry, commerce, finance, law and social administration. Having thus surveyed capitalism, the first question that would most probably occur to his mind would be, " How does such an involved structure keep intact?" or, to express the same point in the language of economics, “What are the economic laws of this mechanism?" This very question may be said to be the subject matter of inquiry of Political Economy, the science that deals with the nature of wealth and the laws that govern its production and distribution. As Marx's concept of value and surplus value can really only be clearly understood when viewed in relation to Political Economy, it is desirable for us to consider the aim, scope and historical background of that science. By presenting the subject in this manner we shall enable the reader to more readily grasp the full import of Marx's economic discoveries.

Theory of Value

The central theme of Political Economy is the theory of value—a theory intended to solve the riddle of what it is that determines price. Why, for instance, should a diamond generally cost more than a hat, or a jeweller receive a higher price for his services than does an agricultural labourer? Problems like these have occupied the attention of economists for centuries.

There is one proposition, however, upon which practically all economists, prior to and contemporary with Marx, have been in agreement, viz., That the average price of an article is regulated by a certain standard, which may be called the article's real value. As a matter of fact, all of us in our daily experience recognise such a standard, for we frequently use the expression "value" in an economic sense during current conversation. We often say, for example, "I've paid more for this article than it's really worth," or conversely, “I've received splendid value for money."

Current Theories of Value

If the reader were to ask the Economic League what determines the value of a commodity he would meet with a reply we have so often received, viz., The value of an article is what it will fetch.

The Economic League are not the only ones to advance this proposition.

The columns of the Catholic Herald have contained a similar thesis in an article devoted to refuting Marxism.

Samuel Butler put it forward in verse in his work " Hudibras," more than two centuries ago, when he wrote: —

“The value of a thing
Is just as much as it will bring."

There may be some justifiable excuse for Samuel Butler and the Catholic Heralds but not so for our modern economists, whose reply surely begs the very question that was raised.

For what a thing will fetch is neither more nor less than its price! Value and price must therefore be considered identical.

But, then, the question still arises, “What determines this value or price?" Does the Economic League think there is any determinant? If not let them explain why a house costs more than a loaf of bread.

Let us leave this fallacy and turn our attention to a much more widespread but equally mistaken notion—the view that supply and demand determine the value or price of an article. In this connection one thing is quite true. If the supply of goods exceeds the demand for them market prices will fall; conversely, where demand exceeds supply (instance torches to-day) market prices will rise.

But let us assume a case where supply and demand are equal.

For example: There are six customers in a shop, each of whom, shall we say, demands a tin of biscuits, and the shopkeeper has precisely six tins of biscuits to sell. What happens in these circumstances ?

Will the shopkeeper charge no price for his wares, just because supply and demand happen to be equal—or will he possibly ask one of his customers to walk out of the shop so as to enable him to fix a price?

Actually, of course, the average price of an article is fixed prior to supply and demand. The latter are factors which send the market price sometimes above the average and at other times below, but they no more determine the height of the average price of a commodity (i.e., the price considered, in normal circumstances, over a given period) than the oscillations of the waves of the sea determine the height of the sea level.

Besides—to those who contend that prices are determined by supply and demand, we would pose the following question: What determines supply and demand?

Finally, let us not omit a reference to the theory of marginal utility.

It would take us too far afield to enter into all the manifold aspects of this modern bourgeois theory, so it must suffice to point out the following:—

Utility, whether marginal or otherwise, cannot possibly serve as an indication of the magnitude of value, for utility itself cannot be measured.

How are we to ascertain, for example, how much more utility there is contained in a diamond than there is in a roll and butter ?

Moreover, quite apart from being an objective measure of value, utility cannot even serve as a subjective measure of value for the capitalist. For it is precisely because the goods his workers have produced are absolutely useless to the capitalist personally that he exchanges them for money. In fact, the ironical part about it all is that their only use value is to him their exchangeable value. And this conclusion alone would lead us to reverse the notion that attributes the exchange-value of an article to its use-value, which is the essence of the theory of marginal utility. Moreover, bootlaces are certainly much more useful than battleships (at any rate, in peace time!), but to the best of my knowledge they have never commanded a higher price. An objection may be here raised that I have merely emphasised one aspect of the theory of marginal utility. I am aware of the fact that there are various schools of thought on the question—that there are some who interpret marginal utility to mean “final demand" and others who include in their idea of utility the concept of “cost of production." These points, however, have already been met in other sections of the article.

Man on Value

According to Marx . . .

That which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour-time socially necessary for its production. . . . As values, all commodities are only definite masses of congealed labour-time. — (“Capital,” Vol. I, page 46, Modern Library Edition.)

On the same page he says: —

The labour-time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.”

He then gives the following example of the theory: —

Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour time. Consequently much labour is represented in a small compass . . . If we could succeed, at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks.” (Page 47.)

We shall elaborate on this labour theory of value in a later article. Here we wish to draw attention to the formulation of this concept by economists before Marx—to the evolution of the theory, so to speak.

The Labour Theory of Value Before Marx

One of the first to grapple with the problem of value was Sir William Petty (1623-1687), Governor- General of Ireland. Petty has been called “the father of Economic Science." In his “A Treatise on Taxes and Contributions," written in 1662, he says: —

  If a man can bring to London an ounce of silver out of the earth in Peru in the same time that he can produce a bushel of corn, then one is the natural price of the other. Now if by reason of new and more easy mines a man can get two ounces of silver as easily as he formerly did one, then corn will be as cheap at ten shillings the bushel, as it was before at five shillings. (P. 43, Cambridge Edition.)
  Labour is the father and active principle of wealth as lands are the mother. (P. 68.)

Petty also held a very clear view on wages:

The value of the average daily wage is determined by what the worker needs—so as to live, labour and generate. (P. 60, “Political Anatomy of Ireland,” British Museum Copy.)

Petty was not, however, always consistent in his views. He laboured to a considerable extent under the Mercantilist illusions of his day—the view that only money had any real value. Expositors of the labour theory of value were also Benjamin Franklin (1706-1790) and Richard Cantillon (died 1734), but their views, like Petty’s, were vitiated by Mercantilist notions, which were more or less an expression of the interests of the rising merchant capitalists.

The Mercantilist economists were succeeded in the order of time by the “Physiocrats," the French school of Political Economy. In their works, Francois Quesnay (1694-1774) and S. R. J. Turgot (1727-1781), the leading representatives of this school, divide society into three classes—agricultural, land-owning, sterile (manufacturing, trading, artisan). Physiocratic theory coincides with the interests of the rising French farming class, at that time occupying an ever-growing influence.

Labour was the source of value and surplus value, thought the Physiocrats, but only so far as agriculture was concerned.

Solomon Goldstein

(To be continued)

The Importance of Marxism (1940)

From the April 1940 issue of the Socialist Standard

Even the most cursory of observers will have noticed of late a growing interest on the part of the workers in political and economic problems. This increase of interest has reflected itself in an enthusiastic response to our propaganda. Our speakers meet with attentive and appreciative audiences, and the influence of our Party is now greater than ever. There is an obvious reason for all this. The average worker can no longer find his bearings in the modern world, which he sees ravaged by wars and strife, persecution, bestiality, poverty and unemployment. As a consequence his outlook has become gloomy, for his hopes and aspirations have been destroyed by the march of events. A restatement of the essentials of Marxism is therefore timely, for Marxism demonstrates the transitory character of our present system. Not only doe sit explain the world in which we live, but it also points the way to a better and brighter future.

What we owe to Marx

The Socialist movement is indebted to Marx for two important discoveries—the materialist conception of history, and the source of surplus value. Both discoveries have established a scientific basis for our cause, and have thus marked us off completely from Utopians, moralists and reformers. Yet, when appraising Marx, one must not overlook the fact that he built upon the work of his predecessors. Marx had already obtained a storehouse of information from English economists, Utopian Socialists and German philosophers, when his own keen analytical mind formulated the doctrines which have been mentioned above.

What is a Materialist?

Quite a number of people have a curious conception of a materialist. The latter appears to them as a vulgar person, devoid of aesthetic appreciation and oblivious of the finer things of life. Nothing could be more absurd. On the other hand, many believe that a materialist is one who dissolves the world into a heap of dead atoms and denies the existence of the mind (Ernst Haeckel, for example). This confusion has prompted Mr. G. D. H. Cole to suggest, in his work, "What Marx Really Meant," that one ought to designate Marx's theory by another name—"Realistic Interpretation of History." Marx had, however, a very good reason for choosing his own particular appellation. In the days when his conception was being formulated a fierce controversy had been going on between two rival philosophical schools of thought. The men who held that Nature had preceded mind or the idea called themselves materialists, and their philosophy materialism. Conversely, the others who believed in the priority of the idea named themselves idealists, and their philosophy idealism. The idealist position leads to God. To the materialist Nature is all that is, and God is a figment of the human imagination. In short, a materialist is a person who contends that ideas are inseparable from human beings, who are products of nature at a certain stage of development. The entire teachings of natural science have demonstrated  the correctness of this philosophical outlook.

Materialist Conception of History

Throughout the centuries historians have recorded the private lives of kings, the adventures of sea captains and the feuds between various religious groups. Consequently history has appeared as a crazy quilt, an endless jumble of perpetually recurring struggles for liberty and justice, which, somehow or other, are never permanently realised. In contra-distinction to this confused romanticism, Marx maintain that the essential factor in all history is the way in which mankind has obtained its livelihood. For, as he quite rightly says, before men can devote themselves either to politics, religion or science, they have got to eat, drink and sleep. And how do men obtain their means of subsistence? With the aid of tools, for man is a tool-making animal. The millions of inventions that have taken place since primitive man's discovery of fire have led to the giant machines that we know to-day. In the 1888 Preface to the Communist Manifesto, Frederick Engels has summarised historical materialism in the following words:

" . . . That in every historical epoch, the prevailing mode of economic production and exchange, and the social organisation necessarily following from it, form the basis upon which is built up, and from which alone can be explained. the political and intellectual history of that epoch; that consequently the whole history of mankind (since the dissolution of primitive tribal society, holding land in common ownership) has been a history of class struggles, contests between exploiting and exploited, ruling and oppressed classes; that the history of these class struggles form a series of a evolutions in which, nowadays, a stage has been reached where the exploited and oppressed class—the proletariat—cannot attain its emancipation from the sway of the exploiting and ruling class—the bourgeoisie—without, at the same time, and once and for all, emancipating society at large from all exploitation, oppression, class distinctions and class struggles."

What a panorama this conception opens up to us! "Freeman and slave, patrician and plebeian, lord and serf, guildmaster and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open, fight, a fight that each time ended either in a revolutionary reconstruction of society at large or in the common ruin of the contending classes.

    "In the earlier epochs of history we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebeians, slaves; in the Middle Ages, feudal lords, vassals, guildmasters, journeymen, apprentices, serf; in almost all of these classes, again, subordinate gradations.  "The modern bourgeois society that has sprouted from the ruins of feudal society has not done away with class antagonisms. It has but established new classes, new conditions of oppression, new forms of struggle in place of the old ones. "Our epoch, the epoch of the bourgeoisie, possesses, however, this distinctive feature: it has simplified the class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat.” (Communist Manifesto, p. 8, Reeves Edition.)

And why has society been divided into classes? In “Socialism, Utopian and Scientific,” Engels has supplied the answer: —

   “ . . : The separation of society into an exploiting and an exploited class, a ruling and an oppressed class, was a necessary consequence of the deficient and restricted development of production in former times. So long as the total social labour only yields a produce which but slightly exceeds that barely necessary for the existence of all; so long, therefore, as labour engages all or almost all the time of the great majority of the members of society . . .  so long, of necessity, this society is divided into classes. Side by side with the great majority, exclusively bond slaves to labour, arises a class freed from directly productive labour, which looks after the general affairs of society; the direction of labour, State business, law, science, art, etc. It is, therefore, the law of division of labour that lies at the basis of the division into classes.” ("Socialism, Utopian and Scientific,” p. 77, Swan & Sonnenschein Ed.)

Would that space permitted me to quote more from these masterly pamphlets! They are unquestionably classics of Socialist literature!

Some Illustrations off the Theory

One can illustrate historical materialism by a multitude of examples. Let us take three outstanding ones:—

(1) The rise of Christianity. In the days when this doctrine arose society was more or less based on slave labour. This form of labour leads to an exhaustion of the productive forces, for the slave recognises his inferior position and vents his spleen on the tools he works with. So long as supplies of slaves were plentiful (through conquest, etc.) the ruling class of Rome cared very little indeed for their chattels. Ruthlessly exploited, ill-treated, his mentality circumscribed by his miserable mode of life, is it to be wondered at that the slave longed for death, or at least for a Messiah who would relieve him of his burdens? For chattel slave labour does not provide the basis for a higher order of society. A Socialist solution of man’s economic problem on this planet was not only impossible but also inconceivable in Rome at that period. For the free men, however, who were disgusted with the striking contrasts between the classes, the only practical escape was a sharing of goods in common. The early Christian Congregation was an organisation of this character. This has led many to believe that Jesus was a Socialist. Apart from the fact that the historicity of Christ has been questioned, the communism of the primitive church was a communism of consumption, not of production. Christianity, confined at first to small congregations, very soon took root in a society which was heading towards the abyss. With the infiltration of wealthy elements the communism of consumption degenerated into philanthropy.

(2) The French Revolution. We are all familiar with the slogans of the Revolution—liberty, fraternity, equality. These were the catch-words of the rising bourgeoisie of France intent on the overthrow of absolute monarchy, the last bulwark of the feudal order. For centuries prior to 1789 the growing capitalist class of France had found themselves hindered by feudal restrictions on their commerce and industry. The extravagances of the monarchs had also dragged the peasants deep into the mire. The bourgeois intellectuals were the most advanced group in this complex society, and it was their initiative, combined with the backing of the lower orders, which finally destroyed feudalism in the great revolution.

(3) The Present War. The present conflict in Europe has been described by the British as a war for democracy and freedom, by the Nazis as a struggle for Socialism against Jewish plutocracy. Millions of people on either side earnestly believe that this is the case. In reality the war is a violent expression of an economic conflict between rival groups of capitalists for a re-division of the plunder filched from the workers. The British and French capitalists own between them territory of nearly eighteen million square miles, with a population of more than six hundred and eight millions. The German bourgeoisie, deprived of their colonial possessions after their defeat in the last great war, find themselves confronted with tremendous economic difficulties. Possessing a vast industrial plant and an enormous proletariat ready for exploitation, their main problem is cheap raw materials and a market for their goods. As the British and French capitalists have already cornered what the German bourgeoisie so eagerly desire, the latter are attempting to take by force what their enemies are not prepared to yield. It is this German threat to the possessions of the British and French capitalists which is the root cause of the present war.

Limitations of the Theory

Many carping critics have complained that Marx's theory is much too general. They have expected from it either a detailed account of every man's doings in the past, or the final answer to all the world's riddles.

Marx, however, does not envisage his conception in that light. For him, as for us, it is a scientific method of interpreting historical events. Moreover, that the materialist conception does really interpret history has been amply demonstrated by the use that has been made of it since Marx's day. One need only mention some well-known historians who have employed the method -- Kautsky, Mehring, Ashley, Townsend, De Gibbin, Tawney, Rogers, Jenks.

Historical Materialism is, however, only the one aspect of Marxism. It is complemented by the concept of surplus value—a theory which reveals the mechanism of capitalist production. We reserve a discussion on this subject for a further article.

Solomon Goldstein

Objectors 1914-18 (1967)

Book Review from the August 1967 issue of the Socialist Standard

'Objections Overruled', by David Boulton (McGibbon & Kee, 45s.)

In his introduction the author of this book describes it as the story of the 16,000 men in this country who refused to fight in the First World War, told wherever possible in their own words from their letters and diaries. In fact, Mr. Boulton has gone far beyond this. In his first chapter, "International Socialism and War" he gives an account of the discussions carried on and resolutions passed in half a century of conferences such as those of the Second International ― and of the total collapse of that supposedly anti-war movement when war broke out in 1914. He also retells the story of the trickery by which the politicians Lloyd George, Asquith and others engineered conscription while professing to be opposed to it.

In other chapters he deals with the founding of the No-Conscription Fellowship and its harrying by the authorities; the strikes on Clydeside; the Leeds Conference called to hail the Russian Revolution; the controversies among organisations to which conscientious objectors belonged; and the subsequent careers of leading figures.

Although the historical section, like the book as a whole, is well documented, the author quite fails to understand why when the time came the working class organisations of the various countries for the most part lined up with their governments in support of the war. Repeatedly he comes back to the theme that the verbal protests about the war were not accompanied by working-class action, "there was no call for revolution, general strike or insurrection." He does half-glimpse the truth that any such call would have fallen on deaf ears but the basic reason escapes him. The fact was that the other so-called Socialist parties in the International were no more Socialist than the British Labour Party. They were not built up of convinced Socialists, accepting the class struggle and its necessary principle of undeviating hostility to capitalism and loyalty to international solidarity. Their horizon was limited to policies of reforming capitalism, of collaborating with avowedly capitalist parties, all within the framework of patriotic loyalty to their own national groups.

It is customary to treat the collapse of the International in 1914 as an unforeseeable catastrophe. But to the Socialist Party of Gt. Britain it was precisely foreseen long before the event, which is why, years before the war, the Socialist Party repudiated and refused to belong to that body.

What did exist in this country was a long tradition of seemingly powerful opposition to the idea of a conscript army on the continental model. But that tradition owed its existence primarily to the fact that British capitalism had operated with a powerful navy and small regular army. In the first two years of the war the authorities depended on volunteers, but as soon as the time came when they needed more fighting men and particularly when the supply of munitions caught up and surpassed the supply of volunteer soldiers, they went over to conscription, and the politicians with few exceptions abandoned their alleged principle of opposition. This included the Labour Party but it took considerable time for them to forget their traditional attitudes. So much so that at one point they were accused by their opposite numbers in France of dragging their feet: "Continued Labour opposition to conscription was causing impatience among French socialists, who feared that the 'pacifism' of British Labour was weakening the Allied cause". (P.80).

An interesting field of study would be the extent to which eventual acceptance of conscription by the trade unions and Labour Party was influenced by the Government's decision to include trade union officials among the occupations exempt from military service.

A device to make conscription less offensive was to include a clause providing exemption for conscientious objectors, but some of the politicians including Lloyd George (himself a long standing declared opponent of conscription) made it clear that they never intended this exemption to be more than a form of words, especially as regards political objectors.

Thus it came about that many of the first wave of objectors in 1916 were subjected to appalling persecution. A number were sentenced to death and only after public outcry were the sentences commuted to 10 years imprisonment. Others were brutally ill treated. At least 73 died as a result and 31 were driven insane. As Woodrow Wyatt wrote in the Evening Standard (27.6.67) "Maybe we should not be too self-righteous when we turn in horror from Japanese prisoner-of-war camps or German concentration camps." As the war dragged on the brutalities lessened but not the suffering inseparable from long imprisonment. Many objectors accepted the alternative of work in Home Office Camps, including the 1000 strong camp at Dartmoor. A major factor was the changed attitude of many soldiers, themselves weary and disillusioned by the horrors of war. The writer recalls the scene in an army guardroom when he was visited by a brother on convalescent leave after being wounded in France. The sergeant in charge was rash enough to express the hope, in front of the soldier prisoners, that the writer might be persuaded by his brother to join up. The brother's blistering reply about the evident insanity of the sergeant was greeted with uproarious approval by the soldier prisoners.

In the same guardroom Brooks, a conscientious objector member of the Socialist Party who had served two sentences and was awaiting a further court martial before going back to jail, held a successful class on Socialism, on the guardroom floor using Hyndman's Economies of Socialism as a text book― until the authorities got wind of it and separated the C.O.'s from the rest.

Boulton makes only a passing reference to the SPGB and that is based on a misconception. Describing the composition of the 10,000 members of the No-Conscription Fellowship, two-thirds of them members of the ILP with Quakers as the second largest group, he writes: "Then followed small groups of political objectors from such fringe organisations of the Left as the British Socialist Party, the Socialist Party of Great Britain, International Workers of the World and other Anarchist and Syndicalist bodies. On the religious side were small groups of non-Quaker pacifists drawn from most of the established churches and from fundamentalist sects such as Plymouth Brethren and Christadelphians". (P.109).

(The proper name of the IWW is of course Industrial Workers of the World).

There were Socialist Party sympathisers in the NCF but Party members did not join it.

Among the book's minor errors and omissions may be mentioned that while Boulton describes the support for recruiting to the Armed Forces by Ramsay MacDonald he does not refer to the similar activities by Keir Hardie and does not tell of the case of Siegfried Sassoon, who as an officer in France refused further participation in the war, though under pressure he later returned to the trenches.

Nor does he mention the characteristic intervention of Bernard Shaw who, congratulating C.O.'s on their stand urged them, having made their protest, to join up and show what splendid soldiers they could be.

The writer's last reminiscence is of a prison warder who loathed all conscientious objectors - except SPGBers, who, he explained, were almost alone in saying that, as well as not wanting to kill, they objected to being killed, in a capitalist war that did not concern them.           

Edgar Hardcastle

Race & Violence (1959)

From the July 1959 issue of the Socialist Standard

With the recent murder of a coloured man in Notting Hill, race-prejudice has once more become a subject of public interest. It is not possible to say at this stage whether or not Kelso Cochrane died as a result of racial hatred.

What can be said is that passions, hatred and sympathies have been aroused. A large crowd of mourners, both white and black, followed Cochrane’s coffin through the streets. Many organisations have had their say about Notting-Hill; some of them, such as the Union Movement, propagating racial discrimination. There is no doubt that the Union Movement is anti-coloured, and rabidly so. It considers that this country should be reserved for Englishmen. This is a “one way only” policy however. Not so many years ago a main plank in Mosley’s platform was the intensive economic development of British Africa; for the benefit of the British, of course. “Keep out the coloureds” does not mean keeping the Pinks out of South Africa, Kenya or Nyasaland. The left-wing too, have been having their little stir. They, poor souls, are in a bit of a quandary, for the Labour Government’s record does not look particularly attractive. The imprisonment of Nkrumah and the banishment of Seretse Khama must make the collection of coloured people's votes a rather difficult matter. There are, too, plenty of advocates in the Labour Party for the policy of restricting or excluding immigrants. The supporters of such views, to be logical, should exclude or restrict the movement of anybody going anywhere to look for jobs.

One form of violence has been put down officially, and with an iron hand. There are other forms of highly discriminatory violence that are encouraged, and financed with millions of dollars, pounds and roubles. Young men at Cape Canaveral in Florida, with considerable academic, scientific and technical qualifications, are busy getting ready to be very violent indeed. They are engaged in the assembly and launching of rockets that may one day destroy whole cities. The crimes against humanity planned here (and in every other weapons-development centre in the world) make the coshings and brawlings of the “Teds” look like nursery-play. Evidently people can be as violent and as discriminatory as they please—at the right place and time and against the wrong people.

The evidence shows that there is no basis whatsoever for thinking one racial or national group inferior to another; and in fact scientists even have difficulty in defining what is meant by “race.” We are one species, one people, and there is no reason why all people should not live in harmony. This will take a bit of organising but it is where we take our stand. We must organise together to throw off the shackles of class-domination. We are against racialism, nationalism and any other form of persecution and prejudice whatsoever. We want a world of human beings aware of their humanity, in place of a world of rocket-launchers and bomb-throwers. “Racialism” and “Nationalism” are social products, and will disappear along with the bomb-throwing society which gives rise to them.

The Scapegoats

Life is unsatisfactory, not only for those on the bottom rungs of the social ladder, but for those who have climbed rather higher as well; it is so much more painful if you fall. Many people, looking round for a scapegoat to blame for all their troubles, fix on the West Indian, Jew or other “outsider.” The West Indian, being rather distinctive both in colour and culture, makes a particularly choice victim. But bad housing has always been a feature of capitalism, it existed long before the recent influx of West Indians. The West Indian is in the same rotten boat as ourselves. He came here because poverty in the West Indies is particularly bad. To blame him for coming here looking for a job is like blaming one’s own relatives for moving to new towns and new employments in order to better themselves. There is nothing logical in this matter however, they are blamed because they work; they are also blamed because they don’t. They can never do anything right. They are blamed for taking houses, they are also blamed for living in overcrowded conditions. They are blamed for “lowering the tone” of the districts in which they live. There wasn’t much tone to be lowered in Brixton or Hackney, the places have been gradually falling apart for years. It is capitalism, a society that produces satellites and rockets as easy as winking that is at fault. The workers never have had enough.

Prosperous Misery

Capitalism isn’t very successful at making people happy; it is not organised for that purpose, it is organised for the making of profits. Tensions and resentments are easily made, and capitalism is glad of it, particularly in time of war.

Even the “successful.” the “man who is getting on,” has little cause for real satisfaction. Society hasn’t got much to offer except the rat-race scramble for good jobs, suburban brick boxes, bigger and better television sets, and all the thousand and one gadgets that capitalism provides as a substitute for human co-operative happiness. The “go-ahead” man usually gets there by stepping on his fellows; the “crawler” is common everywhere, despised yet surreptitiously admired. Somewhere in the struggle humanity has been forgotten; somewhere part of our sympathies and emotions has been destroyed. In such a world as this, full of tensions and resentments, race-prejudice can explode as suddenly as a bomb, erupting into shrieking mob-violence. There is always the quieter, more civilised way; the finding of mock-rational, pseudo-scientific reasons for hating other human beings. Sale and Profit have deadened our humanity, dulled our sensibilities, thwarted our progress, soured our relations with our fellows, made us into hostile, suspicious “insiders” looking out of our brick-box house or tin car at a hostile world, continuously on our guard against the menace outside.

It is not the Black Man, Pink Man or Yellow Man who is the root cause of our problems, it is our arid society; never more financially solvent, yet never more emotionally bankrupt. Wage-slavery has cut-off the world from humanity, the world is the property of someone else. Socialists want the world returned to humanity, of whatever race or colour. What is even more important, we want humans to return to humanity.

F. R. Ivimey

A View on the Crisis: Paul Mattick Jr interview (2011)

Paul Mattick Jnr

Interview from the October 2011 issue of the Socialist Standard

The Marxist economist and author Paul Mattick Jnr talks to Stuart Watkins about his views on Marx, the economic crisis, and the prospects for socialism

Socialist Standard: In your recently published book, Business As Usual (reviewed in the May 2011 Socialist Standard), you give an account of the causes of our present economic situation. Could you summarise the argument for our readers? In your view, just what is this crisis all about really?

Paul Mattick Jnr: This crisis, like those that have punctuated the history of capitalism since the beginning of the nineteenth century, is due to the inadequate amount of profit produced by workers in the capitalist economy, relative to the amount required for a significant expansion of investment. This problem, which first made itself known in the post-World War II period in the mid-1970s, has been hidden by the enormous expansion of debt – public, corporate, and even private – since that time, which continued the expansion of debt in all capitalist nations in response to the long-lasting deep depression of the 1930s. The credit-money created by governments and spread throughout the system by financial institutions created the basis for an apparent prosperity, though one marked by the usual cyclical pattern of ups and downs. But the underlying problem made itself visible, for those who cared to look, in many forms – the persistent inflation of the 1960s, the ‘stagflation’ of the following decade, the debt crises of Latin America and eastern Europe, the currency crises, real estate busts, stock market crashes, and massive bank failures of the last thirty years, as well as the general tendency, worldwide, to substitute speculation for real capital investment. Finally, the capacity of the system to put off dealing with its underlying problem seems to have reached its limits at the end of 2007.

Socialist Standard: According to most commentators in the mainstream press, the Great Recession, though serious, is now over. Do you agree that it is?

Paul Mattick Jnr: Between the time you asked this question and the present moment, many have become anxious about the arrival of a ‘double dip’ recession. In my opinion, the so-called second dip is merely the continuation of the crisis that began in 2007. There are of course economic fluctuations throughout periods of depression as well as periods of prosperity; in addition the government stimulus after 2008, however inadequate, had a certain effect (for instance in China, where the state promotion of an enormous real estate bubble involved the importation of machinery and other goods from Europe and elsewhere). But the fundamental problem, the low profitability of capital, has not been overcome.

Socialist Standard: And in your view, the low profitability of capital can be explained by Marx’s law of the tendency of the profit rate to fall? Can this law be demonstrated to be true empirically?

Paul Mattick Jnr: Yes to your first question; your second raises complex issues. The theory Marx worked out in Capital is an extremely abstract one: it is an attempt to analyze the dynamics of capitalism as a global system, over the long term. It is couched in terms of the quantities of ‘socially abstract labour’ – labour performed in the production process as represented by money when products are bought and sold – because Marx looks as capitalism as fundamentally, like all social systems, an organization of the process of reproducing the human population (and its social relationships). But in the world of business, money is used to symbolise more than the actual activities of social production – it represents, for instance, claims on the social product based on the control of natural resources, and also – to a large extent, in fact – promises to pay in the future, promises to pay off bets made on the way production prices will work their way through the market. And national income statistics, even ignoring the enormous inaccuracies involved in calculating them, are drawn up on the basis of business accounting systems and orthodox economic theorising, which do not distinguish between actual productive activity and speculative hopes. As a result, the data available cannot really be used to prove or disprove Marx's theory.

This is not to say that Marx's ideas can't be measured against experience. His predictions need to be compared with the history of capitalism over the last 200 years. From this perspective, Marx's ideas come off very well, as the main tendencies he predicted for capitalism – towards the supplanting of human labour by machinery, the concentration and centralisation of capital, the spread of wage labour, the tendency towards widescale unemployment, and above all the recurrence of periods of depression – have been realised. In fact, I would say that Marx's theory of the tendency of the rate of profit to fall over the long term is the only convincing account of the business cycle that there is. A particular aspect of this is of personal interest to me: in the 1960s, my father, Paul Mattick, wrote a book, Marx and Keynes, challenging the generally accepted view that Keynesian methods could control or eliminate the business cycle. He asked: if Marx is right, what will happen? And what he predicted has in general come about. This is one of the very few examples of a successful prediction in the social sciences!

Socialist Standard: Could you expand on your claim that the tendency of the rate of profit to fall is the only convincing explanation of the business cycle? Perhaps the most important new work to emerge from the Marxist tradition on crisis in recent years is that of David Harvey. He says, on the contrary, that the tendency of the rate of profit to fall cannot be made to work – it’s too compromised by the counter-tendencies identified by Marx, among other objections. He instead views all the conflicting Marxist accounts of the business cycle – profit squeeze, underconsumption, disproportionality – as possibilities that represent but don’t exhaust possible departures from balanced growth. What is your view of the competing Marxist accounts of crisis, including Harvey’s?

Paul Mattick Jnr: Many Marxist writers have taken some version of the tack Harvey follows, invoking a variety of causal factors to explain crises. The problem with this is that these disparate factors are not operating on the same analytical level. If wages would really squeeze profits, accumulation will decline, putting downward pressure on wages, so this will quickly correct itself. This is why, so far as we can tell from statistics, there have been no notable profit squeezes associated with important downward movements of the economy, despite claims sometimes made that there have been. Similar considerations hold for disproportionality explanations: capitalism in fact is always developing disproportionally, as there is no central regulating agency, but this is also constantly subject to correction by market forces. The explanation of crisis by reference to underconsumption is one of the oldest – it dates back to Sismondi and Malthus in the early 19th century – but also one of the least convincing: clearly, not all the product can ever be consumed, or else there would be no capital accumulation; as well, a constant feature of the system cannot explain the crisis cycle. As Marx points out, of course there is a lack of effective demand in a depression period. But why? His answer is that accumulation – which equals as it determines demand (for consumer goods, via wages, and production goods) – slows in response to declining profitability. And this is in accord with what statistical information we have, as was demonstrated long ago by the American economist Wesley Mitchell and has been recently shown by a number of researchers. Of course, the profits of statistics are, as I have pointed out, not the profits of Marx. But Marx's theoretical considerations provide an explanation for the fluctuations of observable business profits. What is odd is the resistance to Marx's theory when it is in such good accord with the history of capitalism. I believe this is largely due to the fact that most theorists are still in thrall to the economists' idea of capitalism as a naturally self-regulating system. Thus Harvey, for instance, needs to find a reason why it goes out of balance. In fact, however, capitalism is always in disequilibrium. On the broadest scale, it is the crisis that makes continued accumulation possible, just as it is accumulation that leads to a lowering of the rate of profit.

This highly abstract statement ignores the counteracting factors, the list of which Marx borrowed from J.S. Mill. It is not hard to show – it was done by Grossmann and others – that over the long run these factors cannot overwhelm the tendency of profits to fall. But we already know this empirically, since the history of capitalism demonstrates the effects of a periodically falling profit rate.

Socialist Standard: You say your father was proved right and Keynes wrong. But many supporters of the system would say that Keynesian methods saved capitalism from a Great Depression in the 1970s, and led to the Great Moderation – with capitalism delivering generally and gradually improving prosperity for all and monetary policy moderating the ups and downs of the business cycle. Did that not prove Keynes right? Might the same tricks not work again and pull us out of our present crisis?

Paul Mattick Jnr: I think it's fair to say that Keynesian methods saved capitalism from a deep and long depression in the 1970s. But the cost was the rising level of government debt in all capitalist countries. In the 1980s and after this was joined by an unparalleled expansion of corporate and private consumer debt. What happened around 2007 was that this expansion of debt collided with the continuing failure of the capitalist economy proper to expand at a sufficient rate. So one could say that the chickens of 1975 have come home to roost in the current depression. And since the Keynesian card has already been largely played, capitalist governments are now torn between fears of further unraveling of the private-property system and the dangers of further increasing sovereign debt.

Socialist Standard: Your father was connected with our American party, occasionally publishing in its journal. In a newly published biography of one its members (see here), we see you as a child sat at your father’s knee while political discussions raged around you. Do you have memories of these times? What is your memory and present opinion of the WSPUS and our political tradition generally? You say in your book that the heydey of the left and the trade unions is over and there's no hope of reviving them. So what can be done? What's the alternative?

Paul Mattick Jnr: My memories of the WSP are very good ones – I liked the people involved very much. I still remember going to classes in Marxian economics in Boston, taught by Rab and others, in some ways my real initiation into radical theory. I remember, with equal pleasure, the ‘socials’ – parties – when we kids moved around the legs of smoking, drinking, discussing, lovely adults. But I think these experiences, precious though they are to me as an individual, belong to the past. For most of today's young people – and most of their elders – the political ideas of the past have little meaning. And not only ideas – the political movements of the past no longer exist as serious forces. The trade unions have long been in decline world-wide, and the political parties of the left are either fully integrated into the capitalist political system or have become minute, unimportant sects. To an extent, this is good, as it seems to me that leftwing political organizations have historically stood in the way of creative responses to social crises, obsessed as they have been with their own agendas. But in any case, the response to the coming depression and the suffering to be imposed on people by the world's masters (and nature, as a result of the workings of the capitalist economy) is something people will have to work out for themselves, with little help from the past, in response to evolving conditions. To solve their problems, people will have to take direct, concrete action – occupying empty housing, seizing stocks of food and other goods, and eventually, if all goes well, occupying and beginning to operate the means of production and distribution. This lies in the future, but already one can see steps in this direction, in phenomena like the Greek cry ‘We won't pay!’ and French occupations of defunded schools. Even the action of tens of thousand of young Spaniards, simply meeting in the centre of Madrid and other cities, like the Egyptians in Tahrir Square, to discuss politics, is a step towards autonomy from the political wing of the ruling classes, a step towards an autonomous working-class control of social life.

Socialist Standard: We see your point, but we would also say that as people begin to work these things out for themselves, they will also probably be drawn to some of our conclusions: namely, that state power will have to be reckoned with in an organised way, and alternatives to the present system discussed and agreed upon. That’s at least a possibility, isn’t it?

Paul Mattick Jnr: Both of your points seem to me quite true. We can already see the state mobilising its forces in defence of capitalist social relations, even when they are barely challenged, and radical confrontation with the current social order will definitely involve finding ways to counter the military forces that will be deployed. Meanwhile, exploring alternatives to the present system, after a long period during which even the idea of an end to capitalism has been nearly unthinkable, is of great importance. This is especially true because earlier models of social change have been rendered obsolete by the development of capitalism as a system: for instance, an idea like that of the network of workers councils so important to revolutionary thought after the First World War requires thoroughgoing reformulation in a period when large numbers of workers have insecure jobs, and no longer identify themselves as workers within particular industries, not to mention workplaces, while gigantic masses of people all over the world struggle to exist without employment, and when many production processes involve workers and workplaces in different countries, as when Chinese workers assemble iPhones from parts produced in other places. Then, the developing ecological catastrophe raises novel issues which will require serious, large-scale efforts of a technological as well as a social nature. At the same time, the growing proletarianization of the world’s people and the greater level of international integration of populations and cultures, make the old slogan of “world revolution” in some ways more realistic than ever before.

Socialist Standard: Thank you, Paul, very much for talking to us.