therealdeal83
30th August 2014, 01:09
Introduction
We are living through a truly critical phase in the time of not only civilisation, but even of mankind as a historical force. This is only more true because although the fact is often recognized and lamented upon by the more attentive soul, is not recognised as something worth fighting against by even the smallest organised force in society. Unlike the collapse of many other civilisations, from the roman empire to the many preceding examples, the collapse of modern capitalism will come about only after the complete despoliation of the earth, underway with a fury and speed unsurpassed in the history of man. This drive for increased production at all costs (and for its own sake) is the hallmark capitalist production, and has snowballed to embody all the worlds peoples. In our time, some three centuries hence the industrial revolution, class relationships have developed quite beyond those which grew up in the factory systems — yet it must be stated, that this dynamic remains alive and is simply recreated into other forms than the original. Factories persist, and wage labour is the law of the world, yet primary production has become largely automatised and internationalised. The peoples of the world have never been more divorced in their life (and understanding) from the economy. but economics still holds the keys for the liberation of man. This is our great paradox. It is the task of the next generation of radical intellectuals to reraise this banner of economic revolution, and to work towards a redevelopment of the old ideas, primarily the intellectual tradition of Marx and Engels, which the historian would trace back into the working class movements of the french revolution. Thinkers of this tradition have been sidetracked from economics for some decades and those who profess as it’s authorities often are not even familiar with its major works. This is quite understandable given the difficulty of retracing the historical path of a movement long ago betrayed and abandoned mostly by its true beneficiaries. And it is an important topic for those who wish to pursue social enlightenment, and to revolutionise this world. Yet, this is not a topic I wish to broach here.
I return to the purpose of this work, a discussion of the true economic reality in which we find ourselves, and the threat of social collapse. This situation is predicated on the dominance of American empire, established firmly now for almost a century. The path of history — from wwii on to the cold war, the collapse of the soviet union, and the period in which we find ourselves now was completely unpredictable and unseen by all. We should keep this in mind when evaluating the ideas of our fore bearers, but of course it could have been no other way. True radicals are most interested in the realities of their times and do not spend too much efforts on speculations or possible historical outcomes. Our reality is that of a nearly heterogeneously integrated, truly international economy which unites some 8 billions of men, women and children in a great big effort to reproduce our daily needs, and in fact much more than that. International trade relations are inherently unequal and predicated upon a superpower with more armaments than the rest of the world combined. A colossus bent not on expanding markets for its produce, like the British Empire before it, but something much much worse — the consumption of the wealth of these countries, both by appropriation of the natural wealth of the lands (something the 19th century phase of imperialism had at its centre) but more importantly the life and labor of its people. The majority of the worlds people are now involved in a world production process for which they gain no benefit. Yet they have no obvious choice — the law of the market acts without their consent. Their will is of no concern.
Such relations are not anything new — in the historical cycles of civilisation we find endless examples of conquering peoples plundering their neighbours and ruining their way of life. But the narrative of our society precludes such a phenomenon. We are taught to believe that industrialisation frees man, brings us closer to perfection perhaps — freeing our hands so that our desires can be fulfilled — the pursuit of happiness. We are told that increasing economic ties between the centres and the world provinces eventually brings prosperity to subject peoples. But there are endless financial tricks which have been developed to mask the true relationships of international trade and secret channels to funnel out the wealth of nations. The reality is the same as all class societies before it — the freedom of the few is bought at the expense of the many. This cannot change without an economic revolution to abolish class society.
In what follows I hope to develop for the reader a true picture of social relations — the changing relations of social classes from earlier periods of capitalism and specifically the changes in economic relations which have engendered them. Social movements need to take on the colossus — the new leviathan which is set to destroy us all. For too long, we have become meek and misled into arguing about trifles and fighting over crumbs. Lets tear it down.
I. Economic changes since the great wars
The growth of the united states into the world super-imperial power is due fore mostly to the economic and *financial* power gained through the first and second world wars; as commonly recognised, this was accomplished by entering the war late and allowing the other great powers to annihilate the strength of Europe. The Marshall plan and the creation of the financial monolith of the “washington consensus” including the inter-american bank, IMF, world bank etc., are only now, some 70 years later starting to show signs of weakness. In the 1970’s the dominance of the U.S. in international trade had advanced to such a point that it was able to overthrow the gold standard — the financial convention which had held together the capitalist world since the mercantile age in the 16th century. By removing the parity of dollars in gold, the united states gained the ability to transfer wealth from foreign powers due to their holding of dollars in central banks, simply by printing more money and devaluating the currency. The same principle holds for the manipulation of interest rates, fueled by the increased purchases of U.S. treasury bonds engendered by the imbalance of trade. The total amount of wealth transferred by this mechanism can very simply be estimated by comparing the u.s. price of dollars in gold in 1973 [expand — how to calculate for interest on govt bonds?]. This financial form of global exploitation is only possible due to the premiere military capacity of the united states. Recent failures of the oil conquest wars in the middle east show major weakness in the ability of the military, and we are entering a phase of decline and renewed rivalries between the other world powers. Such changes may create new opportunities for revolutionists and we should arm ourselves with the proper understanding to give direction to social movements.
Firstly we should turn our attention to the changes in production, which in turn effects class relations. The development of industrial production has some time ago reached major plateaus in the basic industries — perhaps around the time of WWII. The major growth in engineering as a mechanism for the reinvestment of capital has brought about such a stage of intensive growth that new advances along these lines are at this stage few and far between. The computer revolution allowed for a similar phenomenon to take place in the commercial and service sectors — jobs which Marx would have characterised as falling into the “faux fraix” of production have been reduced to bare minimums. In fact this is another key aspect to the post-1970 dollar-based financial exploitation. and also the globalisation of production. As intensive growth is becoming much more difficult, the continued profitability of the system is ensured only by reducing the costs of labor and inputs to constant capital, namely energy. The current high demand on fossil fuels was not so much as a choice by the ruling classes, but an imperative, to continue the production of profit.
With financialization, we see money, the commodity of exchange value, being used not as a medium of exchange, but transformed into an exploitative tool used for social control and stratification. Money has been divorced from the real economy to such a degree that most of the visible signs of capital now have in fact little to do with production. Real estate holdings, and asset inflation through capital investment companies are now the preferred form in which the ruling class holds its wealth and oppresses the lower classes. Real wages in most countries have become very difficult to determine given the myriad of ways in which wealth is redistributed between different social classes. The growth in the role of the state in this regard should not be underestimated. In our times, the state asserts control as a regulatory body for redistribution of wealth. Massive sums of money pass through it — a fusion of a bank, a credit agency and an insurance company. Small changes to laws can have a great impact the economy and social relations.
These economic changes which I have briefly outlined have dramatically changed the makeup of classes and in turn social relations. More and more people are brought into the global capitalist economy, mostly as wage labourers as larger and larger sections of national economies are commodified — social functions which were previously carried on within the home or larger community are brought into the commercial sphere and ultimately linked up with the international economy. In turn, more and more profits have become available in the imperial centres fuelling an unprecedented growth in unproductive labor. Vast portions of the total product of society are spent on sectors of the economy which function not to produce wealth, but to consume it. The financialization of economic life has fuelled the growth of non-capitalist, perhaps one could say pre-capitalist, forms of exploitation, where surplus product is created, although usually only transferred through methods approximating indentured servitude. Debt slavery has grown to embrace all sections of society and in many cases defines social relations. In order to explain this better it is necessary to make a few digressions into some lesser known concepts in classical economics which have been sidelined for a very long time.
II. The concept of unproductive labor and the role of luxury production
In the draft for his first volume of capital Marx has the following to say in regards to productive and unproductive labour,
“since the direct purpose and the actual product of capitalist production is surplus value, only such labor is productive, and only such an exeter of labour capacity is a productive worker, as directly produces surplus value. Hence only such labor is productive as is consumed directly in the production process for the purpose of valorising capital.”
In order to not misunderstand this definition one should remember that he speaks here of *exchange value* and not use value, and furthermore that since capitalism is only interested in the production of surplus value, what is considered unproductive from the standpoint of the economy, could in fact be quite useful. It is an apparent contradiction which had impeded many from even broaching the topic. Not to mention that even before Marx this concept was politically controversial, dating back to the Physiocratic philosophical assault on the urban areas which were deemed completely unproductive. Marx was perhaps the last in the line of the proponents of classical economics to discuss the question.
One should realise that this definition of labor actually crosses class lines — there are wage labourers who in fact have nothing to do with the production of surplus value, on the other hand there are also many salaried professionals, like engineers for example, who perform productive labor. Labourers in the service industries are most commonly performing unproductive labor — a process where “labor is bought in order to be consumed as use value” (v.481 vol. 34 MECW). Even within one profession, or one person productive and unproductive labor can be distinguished depending on whether it furthers the growth of surplus value (I would add, even if only indirectly, as it is with all scientific labor). Almost all government expenditure, including fore mostly military expenditure, falls within this category of unproductive labor. Although Marx clearly recognised the importance of the question, going so far as note that, “a large part of the annual product… consists of extremely paltry products… fancies… which are only destined for unproductive consumption,” (v.484) i.e. luxury production, and that, “the highest ideal of capitalist production… is the greatest possible reduction in the number of people living on wages, and the greatest possible increase in the number of people living of the net product [of society]” (v.488) he also thought at the same time that the issue was not so important. From his point of view, in the final analysis luxury production would be checked if a disproportionate amount of capital was reproduced in this way — if too few means of production and means of subsistence were produced. Perhaps this was true during his time, but can we say the same for our age? The growth in government expenditure has been enormous, fuelled by the great wars, now consuming large portions of the national product. Additionally the expenditure on luxury production has grown leaps in bounds (although it becomes difficult to define exactly the boundary between the production of luxuries and necessities as this is culturally contingent — it varies from place and over time) There is much more that could be written not this topic — Marx planned a series of six books, one on wage labour which would surely have discusses this issue fully, and another book on the profitability of foreign wars and dealing with international exchange. It is quite unfortunate that the immense achievement of his work on capital left us lacking a full understanding of his views on this and many other issues — we will return to this digression on foreign wars later.
III. The technological composition of capital with regards to the falling rate of profit
There already many volumes written in regards to Marx’s presentation of the falling rate of profit. Entire schools of thought are built around different interpretations and explanations of why or why not there is a falling rate of profit. A discursion on this would take an entire volume as well, and perhaps in the future it would be a task worth pursuing (it is a good example of philosophical origins of many doctrinal disputes). However, I will instead, merely present my own take on this, which is firmly rooted in Marx’s actual writings and doesn’t require much outside of them. The basic idea of the falling rate of profit is as follows: due to the drive of capitalism for accumulation of capital which is inherent in the drive to increase the production of surplus value at all costs, there is an inherent tendency for the organic composition of capital — which is the ratio between the variable capital or wages of the worker and that of constant capital, or the mans of production themselves plus other inputs — to increase. In his own words, Vol. 3, Ch. XIII, A “gradual change in the composition of capital occurs in key spheres of production.. changes in average organic composition of the total capital.. lead to a gradual fall of the general rate of profit *so long as the rate of surplus value remain the same*” The rate of surplus value, or the rate of exploitation is the ratio of surplus value extracted from the worker in relation to his real wages. As the profit rate converges to nil it effects on the economic system a crisis of overproduction, such an occurrence which was quite common in the 19th century and is best represented by the last general crisis, that on the 1930’s. Now it is very important to note that the rate of profit falls if the rate of exploitation remains the same. In no way does he ever imply that there is a tendency for it to remain the same. His presentation here is really to explain to his reader the general outcomes of the production process over many cycles. He wasn’t proposing something so grand, some inherent tendency for the collapse of capitalism, as some of his previous interpreters have proposed. In fact it is rather obvious, and much work has been done in this regard, that in fact this ratio of exploitation has been more or less increasing throughout the post-wwii period, although locally this of course is not true in all places at all times. Additionally he says that, “the law… does not rule out in any way that the absolute mass of exploited labor set in motion by the social capital… may grow”, which has also been a major part of the success of the capitalist economies in the post-wwii era. These tendencies counteract the falling rate of profit. There are even two more factors with this effect — an increase in the technological composition of capital and a change in the value of the constant capital, both of which are frequently neglected by authors. From Vol 3., Ch. III, “the alteration of c [constant capital] may be due either to a mere change in the value of the material elements of constant capital, or to a change in the technical composition of the total capital; that is, a change in the productivity of labour, in the given branch of industry. For example, major decreases in production costs can be effected by a decrease in energy costs, say by flooding the market with cheap oil, and decreases can also be induced by technological innovations such as computerization. Taken together, all four of these factors can have a huge effect and it should not be surprising that there has not been a fall in the general rate of profit on a global scale since the times of the Great Depression. The recent economic crisis was something else entirely, and quite new — a point to return to later.
The technological composition of capital is an idea which has seldom been explored. Marx didn’t write much of it, perhaps because it was something rather spontaneous in his times and driven mostly by entrepreneurs. It is also possible he didn’t expand much on it because almost his entire economic work is premised upon the technological composition remaining constant! It is clearly something which we recognise has social value and in fact is key to the development of civilisation. Just compare plowing a field with the use of a tractor compared to a simple hand plow or that drawn by cattle. A tractor may have an an exchange value equivalent of say 5 cattle, but its capability to produce is much much greater. And these are changes that happen over time. In Vol. 1, Ch. XII he wrote, “Hitherto in treating of surplus-value arising from a simple prolongation of the working-day, we have assumed the mode of production to be given and incurable [?check]. But when surplus-value has to be produced by the conversion of necessary labour into surplus-labour… the technical and social conditions of the process and consequently the very mode of production must be revolutionised before the productiveness of labour can be increased. *By that means alone* can the value of labor-power be made to sink…” And so it has and to a large degree. In addition to computerisation, we have also the birth of the plastics industries, cheapening tremendously all consumer goods, huge changes in agricultural production related to the introduction of chemical fertilizers to the land. The importance of technological development can not be overstated — especially given how little attention has been given to it by radical economic thinkers of our age. Technological improvements are so crucial to the well-being of the system that entire apparatuses inside corporations (R&D departments) and well even an entire branch of industry itself, namely the modern university, has been set up to try to continually develop newer technologies which cheapen the effective costs of labor.
IV. Social changes since the great wars
The last generations have witnessed a tremendous growth in the populations of social classes not directly linked to production. This has taken different forms in the centres as in the provinces. Even as automation has eliminated many of the traditional jobs for the urban petit-bourgeosie, like clerical work, and centralisation of retail capital has eliminated the importance of small shopkeepers, the growth in non-productive branches of production has more than kept pace with these changes and petit-bourgeois professionals still remain a large strata in society. Among these branches of production are advertising and fashion, media and entertainment, tourism, healthcare, restaurants, other service industries of all sorts, finance-related, middle-management, etc.
[list more]. Also we have seen a great expansion of wage labour in non-productive industries. Retail giants employ large armies of cashiers, food service workers, etc. Domestic labour is once again in fashion as the differences in income between the social strata expands. Nannies, housecleaners, gardeners, etc. are employed in larger and larger numbers. In the capitalist provinces there have been large population transfers from the countryside into the cities — and alongside it a major growth in non-proletarianized, non-wage earning urban labor. These populations are very mixed from a class perspective. They contain all the traditional classes of capitalism but on a microcosmic scale — the wage labourer and the small time capitalist, the shopkeeper, and many many others who scrape together a living in the so called informal sector. These populations grew due to a new wave of expropriations of the land from small farmers, a breakdown in more traditional capitalist agricultural relations accompanied by the importation into the provinces of the large, capital intensive agricultural models of the centres — based on production for export. The plateau in the technique of basic production has meant that while all these changes have taken place, the social force of the industrial proletariat has stagnated — however large changes in the composition of the industrial proletariat have taken place — it has become internationalised as basic production has radically shifted to the provinces as the capitalists search endlessly for cheaper sources of labor.
All of these changes together create a world society which is much more urbanised and polarized — the largely “bourgeiosified” imperial centres are inseparably joined with the overly proletarianised neo-colonial provinces. And this two poles of global capitalism are strongly linked by a massive army of transient, expatriate labor. For a revolutionist, or even just a humanist, these changes are on the balance quite negative. The growth in non-productive service-providing wage-labor has a negative psychological impact on the proletariat. Marx wrote about this in regards to the british working class of the Victorian age, [quotation]. It destroys the proletariat’s cognisance of their importance in the production process, it destroys their self-respect and degrades their labor. Furthermore the growth in non-productive labor has been accompanied by all sorts of measures by the ruling classes to transfer back large portions of wages back to them — all sorts of financial schemes by interest-bearing capital, a large growth in rental incomes, and regressive taxes all work against the wage labourers and the lower strata of the petit-bourgois and these transfers install in them a feeling of powerlessness. On the other hand, the internationalisation and nomadification of the working class could become a large impetus for future struggles — these workers are stripped not only of their means of subsistence and forced into the working masses, but in many cases are also stripped of their families, their homes, and their cultural traditions which is substituted with a cheap rip-off of western culture.
[add more material here from my review of Mike Davis’ planet of slums]
V. Economics of the superstructure
Now that I have demonstrated the great growth of luxury production and so-called unproductive labor in general, including government expenditures, which is really the hallmark of our times, let us examine how this effects the reproduction process of capital. This subject is dealt with mostly in Book 2 of Capital. Whereas Book 1 is focuses on one capitalist enterprise — where Marx presented his revelation concerning how exactly the bourgeoisie extracts surplus value through unpaid labor, and how this is unique from pre-capitalist forms of exploitation — in Book 2 Marx develops a picture of the capitalist process as a whole, looking at the interchange between the different branches of production and the basic laws which govern the cycles of production. The basic cycle of capital takes money capital into production which creates a product which in turn is exchanged again for a larger quantify of money capital: M-C-M’. But of course, capital is not simple reproduced, but the drive for profit requires that it be expanded with each cycle. How exactly that takes place is explained by Marx, but is not particularly relevant here. What is necessary is to examine how these recent historical developments in the world economy effect the reproduction process. This massive growth in unproductive production, taken as a whole, has a unique character fundamentally different than the traditional branches of production. These enterprises are similar to simple luxury production in that they are require a portion of the total revenue of society in order to function — if the basic economy was unable to produce enough surplus product to support them, they would collapse. What makes this branch of production unique is that a portion of the values which it appropriates from the total revenue are not converted or replicated in the cycle of capitalist production but are in fact *removed* from it — they do not recirculate as M’ in the M-C-M’ formulation of Marx. The constant and variable portions of this industries must be reproduced and is circulated in order to do so, but there is a remaining portion of the surplus value which is “invested” in these branches that does not reenter the economy. The result is that these branched of production are not constrained to produce for profit, but do still “produce”, although what exactly is usually difficult to define. In fact Marx did describe the economic role in the reproduction of capital of such “industries” within his economic work; although it was in a completely different context and served merely as a tangential digression. In Book 2, Ch. VI., he describes the role of a buying and selling agent of capital (something like a merchant), whose, “usefulness consists rather in the fact that a smaller part of society’s labor-power and labor-time is tied up in this unproductive function.” Although these enterprises have no direct link to capitalist production they are linked to the reproduction process because they serve to reinforce and/or create the “infrastructure” for the successful reproduction and accumulation of capital. In other words, although technically all of the labor involved is unproductive, it is however most useful and necessary for the system to exist! This is the so called “superstructure” of society — all of it’s institutions, both official and unofficial; culturally contingent aspects of our modern society — primarily, the state power, the military, police and government which is required to maintain social order. Secondly are the institutions of indirect control, through the psyche of the population — the media, cultural institutions, churches, entertainment, etc. The third main component of these unproductive branches are the mental, technical and administrative functions which serve to counteract the falling rate of profit, as described above — centrally the universities, national research institutes, so-called “think-tanks”, consulting and lobbying firms for developing administrative technique, the passage of new laws., other bureaucratic institutions, etc. Furthermore he wrote, “if by a division of labor a function, unproductive in itself *although a necessary element of reproduction*, is transformed from an incidental occupation of many into the exclusive operation of a few, into their special business [a special branch of production — JH]… in such a case he should be regarded as a machine which reduces useless expenditure of energy or helps to set production time free.” At least, this is the idea, or intention for which these things kind of expenditures are developed and allowed to persist by the ruling classes. And it is so with these costs, which he deemed commercial, “costs of circulation” which, “ideally considered, do not enter into the value of commodities. The parts of capital expended as such costs are merely deductions from the productively expended capital so far as the capitalist is concerned.”
VI. Economic crisis due to the “overproduction” of superstructure & resource depletion
Now if these industries are not confined to produce for profit than what exactly controls their activities? In the case of governmental organisations, this is of course related to political decisions and the state budget. The media is of course controlled by the whims of the advertising industry, or more commonly nowadays the direct investment of corporations. In other cases it is more complex to determine, yet the bottom line is that all of this expenditure is culturally contingent. It has its own historical development which is apart from the real economy, and is only indirectly controlled by it’s ability to support it’s expenditures. In the financial crisis of 2008 we have perhaps the first widespread example of a major economical crash which at its roots is based in the overgrowth and misappropriation of resources into the superstructure. Firstly you might be asking, well why would you not say the crisis was related to overproduction, which is typical and well documented many times before? But first we should discuss the basic details of the financial crisis. [work on this later — notes are missing, probably at home]
The situation presented a choice for the American ruling class — either they could pass systematic reforms through governmental action to [blah blah] or what they did, which was to print trillions in government bonds and effectively go “double or nothing” on the solvency of the American government. In the process, this devalued the current debt obligations to foreign governments and really pissed of the Chinese. It is a gamble, because although it may seem that the other economic are stuck within american trade relationships this can quickly change and in fact is starting to. They seek a restabilisation of the “washingtonian” system by screwing over everyone below them, basically. This could take the form a real transformation of debt & property relations.
[FIRE-sector, post-regan double depreciation, asset inflation & modern “pyramids” tax-evasion, secret structuring, corporate misaccounting]
VI. Class struggles in the new economy
[Plekhanov on “initial phases of the theory of the class struggle]
class struggle has always been the basis of history — if we are to make any more of it it will continue to be.
must remember that M&E’s views on the proletariat as the force for revolution was based within a coherent historical theory.
class consciousness is not only an awareness of antagonising interests but, “an understanding of the ways of defeating those wo hare defending those opposite interests”
it is not enough to understand that property relations are the foundation of all society but one must understand as well the origins of these property relations and social interests.
the revolutionary class must represent all of society [marx’s critique of law]
there is an insufficient recognition by people in the first world that their standard of living is based upon unequal exchange, i.e. large monopolies “super exploiting” the underdeveloped countries.
dominance of socially unnecessary labor corrupts the people and dehumanises the service workers.
continued destruction of neocolonies through economic collapses, wars, etc. leads to a renewal of ultra-conservative organisations which seek to return to pre-capitalist ways of life. The suffering of the people is being channelled into all kinds of false consciousness and a retreat from modernity.
history is becoming a lost concept — without it we will not have the advantage of any wisdom from past struggles, nor any truly capable leaders.
[Gracchi & Marius, social wars in Roman empire]
VII. The historical-materialist philosophical tradition
[material from my critique of the hegelian dialectic and philosophy as a whole, 1844]
polemic against intellectuals who “reduced the whole process of history to the relation between the rest of the world and [themselves]… [and] dissolved all dogmatic antitheses into the single dogmatic antithesis of [their] own cleverness and the stupidity of the world” this is quite true of most all of the radicals of today.
Aspects of human society like, “wealth, state power, etc.” are estranged from the human being in our thoughts. Abstract thinking is the curse of philosophy… and labor is the link between civil society and man. Not just the positive aspect, that labor creates wealth, but the negative as well, that that labor is alienated from man.
The failure of most treatments of Marxist economics is abstraction — the concepts developed by Marx must be applied concretely to the world as it is, not the other way around. Marx’s newspaper articles are a great example of what this means and in fact what needs to be done today. So many writers/bloggers whatever all write about the newest latest thing and don’t really go into any analysis or details which will have a lasting impact, go into the history of it, the implications, etc. — they just interpret events as is and give them their own spin. This failure of abstract thinking also means that economics should not be considered separately from questions such as ecology, society, law, the land, technology, etc. I.e. putting it on a pedestal which denies its actually utility and then it just become a token.
VIII. Foundations of a new political programme
Elimination of regressive taxation (income tax, sales tax)
not only the traditional slogans
things to address the growth of slums [see other article]
concerning ecology & soil exhaustion — global warming (discuss how it will disproportionately effect the lower classes — again in a previous article)
waste of resources due to distortions in production from fossil fuels; clean energy program
growth of debt-relations much be opposed
landless should return to the countryside & transform it (slow economies/slow food)
capital redistribution internationally and land redistribution nationally
economic equality of nations/ equality of peoples/equality for women
cancellation of all debts — foreign & consumer
rights of the horse before the rights of man
We are living through a truly critical phase in the time of not only civilisation, but even of mankind as a historical force. This is only more true because although the fact is often recognized and lamented upon by the more attentive soul, is not recognised as something worth fighting against by even the smallest organised force in society. Unlike the collapse of many other civilisations, from the roman empire to the many preceding examples, the collapse of modern capitalism will come about only after the complete despoliation of the earth, underway with a fury and speed unsurpassed in the history of man. This drive for increased production at all costs (and for its own sake) is the hallmark capitalist production, and has snowballed to embody all the worlds peoples. In our time, some three centuries hence the industrial revolution, class relationships have developed quite beyond those which grew up in the factory systems — yet it must be stated, that this dynamic remains alive and is simply recreated into other forms than the original. Factories persist, and wage labour is the law of the world, yet primary production has become largely automatised and internationalised. The peoples of the world have never been more divorced in their life (and understanding) from the economy. but economics still holds the keys for the liberation of man. This is our great paradox. It is the task of the next generation of radical intellectuals to reraise this banner of economic revolution, and to work towards a redevelopment of the old ideas, primarily the intellectual tradition of Marx and Engels, which the historian would trace back into the working class movements of the french revolution. Thinkers of this tradition have been sidetracked from economics for some decades and those who profess as it’s authorities often are not even familiar with its major works. This is quite understandable given the difficulty of retracing the historical path of a movement long ago betrayed and abandoned mostly by its true beneficiaries. And it is an important topic for those who wish to pursue social enlightenment, and to revolutionise this world. Yet, this is not a topic I wish to broach here.
I return to the purpose of this work, a discussion of the true economic reality in which we find ourselves, and the threat of social collapse. This situation is predicated on the dominance of American empire, established firmly now for almost a century. The path of history — from wwii on to the cold war, the collapse of the soviet union, and the period in which we find ourselves now was completely unpredictable and unseen by all. We should keep this in mind when evaluating the ideas of our fore bearers, but of course it could have been no other way. True radicals are most interested in the realities of their times and do not spend too much efforts on speculations or possible historical outcomes. Our reality is that of a nearly heterogeneously integrated, truly international economy which unites some 8 billions of men, women and children in a great big effort to reproduce our daily needs, and in fact much more than that. International trade relations are inherently unequal and predicated upon a superpower with more armaments than the rest of the world combined. A colossus bent not on expanding markets for its produce, like the British Empire before it, but something much much worse — the consumption of the wealth of these countries, both by appropriation of the natural wealth of the lands (something the 19th century phase of imperialism had at its centre) but more importantly the life and labor of its people. The majority of the worlds people are now involved in a world production process for which they gain no benefit. Yet they have no obvious choice — the law of the market acts without their consent. Their will is of no concern.
Such relations are not anything new — in the historical cycles of civilisation we find endless examples of conquering peoples plundering their neighbours and ruining their way of life. But the narrative of our society precludes such a phenomenon. We are taught to believe that industrialisation frees man, brings us closer to perfection perhaps — freeing our hands so that our desires can be fulfilled — the pursuit of happiness. We are told that increasing economic ties between the centres and the world provinces eventually brings prosperity to subject peoples. But there are endless financial tricks which have been developed to mask the true relationships of international trade and secret channels to funnel out the wealth of nations. The reality is the same as all class societies before it — the freedom of the few is bought at the expense of the many. This cannot change without an economic revolution to abolish class society.
In what follows I hope to develop for the reader a true picture of social relations — the changing relations of social classes from earlier periods of capitalism and specifically the changes in economic relations which have engendered them. Social movements need to take on the colossus — the new leviathan which is set to destroy us all. For too long, we have become meek and misled into arguing about trifles and fighting over crumbs. Lets tear it down.
I. Economic changes since the great wars
The growth of the united states into the world super-imperial power is due fore mostly to the economic and *financial* power gained through the first and second world wars; as commonly recognised, this was accomplished by entering the war late and allowing the other great powers to annihilate the strength of Europe. The Marshall plan and the creation of the financial monolith of the “washington consensus” including the inter-american bank, IMF, world bank etc., are only now, some 70 years later starting to show signs of weakness. In the 1970’s the dominance of the U.S. in international trade had advanced to such a point that it was able to overthrow the gold standard — the financial convention which had held together the capitalist world since the mercantile age in the 16th century. By removing the parity of dollars in gold, the united states gained the ability to transfer wealth from foreign powers due to their holding of dollars in central banks, simply by printing more money and devaluating the currency. The same principle holds for the manipulation of interest rates, fueled by the increased purchases of U.S. treasury bonds engendered by the imbalance of trade. The total amount of wealth transferred by this mechanism can very simply be estimated by comparing the u.s. price of dollars in gold in 1973 [expand — how to calculate for interest on govt bonds?]. This financial form of global exploitation is only possible due to the premiere military capacity of the united states. Recent failures of the oil conquest wars in the middle east show major weakness in the ability of the military, and we are entering a phase of decline and renewed rivalries between the other world powers. Such changes may create new opportunities for revolutionists and we should arm ourselves with the proper understanding to give direction to social movements.
Firstly we should turn our attention to the changes in production, which in turn effects class relations. The development of industrial production has some time ago reached major plateaus in the basic industries — perhaps around the time of WWII. The major growth in engineering as a mechanism for the reinvestment of capital has brought about such a stage of intensive growth that new advances along these lines are at this stage few and far between. The computer revolution allowed for a similar phenomenon to take place in the commercial and service sectors — jobs which Marx would have characterised as falling into the “faux fraix” of production have been reduced to bare minimums. In fact this is another key aspect to the post-1970 dollar-based financial exploitation. and also the globalisation of production. As intensive growth is becoming much more difficult, the continued profitability of the system is ensured only by reducing the costs of labor and inputs to constant capital, namely energy. The current high demand on fossil fuels was not so much as a choice by the ruling classes, but an imperative, to continue the production of profit.
With financialization, we see money, the commodity of exchange value, being used not as a medium of exchange, but transformed into an exploitative tool used for social control and stratification. Money has been divorced from the real economy to such a degree that most of the visible signs of capital now have in fact little to do with production. Real estate holdings, and asset inflation through capital investment companies are now the preferred form in which the ruling class holds its wealth and oppresses the lower classes. Real wages in most countries have become very difficult to determine given the myriad of ways in which wealth is redistributed between different social classes. The growth in the role of the state in this regard should not be underestimated. In our times, the state asserts control as a regulatory body for redistribution of wealth. Massive sums of money pass through it — a fusion of a bank, a credit agency and an insurance company. Small changes to laws can have a great impact the economy and social relations.
These economic changes which I have briefly outlined have dramatically changed the makeup of classes and in turn social relations. More and more people are brought into the global capitalist economy, mostly as wage labourers as larger and larger sections of national economies are commodified — social functions which were previously carried on within the home or larger community are brought into the commercial sphere and ultimately linked up with the international economy. In turn, more and more profits have become available in the imperial centres fuelling an unprecedented growth in unproductive labor. Vast portions of the total product of society are spent on sectors of the economy which function not to produce wealth, but to consume it. The financialization of economic life has fuelled the growth of non-capitalist, perhaps one could say pre-capitalist, forms of exploitation, where surplus product is created, although usually only transferred through methods approximating indentured servitude. Debt slavery has grown to embrace all sections of society and in many cases defines social relations. In order to explain this better it is necessary to make a few digressions into some lesser known concepts in classical economics which have been sidelined for a very long time.
II. The concept of unproductive labor and the role of luxury production
In the draft for his first volume of capital Marx has the following to say in regards to productive and unproductive labour,
“since the direct purpose and the actual product of capitalist production is surplus value, only such labor is productive, and only such an exeter of labour capacity is a productive worker, as directly produces surplus value. Hence only such labor is productive as is consumed directly in the production process for the purpose of valorising capital.”
In order to not misunderstand this definition one should remember that he speaks here of *exchange value* and not use value, and furthermore that since capitalism is only interested in the production of surplus value, what is considered unproductive from the standpoint of the economy, could in fact be quite useful. It is an apparent contradiction which had impeded many from even broaching the topic. Not to mention that even before Marx this concept was politically controversial, dating back to the Physiocratic philosophical assault on the urban areas which were deemed completely unproductive. Marx was perhaps the last in the line of the proponents of classical economics to discuss the question.
One should realise that this definition of labor actually crosses class lines — there are wage labourers who in fact have nothing to do with the production of surplus value, on the other hand there are also many salaried professionals, like engineers for example, who perform productive labor. Labourers in the service industries are most commonly performing unproductive labor — a process where “labor is bought in order to be consumed as use value” (v.481 vol. 34 MECW). Even within one profession, or one person productive and unproductive labor can be distinguished depending on whether it furthers the growth of surplus value (I would add, even if only indirectly, as it is with all scientific labor). Almost all government expenditure, including fore mostly military expenditure, falls within this category of unproductive labor. Although Marx clearly recognised the importance of the question, going so far as note that, “a large part of the annual product… consists of extremely paltry products… fancies… which are only destined for unproductive consumption,” (v.484) i.e. luxury production, and that, “the highest ideal of capitalist production… is the greatest possible reduction in the number of people living on wages, and the greatest possible increase in the number of people living of the net product [of society]” (v.488) he also thought at the same time that the issue was not so important. From his point of view, in the final analysis luxury production would be checked if a disproportionate amount of capital was reproduced in this way — if too few means of production and means of subsistence were produced. Perhaps this was true during his time, but can we say the same for our age? The growth in government expenditure has been enormous, fuelled by the great wars, now consuming large portions of the national product. Additionally the expenditure on luxury production has grown leaps in bounds (although it becomes difficult to define exactly the boundary between the production of luxuries and necessities as this is culturally contingent — it varies from place and over time) There is much more that could be written not this topic — Marx planned a series of six books, one on wage labour which would surely have discusses this issue fully, and another book on the profitability of foreign wars and dealing with international exchange. It is quite unfortunate that the immense achievement of his work on capital left us lacking a full understanding of his views on this and many other issues — we will return to this digression on foreign wars later.
III. The technological composition of capital with regards to the falling rate of profit
There already many volumes written in regards to Marx’s presentation of the falling rate of profit. Entire schools of thought are built around different interpretations and explanations of why or why not there is a falling rate of profit. A discursion on this would take an entire volume as well, and perhaps in the future it would be a task worth pursuing (it is a good example of philosophical origins of many doctrinal disputes). However, I will instead, merely present my own take on this, which is firmly rooted in Marx’s actual writings and doesn’t require much outside of them. The basic idea of the falling rate of profit is as follows: due to the drive of capitalism for accumulation of capital which is inherent in the drive to increase the production of surplus value at all costs, there is an inherent tendency for the organic composition of capital — which is the ratio between the variable capital or wages of the worker and that of constant capital, or the mans of production themselves plus other inputs — to increase. In his own words, Vol. 3, Ch. XIII, A “gradual change in the composition of capital occurs in key spheres of production.. changes in average organic composition of the total capital.. lead to a gradual fall of the general rate of profit *so long as the rate of surplus value remain the same*” The rate of surplus value, or the rate of exploitation is the ratio of surplus value extracted from the worker in relation to his real wages. As the profit rate converges to nil it effects on the economic system a crisis of overproduction, such an occurrence which was quite common in the 19th century and is best represented by the last general crisis, that on the 1930’s. Now it is very important to note that the rate of profit falls if the rate of exploitation remains the same. In no way does he ever imply that there is a tendency for it to remain the same. His presentation here is really to explain to his reader the general outcomes of the production process over many cycles. He wasn’t proposing something so grand, some inherent tendency for the collapse of capitalism, as some of his previous interpreters have proposed. In fact it is rather obvious, and much work has been done in this regard, that in fact this ratio of exploitation has been more or less increasing throughout the post-wwii period, although locally this of course is not true in all places at all times. Additionally he says that, “the law… does not rule out in any way that the absolute mass of exploited labor set in motion by the social capital… may grow”, which has also been a major part of the success of the capitalist economies in the post-wwii era. These tendencies counteract the falling rate of profit. There are even two more factors with this effect — an increase in the technological composition of capital and a change in the value of the constant capital, both of which are frequently neglected by authors. From Vol 3., Ch. III, “the alteration of c [constant capital] may be due either to a mere change in the value of the material elements of constant capital, or to a change in the technical composition of the total capital; that is, a change in the productivity of labour, in the given branch of industry. For example, major decreases in production costs can be effected by a decrease in energy costs, say by flooding the market with cheap oil, and decreases can also be induced by technological innovations such as computerization. Taken together, all four of these factors can have a huge effect and it should not be surprising that there has not been a fall in the general rate of profit on a global scale since the times of the Great Depression. The recent economic crisis was something else entirely, and quite new — a point to return to later.
The technological composition of capital is an idea which has seldom been explored. Marx didn’t write much of it, perhaps because it was something rather spontaneous in his times and driven mostly by entrepreneurs. It is also possible he didn’t expand much on it because almost his entire economic work is premised upon the technological composition remaining constant! It is clearly something which we recognise has social value and in fact is key to the development of civilisation. Just compare plowing a field with the use of a tractor compared to a simple hand plow or that drawn by cattle. A tractor may have an an exchange value equivalent of say 5 cattle, but its capability to produce is much much greater. And these are changes that happen over time. In Vol. 1, Ch. XII he wrote, “Hitherto in treating of surplus-value arising from a simple prolongation of the working-day, we have assumed the mode of production to be given and incurable [?check]. But when surplus-value has to be produced by the conversion of necessary labour into surplus-labour… the technical and social conditions of the process and consequently the very mode of production must be revolutionised before the productiveness of labour can be increased. *By that means alone* can the value of labor-power be made to sink…” And so it has and to a large degree. In addition to computerisation, we have also the birth of the plastics industries, cheapening tremendously all consumer goods, huge changes in agricultural production related to the introduction of chemical fertilizers to the land. The importance of technological development can not be overstated — especially given how little attention has been given to it by radical economic thinkers of our age. Technological improvements are so crucial to the well-being of the system that entire apparatuses inside corporations (R&D departments) and well even an entire branch of industry itself, namely the modern university, has been set up to try to continually develop newer technologies which cheapen the effective costs of labor.
IV. Social changes since the great wars
The last generations have witnessed a tremendous growth in the populations of social classes not directly linked to production. This has taken different forms in the centres as in the provinces. Even as automation has eliminated many of the traditional jobs for the urban petit-bourgeosie, like clerical work, and centralisation of retail capital has eliminated the importance of small shopkeepers, the growth in non-productive branches of production has more than kept pace with these changes and petit-bourgeois professionals still remain a large strata in society. Among these branches of production are advertising and fashion, media and entertainment, tourism, healthcare, restaurants, other service industries of all sorts, finance-related, middle-management, etc.
[list more]. Also we have seen a great expansion of wage labour in non-productive industries. Retail giants employ large armies of cashiers, food service workers, etc. Domestic labour is once again in fashion as the differences in income between the social strata expands. Nannies, housecleaners, gardeners, etc. are employed in larger and larger numbers. In the capitalist provinces there have been large population transfers from the countryside into the cities — and alongside it a major growth in non-proletarianized, non-wage earning urban labor. These populations are very mixed from a class perspective. They contain all the traditional classes of capitalism but on a microcosmic scale — the wage labourer and the small time capitalist, the shopkeeper, and many many others who scrape together a living in the so called informal sector. These populations grew due to a new wave of expropriations of the land from small farmers, a breakdown in more traditional capitalist agricultural relations accompanied by the importation into the provinces of the large, capital intensive agricultural models of the centres — based on production for export. The plateau in the technique of basic production has meant that while all these changes have taken place, the social force of the industrial proletariat has stagnated — however large changes in the composition of the industrial proletariat have taken place — it has become internationalised as basic production has radically shifted to the provinces as the capitalists search endlessly for cheaper sources of labor.
All of these changes together create a world society which is much more urbanised and polarized — the largely “bourgeiosified” imperial centres are inseparably joined with the overly proletarianised neo-colonial provinces. And this two poles of global capitalism are strongly linked by a massive army of transient, expatriate labor. For a revolutionist, or even just a humanist, these changes are on the balance quite negative. The growth in non-productive service-providing wage-labor has a negative psychological impact on the proletariat. Marx wrote about this in regards to the british working class of the Victorian age, [quotation]. It destroys the proletariat’s cognisance of their importance in the production process, it destroys their self-respect and degrades their labor. Furthermore the growth in non-productive labor has been accompanied by all sorts of measures by the ruling classes to transfer back large portions of wages back to them — all sorts of financial schemes by interest-bearing capital, a large growth in rental incomes, and regressive taxes all work against the wage labourers and the lower strata of the petit-bourgois and these transfers install in them a feeling of powerlessness. On the other hand, the internationalisation and nomadification of the working class could become a large impetus for future struggles — these workers are stripped not only of their means of subsistence and forced into the working masses, but in many cases are also stripped of their families, their homes, and their cultural traditions which is substituted with a cheap rip-off of western culture.
[add more material here from my review of Mike Davis’ planet of slums]
V. Economics of the superstructure
Now that I have demonstrated the great growth of luxury production and so-called unproductive labor in general, including government expenditures, which is really the hallmark of our times, let us examine how this effects the reproduction process of capital. This subject is dealt with mostly in Book 2 of Capital. Whereas Book 1 is focuses on one capitalist enterprise — where Marx presented his revelation concerning how exactly the bourgeoisie extracts surplus value through unpaid labor, and how this is unique from pre-capitalist forms of exploitation — in Book 2 Marx develops a picture of the capitalist process as a whole, looking at the interchange between the different branches of production and the basic laws which govern the cycles of production. The basic cycle of capital takes money capital into production which creates a product which in turn is exchanged again for a larger quantify of money capital: M-C-M’. But of course, capital is not simple reproduced, but the drive for profit requires that it be expanded with each cycle. How exactly that takes place is explained by Marx, but is not particularly relevant here. What is necessary is to examine how these recent historical developments in the world economy effect the reproduction process. This massive growth in unproductive production, taken as a whole, has a unique character fundamentally different than the traditional branches of production. These enterprises are similar to simple luxury production in that they are require a portion of the total revenue of society in order to function — if the basic economy was unable to produce enough surplus product to support them, they would collapse. What makes this branch of production unique is that a portion of the values which it appropriates from the total revenue are not converted or replicated in the cycle of capitalist production but are in fact *removed* from it — they do not recirculate as M’ in the M-C-M’ formulation of Marx. The constant and variable portions of this industries must be reproduced and is circulated in order to do so, but there is a remaining portion of the surplus value which is “invested” in these branches that does not reenter the economy. The result is that these branched of production are not constrained to produce for profit, but do still “produce”, although what exactly is usually difficult to define. In fact Marx did describe the economic role in the reproduction of capital of such “industries” within his economic work; although it was in a completely different context and served merely as a tangential digression. In Book 2, Ch. VI., he describes the role of a buying and selling agent of capital (something like a merchant), whose, “usefulness consists rather in the fact that a smaller part of society’s labor-power and labor-time is tied up in this unproductive function.” Although these enterprises have no direct link to capitalist production they are linked to the reproduction process because they serve to reinforce and/or create the “infrastructure” for the successful reproduction and accumulation of capital. In other words, although technically all of the labor involved is unproductive, it is however most useful and necessary for the system to exist! This is the so called “superstructure” of society — all of it’s institutions, both official and unofficial; culturally contingent aspects of our modern society — primarily, the state power, the military, police and government which is required to maintain social order. Secondly are the institutions of indirect control, through the psyche of the population — the media, cultural institutions, churches, entertainment, etc. The third main component of these unproductive branches are the mental, technical and administrative functions which serve to counteract the falling rate of profit, as described above — centrally the universities, national research institutes, so-called “think-tanks”, consulting and lobbying firms for developing administrative technique, the passage of new laws., other bureaucratic institutions, etc. Furthermore he wrote, “if by a division of labor a function, unproductive in itself *although a necessary element of reproduction*, is transformed from an incidental occupation of many into the exclusive operation of a few, into their special business [a special branch of production — JH]… in such a case he should be regarded as a machine which reduces useless expenditure of energy or helps to set production time free.” At least, this is the idea, or intention for which these things kind of expenditures are developed and allowed to persist by the ruling classes. And it is so with these costs, which he deemed commercial, “costs of circulation” which, “ideally considered, do not enter into the value of commodities. The parts of capital expended as such costs are merely deductions from the productively expended capital so far as the capitalist is concerned.”
VI. Economic crisis due to the “overproduction” of superstructure & resource depletion
Now if these industries are not confined to produce for profit than what exactly controls their activities? In the case of governmental organisations, this is of course related to political decisions and the state budget. The media is of course controlled by the whims of the advertising industry, or more commonly nowadays the direct investment of corporations. In other cases it is more complex to determine, yet the bottom line is that all of this expenditure is culturally contingent. It has its own historical development which is apart from the real economy, and is only indirectly controlled by it’s ability to support it’s expenditures. In the financial crisis of 2008 we have perhaps the first widespread example of a major economical crash which at its roots is based in the overgrowth and misappropriation of resources into the superstructure. Firstly you might be asking, well why would you not say the crisis was related to overproduction, which is typical and well documented many times before? But first we should discuss the basic details of the financial crisis. [work on this later — notes are missing, probably at home]
The situation presented a choice for the American ruling class — either they could pass systematic reforms through governmental action to [blah blah] or what they did, which was to print trillions in government bonds and effectively go “double or nothing” on the solvency of the American government. In the process, this devalued the current debt obligations to foreign governments and really pissed of the Chinese. It is a gamble, because although it may seem that the other economic are stuck within american trade relationships this can quickly change and in fact is starting to. They seek a restabilisation of the “washingtonian” system by screwing over everyone below them, basically. This could take the form a real transformation of debt & property relations.
[FIRE-sector, post-regan double depreciation, asset inflation & modern “pyramids” tax-evasion, secret structuring, corporate misaccounting]
VI. Class struggles in the new economy
[Plekhanov on “initial phases of the theory of the class struggle]
class struggle has always been the basis of history — if we are to make any more of it it will continue to be.
must remember that M&E’s views on the proletariat as the force for revolution was based within a coherent historical theory.
class consciousness is not only an awareness of antagonising interests but, “an understanding of the ways of defeating those wo hare defending those opposite interests”
it is not enough to understand that property relations are the foundation of all society but one must understand as well the origins of these property relations and social interests.
the revolutionary class must represent all of society [marx’s critique of law]
there is an insufficient recognition by people in the first world that their standard of living is based upon unequal exchange, i.e. large monopolies “super exploiting” the underdeveloped countries.
dominance of socially unnecessary labor corrupts the people and dehumanises the service workers.
continued destruction of neocolonies through economic collapses, wars, etc. leads to a renewal of ultra-conservative organisations which seek to return to pre-capitalist ways of life. The suffering of the people is being channelled into all kinds of false consciousness and a retreat from modernity.
history is becoming a lost concept — without it we will not have the advantage of any wisdom from past struggles, nor any truly capable leaders.
[Gracchi & Marius, social wars in Roman empire]
VII. The historical-materialist philosophical tradition
[material from my critique of the hegelian dialectic and philosophy as a whole, 1844]
polemic against intellectuals who “reduced the whole process of history to the relation between the rest of the world and [themselves]… [and] dissolved all dogmatic antitheses into the single dogmatic antithesis of [their] own cleverness and the stupidity of the world” this is quite true of most all of the radicals of today.
Aspects of human society like, “wealth, state power, etc.” are estranged from the human being in our thoughts. Abstract thinking is the curse of philosophy… and labor is the link between civil society and man. Not just the positive aspect, that labor creates wealth, but the negative as well, that that labor is alienated from man.
The failure of most treatments of Marxist economics is abstraction — the concepts developed by Marx must be applied concretely to the world as it is, not the other way around. Marx’s newspaper articles are a great example of what this means and in fact what needs to be done today. So many writers/bloggers whatever all write about the newest latest thing and don’t really go into any analysis or details which will have a lasting impact, go into the history of it, the implications, etc. — they just interpret events as is and give them their own spin. This failure of abstract thinking also means that economics should not be considered separately from questions such as ecology, society, law, the land, technology, etc. I.e. putting it on a pedestal which denies its actually utility and then it just become a token.
VIII. Foundations of a new political programme
Elimination of regressive taxation (income tax, sales tax)
not only the traditional slogans
things to address the growth of slums [see other article]
concerning ecology & soil exhaustion — global warming (discuss how it will disproportionately effect the lower classes — again in a previous article)
waste of resources due to distortions in production from fossil fuels; clean energy program
growth of debt-relations much be opposed
landless should return to the countryside & transform it (slow economies/slow food)
capital redistribution internationally and land redistribution nationally
economic equality of nations/ equality of peoples/equality for women
cancellation of all debts — foreign & consumer
rights of the horse before the rights of man