Royal Fail, Royal Mail theft

Something many of us knew before hand anyway the but it is confirmed the Royal Mail was sold off on the cheap by the Tories. The privatisation of Royal Mail did not achieve the best value for taxpayers because of the government's "deep caution", the spending watchdog says. The National Audit Office said too much emphasis was put on completing the sale within this Parliament, at the expense of achieving better value for money. Royal Mail shares are now more than 70% higher than the original sale price of 330p in October 2013. The privatisation of Royal Mail took place amid huge public interest and the shares rose by 38% to 455p on their first day of trading, representing an increase in value of £750m for the new shareholders. The NAO report concluded that the Department for Business, Innovation and Skills was too cautious when setting the sale price of 330p per share. "The department was very keen to achieve its objective of selling Royal Mail, and was successful in getting the company listed on the FTSE 100," said Amyas Morse, head of the NAO. L Achieving the highest price possible at any cost and whatever the risk was never the aim of the sale” End Quote Vince Cable Business Secretary "Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer." A planned postal workers' strike, which was eventually cancelled after the privatisation, also affected the government's sale price. Demand for Royal Mail shares was 24 times the maximum number available to investors, the NAO said, but the banks overseeing the sale advised there was not sufficient demand to justify a significantly higher figure. George Godber, a fund manager at Milton Group, told Radio 4 that he was "astounded" by the low price. "I thought it was significantly underpriced. In stock market terms, this was the London 2012 Olympic ticket moment, lots of people applied but very few got to go to the opening ceremony." Managers from two of these advising banks - Goldman Sachs and UBS - said market uncertainty and the complexity of the deal led them to a conservative price when they were questioned by MPs in November last year. As we seen last week the Royal Mail is already cost cutting looking to slash its workforce by 1600 predictably the CWU union makes a lot of noise but will anything be done about this? I doubt it much like the proposed strike back over privatisation which was more hot air from the likes of Billy Hayes and Dave Ward who would rather wait for a labour government. Labour have predictably come out saying the tax payer has been sold a short one and that Royal Mail was under sold but this miss's the glaring point that it shouldn’t have been sold off in the first place. Instead of ranting about how cheaply it was sold off how about making the case for renationalization and returning the organisation to public hands and running it for people’s needs not a few peoples profits.

Outsourced Britain

As austerity continues to bites one of the big features before and now very much more so after the great recession is the idea of outsourcing and it is really happening on a huge scale lets be frank. Outsourcing is a good way for capitalist to drive down labour costs during times of austerity. Take N Power this week. "Npower is to cut 1,400 UK jobs. PA Npower is to close offices and outsource work to India in a move that will see 1,400 UK staff lose their jobs at the energy supplier. The announcement is expected to intensify public anger around the activities of the Big Six power companies and raise the political heat in Westminster where energy has risen to the top of the political agenda. Trade unions accused npower of serving up a "Christmas nightmare" by planning to offshore 1,400 jobs to India and transfer a further 570 to another British firm, probably Capita. It is understood that frontline call-centre operations will be outsourced to a third party in the UK, with back-office work moved to India. Union leaders warned the moves would backfire and further tarnish the reputation of npower which came bottom for customer service in a recent survey and which told a parliamentary committee earlier this year that it had paid almost no corporation tax for three years. Npower, the energy supplier of Germany's RWE, hit gas and electricity customers with a 10.4% rise in fuel bills earlier this month and its central London offices were the target of fuel poverty demonstrations earlier this week. The company declined to comment on the planned office and staff cuts but well-informed sources told the Guardian that npower staff would be informed of the changes at 9am on Thursday. Npower said in a statement: "As we announced a couple of months ago, npower has been undertaking a major review of sites, operations and people across the UK. "We've been doing this to improve our customer service and keep our costs down, at a time of external pressures on customers' bills. As we've always said, we'll tell our people first and then inform the media," it added. Npower and the other big six firms such as SSE and Centrica insist that they have to raise domestic bills and trim their costs in a bid to counter the impact of rising wholesale prices and green levies for home insulation. Npower's parent RWE said earlier this month that 6,750 jobs would need to be cut across Europe as it tries to reduce a debt mountain of over £28bn, partly caused by the Berlin government's decision to phase out nuclear power stations." The key bit that jumps out at me in that piece in the Guardian was the cutting costs line. This is clearly not to cut costs for the customers and those who use Npower but to keep costs down for the business and to maintain profits and raise profit levels if possible. With Britain being the second biggest nation for outsourcing we will see in time if its allowed to happen a huge wave of outsourcing to other cheaper nations and to areas where the labour costs are cheaper. In an excellent piece on Open democracy Stuart Weir writes "The government has put a huge FOR SALE sign over the country’s public assets and services. According to the sharedserviceslink.com website, the bulletin board for “leaders in finance shared services”, the United Kingdom is the world’s largest out-sourcing market after the United States. The number of contracts in the UK has increased sharply by 47 per cent to 148 contracts a year since 2010. The annual contract value for this country jumped 16 per cent in 2012 to $3.75 billion! All this before the major sale drive about to take place in the NHS. The International Services Group (ISG) states that the UK accounted for 80 per cent of all contracting out across Europe, the Middle East and Africa, making our government alone among the major European economies in using out-sourcing as a key element in its response to austerity. Richard Vize, of Outsourcer Eye, says that the application of cuts is dominated by “short-term thinking”. The effects of all this activity on quality or cost is unclear and there is no reliable information on the impact of cuts or out-sourcing – though these effects are visible, for example, in local government, the NHS and government agencies such as the Inland Revenue. The government’s “short-term” thinking is of course, as Polly Toynbee warned recently, part of a determined and reckless long-term drive to reduce the public sector to a mere rump. Social security is gradually being outsourced to charities and food banks, while services and assets are increasingly handed out to private firms to operate at often extortionate prices (like the trains), described by George Monbiot as the 'toll booth economy'. The effects on ordinary citizens will be far-reaching and devastating, the more so for the vulnerable people whom the state has long acknowledged a responsibility to protect. The state is being fundamentally transformed before our eyes. This is a phase or a form of capitalism which is turning public service’s into money making enterprises and this will stop at nothing. From our energy sector to our schools and hospitals nothing is sacred when it comes to capital's drive for greater and grater profits. With thanks to open democracy link to article at http://www.opendemocracy.net/ourkingdom/stuart-weir/uk-becomes-worlds-second-largest-outsourcing-market

The bond of political economy

Politics and economics in my opinion as was Karl Marx cannot be separated and the two go hand in hand politics effect economics and economics effect politics. To some people certainly in the bourgeois media politics and the economy seem detached but they are really not. Karl Marx recognised this many years ago when he set about his work on political economy including his most famous works in Das Capital. Marx's critique of political economy was not a proposal for a new, 'socialist economics'-for Marx, socialism implied the withering away of economics. Nor was it a 'critique of capitalism'. I think that 'criticising' a social order is a bit like criticising the weather. (As Mark Twain complained, everybody grumbles, but nobody seems to do anything about it.) In any case, Marx never used the word 'capitalism'. As he explained, his critique is directed primarily against the categories of political economy, that is, against economics as such. (When Marx spoke of 'the system of bourgeois economy', he always meant the science of political economy.) For Marx, classical political economy, utopian socialism and the Hegelian system represented the attempts of the greatest bourgeois thinkers to grasp the nature of modern society. Their categories and methods of thought gave the highest theoretical expression to the contradictions of bourgeois social relations. Essentially, all of these contradictions, including the struggle between capital and the proletariat, express a more fundamental one: that between humanity-self-creation, selfconsciousness, sociality-and inhumanity-whatever blocks and perverts these. What economics took for granted as 'natural' and 'rational', Marx saw as the inhuman and irrational shell inside which human life was imprisoned. Marx's critique is inseparable from its struggle to smash this shell. Marx characterised the 'classical political economists' as those who, 'since the time of W Petty have examined the real internal framework [innern Zusammenhang = inner coherence] of bourgeois relations of production' (Marx, 1976 Vol.I/l: 174-5). As he wrote in a well-known letter: Once insight into the connectedness has been gained, all theoretical belief in the permanent necessity of existing conditions collapses before the practical collapse. (Marx to Kugelmann 11/7/1868, in Marx and Engels, 1983:149). There clearly is a dialectical relation between politics and economics which for Marx made perfect sense. In examining the work of the classical political economists, Marx was investigating a social illness. It was like his attitude to religion: it could not be cured by correcting some logical errors, but only by overthrowing the social order whose contradictions they expressed. His critique opened the way for 'revolutionary practice', in which 'human activity or self-change' could be seen to coincide with 'the changing of circumstances' (ibid. The greatest philosophers and political thinkers tried to systematise this ordinary consciousness. That was how political economy, when it was still a science, studied the heart of the capital relation, its 'inner coherence', and that was why Marx spent forty years on its critique. Political economy took the upside-down forms within which the inhumanity of bourgeois relations seemed 'natural' to ordinary consciousness, and tried to make them into a coherent system. But because these forms were essentially a denial of humanity, this attempt could not succeed. Just as the exchange relation itself was crazy [verruckt],4 so were the categories of the very best political economy. ('Vulgar economists' were absolutely no use for Marx's purposes.) Through the essential inconsistencies in this science, Marx sought to reveal the contradictions of those social forms. The critique of this bourgeois science thus showed that the 'integument' could be broken through by the socialist revolution, to open the way for a life 'worthy of our human nature' (Marx, 1978 Vol 3. So when we think about politics we must link it always in to economics and vice versa. Marx was right on this point and we should not forget this fact.

Why the underconsumptionists appear to be winning the argument

This is the perception anyway. The underconsumptionist argument detailed by myself and Bruce and Steve Dobbs in various blogs in the last few months has detailed how they as revolutionaries try to explain the crisis. It is clear that this is a popular and highly thought of position certainly within the trade unions anyway. This is a worry and not just for Marxists. If the trade union movement or the labour movement believe in reforming capitalism and that it is simply a lack of demand that is hampering the capitalist mode of production from investing then we are indeed in a very very bad place indeed. I do believe the under consumption position is so wide spread is because it is easy. It is easy to understand and then consider yourself a Marxist if you get it which frankly isn’t hard. You don’t need to read Marx or Lenin or any Marxist economist if you believe that there is no such thing as a falling rate of profit or if you do and just consider it maybe as part of a multi causal cause of a crisis under capitalism then you nod to yourself and carry on This was in fact my position for a long time and due to me not critically thinking and not questioning the position and the economic analysis of my own party I just took this explanation as read. I have now met a fantastic group of Marxists and have now started to root out the causes of capitalist crisis and Marx himself provided us with a brilliant and well thought out explanation and it is an amazement that more Marxists do not and refuse to take this up. I do wonder why. Maybe the implications of what Marx says is too much for some and the status quo is something however much some may detest it maybe just too great to get rid of all together ? But as I say holding a under consumptions view on the cause of the crisis and all crisis's is a quite simple and yet it is not a view that is helpful to the labour movement. Under consumptionism which in affect is a Keynesian idea and as a result is a bourgeois idea and even Keynes was not on the side of the workers so why some bring this into the labour movement I have no idea. Maybe they fear the socialist revolution more than the capitalists themselves? As I say this is an easy position to get to grips with all be it not a Marxist position at all as I shall explain. “For Marxists, capitalism goes into economic slump because profitability drops so much that the mass of profit starts to fall. This leads to capitalists stopping investment in real production. If credit is provided, investors use their money to invest in other assets that are not productive like property or speculating in shares. Thus this capital becomes fictitious. It will not stop the eventual slump but merely delay it. Once enough capital value (of money, labour and plant) is destroyed and profitability is restored, those capitalists that are left will start to invest again and the ‘liquidity trap’ will end. Just as huge dollops of credit will not stop a slump under capitalism; neither will huge dollops of credit revive capitalism, if profitability is not right.... Slumps cannot be avoided under capitalism, because they are necessary to restore profitability when it gets too low.” The laws of motion that Marx identified in the capitalist mode of production, including the Law of the Tendency of the Rate of Profit to Fall (LTRPF), are responsible for booms and slumps and crises. Quite often you will get arguments like this below on the left and must be taken to task as Steve Dobbs a fine comrade and a comrade I have huge respect for has done in his blogs repeatably . “The reality is the capitalist system has reached its limits. In the past, it was able to develop the productive forces at a colossal pace. The recent period of globalization and intensification of world trade reflects the latest efforts of the system to overcome its contradictions. Credit was used to extend the market beyond the limits of capitalism but this has now reached its limits..... While corporations are flush with cash, they are not prepared to invest given the lack of markets but without investment there can be no recovery. This, in turn, adds to a collapse in demand. It is a vicious circle.” The capitalist system has reached an impasse. Sound familiar? It gets better: “Marx analysed capitalism long ago. He explained the contradictions of a system based upon the drive for profit. The capitalists employ workers in order to squeeze surplus value from their labour. This surplus value is then reinvested by the capitalists to make more money which serves to develop the productive forces. However, the barrier to capitalism is capital itself. The outpouring of commodities seeking new markets reaches a crescendo at the height of the boom. However, there comes a point where the limits of the market come into collision with the unlimited production of commodities. This leads to an inevitable crisis of over-production, as witnessed in 2008-9. Everything comes to a complete standstill. The capitalist system is paralyzed, not because people do not want things, but because of a shortage of effective demand, i.e. money to buy the products.” So now the problem is the limits of the market – there is not enough demand for all these commodities produced, so there is overproduction of commodities. This is nonsense. Workers can never afford to buy back the goods they produce, so how can this be a cause of crisis? Overproduction is never in relation to consumer demand, as I explained previously. “A fall in the rate of profit and accelerated accumulation are different expressions of the same process only in so far as both reflect the development of productiveness.... Those economists, therefore, who, like Ricardo, regard the capitalist mode of production as absolute, feel at this point that it creates a barrier itself, and for this reason attribute the barrier to Nature (in the theory of rent), not to production. But the main thing about their horror of the falling rate of profit is the feeling that capitalist production meets in the development of its productive forces a barrier which has nothing to do with the production of wealth as such; and this peculiar barrier testifies to the limitations and to the merely historical, transitory character of the capitalist mode of production; testifies that for the production of wealth, it is not an absolute mode, moreover, that at a certain stage it rather conflicts with its further development.” (Marx, Capital vol 3, Chapter 15, http://www.marxists.org/archive/marx/works/1894-c3/ch15.htm) As Marx states, the capitalist mode of production becomes the barrier to itself because of the falling rate of profit, which means that capital can no longer accumulate at the same pace. This is rooted in production, not the market. In fact, Marx explicitly cites the falling rate of profit as the underlying cause of over-production and crises: “On the other hand, the rate of self-expansion of the total capital, or the rate of profit, being the goad of capitalist production (just as self-expansion of capital is its only purpose), its fall checks the formation of new independent capitals and thus appears as a threat to the development of the capitalist production process. It [the falling rate of profit] breeds over-production, speculation, crises, and surplus-capital alongside surplus-population.” (Marx, Capital vol 3, Chapter 15, http://www.marxists.org/archive/marx/works/1894-c3/ch15.htm) Clearly, having large amounts of debt in itself does not cause crisis. Remember, the highest percentage of debt to GDP, 250%, the British government had was after WW2, but it was able to pay off most of the debt over the proceeding decades on the basis of the high rate of profit. http://www.google.com/url?q=http%3A%2F%2Fsocialismiscrucial.files.wordpress.com%2F2013%2F08%2Fuk-debt.jpg&sa=D&sntz=1&usg=AFQjCNFxiv0oIittK6-hP5A1Ey7cg2wT6w With thanks and links and references to comrade Steve dobbs who blogs at http://wp.me/p2NvOP-36

Prospects for the UK economy

Prospects for the UK economy As we hear today Britain has seen some modest growth figures. Is this cause for celebration or a false dawn? — Britain's economy grew faster than thought in the second quarter, official data showed on Friday, extending a broadly based recovery. Gross domestic product (GDP) -- the total value of goods and services produced in the economy -- grew by 0.7 percent in the second quarter, the Office for National Statistics said in a statement. That marked an upgrade from the initial estimate of 0.6-percent expansion. Growth occurred across all sectors of the economy, with small upward revisions across manufacturing, construction and parts of services. Second-quarter GDP growth has more than doubled from the 0.3-percent expansion that was witnessed in the first three months of the year. The economy expanded by 1.5 percent in the second quarter, or three months to the end of June, compared with the equivalent period in 2012, the ONS added. That was also up from the previous estimate of 1.4 percent. Sterling and the London stock market shrugged off the news. Market expectations had been for no change to both figures, according to analysts polled by Dow Jones Newswires. The ONS added that construction activity expanded by 1.4 percent in the second quarter, up from the initial estimate of 0.9 percent, as the housing market was partly lifted by state schemes that are aimed at stimulating lending to homebuyers. Factory output grew 0.7 percent in the quarter, up from the prior figure of 0.4 percent, while consumer spending rose 0.4 percent. There were also upward revisions for output from distribution, hotels and catering firms, as well as business services and finance firms, and the agriculture sector. Britain's shrinking net trade deficit, which dropped to £3.2 billion ($5.0 billion, 3.7 billion euros) in the second quarter from a £4.3-billion deficit in the first quarter, also boosted growth as exports hit a record level. Friday's data comes one week after news that British retail sales -- a vital indicator of consumer confidence -- jumped 1.1 percent in July from June as a heat wave fuelled spending on food, drinks and summer clothing. "The slight upward revision to Q2 GDP continues the run of good news on the UK economy and the spending breakdown looks reasonably encouraging too," said Vicky Redwood, chief UK economist at consultancy Capital Economics. "The initial estimate of a 0.6-percent quarterly rise has been nudged up to 0.7 percent and now looks even better compared to the more modest rises seen in the US and euro zone in Q2. "As indicated by the timelier retail sales figures, consumer spending played a big role." ING economist James Knightley added that the higher estimate of GDP will "boost optimism on the economy". Although this is some modest growth it is still the fact that not enough constant capital dead labour in affect has not been destroyed to restore the rate of profit. As such the system is bound to hit trouble in the near future. As we know the capitalist system is not based on meeting so called demand in fact workers can never buy back what they create as this would mean the system wouldn’t be capitalist at all in fact. This is a crisis of profitability with the under lying crisis being caused by the law of the tendency of the rate of profit to fall which Karl Marx brilliantly described many years ago in his works on das capital in the 19th century. For the capitalist system to come out of recession a certain amount of constant capital needs to be destroyed to create space for new modes of production to sprout. The reason the recovery is so sluggish is due to the organic composition of capital and the simply fact there is still far too much constant capital to variable in a ratio form anyway. We are not out of the woods yet and any capitalist polititian calling this a real recovery should hold fire. Certainly in the UK much of this short term growth can be put down to the laying off of workers and the driving down of the surplus workers receive their wages in other wods increasing profits as a result. Capitalism is a system which invests for profits not to meet need so calling this a crisis of under consumption I don’t think is right as capitalism has never been about meeting the working class’s needs not now not ever. Understanding Marx’s 3rd law of capitalist motion is key to understanding that the system cannot be reformed or made to work for us. It simply must be replaced with a system planned to meet the mass’s needs before profits are even considered which under socialism they will become less and less relevant.

The long term view of capitalist development or degeneration

There is much talk in the financial press and among economists of the risk that the major capitalist economies could be slipping back into recession. Economic data for the US and Europe are indicating a significant slowdown in economic growth and a weak recovery in employment and investment. Is this just a temporary blip or does it represent a significant downturn? I would like to answer that by returning to the long view. The long view I’d describe is Karl Marx’s law of the tendancy of the rate of profit to fall which I believe is the underlying cause of the capitalist crisis and indeed is the cause of most if not all crisis’s and is Marx’s 3rd law of capialistmotion which we must look at to understand the changes in capitalism and how we stand today. Just taking the post-war period, there was a Golden Age of profitability from 1946 to 1965 when the rate of profit (ROP) was high and even rising. During this period, economic recessions were few and relatively shallow. Then there was a period of crisis when profitability fell steadily until it reached a nadir in 1982. During this period, economic recessions were more frequent, violent and deep i.e. 1969-70, 1974-5 (the first simultaneous post-war economic recession) and 1980-2 (the deepest recession since the 1930s). After 1982 there was a recovery in profitability right up to 1997. This was the period of so-called neoliberalism that many have argued constitutes a completely new structure of capitalism based on ‘financialisation’ and neoliberal policies of privatisation and weakening of the labour movement (see my comrade Steve Dobson’s excellent post “neo liberalism a new stage of capitalism” a http://socialismiscrucial.wordpress.com/2013/07/25/neoliberalism-a-new-stage-of-capitalism/ There was only one significant economic slump in 1990-1. What next? Once the ROP starts falling, it takes a few years before an economy moves into recession. The ROP has usually been falling for three to four years before that happens. On that basis, the US economy will not drop into a new recession until about 2014 onwards. The debate continues among Marxist economists, but if the underlying cause of capitalist crisis is a falling ROP, then a new slump is unlikely to develop until 2014. But it confirms that even the Great Recession of 2008-9 was not big enough to restore a sustained rise in the ROP. That is because it has not destroyed enough value in accumulated capital or in the excessive build-up of debt (fictitious capital) before 2007. More destruction of value is necessary to do that. That there is still much fictitious capital in the system is revealed by the value of the stock market relative to a measure of the real value of the companies the stock prices represent. James Tobin, the leftist economist, developed a measure to tell if the stock market was overvalued or not and whether it would be heading down. It is called Tobin’s Q, measuring the stock market’s value against the replacement value of all the assets of the companies in a stock market index –for the US S&P-500 stock index (the top 500 companies It is difficult to fully predict how the economies of the world will develop by focusing on Marx’s works in volume 3 of capital and especially the chapters on the law of the tendency of the rate of profit to fall are crucial to understanding crisis I feel. I am studying all sorts of facts and figures trying to get to grips with crisis and Marx understands there are many views out there with lots of figures which prove something different. We must be careful to pay attention to all sides of the debate and be sure to uphold the law of Marx who was sure of the cause of capitalist crisis’s despite not finishing volume 3 all his work was there if not published it was in draft form ready for Engel’s to publish and edit and place in order the content was always there. Marx didn’t call this law the most important in political economy for no reason at all. Let’s get with the programme and take up Marx’s ideas again and apply them to 2013.

Capital acting as a barrier to itself

Many economists and Marxists too have struggled with the reasons for crises in the capitalist system. Well the whole system is based on contradictions which become greater and greater as the system develops into a more advanced economic system. As a Marxist I follow the writings of Karl Marx not dogmatically but by applying his theories to the current situation today. I am a big supporter of Marx’s theory of the tendency of the rate of profit to fall and believe firmly that this is where Marxists and economists alike should be focusing their studying time. I’ve just finished the section the 3 chapters which I think are crucial in Marx’s capital Vol 3 are chapters 13, 14 and 15. In the first chapter 13 Marx sets out his theory of the tendency of the rate of profit to fall in a superb fashion going on in the other two chapters to explain what counter actions could be put in place to slow or decrease the fall of the rate of profit to fall whilst upholding that this can only ever be temporary and eventually the economic crash is not far away and counter measures o stem the crisis like we are seeing right now will only delay the eventual slump and depression. Capitalists area always having to update and improve their modes of production speed up the process buy more effective and efficient machinery and this as a result takes away the role of a labourer or two this as we know diminishes the rate of surplus value due to the need to improve production forces yet the source of a capitalist profit from the embodiment of human wage labour is reduced to the addition of new machines causing the rate of profit to fall s a result. This is a natural process as to remain competitive the capitalist must cut his production costs in terms of his constant capital and his means of production. The e rules of competition require the capitalist to constantly try and out do his competitors to steal a march in the market and to eventually drive out his competitors he does this in several ways. Karl Marx writes in his supplementary remarks in chapter 15 of volume 3 “While the circulating part of constant capital, such as raw materials, etc., continually increases its mass in proportion to the productivity of labour, this is not the case with fixed capital, such as buildings, machinery, and lighting and heating facilities, etc. Although in absolute terms a machine becomes dearer with the growth of its bodily mass, it becomes relatively cheaper. If five labourers produce ten times as much of a commodity as before, this does not increase the outlay for fixed capital ten-fold; although the value of this part of constant capital increases with the development of the productiveness, it does not by any means increase in the same proportion. We have frequently pointed out the difference in the ratio of constant to variable capital as expressed in the fall of the rate of profit, and the difference in the same ratio as expressed in relation to the individual commodity and its price with the development of the productivity of labour. [The value of a commodity is determined by the total labour-time of past and living labour incorporated in it. The increase in labour productivity consists precisely in that the share of living labour is reduced while that of past labour is increased, but in such a way that the total quantity of labour incorporated in that commodity declines; in such a way, therefore, that living labour decreases more than past labour increases. The past labour contained in the value of a commodity — the constant part of capital — consists partly of the wear and tear of fixed, partly of circulating, constant capital entirely consumed by that commodity, such as raw and auxiliary materials. The portion of value deriving from raw and auxiliary materials must decrease with the increased productivity of labour, because with regard to these materials the productivity expresses itself precisely by reducing their value. On the other hand, it is most characteristic of rising labour productivity that the fixed part of constant capital is strongly augmented, and with it that portion of its value which is transferred by wear and tear to the commodities. For a new method of production to represent a real increase in productivity, it must transfer a smaller additional portion of the value of fixed capital to each unit of the commodity in wear and tear than the portion of value deducted from it through the saving in living labour; in short, it must reduce the value of the commodity. It must obviously do so even if, as it occurs in some cases, an additional value goes into the value of the commodity for more or dearer raw or auxiliary materials over and above the additional portion for wear and tear of the fixed capital. All additions to the value must be more than offset by the reduction in value resulting from the decrease in living labour. This reduction of the total quantity of labour going into a commodity seems, accordingly, to be the essential criterion of increased productivity of labour, no matter under what social conditions production is carried on. Productivity of labour, indeed, would always be measured by this standard in a society, in which producers regulate their production according to a preconceived plan, or even under simple commodity-production. But how does the matter stand under capitalist production? Suppose, a certain line of capitalist industry produces a normal unit of its commodity under the following conditions: The wear and tear of fixed capital amounts to ½ shilling per piece; raw and auxiliary materials go into it to the amount of 17½ shillings per piece; wages, 2 shillings; and surplus-value, 2 shillings at a rate of surplus-value of 100%. Total value = 22 shillings. We assume for the sake of simplicity that the capital in this line of production has the average composition of social capital, so that the price of production of the commodity is identical with its value, and the profit of the capitalist with the created surplus-value. Then the cost-price of the commodity = ½ + 17½ + 2 = 20s. the average rate of profit 2/20 = 10%, and the price of production per piece of the commodity, like its value = 22s. Suppose a machine is invented which reduces by half the living labour required per piece of the commodity, but trebles that portion of its value accounted for by the wear and tear of the fixed capital. In that case, the calculation is: Wear and tear = 1½ s., raw and auxiliary materials, as before, 17½s. wages, 1s., surplus-value 1s., total 21s. The commodity then falls 1s. In value; the new machine has certainly increased the productivity of labour. But the capitalist sees the matter as follows: his cost-price is now 1½s. For wear, 17½s. For raw and auxiliary materials, 1s. For wages, total 20s., as before. Since the rate of profit is not immediately altered by the new machine, he will receive 10% over his cost-price, that is, 2s. The price of production, then, remains unaltered = 22s., but is 1s. Above the value. For a society producing under capitalist conditions the commodity has not cheapened. The new machine is no improvement for it. The capitalist is, therefore, not interested in introducing it. And since its introduction would make his present, not as yet worn-out, machinery simply worthless, would turn it into scrap-iron, hence would cause a positive loss, he takes good care not to commit this, what is for him a utopian, mistake. The law of increased productivity of labour is not, therefore, absolutely valid for capital. So far as capital is concerned, productiveness does not increase through a saving in living labour in general, but only through a saving in the paid portion of living labour, as compared to labour expended in the past, as we have already indicated in passing in Book I (Kap. XI II, 2, 5. 409/398). [English edition: Ch. XV, 2. — Ed.] Here the capitalist mode of production is beset with another contradiction. Its historical mission is unconstrained development in geometrical progression of the productivity of human labour. It goes back on its mission whenever, as here, it checks the development of productivity. It thus demonstrates again that it is becoming senile and that it is more and more outlived.] [1] Under competition, the increasing minimum of capital required with the increase in productivity for the successful operation of an independent industrial establishment, assumes the following aspect: As soon as the new, more expensive equipment has become universally established, smaller capitals are henceforth excluded from this industry. Smaller capitals can carry on independently in the various spheres of industry only in the infancy of mechanical inventions. Very large undertakings, such as railways, on the other hand, which have an unusually high proportion of constant capital, do not yield the average rate of profit, but only a portion of it, only an interest. Otherwise the general rate of profit would have fallen still lower. But this offers direct employment to large concentrations of capital in the form of stocks. Growth of capital, hence accumulation of capital, does not imply a fall in the rate of profit, unless it is accompanied by the aforementioned changes in the proportion of the organic constituents of capital. Now it so happens that in spite of the constant daily revolutions in the mode of production, now this and now that larger or smaller portion of the total capital continues to accumulate for certain periods on the basis of a given average proportion of those constituents, so that there is no organic change with its growth, and consequently no cause for a fall in the rate of profit. This constant expansion of capital, hence also an expansion of production, on the basis of the old method of production which goes quietly on while new methods are already being introduced at its side, is another reason, why the rate of profit does not decline as much as the total capital of society grows. The increase in the absolute number of labourers does not occur in all branches of production, and not uniformly in all, in spite of the relative decrease of variable capital laid out in wages. In agriculture, the decrease of the element of living labour may be absolute. At any rate, it is but a requirement of the capitalist mode of production that the number of wage-workers should increase absolutely, in spite of its relative decrease. Labour-power becomes redundant for it as soon as it is no longer necessary to employ it for 12 to 15 hours daily. A development of productive forces which would diminish the absolute number of labourers, i.e., enable the entire nation to accomplish its total production in a shorter time span, would cause a revolution, because it would put the bulk of the population out of the running. This is another manifestation of the specific barrier of capitalist production, showing also that capitalist production is by no means an absolute form for the development of the productive forces and for the creation of wealth, but rather that at a certain point it comes into collision with this development. This collision appears partly in periodical crises, which arise from the circumstance that now this and now that portion of the labouring population becomes redundant under its old mode of employment. The limit of capitalist production is the excess time of the labourers. The absolute spare time gained by society does not concern it. The development of productivity concerns it only in so far as it increases the surplus labour-time of the working-class, not because it decreases the labour-time for material production in general. It moves thus in a contradiction. We have seen that the growing accumulation of capital implies its growing concentration. Thus grows the power of capital, the alienation of the conditions of social production personified in the capitalist from the real producers. Capital comes more and more to the fore as a social power, whose agent is the capitalist. This social power no longer stands in any possible relation to that which the labour of a single individual can create. It becomes an alienated, independent, social power, which stands opposed to society as an object, and as an object that is the capitalist's source of power. The contradiction between the general social power into which capital develops, on the one hand, and the private power of the individual capitalists over these social conditions of production, on the other, becomes ever more irreconcilable, and yet contains the solution of the problem, because it implies at the same time the transformation of the conditions of production into general, common, social, conditions. This transformation stems from the development of the productive forces under capitalist production, and from the ways and means by which this development takes place. No capitalist ever voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit. Yet every such new method of production cheapens the commodities. Hence, the capitalist sells them originally above their prices of production, or, perhaps, above their value. He pockets the difference between their costs of production and the market-prices of the same commodities produced at higher costs of production. He can do this, because the average labour-time required socially for the production of these latter commodities is higher than the labour-time required for the new methods of production. His method of production stands above the social average. But competition makes it general and subject to the general law. There follows a fall in the rate of profit — perhaps first in this sphere of production, and eventually it achieves a balance with the rest — which is, therefore, wholly independent of the will of the capitalist. Three cardinal facts of capitalist production: 1) Concentration of means of production in few hands, whereby they cease to appear as the property of the immediate labourers and turn into social production capacities. Even if initially they are the private property of capitalists. These are the trustees of bourgeois society, but they pocket all the proceeds of this trusteeship. 2) Organisation of labour itself into social labour: through co-operation, division of labour, and the uniting of labour with the natural sciences. In these two senses, the capitalist mode of production abolishes private property and private labour, even though in contradictory forms. 3) Creation of the world-market. The stupendous productivity developing under the capitalist mode of production relative to population, and the increase, if not in the same proportion, of capital-values (not just of their material substance), which grow much more rapidly than the population, contradict the basis, which constantly narrows in relation to the expanding wealth, and for which all this immense productiveness works. They also contradict the conditions under which this swelling capital augments its value. Hence the crises. References Karl Marx capital volume 3 Penguin edition http://www.marxists.org/archive/marx/works/1894-c3/ch15.htm

a brief look at merchants capitalism

Right across the world some of the biggest well known brand names including Nike, Apple, Benetton, Gap and others have huge power now with allot of them acting under a merchant capitalist mode of production. What I mean is that the likes of Nike and Apple do not produce anything at all. They do not produce any surplus value to speak of the sub contract all their work out to companies in Asia or Central America where the rate of exploitation is huge. This means that the merchant capitalist such as Nike does not have to enter into labour negotiations rather rather it is the sub contractor who deals with labour negotiations which usually means not recognising unions and making their workers work in some of the worst conditions known to man on the planet all in the pursuit of profit for themselves but also Nike or whoever is the merchant capital putting their capital into circulation in the homeland. It is a quite strange thing to say thing to say when you say Apple doesn’t actually produce anything at all but it is the case all of their products are made in China with the likes of Foxcom who saw huge workplace riots just last year due to Apples drive for lower wages and harder and harder rates of exploitation. Due to the huge demand for their commodities their products in other words in the western world their workers who are sub contracted not actually employed by Apple as such but Apple do extract the mass of surplus value or a cut of that value for their own profitable ends. As Karl Marx wrote in capital volume 3 “Hitherto we have considered merchant's capital merely from the standpoint, and within the limits, of the capitalist mode of production. However, not commerce alone, but also merchant's capital, is older than the capitalist mode of production, is, in fact, historically the oldest free state of existence of capital.” “Since merchant's capital is penned in the sphere of circulation, and since its function consists exclusively of promoting the exchange of commodities, it requires no other conditions for its existence — aside from the undeveloped forms arising from direct barter — outside those necessary for the simple circulation of commodities and money. Or rather, the latter is the condition of its existence. No matter what the basis on which products are produced, which are thrown into circulation as commodities — whether the basis of the primitive community, of slave production, of small peasant and petty bourgeois, or the capitalist basis, the character of products as commodities is not altered, and as commodities they must pass through the process of exchange and its attendant changes of form. The extremes between which merchant's capital acts as mediator exist for it as given, just as they are given for money and for its movements. The only necessary thing is that these extremes should be on hand as commodities, regardless of whether production is wholly a production of commodities, or whether only the surplus of the independent producers' immediate needs, satisfied by their own production, and is thrown on the market. Merchant's capital promotes only the movements of these extremes, of these commodities, which are preconditions of its own existence.” Understanding merchant’s capitalism is quite important as I believe and as I’ve understood laid the basis for capitalism to develop on a larger scale. It is the point in which capital is put into motion by those financial capitalists with the capital to invest in new areas of industry to socialise more labour power to then convert this into greater and greater surplus value. Being such an old system it is interesting to look into the ways merchant capital progressed. Merchant capitalism is a term used by economic historians to refer to the earliest phase in the development of capitalism as an economic and social system. Early forms of merchant capitalism were developed in the medieval Islamic world from the 9th century, and in medieval Europe from the 12th century. In Europe, merchant capitalism became a significant economic force in the 16th century, depending on point of view. The mercantile era drew to a close around 1800, giving way to industrial capitalism. However, merchant capitalism remained entrenched in some parts of the West well into the 19th century, most notably the Southern United States, where the plantation system constrained the development of industrial capitalism (limiting markets for consumer goods) whose political manifestations prevented Northern legislators from passing broad economic packages (e.g. monetary and banking reform, a transcontinental railroad, and incentives for settlement of the American west) to integrate the states' economies and spur the growth of industrial capitalism.[4] Merchant capitalism is distinguished from the mature variety by the lack of industrialization and commercial finance. Merchant houses were backed by relatively small private financiers acting as intermediaries between simple commodity producers and by exchanging debt with each other. Thus, merchant capitalism preceded the capitalist mode of production as a form of capital accumulation. The transformation of merchant capitalism into industrial capitalism necessitated, according to Karl Marx, a process of primitive accumulation of capital, upon which commercial finance operations could be based and making application of mass wage labor and industrialization possible. This period was also more commonly known as Mercantilism a primititive stage in capitalist production. With extracts from Wickepedia and Karl Mars’s volume 3 by penguin books.

A distinct lack of genuine political debate

In todays modern fast moving ever changing society we find ourselves in a state of low class contiousness due to a lack of struggles up till now as we had been part of a boom time. Things are changing but i wanted to touch on something which has become increasingly clear to me.

The lack of genuine political debate is very evident to me. The fact that all political parties the main ones i mean Labour, tory and Lib dems are very similar in their nature and similar in the system they support. The exploititive system of capitalism. Some support it more than others but be under no doubt none want to do away with it or even begin to discuss if there is a better way for all of us.

There is multiple reasons why i think this is. They all wish to manage capitalism the best and each election they battle with eachother on tiny differences in who can manage capitalism better than the other. New labour did do a good job of this from a capitalist point of view they helped the rich get even richer than ever before giving tax cuts to the rich and deregulating the banks.

The lack of a genuine voice for workers and working class people and the poor is very striking i feel. Not that a mass workers party would find it any easier to get their ideas out ther as the mass media is still owned and controlled by the rich capitalist barons.

But having a mass party of workers organised in trade unions too all standing up for workers and popularising other ideas like socialism and socialist ideas such as a shorter working week with no loss of pay, a mass affordable house building scheme to tackle our shortage of affordable homes for all, nationalisation of the commanding heights of the economy and major utilities including energy water etc. All of these ideas could be given a mass hearing if a new workers party was formed.

The fact is we have to try doubley hard to get our ideas out ther to people. People still read papers like the sun and the daily mail sadly it is not about condemning them for daring to read such papers that is their choice but about us engaging with them and steering their ideas in a friendly socialist manner. Asking them questions and engaging in real debate is waht is needed.

Take BBC question time on a thursday night meant to be the highlight of the week and the height of political debate. I frankly do not see any debate on there at all anymore. You have lib dems, tories and labour all argueing who can screw over the poor the most. None of them speak up for ordinary workers and any questions an audience asks they are baffled with science and fobbed off. This is not good enough and a change is needed.

Such ideas of socialism and trade unionism have been down trodden for years and years and it will take a while to get the ideas back into peoples minds. Big struggles like strikes on november the 30th and more like that will do wonders to increasing peoples understanding and contiousness of the unfair world around us that we live under.

Having our own media will be a start i feel. In the socialist party we produce our own weekly paper produced by working class people for working class people not for a profit but to spread the ideas of our party and to popularise ideas that can improve the situation we all live under.

The wealth is there in society we in Britain are one of the worlds richest nations i simply do not accept there is no money left. There is if it is distributed fairly among all in society not concentrated among a elite few.