Marxist crisis theory, does it matter?

I’d argue it does very much. To have an understanding on crisis and the reasons why and how they occur under capitalism and why the system is riddled with contradictions and crisis is key to understanding the world we live in in 2013. In 2007/08 many so called economists were caught off guard when the economic crisis or what it has now been dubbed the great recession hit. Why was this? Well many economists are pro capitalist and do not understand the labour theory of value but also they were taken in by the system thinking that the boom times could keep on rolling and rolling indefinitely. As Marxists we know capitalism is a system which serves rich elite who control and own the means of production for profits sake. The recent economic crisis and persistent recession are bringing out new interest in Marx’s writings. We are in danger of Marx being reduced to a figurehead Who can be used by anyone to mean anything, as members of the “Marx industry” use his name to promote their own theories even when the result is to make Marx’s own theory disappear from view? Marx’s works can be difficult to understand today, when we have little context for the milieu in which he was writing, yet once understood, they illuminate capitalism and what must be changed in order to replace it with a new human society, as no other thinker’s writings can do. We want young people and new people looking for revolutionary ideas to be able to learn and evaluate Marx’s theories for ourselves, not to be misinformed by “Marxists” who are promoting their own theories as superior to his. Many economists including many Marxists point to one of the contradictions of capitalism at present of the huge hordes of money many capitalists are sitting on. This is indeed interesting and has puzzled me for a very long time. Until I myself read Marx and tried to get my head around how this could be. As comrade Bruce Wallace points out on his excellent blog http://69.195.124.91/~brucieba/ “By 2020 (seven years!) The capitalists will have $900 trillion of financial assets worldwide, compared to $90 trillion of GDP. Yes that’s right they are in massive debt but will have assets ten times the size of world economic output! How can this be possible? Some Marxists suggests that the capitalists have loads of capital (awash in profits, drowning in capital and other aquatic metaphors) and won’t invest because there is no demand. Yes this is the stock Keynesian bourgeois economist’s explanation of crisis. However we have a problem? How is it possible to be in massive debt but to be awash in assets at the same time? Well it isn’t. The projected $900 trillion in assets isn’t real! This represents the massive fictitious capital that has swollen and will continue to swell through the proliferation of financial instruments such as credit default swaps and other exotic financial trickery. In reality things aren’t so rosy. The US capitalists for example are in massive debt and any assets need to be balanced against that. Market Watch reported in August 2010 (which is a bit dated but trends have continued since then) ”According to the Federal Reserve, nonfinancial firms borrowed another $289 billion in the first quarter, taking their total domestic debts to $7.2 trillion, the highest level ever. That’s up by $1.1 trillion since the first quarter of 2007; it’s twice the level seen in the late 1990s”. So is it any wonder I’m starting to question and wonder just a little bit about our own economic analysis of the socialist party and the CWI. As Michael Roberts a Marxist economist who I’ve been following of late who I find has an interesting take on the global financial situation says in a recent blogpost “In my view, we are now in a Long Depression, centred in the advanced capitalist economies but also affecting the emerging capitalist economies. The latter do better because they still have ample supplies of cheap labour available to exploit (well, at least some larger emerging economies do). So absolute surplus value can be increased without Marx's law of profitability applying too strongly. What do I mean by that? Well, capitalists are permanently engaged in the search for value, or more specifically, surplus value. They can get that globally by drawing more of the population into capitalist production. The big issue is how much longer capitalism can continue to appropriate value from human labour power when the workforce globally can no longer expand sufficiently. Ironically, the UK's right-wing City paper City Am put it from the perspective of capital: "People, not commodities, land or even capital, are the ultimate resource of an economy, as the US academic Julian Simon famously put it. Without talented, motivated, skilled and educated individuals, nothing is possible; capital itself is a product of labour. Human ingenuity is able to overcome everything. Malthusians who dream of a shrinking population and who reflexively believe that every country is over-populated are wrong. This is always a lesson that nations suffering from shrinking populations relearn at great cost: all the productivity growth in the world is rarely enough to compensate for the psychological and actual effect of a declining population." More important, more people mean more potential value to be appropriated by capital. But getting more value and surplus value through extending the size of the workforce is increasingly difficult or even impossible in many advanced capitalist economies. Instead, in these economies, capitalists must try and raise surplus value though the intensity of work and through more mechanisation and technology that saves labour i.e. relative surplus value. But that, as Marx explained, brings into operation the law of the tendency of the rate of profit to fall and the ultimate barrier to further accumulation and growth in value (see my post on http://thenextrecession.wordpress.com/2012/09/12/crisis-or-breakdown/). “ Understanding crisis is crucial to have a chance in understanding the tight turns and longer term trends in capitalism and when the opportunities are best for the workers to go on the offensive. Right now workers are very much on the back foot defending their gains. As capitalism continues to struggle to improve the rate of profit more workers will be encourage into fighting back. Understanding crisis as a Marxist is crucial and taking a serious approach to the study of Marx’s work is the first step towards that. With thanks to my comrade Bruce Wallace and his excellent blog at http://69.195.124.91/~brucieba/

Ted Grant's Notes on Marxist Economics

http://socialismiscrucial.wordpress.com/2013/07/15/ted-grants-notes-on-marxist-economics/

The separation of exchange and use value as a process

I’ve noticed a trend of late that we’re seeing a separation more and more of exchange value and use value two separate parts which make up a commodity according to Karl Marx. A commodity has a use-value and an exchange value. Marx held that these two things implied a third thing, value, and that there was a fundamental antagonism inside this relation between use-value and exchange value. This contradiction pops up again and again in his writing on capitalism. Let’s see what he was talking about. A commodity has a use. This is its use-value. What does use-value tell us? It tells us how a commodity satisfies a social need. If we want to feed everybody we need a certain quantity of food. If we want to build everyone a house we need a certain quantity of wood and nails. Some use-values require no effort to attain: air, sun, gravity, etc. Others require effort to attain. There is a finite limit to the amount of labor that can be devoted to the production of use-values. Society must apportion this labor between the production of different use-values in some way. As technology changes the amount of labor required to produce some use-values decreases thus signaling a change in the apportioning of labor. As technology evolves to reshape what human labor is capable of producing so do our needs and desires evolve. In different societies this labor is apportioned by different methods. In a market society it is the buying and selling of the products of labor in the marketplace that serves the purpose of allocating labor between the production of this use-value or that use-value. This creates a second type of value, unique to market societies: exchange-value. Exchange value is the ratio in which one good exchanges for another. Perhaps one baseball exchanges for a loaf of bread. Or a new car exchanges for a thousand bottles of whiskey. These ratios are all exchange values. In a developed market society one commodity eventually emerges as the primary commodity in which all other commodities express their exchange value. This is what money is. For most of the history of capitalism this commodity has been gold. By comparing the ratio of apples or cars or Cricket bats to gold all commodities measured their exchange value in ratios to gold. These two sides of the commodity, its use-value and exchange value, form two opposing, contradictory poles. They may not seem very contradictory right now, but over the course of Das Kapital Marx shows us just how much of the social antagonisms of capitalism are rooted in this tension between use-value And use value. The two are constantly in dialectic to each other mixing and merging blurring the lines as a commodity is formed. Yet today we are finding that as capitalism is struggling in a fundamental crisis it’s struggling to find more and more exchange values. There are plenty of use values but not enough exchange values as I see it. Use-value only exists for a person using a commodity. If I am selling a Apple or a Football this commodity has no use-value at all for me. Its use-value only exists as a social use-value for a society that has demanded its production. But I, the seller, have no use for it at all. I am only interested in the exchange-value, how much money I can get for it. Once the commodity has been consumed it looses exchange value. So a comodity is only able to deal with exchange value for as long as it serves a socail want or a sale as such once that sale has been made it goes back to its use value. This contradiction between use-value and exchange-value becomes more and more significant, becomes more and more antagonistic the more we examine all of the ways that it plays out in a capitalist society. We can’t really talk about them here until we work out the concepts of capital, profit, etc. But a simple example might suffice for now: One example maybe he fact that we have many run down and derilict homes in the UK a estimated 1 million that could be renevated and brought back into use value these properties are not used to satisfy this social need. Why not? Because the owners of these commodities are not interested in their use. They are interested in their exchange-value, the rent they receive from the property. For decades they collected rent while the use-value of the house deteriorated. And now, to the landlords, these houses that blight the neighborhood are just assets waiting for the right investment opportunity. References http://kapitalism101.wordpress.com/2010/01/12/law-of-value-4-use-value-exchange-value-and-value-draft/"

Is an Underconsumptionist theory relative to today’s current crisis?

i received an interesting reply on my blog today in response to yesterdays post on Marx’s theory on the tendency for the rate of profit to fall. This is their reply. I’ll keep them nameless Justin case of any awkwardness. “No, it isn't. Firstly, Marx distinguishes between financial crises and economic crises. The former as he points out relates to crises that emanate from the circulation of money rather than capital. They emanate, therefore, in financial markets rather than in the real economy. A Stock Market, Bond market or Property Market crash would be an example. Marx points out those crises can remain within that sphere, or may spread out to affect the real economy i.e. through a Credit Crunch. But, such crises have nothing to do with the Tendency for the Rate of Profit to fall. But, the latter also has little or nothing to do with crises in the real economy either, crises that Marx describes as arising from an overproduction of capital. For one thing, Marx points out that although there is a minimum for wages, set by the Value of Labour Power, there is no minimum rate or amount of profit. Subjectively, of course, there may be some point at which capitalists decide to consume unproductively or speculate rather than invest, but such action Marx describes, in itself tends to cause accumulation to slow down, and the rate of profit to rise. A falling rate of profit is a long-term tendency, whereas crises are sharp ruptures. The former cannot be the cause of the latter. Marx sets out the very many counter tendencies to the Falling Rate of Profit, to an extent that it’s clear that in practice there is no reason why the Rate of Profit should fall. In fact, over the last 30 years its clear it has been rising sharply.” Let’s look at the whole Underconsumptionist theory if we will use my good comrade Bruce Wallace’s and his excellent blog at http://69.195.124.91/~brucieba/2013/03/18/does-the-cwi-have-an-underconsumptionist-position/ So here is an extract from a paper Bruce wrote to clarify his own thoughts on the issue: What is Over-Production? There has been an ongoing debate amongst Marxists since the death of the founder of scientific socialism in 1883 as to the meaning of his critique of capitalism. In terms of historical time, a not particularly lengthy period, of one hundred and twenty nine years, actually only some four to five generations, revolutionary socialists have tended towards two camps with various offshoots. One group has adhered to an interpretation of Marx’s critique of capitalism that the reason for capitalist crisis is that the working class does not receive the full fruits of their labour in wages. Surplus value, which equals profit, is the unpaid labour of the working class and therefore workers, the mass of the population, will have insufficient means to buy back all the commodities that capitalism produces. Therefore capitalist crisis is primarily caused by over-production of commodities for which there is an insufficient market i.e. in economic speak demand. Supporters of this view are called underconsumptionists. Other Marxists reject this view as simplistic and not based on a thorough understanding of Marx’s critique of capitalism and that the underconsumptionist position is, in fact, not a Marxist position at all, but a distortion of his ideas. Why should this be an important issue today? Does it really matter if one group of Marxists disagrees with another group over the interpretation of Marx’s critique of capitalism? Surely we are all opponents of capitalism and so what if we disagree over what causes capitalist crisis, surely the point is to overthrow the system? In fact this is probably one of the most important disputes in the history of the revolutionary movement. It not only deals with the fundamental meaning of Marxism but also has direct implications for theory, strategy, tactics and programme. It also impacts on how we view Marxist’s vision of the future socialist society. So this paper will hopefully attempt to address some of these issues in plain language without recourse to mathematics. The Manifesto Apparent support for the under-consumptionist position has been sought in the Communist Manifesto of 1848 by Karl Marx and Fredrik Engel’s where they state: ‘It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, is periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce are destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce’. The Socialist Party of England and Wales Website has a commentary on the Manifesto which explains: ‘The Manifesto outlines how destructive periods of recession are inherent in capitalism. It appears that “too much” is produced, but the working class receives far less in wages than the value of the goods they produce. The “consumers” of today can no longer buy the products which they themselves, as workers, produced only yesterday’! Unfortunately this is reading something into the Manifesto which isn’t actually there. This is all that the Manifesto states: ‘Previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production’. There is no mention at all that the destruction of productive forces is because, ‘The “consumers” of today can no longer buy the products which they themselves, as workers, produced only yesterday’! This is the classic underconsumptionist ‘common sense’ explanation of capitalist crisis projected onto the description of crisis by Marx and Engel’s in 1848. The founders of scientific socialism never stated, anywhere, that capitalist crisis is caused by the under-consumption of the ‘products’ of capitalism. And the reason that there isn’t an explanation in the Manifesto as to how crises of over-production occur, not one jot, is because in 1848 neither Marx nor Engel’s knew what the causes of over-production actually were. Their referral to over-production is purely a description of the form of capitalist crisis exhibited at the time, not an analysis of causation. What’s in a word? The word ‘product’ is not a description that Marx went on to use in his critique of capitalism in Capital. The word ‘product’ appears in the Manifesto in 1848 but that was before Marx’s intellectual labours uncovered the way that capitalism actually worked, but he only reached this conclusion in 1858 when he was compiling his Grundrisse notebooks. He discovered that capitalism produces commodities which can be bought and sold for a profit. A ‘product’ is a completely different thing and could be the outcome of the labour of a prehistoric caveman, which certainly wasn’t ever produced to make a profit. Marx dedicated the first chapter of volume one of Capital to ‘Commodities’. The reason for this is that Marx had discovered that commodities are the ‘cell form’ of capitalist production and any analysis of the system needed to start from there. What characterises the capitalist mode of production, unlike all other pre-existing modes of production, is the presentation of ‘an immense accumulation of commodities’ (Capital Vol I on the very first page!). This ‘minor’ terminological and historical blip being cleared up, what actually was Marx’s view of over-production? References http://69.195.124.91/~brucieba/2013/03/18/does-the-cwi-have-an-underconsumptionist-position/

Marx’s theory of the tendency of the rate of profit to fall

This is Karl Marx’s basic ideas of financial crisis. It’s not something which is easily understood and many on the left today fail to grasp Marx’s teachings sadly. But here I will point readers in the right direction. Marx described his idea of how crisis’s come about and how they can be counters acted and how they will eventually be overcome. This is basic Marxism which all comrades must try and grasp if we are to understand the current economic crisis and produce a well rounded Marxist analysis and a alternative to the crisis which as Marxist’s must be nothing less than the over throw of the current order the removal of the capitalist system in place of a socialist planned democratic economy based on the needs of the many. The tendancy for the rate of profit is basically summed up in the notion thatcapitalits as technology advances naturally uses’s more machinery to help produce comodites and as Labour is the source of profit the capitalist use’s less of labour power variable capital if you like the tendancy for the rate of profit to fall is thus. One blog I would point you in the direction of is my comrade from Scotland Bruce Wallace http://69.195.124.91/~brucieba/ Bruce is a highly developed comrade in terms of political economy and Marxist economics that the CWI should treasure and look to. Bruce’s blog is excellent in expressing and educating other socialists on the ideas of Marx and Marx’s ideas of crisis. Bruce like others remains true to the ideas of Marx and Marx’s ides in volume 3 which I’d advice all comrades to read closely the ideas of crisis and how Marx understands crisis’s to develop. To quote from Bruce’s excellent blog below. “We must clarify exactly what is meant by the rate of profit in capitalism because the term profits can be quite misleading. The rate of profit is determined by the rate of return on the amount of capital invested (advanced in Marx’s terminology). If a capitalist advances a capital of £100 and the rate of profit is 20% they will get their original investment back plus £20 in profit. The rate of profit is therefore a percentage rate of return on investment. The £20 the capitalist reaps as profit at the end of the production process is what is regarded as the mass of profit. From this it is easy to see that if the rate of profit falls to say 10% but the capitalist advances £1000 that the mass of profit will be £100. So even with a lower rate of profit the capitalist can recoup a greater mass of profit. This is an important point to remember as we proceed with Marx’s theory. What is clear is that the rate of profit is what the capitalist expects to make on the investment of their capital based on the existing rate of profit. So caution is required when reading economic literature that refers to the abstract term ‘profits’ as the rate and mass of profit are two distinctly different things. The rate is the expectation and the mass is the result. Capital is attracted to the areas of industry which are making the highest rate of profit. This is not based on the independent decision making of individual capitalists. In modern capitalism there is a free flow of capital to the most profitable sectors and this process is automatically governed by the stock market. Through the coercive force of competition the rate of profit tends to equalize and to fall across the economy as a whole. This applies to the world economy and not just within national economies. The less productive, and hence less profitable, industries go out of business or are absorbed by rivals. So it is the rate of profit which is the motive force of competition and for a greater and greater concentration and centralisation of capital. There is a growth of larger corporations and monopolies with their integration into banking and finance. This is what Marx means by an increase in the mass of accumulated capital although a fall in the rate of profit means a decline in the rate of accumulation. In other words economic growth slows but the concentration of capital (its mass) increases. This is very much like the evolution of a black hole in physics. How the LTRPF, in tandem with accumulation, works out in practice to produce crisis is explained by Marx in a chapter in Capital Volume III titled “Development of the Law’s Internal Contradictions”. Let’s look at how it works? How it Works in Practice The continuous downward pressure on the rate of profit brings forth what Marx called counteracting influences or tendencies and these are the main ones. • More intense exploitation of labour (increasing productivity) • Reduction of wages below their value (wage cuts) • Cheapening of the elements of constant capital (reducing the cost of machinery) • The relative surplus population (using unemployment to force down wages and conditions)) • Foreign trade (the expansion of global capitalism) • The increase in share capital (the growth of banking and finance/debt” All these points above are crucial to understanding how the tendency for the rate of profit LTRPF, can be delayed and held up. But as we know this can only delay the v LTRPF to fall. The general tendency is for this to eventually fall. The addition of credit in the capitalist system in the last 10- 20 years extending this process was a method adapted to the capitalist system only to stem the crisis and put it off for another day. Bruce in his superb blog goes on to explain what this means in practice “The LTRPF is primarily a historical law whose influence is felt over a protracted period of time resulting in major periodic crisis but it also is the underlying reason for ‘normal’ periodic recessions. In this sense the law has two aspects. Marx analysed the impact of the counter tendencies on the long term operation of the law. As he explains in relation to increasing the exploitation of the working class either through improving productivity or lengthening the working day: ‘This factor does not abolish the general law. But it causes that law to act rather as a tendency, i.e., as a law whose absolute action is checked, retarded, and weakened, by counteracting circumstances’. (Capital Vol III ) Earlier, in relation to the reduction of surplus value embodied in commodities due to accumulation offsetting a fall in the rate of profit by cheapening the cost of both productive and consumer goods he wrote: ‘But in reality, as we have seen, the rate of profit will fall in the long run. In no case does the fall in the price of any individual commodity by itself give a clue to the rate of profit. Everything depends on the magnitude of the total capital expended in its production’. (Capital Vol III ) And: Thus the law acts only as a tendency. And it is only under certain circumstances and only after long periods that its effects become strikingly pronounced’ Recourse to credit and finance was a particular feature of the neo-liberal boom. There was a huge growth in both consumer and government debt which extended the period of the boom but it did not negate the general law. Thus recourse to what Marx called fictitious capital laid the basis for a sovereign debt and fiscal crisis. This is fictitious i.e. imaginary value, because it is based purely on paper assets, promissory notes on future profits, yet the root of the crisis lay in production and the long term decline in the rate of profit. The law appears to operate cyclically and governs the onset of recessions. This has been proven in excellent research by José Granados (2012): ‘‘Data on 251 quarters of the U.S. economy show that recessions are preceded by declines in profits. Profits stop growing and start falling four or five quarters before a recession. They strongly recover immediately after the recession. Since investment is to a large extent determined by profitability and investment is a major component of demand, the fall in profits leading to a fall in investment, in turn to a fall in demand, seems to be a basic mechanism in the causation of recessions.’ Thus we have periodic booms and slumps. Normally there are recessions approximately every eight years or so that are quickly overcome but the process is also cumulative. As accumulation proceeds the historical operation of the law builds up pressure for major generalised crises over a longer timescale. We have seen this in the history of capitalism where there have been four major generalised crises; the Long Depression of the 1870’s, the Great Depression of the 1930’s, the crisis of the 1970’s and todays Long Depression. The falling rate of profit is the underlying and indirect force driving these crises all of which have specific and unique features. In some ways this is akin to the movement of the earth’s tectonic plates that build up pressure at fault lines in the earth’s crust eventually causing earthquakes. The LTRPF is exactly like this; an indirect force acting on the dynamics of capitalist development that causes economic earthquakes! “ Bruce finnish’s with this section “The crisis is far from over as more sober economic commentators have pointed out in a world loaded with geopolitical and economic risk. It is just as Karl Marx predicted for capitalism: ‘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’. (Capital Vol III ) Capitalism is senile and outlived because its motive force, the rate of profit, is weak. In order to restore it and usher in a renewed period of dynamic growth there must be the mass destruction of capital value and intensified exploitation of the working class, a renewed major global economic slump is therefore inevitable at some point. Even a major recovery will sow the seeds for a renewed downturn and these are becoming ever more violent and catastrophic in their effect. Only One Alternative Marxists are in favour of revolution not because capitalism is an unjust or unequal form of society. Of course capitalism is just that but there is another more pressing reason. Marx showed that capitalism leads to ever more destructive economic crises. Capitalism’s lust to expand endlessly inevitably hits ever more insurmountable barriers due to the crisis tendency that is inbuilt into the very logic of the system itself. As Marx stipulated the barrier to capital in these terms is capital itself. Unless capitalism is overthrown the prospects for humanity are grim including the exhaustion of the earth’s natural resources or destructive war but there is an alternative: ‘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’. (Marx Capital Vol III) The only alternative to the deepening crisis of capitalism’s ‘creative destruction’ is its abolition as a social system and its replacement with a socialist plan of production on a global scale. Other solutions, such as limited nationalisation, state control of the banks and policies aimed at redistributing wealth for example are completely utopian. Provided capitalist production continues i.e. a system which aims at the production of value, of abstract wealth, in favour of a small minority of society and not to meet general human need more destructive crises are inevitable. Marxists do of course struggle for immediate reforms such as halting the austerity cuts, an increase in wages and a program of public works but only as part of a general strategy towards the overthrow of the capitalist system itself. To argue otherwise, as some on the left have done, that capitalism has somehow solved its problems in the advanced countries negating the need for revolution is flying in the face of reality. The epicentre of the current capitalist crisis is precisely in the advanced capitalist countries where there is such a historic accumulation of the mass of capital. In the advance countries the prospect for the working class is increasing misery and exploitation and the historic decline of the economy. The Greek and Spanish crises show the more advanced European countries an image of their own future as the crisis begins to grip France who’s unemployment has hit 10%. Across Europe more that 20 million workers are jobless and the depression is deepening. Neither will the rise of capitalism in the emerging markets offer a way out as this will lead to exactly the same working out of Marx’s law. China, the world’s second biggest economy, is preparing a massive slump with its huge growth of constant capital. The interconnectedness of the global capitalist economy heralds further conflagrations of more intensity and depth on a world scale than ever before. The long term choice for the working class is stark, socialism or barbarism, and only in the works of Karl Marx can a thought out scientific answer to the way forward be found.” So we can see that the tendancy for the rate of profit to fall is a long term affect with several counter acting measues which can be taken but ultimately can only put off the crisis for another day. The ultimate choice is of a widespread destruction of capital resulting in huge redundancies, mass unemployment and therefore a driving down of labour power to a point where capital can feel confident enough to start to reinvest. Not when the ground is clear for reinvestment will this happen. It is clear that left Keynesian demands will only go so far that we have to take a much bigger look at the overall picture of production and the capitalist system as a whole to understand the long term trends within the system itself. For Marxist’s this should be Marxism 101 but not for an all sadly. A fear of theory and economics leads others to blindly follow others yet a examination of Marx’s works will show many experienced Marxists that the tendency of the rate of profit to fall is spot on and however had they try to disprove it Marx always comes back stronger and even more correct. Lastly I don’t fully understand this myself but am developing my understanding all the time I therefore encourage other comrades and beyond to educate themselves too in the teachings of Marx and Engel’s in economics as it’s crucial to understanding the period we are living through. With huge thanks to comrade Bruce Wallace and his excellent blog for extracts and help. Do check him out if you can. References Marx, K. (2013) Capital Volume I Marxist internet archive http://www.marxists.org/ Marx, K. (2013) Capital Volume II Marxist internet archive http://www.marxists.org/ Marx, K. (2013) Capital Volume III Marxist internet archive http://www.marxists.org/ Marx, K. (2013) Theories of surplus value Marxist internet archive http://www.marxists.org/ Marx , K. (2013) Grundrisse Marxist internet archive http://www.marxists.org/ And lastly comrade Bruce Wallace’s blog http://69.195.124.91/~brucieba/2013/06/11/the-basic-mechanism-of-capitalist-crisis-part-ii/

What are the most favourable conditions for the working class under capitalism?

It is often said capitalism from a left wing position is a awful, evil and exploitative system but I’d like to examine which conditions under capitalism would be favourable to the working class for winning concessions and gaining under the system not that they could ever really gain but for a time gain bit on their employing masters.

In Karl Marx fantastic pamphlet wage labour and capital the last chapter describes this brilliantly for me.
As we know the interests of labour and capital are in total opposites of each other and fighting in two different directions.

As Marx’s chapter 8 of wage labour and capital quoted here shows us
“A rapid growth of capital is synonymous with a rapid growth of profits. Profits can grow rapidly only when the price of labour – the relative wages – decrease just as rapidly. Relative wages may fall, although real wages rise simultaneously with nominal wages, with the money value of labour, provided only that the real wage does not rise in the same proportion as the profit. If, for instance, in good business years wages rise 5 per cent, while profits rise 30 per cent, the proportional, the relative wage has not increased, but decreased.
If, therefore, the income of the worker increased with the rapid growth of capital, there is at the same time a widening of the social chasm that divides the worker from the capitalist, and increase in the power of capital over labour, a greater dependence of labour upon capital.
To say that "the worker has an interest in the rapid growth of capital", means only this: that the more speedily the worker augments the wealth of the capitalist, the larger will be the crumbs which fall to him, the greater will be the number of workers than can be called into existence, the more can the mass of slaves dependent upon capital be increased.
We have thus seen that even the most favourable situation for the working class, namely, the most rapid growth of capital, however much it may improve the material life of the worker, does not abolish the antagonism between his interests and the interests of the capitalist. Profit and wages remain as before, in inverse proportion.
If capital grows rapidly, wages may rise, but the profit of capital rises disproportionately faster. The material position of the worker has improved, but at the cost of his social position. The social chasm that separates him from the capitalist has widened.
Finally, to say that "the most favourable condition for wage-labour is the fastest possible growth of productive capital", is the same as to say: the quicker the working class multiplies and augments the power inimical to it – the wealth of another which lords over that class – the more favourable will be the conditions under which it will be permitted to toil anew at the multiplication of bourgeois wealth, at the enlargement of the power of capital, content thus to forge for itself the golden chains by which the bourgeoisie drags it in its train.
“

Marx is explaining that the greater growth of capital and the capitalist mode of production is in an upswing and is increasing its means of production to a point more workers can be employed from the mass reserve army and the workers can therefore go on the offensive within the trade unions to fight for better working pay and conditions. As socialists we look to expose the capitalist system at any chance we get but it’s a two fold approach from what I can tell when the capitalist system is in decline as we are now the system becomes far more exposed and workers can realise how little stake in society they really have whereas if the capitalist system is in a incline the workers can gain more as a slice of the pie but find it harder to recognise the contradiction of the system as they are benefiting from in the short term.
As the rich get richer the poor get constantly poorer even during the so called better times. So my argument would be even though an upswing in the capitalist system can benefit the workers in a sense this will not challenge the contradictions of the system and ultimately do nothing to defeat the wage labour system and lead to a breaking of the workers chains for their ultimate road to freedom.
But of course workers would prefer periods where they can go on the offensive and gain rather than periods they are set to defend what they have gained and to not loose anymore.

The acceleration of capital the speeding up of society

I have started to read Karl Marx’s mammoth book of capital volume 2 after completing volume one not so long ago. It’s a text I will return to I am sure over time as holds so much unwrapped knowledge that can hold so much potential in the class struggle and understanding capitalism .

But volume two so far is a very different text. Focusing on a lot more theory behind the movement of capital and the process’s involved not much politics at all compared to volume one. This book is I have been told a boring book and is a hard read I may not complete it as many don’t but at first glance I can tell there is something going on with the movement of capital.

In today’s capitalist society of a financially focused economy certainly in the west excluding Germany dominates.

But throughout this century and the one before everything about capitalism has been focused round speeding the process of things up. Increasing turnover and production.
The idea is that the more and quicker you can produce commodities the quicker you can make a profit and gain an advantage over your competitors.

This has been the way of capitalist production for some time now if we look at food production for example and the example of meat Pigs now are breed now for giving birth to litters 3 times a year now instead of just the one that is normal for a pig.

Also if you read back to Charles Dickens days in his books the meat was mutton but now we all eat Lamb as it was found that you can breed more and eat them younger specifically breeding for consumption.

The whole idea of speeding up production to increase turnover of profit is something that has been as natural to capitalist production as day is to night. Ever since its inception capitalist production has always looked to find quicker and more efficient ways of producing products. Even though this is cancelled out by the huge waste in competition it creates.



The consumption of the working class doesn’t really play a big part in Marx’s first volume of capital but does play more of a part in volume 2. The consumption of the workers is key to capitalism whether workers can buy back the fruits of their labour is often a question posed. One of the contradictions that can play a part in the crisis’s of capitalism is the fact that production is speeded up so much that workers do not earn enough to buy back the fruits of their labour leading to a over production and a big gap between what the workers can afford with their wages compared to the surplus value that is created in their labour time. The accumulation of capital touched on towards the end of the first volume of capital by Marx is revisited in volume 2 the concentration of wealth by one part of society i.e. the rich and the bourgeoisie in other words means that at the other end of the scale there is a mass pool of poverty and deprivation. Of course the ideas of the increased reserve army of workers plays a bigger part and holds workers in work wages down to a minimum.
This accumulation of capital has several affects one it narrows competition in the market and can in a way almost bring the market to a halt at points. As barriers to continue production a mass of wealth in fewer and fewer hands as is the case with the development of capitalism does lead to deeper and deeper crisis’s which capitalism fails to deal with.

The unplanned nature of capitalism and the desperate drive for profit and more profit can lead to huge over production and under consumption by the masses of people but this is again more contradictions in the system and its inner workings.

I feel that the speeding up of capitalist production can lead to deeper and far quicker crisis’s and move the system on closer to the next meltdown. I will continue to read more on volume 2 and blog on any other new things I come across that can help me understand how Marx interpreted the capitalist system.