Are property rights essential to prosperity and liberty? The ‘No’ case.

This is a presentation by socialist economist David McMullen at a Melbourne Argument debate at the Royal Oak Hotel, North Fitzroy, Melbourne, on February 8, 2017. His opponent was Ted Lapkin, a former adviser in the Abbott government.

Private Property Rights are Essential not only to Economic Prosperity but to Political Liberty – The No Case

February 12, 2017 via Different Wavelength

* * * *

When looking at economic prosperity and political liberty, the private property rights we are concerned about are the ownership rights of the capitalist class over the means of production or productive assets. We are not arguing about private property rights over items of consumption. So I acknowledge everyone’s right to their own toothbrush.

What I want to contend is that in the future we will get by very nicely without private ownership of the means of production. We will do this by creating a class free society where the means of production are socially rather than privately owned. This will free the economy of the many shackles placed on it by capitalism and at the same time create a society that requires the fullest political freedom for its proper functioning.This future system is generally referred to as communism.

OK why do I take this singularly unpopular position which everyone knows has been totally discredited? Well, I subscribe to the Marxist view that capitalism creates the conditions for this new more advanced system.In a nutshell, capitalism eliminates the need for the profit motive and hence the need for its own existence. It does this through the creation of modern industry and technology which open up the prospect of universal prosperity, and of robots and computers doing all the work that we really don’t want to do. Under these new conditions we can begin to imagine people working because they like what they are doing and they want to contribute, while at the same time being happy with an equal share of an increasing level of prosperity. In other words we can see social ownership having a totally different and better form of motivation than the profit motive that is associated with private ownership.

This means that what was previously impossible becomes possible.Past history already tells us that sharing poverty and laborious work is impossible. You cannot create equality under those conditions. It is a utopian dream. For example, as the Middle Ages illustrate it only requires a small band of thugs who would prefer to live off everybody else’s hard work and you end up with a very nasty class society. Also when assessing the experience of the Soviet Union, and the various regimes derived from it, it is important to keep in mind their backward economic conditions as a factor in determining how things turned out there.

Now, favorable economic conditions presently only exist in the rich countries where less than 20 per cent of the world’s people reside. What about the rest of the world? It looks like it is going to take a number of generations for them to develop. It is hard to be any more definite than that. However, I would suggest that the prospects are best if there is a healthy global economy and a willingness to provide well directed economic aid and also to offer diplomatic and military assistance to those resisting the forces of tyranny and corruption.

Anyway, why do I consider that social ownership will bring greater economic prosperity and progress? There are five reasons that strike me as being particularly important.

  1. Firstly capitalist firms cannot match the work performance that would be achieved where workers unprompted want to do the job to the best of their ability.Capitalist firms have to apply various rewards and penalties to get their employees to do their bidding. However, if a job is in any way complex it becomes difficult to correctly assess how well people are doing their job. And jobs are becoming increasingly complex so this is becoming more and more of a problem.
  2. Secondly once we get rid of private ownership and private debt we will also get rid of economic crises, stock market crashes, bank collapses and extended periods of depressions or recessions that lead to unemployment and reduced production.
  3. Thirdly we will get rid of the waste of human labor that Marx called pauperization where a large number of people are thrown on the scrap heap and survive on welfare. They are not equipped to develop work skills or they are psychologically maimed from living in this society.
  4. Fourthly, we will not have capitalism’s sluggishness in terms of what are arguably the main drivers of economic progress, namely,science, research and development, and technological innovation. There are a number of reasons for capitalism’s lack of vigor in this area. If I can beg your indulgence I will list six that I am aware of. Firstly, capitalists are not interested in major technological breakthroughs that will make their present investments less valuable or even obsolete. They just want incremental improvements that increase their value. Secondly, benefits from spending on R&D are long term but capitalists tend to have a short term perspective. Thirdly because of the public good nature of new knowledge, firms cannot capture all the benefits and so underspend on it. Fourthly, where intellectual property right laws are applied, access to knowledge is restricted. Fifthly, government funding for R&D is the first thing to go when there are government budget cuts. And also there is huge wastage as researchers game the funding system and personal prestige and career take precedence over outcomes. And sixthly, capitalism generates an anti-technology and anti-science attitude among the alienated masses. People see the modern industry created by capitalism as the problem rather than capitalism itself. We have people whose livelihood is threatened by new technologies. And there are the greenies who have a romantic view of the pre-industrial past.
  5. Now the last but by no means least on my list of capitalism’s economic problems that will be overcome under communism is what economists like to call government failure.Capitalism tolerates a lot of bureaucracy and regulation.Much of it is devoted to catering to the needs of vested interests in ways that harm the economy. Vested interest is just another term for private property. And as well as this there is of course empire building by career minded bureaucrats.

OK those are my arguments for why I think that private ownership of the means of production is a fetter on the economy. Now I want to address what I think are the two main arguments against what I’ve been saying. Firstly, we are told that social ownership would require excessive centralization and secondly that you can’t change human nature.

Economists argue that all this well-intentioned motivation would come to very little because an economy based on social ownership has an inherent economic calculation problem: in the absence of market transactions between enterprises it could not have a properly functioning price system. And as a consequence social ownership would require clumsy centralized resource allocation of the kind that existed in the Soviet Union. I am not going to speculate on how economic decisions will be made in the future under communism. However, we can say that there is nothing about the non-market transfers of custody over components from producer to user enterprises that would prevent them from making decentralized decisions based on prices. Furthermore, we could hardly do a worse job of allocating investment funds than do highly fluctuating interest rates and exchange rates produced by capitalist finance. Indeed, there are good reasons for thinking that economic decision-making would be far superior to that under capitalism. To begin with, because of the absence of ownership barriers, there would be far more scope for coordination, and less scope for secrecy and deception.

Human nature and mutual regard

Now what about human nature? A society based on social ownership requires far more than simply state ownership, although that is a prerequisite. There need to fundamental changes in people’s behavior and abilities.

The behavior change can be best summed up in the expression ‘mutual regard’.You do the right thing because you want to contribute and you know that your efforts are not futile because a large and increasing section of society is doing likewise. As well as being the basis of morality and what is considered honorable it is also enlightened self-interest. By everybody serving others we are all served. This altruism is not the self-denial that Ayn Rand made it out to be.

Many would doubt the ability of rank and file workers to do the complex kinds of work required in the future. However, I would suggest that people have greatly untapped potential. There are many ways that they are presently held back or find themselves unchallenged.

The kinds of changes we are talking about here will not happen overnight. There will have to be a transition period that will take a generation or more and is generally referred to as socialism. It will take time to totally eliminate private ownership, starting with the big fish, and it will take time to move completely away from the old capitalist work incentives. And it won’t be smooth sailing. Good behavior will only win out once the good majority gain the confidence and moral courage to stand up to those who behave badly. And there will be lots of old management types trying to run things in the old way and convincing workers that the new ways are futile. So it will be touch and go for a while and we may need more than one stab at it.

Now let’s look at political liberty

With the emergence of capitalism we have seen for the first time a degree of political liberty. We have constitutions limiting the power of government, we have elections, the separation of powers, habeas corpus. These would have been unimaginable in the Middle Ages or in any other pre-capitalist society.

The main problem however is that the capitalist system tends to abandon political liberty in times of crisis. Also a big test of political freedom is our freedom to confiscate the means of production from the capitalists and convert them into social property. In the face of a serious revolutionary movement one would expect to see states of emergency, unofficial death squads, and well-resourced propaganda campaigns spreading fascism and xenophobia.

Historical accidents

What conclusions should we draw about the lack of democracy in the so-called communist bloc countries? The Soviet Union etc? The first thing to note is that we dealing with an historical accident. By virtue of some rather specific or contingent circumstances,communists found themselves in charge in countries that with few exceptions were economically and socially backward, and totally unsuited to undertaking a communist revolution. Also, the regimes did not arise as a result of popular support for communism. In the revolutions in the Soviet Union and China the primary concern of the peasant masses was nothing more than land reform. In Eastern Europe the regimes were due to the arrival of the Soviet Red Army at the end of WWII rather than popular revolutions. So I think it is safe to say that these regimes would not have survived if they had been democratic.

However, it is important to keep in mind the alternative in most cases was right-wing tyranny rather than democracy. And of course these regimes eventually lost the minimal revolutionary content they may have originally had.So their authoritarian nature could no longer be blamed on communists. Instead we just had phonies like Vladimir Putin who pretended to be communists until the collapse of the Soviet Union and we presently have people like Xi Jinping in China who still pretend to be communists. The take-home message here is that the conditions were very different from what we would expect in the future when revolutionary regimes come to power in highly developed societies on the back of widespread support for their political program.

Freedom of speech

Now, the economist Milton Friedman famously argued that freedom of speech and the emergence of diverse political groups require the decentralization of resource ownership that only capitalism can deliver.He argued that under capitalism you have the possibility of finding a rich patron. Marx and Frederick Engels and the Bolsheviks received money from anonymous benefactors as well as from robbing banks. Under social ownership, however, resources would be centralized in the hands of the very authorities that you may want to criticize. However, I would argue that with everyone having very high disposable incomes and access to the Internet you would not have to rely on central authorities providing resources. Also I do not see any insurmountable obstacles to ensuring open access for various resources needed for a vibrant political life.

I do not want to paint too rosy a picture.A revolutionary government during its initial phase may have to declare a state of emergency if there is a rebellion by supporters of the old order. Their rebellion could take the form of civil war, terrorism and sabotage, and dealing with it will not be easy. At the same time, for success, we will need the freedom to criticize those in positions of authority when they display incompetence or lack of revolutionary politics. Bottom up supervision will be a critical part of the system. Indeed, a social system that relies on people taking the initiative without external prompting, could not function if people are not able to say what they think is wrong and what they think should be done about it.

Summing up

I will now make two points to briefly sum up.

Firstly, capitalism creates the very economic conditions required for a more advanced classless society that will be based on social ownership of the means of production.

Secondly, a primary task for the present period is ensuring economic and political progress in the more backward regions of the world. For this we need a liberal global economic order, well directed economic aid, and diplomatic and military support in fighting the battle for democracy. And critical to this is beating back the nationalist anti-globalist wind that is blowing at the moment.

 

Hasn’t communism already failed?

There is a thoroughly entrenched view that the experience of revolutions during the 20th century shows that communism has failed. It is true. There was a failure. However, it was not of communism, but rather of an attempt to sustain a path towards it when its preconditions were absent.

Another section from Rescuing the message of The Communist Manifesto

* * * *

There is a thoroughly entrenched view that the experience of revolutions during the 20th century shows that communism has failed. It is true. There was a failure. However, it was not of communism, but rather of an attempt to sustain a path towards it when its preconditions were absent. Russia in 1917 and virtually all the “communist” regimes established mid-century were essentially backward pre-capitalist societies. Most people were peasants rather than proletarians, and they were more interested in land for the tiller than social ownership. There was little modern industry and thinking was more medieval than modern. They had not passed through the capitalist stage, which is necessary for a successful communist revolution. As the experience of other backward countries shows, even getting capitalism off the ground under these circumstances is hard enough, let alone a society that aims to supersede it.

This peculiar state of affairs arose because the bourgeoisie was too weak, cowardly or treacherous to carry out its own tasks. Instead, in the first half of the 20th century, communists found themselves at the head of both anti-feudal modernist revolutions and patriotic resistance to fascist aggression and occupation.

After World War II, the Bolshevik regime in the Soviet Union was joined  by a host of other countries in what became ‘the socialist camp’. It included China, Vietnam and Yugoslavia where their own revolutionary forces had taken power, and eastern and central Europe and northern Korea where regimes were established by virtue of Soviet military occupation in the aftermath of the defeat of Germany and Japan. So, by historical accident communists found themselves burdened with the task of raising their societies out of social and economic backwardness. They had to perform the work of capitalism. They had to create an industrial base and a trained workforce virtually from scratch. The “failure of communism” was a consequence of the tardiness, perhaps even failure, of capitalism.

 

“It is true. There was a failure. However, it was not of communism, but rather of an attempt to sustain a path towards it when its preconditions were absent.”

 

Under these conditions the move in a communist direction could only be quite limited and eventually proved unsustainable. They took important preliminary steps but did not achieve the real substance. Industry was placed under state ownership which meant that capitalist industry was expropriated and the new accumulation of private wealth thwarted. At the same time there was a degree of economic security for workers. The system was described as socialism, the first stage on the road to communism. However, the weakness of the proletariat placed severe limits on what could be achieved. With a couple of exceptions in central Europe, it only began to become a significant section of society with the industrialization that followed the revolution. Proletarians were former peasants engaged mainly in the low paid toil that you would expect at this stage of development. They were simply not ready to be a ruling class. There was not the basis for a society based on mutual regard. Enthusiasm and unprompted initiative was limited in these harsh conditions and so there was a heavy reliance on material incentives and top down command with all kinds of perverse results. The freedom and democracy required for the full development of the proletariat was not possible given the intensity of external and internal opposition and the weakness of the revolutionary forces.

Because most work was arduous and repetitive manual labor, and the education level and background of the typical worker left them ill-equipped for involvement in the mental aspects of production, there was a minority who did the thinking and deciding. These were the managers, engineers and officials – generally referred to as ‘cadres’. Members of this elite had a vested interest in entrenching their privileged position and were unlikely to encourage an invasion of their domain as workers became more skilled and educated, and industry more mechanized, nor to willingly start to take upon themselves a share of the more routine forms of labor.

Once career, income and position are the primary impulse, economic results take a second place to empire building, undermining rivals, promoting loyal followers, scamming the system and concealing one’s poor performance from superiors. The opportunity for workers to resist these developments was limited by the lack of freedom and the culture of subordination which drains away confidence and the courage to act. This culture can be very strong even in the absence of political tyranny as we can see in any “liberal” capitalist society. At the same time, one can imagine that, under these conditions, rank and file workers with special abilities or talents would tend to be more interested in escaping the workers’ lot by becoming one of the privileged rather than in struggling against it.

 

“… after a crash industrialization in the 1930s, the Soviet Union was able to defeat the fascist Axis powers through the largest military mobilization in human history. This is something for which the world should be eternally grateful.”

 

Mao Zedong, the head of the Chinese Communist Party until his death in 1976, referred to this process, once fully entrenched and endorsed at the top, as capitalist restoration and those encouraging it as revisionists and capitalist roaders. The Chinese Cultural Revolution that he led in the late 1960s was an attempt to beat back this trend. However, that revolution was sabotaged and defeated, and the capitalist roaders were able to seize supreme power in China after his death.

The Soviet Union and similar regimes in Eastern Europe ended up as a distinctive type of dead-end economically, politically and socially, and their demise in 1989-90 is one of the celebrated advances of the late 20th century. At the same time, by discarding much of the empty and dysfunctional formal shell of socialism and operating more like normal capitalist economies, both China and Vietnam have managed to achieve considerable economic development in recent decades. Cuba is now beginning to take this route. The monstrosity in North Korea survives throught mass terror and the support of the Chinese. All these regimes are an affront to freedom and democracy, and will share the same fate as those in other countries where the capitalist “Communist Parties” have already been overthrown.

 

“This peculiar state of affairs arose because the bourgeoisie was too weak, cowardly or treacherous to carry out its own tasks. Instead, in the first half of the 20th century, communists found themselves at the head of both anti-feudal modernist revolutions and patriotic resistance to fascist aggression and occupation.”

 

Notwithstanding this grim picture, there were still some significant achievements. In a large part of the world, landlords and feudal relations were swept from the countryside. Industrialization was raised from a very low base and generally outperformed the backward countries in the capitalist camp. Most importantly, after a crash industrialization in the 1930s, the Soviet Union was able to defeat the fascist Axis powers through the largest military mobilization in human history. This is something for which the world should be eternally grateful.

The dilemma faced by 20th century communists was anticipated by Engels in the following passage from chapter 6 of The Peasant War in Germany, published in 1850:

The worst thing that can befall a leader of an extreme party is to be compelled to take over a government in an epoch when the movement is not yet ripe for the domination of the class which he represents and for the realization of the measures which that domination would imply. What he can do depends not upon his will but upon the sharpness of the clash of interests between the various classes, and upon the degree of development of the material means of existence, the relations of production and means of communication upon which the clash of interests of the classes is based every time. What he ought to do, what his party demands of him, again depends not upon him, or upon the degree of development of the class struggle and its conditions. He is bound to his doctrines and the demands hitherto propounded which do not emanate from the interrelations of the social classes at a given moment, or from the more or less accidental level of relations of production and means of communication, but from his more or less penetrating insight into the general result of the social and political movement. Thus he necessarily finds himself in a dilemma. What he can do is in contrast to all his actions as hitherto practised, to all his principles and to the present interests of his party; what he ought to do cannot be achieved. In a word, he is compelled to represent not his party or his class, but the class for whom conditions are ripe for domination. In the interests of the movement itself, he is compelled to defend the interests of an alien class, and to feed his own class with phrases and promises, with the assertion that the interests of that alien class are their own interests. Whoever puts himself in this awkward position is irrevocably lost.

*****

This discussion of the “failure of communism” in backward countries certainly does not imply that the process of communist revolution would be easy in countries that have reached the developed stage of capitalism. While capitalism has created conditions that make communism possible, there is nothing automatic about it. Indeed it will require an entire epoch of struggle to make the transition to a society based on mutual regard rather than profit. There cannot be any notion of ‘socialism’ that does not see it as a revolutionary transition that is prone to capitalist restoration. The initial threat from the old bourgeoisie is followed by a threat from a new bourgeoisie emerging among cadres, who wave the red flag in order to oppose it.

The initial period of the revolution will have many problems. A large number of people will  be hostile, neutral or lukewarm in their support. New revolutionary governments will be far less experienced than their opponents, and will face many difficulties getting into power and holding onto it. The old management cannot be dispensed with overnight and will be in a position to sabotage output and efforts to change things. Defeat could result from revolutionaries making mistakes or the counter-revolution recovering from temporary disarray.

There has to be a fundamental change in human behavior and the way society operates. The bourgeoisie, and the habits and ways of thinking of its society will prove tenacious, and the proletariat will have to transform itself in the struggle against them.

We will have to learn new ways and cast off old ones. We will have to unlearn passive, submissive and weak-spirited habits engendered by capitalism, and develop the new morality of mutual regard and steadfast resistance to the old forms of behavior. Mutual regard is enlightened self-interest where everyone does the right thing knowing that a large and increasing section of society is doing the same. It will be the basis of morality and what is honorable. We will all share in the ‘pool’ of greater prosperity and good-will that results. Such a culture is totally at odds with capitalism where the rich exploit everyone else and a large number of people are simply thrown on the scrap heap.

Critical for success is the emergence of a large and increasing number of people who see the revolutionary transformation of the conditions around them as a prime mission in life.

Freedom from want and toil – and the capitalist social revolution

From the Communist Manifesto Project‘s pamphlet: Rescuing the Message.

 

* * * *

 

Freedom from want and toil

The industrial revolution that began over two centuries ago is transforming the material conditions of life in ways that make capitalism obsolete. In the most developed regions of the world it is providing something approaching a modest level of material abundance and removing much of the necessary toil from work. These conditions make it possible to contemplate social ownership where the motivation is no longer profit, or some reward derived from it, but rather mutual regard and the satisfaction obtained from labor.

At the moment, the rich countries are home to only 15-20 per cent of the world’s population. However, the middle income countries such as China, India, Mexico, Turkey and Brazil could well achieve high levels of development over the next two or three generations, while the poorer half of the world should catch up later this century or early in the next. The pace of development will depend on a range of factors including the prevalence of political crises, wars and economic depressions.

With increasing productivity under capitalism, a stage is reached where an equal share of the social product ceases to be shared poverty. Under less developed conditions, the prospect of shared hunger and distress impels those who are in a position to do so to exploit others through plunder, slavery, serfdom or the ownership of the means of production. However, as the average share begins to promise an increasing degree of prosperity, the imperative to fare better than others diminishes. Marx and Engels make this point in part II, section 5 of The German  Ideology:

… this development of productive forces … is an absolutely necessary practical premise, because without it privation, want is merely made general, and with want the struggle for necessities would begin again, and all the old filthy business would necessarily be restored …

Under developed capitalism, mechanization and automation have done much to reduce the odious or toilsome nature of work. Pick and shovel work and carrying heavy loads are things of the past and much of the remaining menial and routine work in the manufacturing and service sectors will be automated in the next generation. The work we are left with will be primarily intellectual in nature and potentially interesting and challenging.

“With increasing productivity under capitalism, a stage is reached where an equal share of the social product ceases to be shared poverty.”

Some doubt the ability of workers to keep up with the requirements of the new work. Certainly capitalism leaves a lot of workers behind and on the scrap heap. Nevertheless, the level of training of workers is higher than ever and should increase over time. In developed countries about a quarter of young proletarians graduate from university and a similar proportion have other forms of training.

We can also expect improved ability to perform complex work in a future communist society as many of the conditions that cause stunted development are eliminated. These include lack of family support, peer pressure to under-perform and an inadequate education system. Social ownership will end the isolation of education from production and other activities, so uniting learning and doing. Workers will help each other to learn. We will also benefit from an increasing understanding of human development and what causes learning difficulties. And over the longer term we can expect to see artificial improvements through mind-enhancing drugs, genetic engineering (induced evolution) and brain link-ups to computers.

The Capitalist Social Revolution

The dominance of capitalist market relations brings a social as well as an industrial revolution. The outcome is frightful in many ways but vastly better than what it replaces. In particular, the revolution casts off many ancient shackles and replaces them with weaker capitalist ones.

Proletarians are employees not slaves or serfs. As wage workers they only have a contractual arrangement for part of the day with their capitalist master and are free to move from one job to another. Their boss, unlike the peasants’ lord, is probably not the local political chief or magistrate.

Their position in the labor market also frees them from subordination to the extended family, tribe or local community. It provides economic independence and the opportunity to physically escape from these sources of oppression and conservatism.

“Their position in the labor market also frees them from subordination to the extended family, tribe or local community. It provides economic independence and the opportunity to physically escape from these sources of oppression and conservatism.”

The new market-based class relations also raise women from their age old subordinate position. The nuclear family replaces the extended family as the economic unit so that women only have to deal with their freely chosen husband and not his relatives. Then comes the independence of employment for a wage. The changing conditions plus struggles by women lead to the removal of legal discrimination, new divorce laws and various forms of government child support. Even the nuclear family becomes optional. These changes cut away much, although not all, of the legacies of women’s oppression and create the conditions where men and women can begin to understand their differences and similarities, and better meet their mutual needs.

The emergence of capitalism has been accompanied by the bourgeois democratic revolution that brings equality before the law, freedom of speech and assembly, due process and constitutional rule. People now expect these political conditions and feel aggrieved by their absence. They could not imagine being ruled by the bejewelled thugs of earlier times. This provides space for the proletariat to organize itself and for a revolutionary movement to emerge and develop. Although when the capitalists feel sufficiently threatened they dispense with these arrangements. This may involve goons and death squads, a state of emergency,  a military coup or the coming to power of a fascist tyrant. However, such drastic measures cannot permanently put the genie back in the bottle and they are bound to provoke resistance.

Overcoming both submissive and oppressive behavior will be at the core of the struggle for communism.  Individuals will require the boldness to stand up to people who act in a harmful manner either to them or to others, while expecting other people to submit to you is completely at odds with a culture of mutual regard. Overcoming the submissive and oppressive forms of behavior found under capitalism will prove difficult enough. Having to at the same time overcome their far more extreme pre-capitalist forms would be unimaginably difficult.

The experience of constant flux experienced under capitalism is also important for communism. Pre-capitalist societies are static. The way of life in your old age is the same as that in your youth. In keeping with this there are set and unchanging ways of thinking and general acceptance of how things are. Under capitalism there is constant change and increasing uncertainty in the conditions of life and the prevailing ways of thinking. It then becomes possible for people to look at where they are and where they are going. This is expressed well in The Communist Manifesto as follows:

All fixed, fast-frozen relationships, with their train of venerable ideas and opinions, are swept away, all new-formed ones become obsolete before they can ossify. All that is solid melts into air, all that is holy is profaned, and men at last are forced to face with sober senses the real conditions of their lives and their relations with their fellow men.

Hasn’t Communism Already Failed? (More from The Communist Manifesto Project)

There is a lot to be done on the democratic front. This includes:

supporting freedom of speech and assembly, government transparency, right to due process and freedom from government harassment and surveillance;

helping neutralize any emerging fascists trends;

struggling for a democratic political culture within the communist movement that effectively deals with controlling personalities, sycophants and attempts to close down critical thinking;

being better than others at exposing the folly of professional politicians;

proposing changes to the constitution and system of representation that would open up politics to greater scrutiny and participation;

and showing how vested economic interests under capitalism have a corrupting effect on government.

(More from The Communist Manifesto Project)

****

There is a thoroughly entrenched view that the experience of revolutions during the 20th century shows that communism has failed. There was indeed a failure. However, it was not of communism, but of an attempt to sustain a path towards it when its preconditions were absent. Russia in 1917 and China in 1949 were essentially backward pre-capitalist societies. Most people were peasants rather than proletarians, and they were more interested in land for the tiller than social ownership. There was little modern industry and thinking was medieval. They had not passed through the capitalist stage, which is required for a successful communist revolution. As the experience of other backward countries shows, even getting capitalism off the ground under these circumstances is hard enough, let alone a society that is supposed to supersede it.

This peculiar state of affairs arose because the bourgeoisie was too weak, cowardly or treacherous to carry out its own tasks. Instead, communists found themselves at the head of both anti-feudal modernist revolutions and patriotic resistance to fascist aggression and occupation. The Bolshevik regime in the Soviet Union was joined after World War II by a host of other countries in what became ‘the socialist camp’. It included China, Vietnam and Yugoslavia that had taken power with their own revolutionary forces, and eastern and central Europe and northern Korea where regimes were established by virtue of Soviet military occupation in the aftermath of the defeat of Germany and Japan. So, by historical accident communists found themselves burdened with the task of raising their societies out of social and economic backwardness. They had to perform the work of capitalism. They had to create an industrial base and trained work force virtually from scratch. The “failure of communism” was a consequence of the failure of capitalism.

Under these conditions the move in a communist direction could only be quite limited and proved unsustainable. They took important preliminary measures but did not achieve the real substance. Industry was placed under state ownership which meant that capitalist industry was expropriated and the new accumulation of private wealth prevented. At the same time there was a degree of economic security for workers. The system was described as socialism, the first stage on the road to communism. However, the weakness of the proletariat placed severe limits on what could be achieved. With some minor exceptions in Europe, it only began to become a significant section of society with the industrialization that followed the revolution. Proletarians were former peasants engaged mainly in the low paid toil that you would expect at this stage of development. They were simply not ready to be a ruling class. There was not the basis for a society based on mutual regard. Enthusiasm and unprompted initiative was limited in the harsh conditions and so there was a heavy reliance on material incentives and top down command with all kinds of perverse results. The freedom and democracy required for the full development of the proletariat was not possible given the intensity of external and internal opposition and the weakness of the revolutionary forces. Conditions also dictated a heavy reliance on a “revolutionary vanguard”.

Because most work was arduous and repetitive manual labor, and the education level and background of typical workers left them ill-equipped for involvement in the mental aspects of production, there was a minority who did the thinking and deciding. These were the managers, engineers and officials – generally referred to as ‘cadres’. Members of this elite had a vested interest in entrenching their privileged position and were unlikely to encourage an invasion of their domain as workers became more skilled and educated, and industry more mechanized, nor to willingly start to take upon themselves a share of the more routine forms of labor.

Once career, income and position are the primary impulse, economic results take a second place to empire building, undermining rivals, promoting loyal followers, scamming the system and concealing one’s poor performance from superiors. The opportunity for workers to resist these developments was limited by the lack of freedom and the culture of subordination which drains away confidence and the courage to act. This can be very strong even in the absence of political tyranny as we can see in any liberal capitalist society. At the same time, one can imagine that any rank and file worker with special abilities or talents would tend to be more interested in escaping the workers’ lot by becoming one of the privileged rather than struggling against them.

Mao Zedong, the head of the Chinese Communist Party until his death in 1976, referred to this process, once fully entrenched and endorsed at the top, as capitalist restoration and those encouraging it as revisionists and capitalist roaders. The Chinese Cultural Revolution that he led in the late 1960s is the only attempt to beat back this trend. However, that revolution was sabotaged and defeated, and the capitalist roaders were able to seize supreme power in China after his death.

The Soviet Union and like regimes in Eastern Europe represented a distinctive type of dead-end economically, politically and socially, and their demise in 1989-90 is one of the celebrated events of the late 20th centuries. By discarding much of the empty and dysfunctional formal shell of socialism and operating more like normal capitalist economies both China and Vietnam have managed to achieve considerable economic development in recent decades. Cuba is now beginning to take this route. The monstrosity in North Korea relies on mass terror and the support of the Chinese. All these regimes are an affront to freedom and democracy, and must be overthrown.

Notwithstanding this grim picture, there were still some significant achievements. In a large part of the world landlords and feudal relations were swept from the countryside. Industrialization was raised from a very low base and generally outperformed the backward countries in the capitalist camp. Most importantly, after a crash industrialization in the 1930s, the Soviet Union was able to defeat Nazi Germany. This is something for which the world should be eternally grateful.

The dilemma faced by 20th century communists was anticipated by Engels in the following passage from chapter 6 of The Peasant War in Germany, published in 1850:

The worst thing that can befall a leader of an extreme party is to be compelled to take over a government in an epoch when the movement is not yet ripe for the domination of the class which he represents and for the realization of the measures which that domination would imply. What he can do depends not upon his will but upon the sharpness of the clash of interests between the various classes, and upon the degree of development of the material means of existence, the relations of production and means of communication upon which the clash of interests of the classes is based every time. What he ought to do, what his party demands of him, again depends not upon him, or upon the degree of development of the class struggle and its conditions. He is bound to his doctrines and the demands hitherto propounded which do not emanate from the interrelations of the social classes at a given moment, or from the more or less accidental level of relations of production and means of communication, but from his more or less penetrating insight into the general result of the social and political movement. Thus he necessarily finds himself in a dilemma. What he can do is in contrast to all his actions as hitherto practised, to all his principles and to the present interests of his party; what he ought to do cannot be achieved. In a word, he is compelled to represent not his party or his class, but the class for whom conditions are ripe for domination. In the interests of the movement itself, he is compelled to defend the interests of an alien class, and to feed his own class with phrases and promises, with the assertion that the interests of that alien class are their own interests. Whoever puts himself in this awkward position is irrevocably lost.

What is to be Done?

At the moment when inquiring minds seek to learn about communism they will encounter a range of appalling nonsense from various tiny groups claiming to be communist or Marxist. Some support the regimes in Cuba and China, and there are even the occasional North Korea supporters. The absurd regime in Venezuela inspires many of them. They all cling onto the once true but now outdated view that US imperialism is the main problem in the world today, and for this reason some even see a good side to Daesh, Al Qaeda and the Taliban. They all share the mainstream view that regime change in Iraq has been a disaster and the fascist Baath Party should have been left in power. These groups never talk about how capitalism is creating the conditions for communism but simply whine about how terrible the system is, and often do this in a reactionary way particularly in their opposition to “globalization” and acceptance of green views on virtually everything. They rarely talk about and scarcely understand communism, and they simply see it as something in never-never land rather than their real purpose.

It will be up to the now very young or yet to be born to rediscover communism. For older people it would require too much of a break from their entrenched ways of thinking. Only then can we expect to see the beginnings of a communist movement.

As well as understanding and conveying the ultimate aims of communism and social ownership, with its elimination of market relations and the full development of the individual, they will also need to come to grips with how we get there. This has a number of phases. Listing them in reverse chronological order they are: the period of revolutionary transition when we shake off all the “muck of the ages”; the initial phase of the revolution, day one so to speak; and the here and now.

On the transition phase it will be particularly important to understand the tenacity of the bourgeoisie and old bad habits and thinking, and the need for the proletariat to transforms itself in the struggle. The new society cannot be created overnight. A vigorous mass movement will be critical for the transition because a passive population means certain defeat at the hands of a new bourgeoisie. In this context there would need to be a firm rebuttal to any idea of ‘socialism’ that is not seen as a revolutionary transition stage on the road to communism. There has to be a fundamental change in human behavior and the way society operates. It is that or capitalism. Any halfway stage has to proceed to communism or revert to capitalism.

During the initial phase, one of the first tasks of the revolution will be the neutralization of the bourgeoisie by expropriating their assets. This could be done fairly quickly and would not have to await more fundamental changes in economic arrangements. It could be achieved with a 100 per cent wealth tax on all wealth over a certain level. All the company stock, bonds, bank deposits and other income earning assets belonging to the bourgeoisie would become the property of the state. This would in an instant drastically reduce their economic and political power. People in executive positions would simply be instructed to keep doing their job under threat of dismissal. Some capable executives are indeed capitalists so some concessions may need to be made to them if they are prepared to cooperate.

During the pre-revolutionary period there are many matters that the communist movement will need to deal with. It is important to connect with those resisting the various symptoms of the existing order because they would be among the more amenable to communist ideas and there is much to be achieved in the here and now that is necessary for communism.

There is a lot to be done on the democratic front. This includes: supporting freedom of speech and assembly, government transparency, right to due process and freedom from government harassment and surveillance; helping neutralize any emerging fascists trends; struggling for a democratic political culture within the communist movement that effectively deals with controlling personalities, sycophants and attempts to close down critical thinking; being better than others at exposing the folly of professional politicians; proposing changes to the constitution and system of representation that would open up politics to greater scrutiny and participation; and showing how vested economic interests under capitalism have a corrupting effect on government.

People are seeking remedies to the various ills of the present system. They seek the alleviation of poverty, better healthcare and education. While helping to pursue improvements in the here and now communists would be there explaining the limitations of what can be achieved under the system. They would not simply be demanding the same things but in a more militant in tone. Their central focus would not be on denouncing governments for under-spending in these areas or for pursuing this policy or that. Rather, they would stress that only communism can ensure jobs and economic security and explain how it would lead to better healthcare and education through the fundamental changes in human behavior.

Communists must advocate rapid scientific advance and denounce capitalism for its tardiness in this area. It is critical to both our ability to thrive on this planet and to create the material conditions for communism. In the process they will have to lock horns with the green opponents of “technofix” who think that science just creates new problems. For the greens, the “solution” is less consumption and a population collapse.

Communists will need to be vocally demanding that the international bourgeoisie do far more to further what Marx called the bourgeois democratic revolution. Their tardiness in this area is legendary. For example, if a communist movement existed at this very moment it would be vigorously demanding that the powers that be quickly sort out the appalling situation in Syria and Iraq. Their failure to give effective assistance to the legitimate rebel forces in Syria meant that Daesh was able to thrive with appalling results. US President Barak Obama’s inaction in the early phase of the Syrian civil war should be condemned as should that country’s ongoing underwriting of Israeli oppression of the Palestinians. Generally we should be demanding that our rulers do everything possible to re-spark the Arab Spring.

Part of the problem is a prevailing pacifism both within the ruling class and society at large. A communist movement would be particularly concerned that the liberal democracies retain their military supremacy and stay well ahead of Russia and China. A large defense reserve should play a role, and would ensure that professionals are not the only ones with military training.

The Communist Manifesto Project – opposing the ‘reactionists’. Some annotations.

“The bourgeoisie, historically, has played a most revolutionary part” – Karl Marx 1848

Marx considered capitalism revolutionary, an advance on all previous societies. Most contemporary “Marxists” and the pseudo left more broadly either disagree or are highly ambivalent… For example, they bemoan “corporate globalization” and believe that the very far from complete process of economic development is ecologically unsustainable and we need to revert to a something “simpler”. Marx refers to these people as “reactionists”.

(Via The Communist Manifesto Project)

 

communist-manifesto

 

****

Annotations

These are some comments to consider while reading The Communist Manifesto. Most of them highlight the many instances where Marx’s views are contrary to those of present-day “Marxists”. Marx is referred to as the writer here. While Engels was a co-author, the final writing was the work of Marx.

Chapter 1: Bourgeois and Proletarians

“The bourgeoisie, historically, has played a most revolutionary part.”

Marx then goes on to elaborate on this point in the subsequent 11 paragraphs. He considered capitalism revolutionary, an advance on all previous societies. Most contemporary “Marxists” and the pseudo left more broadly either disagree or are highly ambivalent. They do not see the capitalist transformation of the economy and society as the launching pad for communism. Rather, the society they want requires a retreat from this process. For example, they bemoan “corporate globalization” and believe that the very far from complete process of economic development is ecologically unsustainable and we need to revert to a something “simpler”. Marx refers to these people as “reactionists”.

” We see then: the means of production and of exchange, on whose foundation the bourgeoisie built itself up, were generated in feudal society. At a certain stage in the development of these means of production and of exchange, the conditions under which feudal society produced and exchanged, the feudal organisation of agriculture and manufacturing industry, in one word, the feudal relations of property became no longer compatible with the already developed productive forces; they became so many fetters. They had to be burst asunder; they were burst asunder.”

So the transition from capitalism to communism will not be unique. As well as the transition from feudalism to capitalism there was also the transition from hunter-gathering to agriculture based society. In each case there was a total change in thinking and doing – “human nature”.

” For many a decade past the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule. ”

Marx goes on to cite capitalist economic crises as a prime example of the system’s obsolescence. Some claim that crises are not inevitable under capitalism. However, the evidence seems to suggest that they can only be delayed and at the cost of making them worse.

Other economic failings of the system include its slowness to innovate [see here] and its inability to tap the enthusiasm and initiative of workers [see here].

” Owing to the extensive use of machinery, ……. according to their age and sex.”

This is an accurate description of machine tending where work becomes confined to simple repetition. However, this should not be taken to be Marx’s overall assessment of work under capitalism. In Capital Vol. I Chapter Fifteen Section 9, he has two paragraphs that gives his general view of the labor process under capitalism. These are quoted in full below.

“Modern industry never looks upon and treats the existing form of a process as final. The technical basis of that industry is therefore revolutionary, while all earlier modes of production were essentially conservative. [225] By means of machinery, chemical processes and other methods, it is continually causing changes not only in the technical basis of production, but also in the functions of the labourer, and in the social combinations of the labour-process. At the same time, it thereby also revolutionises the division of labour within the society, and incessantly launches masses of capital and of workpeople from one branch of production to another. But if modern industry, by its very nature, therefore necessitates variation of labour, fluency of function, universal mobility of the labourer, on the other hand, in its capitalistic form, it reproduces the old division of labour with its ossified particularisations.We have seen how this absolute contradiction between the technical necessities of modern industry, and the social character inherent in its capitalistic form, dispels all fixity and security in the situation of the labourer; how it constantly threatens, by taking away the instruments of labour, to snatch from his hands his means of subsistence, [226] and, by suppressing his detail-function, to make him superfluous, we have seen, too, how this antagonism vents its rage in the creation of that monstrosity, an industrial reserve army, kept in misery in order to be always at the disposal of capital; in the incessant human sacrifices from among the working-class, in the most reckless squandering of labour-power and in the devastation caused by a social anarchy which turns every economic progress into a social calamity. This is the negative side. But if, on the one hand, variation of work at present imposes itself after the manner of an overpowering natural law, and with the blindly destructive action of a natural law that meets with resistance [227] at all points, modern industry, on the other hand, through its catastrophes imposes the necessity of recognising, as a fundamental law of production, variation of work, consequently fitness of the labourer for varied work, consequently the greatest possible development of his varied aptitudes. It becomes a question of life and death for society to adapt the mode of production to the normal functioning of this law. Modern Industry, indeed, compels society, under penalty of death, to replace the detail-worker of to-day, grappled by life-long repetition of one and the same trivial operation, and thus reduced to the mere fragment of a man, by the fully developed individual, fit for a variety of labours, ready to face any change of production, and to whom the different social functions he performs, are but so many modes of giving free scope to his own natural and acquired powers.

“One step already spontaneously taken towards effecting this revolution is the establishment of technical and agricultural schools, and of “écoles d’enseignement professionnel,” in which the children of the working-men receive some little instruction in technology and in the practical handling of the various implements of labour. Though the Factory Act, that first and meagre concession wrung from capital, is limited to combining elementary education with work in the factory, there can be no doubt that when the working-class comes into power, as inevitably it must, technical instruction, both theoretical and practical, will take its proper place in the working-class schools. There is also no doubt that such revolutionary ferments, the final result of which is the abolition of the old division of labour, are diametrically opposed to the capitalistic form of production, and to the economic status of the labourer corresponding to that form. But the historical development of the antagonisms, immanent in a given form of production, is the only way in which that form of production can be dissolved and a new form established. “Ne sutor ultra crepidam” — this nec plus ultra of handicraft wisdom became sheer nonsense, from the moment the watchmaker Watt invented the steam-engine, the barber Arkwright, the throstle, and the working-jeweller, Fulton, the steamship. [228]”

“226.
“You take my life
When you do take the means whereby I live.”
Shakespeare.

227. A French workman, on his return from San-Francisco, writes as follows: “I never could have believed, that I was capable of working at the various occupations I was employed on in California. I was firmly convinced that I was fit for nothing but letter-press printing…. Once in the midst of this world of adventurers, who change their occupation as often as they do their shirt, egad, I did as the others. As mining did not turn out remunerative enough, I left it for the town, where in succession I became typographer, slater, plumber, &c. In consequence of thus finding out that I am fit to any sort of work, I feel less of a mollusk and more of a man.” (A. Corbon, “De l’enseignement professionnel,” 2ème ed., p. 50.)

228. John Bellers, a very phenomenon in the history of Political Economy, saw most clearly at the end of the 17th century, the necessity for abolishing the present system of education and division of labour, which beget hypertrophy and atrophy at the two opposite extremities of society. Amongst other things he says this: “An idle learning being little better than the learning of idleness…. Bodily labour, it’s a primitive institution of God…. Labour being as proper for the bodies’ health as eating is for its living; for what pains a man saves by ease, he will find in disease…. Labour adds oil to the lamp of life, when thinking inflames it…. A childish silly employ” (a warning this, by presentiment, against the Basedows and their modern imitators) “leaves the children’s minds silly,” (“Proposals for Raising a Colledge of Industry of all Useful Trades and Husbandry.” Lond., 1696, pp. 12, 14, 18.)”

The basic message is that despite the tendency for capitalism to impose a narrow division of labor, the objective conditions of modern industry limit the extent they can do that.

This view is very much at odds with Braverman’s Labor and Monopoly Capital, The Degradation of Work in the Twentieth Century. This book has had a very unfortunate influence of how people on the left view the labor process under capitalism. It claims that capitalism tends to increasingly degrade work and deskill workers. The present situation totally refutes this view given that 15-20 per cent of the workforce have university degrees and a larger number have vocational training. If it were true that capitalism was simply reducing the workforce to automatons, it would be hard to see how they could ever get rid of, and then manage without, the bourgeoisie. For a full refutation of Braverman see Deskilling Debunked.

” The various interests and conditions of life within the ranks of the proletariat are more and more equalized, in proportion as machinery obliterates all distinctions of labour, and nearly everywhere reduces wages to the same low level. ”

While proletarians are no longer mainly machine tenders, the point about equalization is still quite valid.
The wage disparity among the vast majority of workers is not enough to generate major differences in material conditions of life. There is a mass mainstream, with perhaps 10 per cent at the top and 10 per cent at the bottom living in different worlds. This is important from the point of view of overall solidarity and individuals identifying with most other people. The way that the vast bulk of people think of themselves as ‘middle class’ is one reflection of this.

” Finally, in times when the class struggle nears the decisive hour, the progress of dissolution going on within the ruling class, in fact within the whole range of old society, assumes such a violent, glaring character, that a small section of the ruling class cuts itself adrift, and joins the revolutionary class, the class that holds the future in its hands. Just as, therefore, at an earlier period, a section of the nobility went over the bourgeoisie, so now a portion of the bourgeoisie goes over to the proletariat, and in particular, a portion of the bourgeois ideologists, who have raised themselves to the level of comprehending theoretically the historical movement as a whole.”

Now most members of the intelligentsia are part of the proletariat. They come from proletarian families and works for a salary. Unfortunately, because of their employee status most are hacks working in the service of the bourgeoisie. This includes the pseudo left in the social sciences who have done much to stifle young inquiring minds. Under these circumstances independent thinkers with independent means would be most valuable.

” Of all the classes that stand face to face with the bourgeoisie today, the proletariat alone is a really revolutionary class. The other classes decay and finally disappear in the face of Modern Industry; the proletariat is its special and essential product.”

In modern capitalist societies the vast majority of people are members of the proletariat. They are either wage or salary earners or on welfare. They have no means of production of their own. The capitalists are a tiny minority and the petty bourgeoisie comprise around 10 per cent. The proletariat is revolutionary because it has no interest in the present system and can do without the bourgeoisie. For more on the modern proletariat go here.

“All the preceding classes that got the upper hand sought to fortify their already acquired status by subjecting society at large to their conditions of appropriation. The proletarians cannot become masters of the productive forces of society, except by abolishing their own previous mode of appropriation, and thereby also every other previous mode of appropriation. They have nothing of their own to secure and to fortify; their mission is to destroy all previous securities for, and insurances of, individual property.

“All previous historical movements were movements of minorities, or in the interest of minorities. The proletarian movement is the self-conscious, independent movement of the immense majority, in the interest of the immense majority. The proletariat, the lowest stratum of our present society, cannot stir, cannot raise itself up, without the whole superincumbent strata of official society being sprung into the air.”

The proletariat has to own all the means of production in common. Parceling them out to separate groups of workers would simply bring you back to capitalism.

” The modern labourer, on the contrary, instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident, that the bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an over-riding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state, that it has to feed him, instead of being fed by him. Society can no longer live under this bourgeoisie, in other words, its existence is no longer compatible with society.”

This is still indeed the case for a significant section of the proletariat. A pauper is someone who cannot support them-self. In the present context that means being on the dole or invalid pension. Pauperism occurs because capitalism fails to ensure that everyone is equipped with the abilities required for the workforce and also leaves many people the psychological casualties of a dog eat dog society.

Chapter 2: Proletarians and Communists

“In the national struggles of the proletarians of the different countries, they point out and bring to the front the common interests of the entire proletariat, independently of all nationality.’

A lot of the pseudo left demand protection from “cheap foreign labor”.

“Communistic abolition of buying and selling”
This means no more markets. Most “Marxists” have gone to water on this and agree with the bourgeoisie that it is impossible. For a discussion of how communism would thrive without markets go here.

” The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State,i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible.”

This is totally at odds with the green anti-growth view that is now so widely held.

” In place of the old bourgeois society, with its classes and class antagonisms, we shall have an association, in which the free development of each is the condition for the free development of all.”

Another way of expressing this is to say – each person’s free development depends on the free development of everyone else. This is obvious if you think about how difficult it would be to fully thrive if those around you are hopelessly inadequate.

Chapter 3: Socialist and Communist Literature

​In this chapter Marx lists the various types of “anti -capitalism” that prevailed at that time. A new list for the present time needs to be prepared. There will be significant similarities and they will be as equally reactionary.

Chapter 4: Position of the Communists in Relation to the Various Existing Opposition Parties

This chapter looks at immediate tasks for communists at that time. At the present moment the big issue is the Arab Spring. This revolution, no matter however totally bourgeois, is in the interest of the proletariat and people, both of the region and internationally. The major capitalist powers must be placed under the greatest possible pressure to do all they can assist, including militarily. The “Marxists” and other pseudo leftists have done all they can to oppose this and are a total disgrace.

Fascism and the Left (from Red Eureka Movement, November 1980)

… scratch a “Communist” and one quite often finds a fascist underneath.

(Note: I was personally on the other side, the wrong side, during the conflict described in this article. I opposed the Red Eureka Movement. I now regret not being open-minded and rebellious and instead clinging to the safety of dogma, a close social circle and the Party Line. We all have our dark years, I suppose. The thing is to face them and keep learning…).

* * * *

A major theme in left wing propaganda is opposition to fascism. Quite often relatively moderate opponents of the left are described as “fascists”.

Yet scratch a “Communist” and one quite often finds a fascist underneath.

The regime that began with the October Revolution is now a fascist dictatorship. In China too, since the defeat of the Cultural Revolution many revolutionaries have been executed and the right to speak out freely, hold great debates, put up big character posters and so on has been officially and formally repudiated.

The degeneration of Communist Parties in power is a separate problem calling for a separate analysis. But what about the degeneration of parties holding no power?

THE CPA (ML)

Our experiences with the “Communist Party of Australia (Marxist-Leninist)” were sufficiently frightening to require some deep analysis. Almost any split is accompanied by outraged cries of “unfair” or “undemocratic” from the losing side, so it seemed undesirable to distract attention from the fundamental issues at stake by going into details of who done what to who. But another reason why we never got around to it was probably embarrassment at ever having been involved with such a sick group.

The bankruptcy of Australian nationalism as an ideology for communists is now pretty apparent, while the question of whether China has gone revisionist has been settled by open proclamations from the Chinese leadership themselves. Although Vanguard keeps coming out each week, the people behind it seem pretty discredited and there is little need to discredit them further.

In Adelaide the “Worker Student Alliance for Australian Independence” has disintegrated, along with its newspaper People’s Voice. In Melbourne the entire editorial collective of Independence Voice quit some time ago, there was no “Independence platform” at Mayday, the “Australian Independence Movement” is virtually defunct and supporters of this line have been completely routed in “Community Radio” 3CR. The Australia China Society is unable to defend the new regime in China and little has been heard from the CPA(ML) in the trade union movement either.

As a complete expression of E.F.Hill’s bankruptcy we have the suggestion in “Australian Communist”, that they want unity with us (previously described as “Soviet agents”). Hill has even signed an article proposing reunification with the CPA in “one Communist Party” (presumably because the Chinese revisionists, having recently re-united with their Italian and Yugoslav colleagues, also wish to re-establish relations with the CPA, leaving Hill out in the cold).

The thuggish behaviour of the CPA(ML) supporters in attempting to intimidate their opponents is well known. Both intellectual and physical thuggery, in 3CR and elsewhere, has become so notorious that the only “broad united front” they have been able to create has been that directed against themselves. They have also become notorious for openly preferring to ally themselves with various Nazis and other fascists against the Soviet Union rather than trying to unite the people, and especially the left, against Soviet imperialism on the basis of progressive principles. Their main political theme these days is the united front they claim to have with Malcolm Fraser,who nevertheless remains quite unaware of their existence. As for China, they openly say they would rather not talk about it, even though China was, and is, central to their whole political outlook.

These facts are mentioned, not to kick a dead horse, but to emphasise that the horse really is dead and to confirm that the additional facts about it cited below are genuine observations and not just part of some ongoing sectarian faction fight.

OTHERS TOO

The more or less open fascism of the CPA (ML) has resulted in that group being simply dismissed as “crazies”. But in fact they are only a more extreme expression of problems that exist, less overtly, throughout the left. Indeed it has been noticeable in 3CR for example, that the excuse of “keeping out the crazies”, has been used to justify appallingly manipulative and undemocratic behaviour (e.g. elected listener sponsor representatives voting against explicit directives from a large general meeting of listener sponsors). People who would be shocked and indignant about that in other contexts have made excuses for it when their own friends are doing it. Really how far is it from making excuses to acting in the same way?  And how far from there to ending up just like the “crazies” themselves?

Also the fact that China and the Chinese parrots are anti-Soviet (and Reagan, Thatcher, Fraser etc) has become an excuse to actually apologise for Soviet actions that would be called “fascist” if American was doing it.  Indeed many quite non-crazy “left liberals” have been prepared to go through the most amazing mental contortions to justify the Vietnamese occupation of Kampuchea or to minimise the significance of Soviet aggression elsewhere.  Rather than agree with “right-wingers” (like Churchill), they prefer to apologise for fascists (like Hitler).

Where was the left wing outrage (as distinct from concern) when Polish workers were being denied the elementary right to form free trade unions?  Why do “militants” in “left-wing” unions take delight in the same bureaucratic manoeuvres their opponents use to stay in power?  Why are splits in left wing groups so common and so nasty?

In Australia many other groups supposedly on the left have exhibited a personal intolerance comparable to the Chinese parrots, and also a comparable willingness to apologise for reactionary regimes in other countries, provided those regimes pay lip service to “anti-imperialist” principles. (Vietnam, Cuba, Iran, Libya… name a country that is suppressing some other country or trying to impose some medieval religion on its people and you will find a “left” group wildly enthusiastic about it.)  Scanning overseas “left” newspapers one gets the impression that narrow minded religious bigotry is pretty common, and even where it is not taken to extremes, it is still present.  No wonder so many on the “left” thought a fellow zealot like Khomeiny would be progressive for Iran.

The undemocratic tendencies of “Leninists” is a common theme in anti-Communist propaganda – from open representatives of the bourgeoisie, from Social Democrats, from Anarchists, from “Left” or “Council” Communists and what have you.  Nevertheless, attacks from our opponents should be taken seriously, and indeed have been taken seriously by the classic exponents of Marxism.

CHINESE FASCISM

This question was especially taken seriously in China and some of the material from the Chinese Cultural Revolution is very valuable for understanding the emergence of fascist tendencies among alleged “Communists”.

For example Mao Tsetung’s unpublished works, and the material criticizing Lin Piao (the “successor” who turned out to be a fascist). The Cultural Revolution was after all a direct struggle between revolutionaries and counter-revolutionaries who both purported to be part of the “left”. The concept of fighting bourgeois ideas disguised as “left” ideas was crucial to unleashing the 1960s upsurge and will be crucial again. It was necessary to challenge the “peace” ideas that were dominant in the left in the 1960s and it will be necessary to challenge the views that are dominant now – many of which are again crystallised in the eclectic mishmash of the “CPA”.

In the “gang of four’s” Peking University Journal of September 1, 1976 there is an important article on “The Bureaucrat Class and the Dictatorship of the Proletariat”:

…We must further recognise the high concentration of political and economic powers under the dictatorship of the proletariat. If the bureaucrat class succeeded in usurping power and in its restorationist conspiracies throughout the country, then it would continue to flaunt the banner of socialism, take advantage of this high concentration of political and economic powers and turn the democratic centralism of the proletariat into the fascist centralism of the bureaucrat class.

In controlling and manipulating the means of production and the product of Labor, these bureaucrats will be far more powerful than any previous exploiting classes and their political representatives, than the slave owners and feudal rulers who claimed that “all land under the sun is my territory and all people on earth are my subjects”, and than the bureaucrats and financiers in capitalist countries…In a similar vein, the present day new tsars behave much worse than the old tsars…

(Translation from Selections from People’s Republic of China Magazines No 895, American Consulate General, Hong Kong. Reprinted in Study Notes No 6, Red Eureka Movement, August 1978)

This article also goes into the question of the transformation of authority into capital and capital into authority, which is relevant to an understanding of imperialism in the West as well as in the Soviet Union and China.

Western bourgeois democratic society is heading towards an acute crisis and upheaval as another Great Depression and a Third World War develop. The outcome can be Communist Revolution or some form of fascism or social-fascism. We could face a new ruling class more powerful than the present one. It largely depends on how clear the left is on what we are fighting for and what we are fighting against and how sharply we can draw the line against perpetuating the old system of exploitation in our own practice. If the left continues to whinge about capitalism, and even oppose it from a reactionary perspective then it cannot hope to inspire people to fight for something fundamentally different.

Indeed, just as one would have to defend the national independence that Western and Third World countries have already achieved, from Soviet “socialist” imperialism, one would also have to defend the achievements already won by the bourgeois democratic revolution from attack by alleged “socialists” who want to go backwards to a more oppressive society.

DEMOCRATIC CENTRALISM

If the democratic centralism of the proletarian dictatorship can be easily transformed into the fascist centralism of the bureaucrat class in a developing socialist country, then what about democratic centralism in Leninist parties out of power? Is this an argument against democratic centralism and proletarian dictatorship, as anarchists and others insist?

The answer to this argument is that there never can be a guarantee against proletarian dictatorship turning into its opposite, and Communists in power must always be prepared for transition to underground life as Communists in opposition to capitalist roaders in power. Likewise in Communist Parties generally – one must be prepared to rebel and to be expelled for rebelling.

But if there was no democratic centralism and proletarian dictatorship then it would be quite impossible for the revolutionary ideas held only by a minority in capitalist and socialist society to be centralised and dominant and in that case the bourgeoisie holds power anyway. So weakening democratic centralism is not the answer. On the contrary, it needs to be strengthened to keep fascists out, on the same argument that the left cannot afford to be pacifist and must learn the use of arms if it doesn’t want warmongers to hold power.

Proletarian dictatorship means just that. It does not mean dictatorship over the proletariat by some bureaucrats. It means a political system in which the working class can really wield political power – something that can be achieved by workers councils led by a revolutionary party and cannot be achieved by parliamentary institutions or by milling around in confusion.

Democratic centralism also means just that. It does not mean the leadership imposing decisions on a reluctant membership. It means that the abstract “parliamentary” right which almost all organisations give their members to ultimately take decisions, is made real by conscious leadership of the decision making process to make it “from the masses, to the masses” and so make it actually work without manipulation or obstruction.

This article is not a plea for everybody to be more tolerant of everybody else. It is a call for sharper defence of our basic principles and less tolerance of attempts to undermine them. One cannot be a Communist if one is not first a democrat. The democratic revolutionaries of England, France and so on in earlier centuries had no hesitation about chopping off the heads of their aristocratic opponents and neither should we.

Fear of strengthening democratic centralism is really fear of struggle. Such fear is fully understandable in the present situation, and a lot better than blinkered complacency. But it must be overcome.

The quote from Orwell’s “Road to Wigan Pier” in “the Personal is Political” (Discussion Bulletin No 9) rang a few bells and is worth repeating:

…..”Socialism” is pictured as a state of affairs in which our more vocal Socialists would feel thoroughly at home. This does great harm to the cause. The ordinary man may not flinch from a dictatorship of the proletariat, if you offer it tactfully; offer him a dictatorship of the prigs,and he gets ready to fight.

We should be ready to fight against the dictatorship of the prigs and to do this it is necessary to understand the transformation of Communists into prigs.

ARE WE DIFFERENT?

If we take Lin Piao for example, there is no doubt that he did make contributions to the Chinese revolution before emerging as an outright fascist. The superstitious Mao cult he built up in opposition to Mao had definite roots in China’s feudal past, but also struck a chord among Western “Maoists”.

Ted Hill now appears to be nothing more than a follower of Liu Shao-chi, then Lin Piao (as a major cult advocate) then Liu Shao-chi again, or whoever may hold power in China at any given moment. But some of his analyses of revisionism,parliamentarism and trade union politics in publications like “Looking Backward; Looking Forward” are still valuable and he once made a point of opposing sacred cows and stereotypes and supporting rebellion.

Things were drastically wrong with the CPA(ML) long before we parted company and people are entitled to ask how we got mixed up with them and why we should be regarded as any different. If we are to be any different then we must analyse the thin dividing line that appears to exist between being a Marxist-Leninist or “Maoist” on the one hand, and being a lunatic or a fascist on the other.

There is little need to “expose” the CPA(ML) leadership now in view of its obvious degeneration. But the roots of current fascist attitudes do need study, so the following facts are placed on the record for our own benefit rather than for the benefit of anyone still taken in by Hill.

SOME FACTS

  1. There never was anything remotely resembling democracy within the CPA(ML). This became obvious when concrete disagreements made it necessary to have a proper discussion and take a decision. But it should have been obvious even when people thought they were in agreement.
  2. As soon as a disagreement in principle was announced “through the proper channels” etcetera, the immediate response was to launch vituperative attacks on individuals – at first surreptitiously behind their backs and then openly in Vanguard.
  3. The very idea of discussing the differences was repudiated and “security” was abused to tell people that there had been a full democratic discussion, which they just didn’t happen to be part of.
  4. As a matter of fact it turned out that no Central Committee actually existed. One member of the Red Eureka Movement discovered that he was supposed to be a CC member after wanting to express his views to the CC. This must be some sort of record in the international communist movement!
  5. Other members of the Red Eureka Movement who were both on the Central Committee and knew it , were able to expose the lie that there had been some kind of Central Committee discussion about China and that documents expressing opposition had been circulated to the Central Committee etc.
  6. Individual party members had to go outside the “channels” to get any kind of discussion and then discovered that the “channels” didn’t really exist. Now others who accepted this are finding the same situation.

7.It was not a case of discussion being suppressed arbitrarily and decisions usurped, but of there being no provision whatever for seriously discussing and reversing a policy disagreed with.

  1. This situation which existed long before it came to a head was put up with by people who would rebel strongly against similar fascist practices in any other social institution.
  2. Many people on becoming aware of it, and seeing people branded as Soviet agents etcetera, took a cynical attitude that this was wrong but not a major question of principle requiring them to take a stand.
  3. Our initial reaction to all this shit was not to launch a public struggle as in the Cultural Revolution or in accord with our own experiences in the 1960s. Instead we had great hangups about “the party” and organised semi-conspiratorially.
  4. Despite being a very small group, since breaking with the CPA(ML) leadership we have not been able to resolve internal disagreements in a civilised, let alone comradely manner, but have had two further splits. While nowhere near as bad as Hill’s, these have also involved strange behaviour that would not be tolerated in most community organisations and should not be tolerated on the left. Moreover they have occurred in a situation where we are not leading any great revolutionary struggle and no pressing life or death decision was at stake.

LIFE WASN’T MEANT TO BE EASY!

We did not fully realise it at the time, but there was little alternative to the apparent extremism of Hill’s stand because there really wasn’t any possibility of a discussion. If he had agreed to a discussion, what could he possibly have said? And if the CPA(ML) did not follow China religiously, what else could it do? We cannot blame Hill for our own naivety.

We only realised how difficult most people find it to rebel and think for themselves once we had broken with Hill and company. “Stalinists without a country” was the contemptuous Trotskyist label, and there is something in it. It really is enormously easier to at least think you know what you’re doing when there is some “socialist motherland”backing you up. (Or a “Fourth International”, a “great leader” or some other crutch).

For non-revolutionaries its fairly easy to maintain a political position sustained by one or other of the reformist currents in mainstream bourgeois society. But in a non-revolutionary society and with no back up from a revolutionary society, it requires real effort to develop a revolutionary program. How much easer it would have been if we could have forgotten that we didn’t have such a program by simply pretending to ourselves that China, or Albania or somewhere was revolutionary and that supporting them would somehow produce a revolution here. Or by pretending that if we were all more dedicated, we would figure out where we were going while getting there.

Its interesting to note how even people with no attachment to Russia, China or Albania have managed to persuade themselves that Vietnam is still worth supporting and feel a deep and personal threat to their whole ideology when this is questioned. Or how people leaving REM because it hasn’t been getting anywhere who know perfectly well what’s wrong with the political line of the Revolutionary Communist Party (USA), are nevertheless attracted by the reassuring certainty of that group’s proclamations.

“Idealism and metaphysics are the easiest things in the world, because people can talk as much nonsense as they like without basing it on objective reality or having it tested against reality. Materialism and dialectics, on the other hand, need effort. They must be based on and tested by objective reality. Unless one makes the effort, one is liable to slip into idealism and metaphysics.”(Mao Tsetung)

PRIESTS AND HORSES

Judging from overseas literature, the temptation of closed minded religious fanaticism is very strong in this situation. It provides a certainty that would otherwise be lacking and puts an end to all confusion,doubt,cynicism, liberalism and so on.

But this way out is the way out of the movement.It means joining the innumerable sects that are much better organised and disciplined than we are, and are able to get more done precisely because they do not have the “burden” of really having to think out a revolutionary line.

We did not hesitate to reject the “security” of blindly following China, Albania or anybody else so we should not regret the consequences.

One consequence is that we are in some respects more vulnerable to confusion, doubt, liberalism, cynicism and so on than other left groups that feel more confident about their (manifestly wrong!) lines. The reason horses are given blinkers is that it keeps them working away steadily without getting distracted by things they might see.Groups that have attached themselves to a foreign state, or that merely reflect a reformist current  in mainstream bourgeois ideology, have a secure basis for their activity and can work away at it for years after it has ceased to have any social relevance or has become purely reactionary.

The same can easily be true of “revolutionary” groups that feel secure, or pretend to feel secure in their “correct line”. They can whip up a great frenzy of activity, full of sound and fury, but signifying nothing. Take a look at the Communist Workers Party or the Revolutionary Communist Party (USA). On many points we would be in full agreement. They have a similar analysis of China and Albania to ours and they certainly do make a clear distinction between communist revolution and the bourgeois reformism advocated by most “revolutionaries”.

On international questions of very great significance they appear to have a fundamentally wrong analysis, But even more important, their whole approach to “correct line” politics seems alien. They are certainly not paralysed by liberalism like we are – but so what?

While confusion, doubt, liberalism, cynicism and so on persist we will remain unable to accomplish very much, including theoretical work:

“We must have faith in the masses and we must have faith in the Party. These are two cardinal principles. If we doubt these principles, we shall accomplish nothing.”(Mao Tsetung)

But the only basis for faith in the Party is confidence in the soundness of its analysis and line. Once we have grounds for such faith we will be able to accomplish something, but not before. (And of course once we do, we will again have the problem of blind faith and the potential for people to continue following a leadership that has proved itself worthy of confidence, long after it has ceased to play a progressive or revolutionary role. But then it would be at a higher stage of the spiral).

Demands that people pull themselves together, combat liberalism or what have you, will not solve the problem of lack of faith. This is an atheistic age and real communists are atheistic people. Our only God is the masses and the only basis for our faith is scientific analysis of reality.

The situation we are in calls urgently for working out where we are and where we are going. Without that , calls to press on more resolutely and with greater vigour will only result in people getting more lost.

CHIN UP, BACK STRAIGHT, EYES SHUT!

It is conservative, not revolutionary to promote “leadership”, “organisation”, “doing things”, “collective life” and so on without a clear perspective for liberating people from oppression. Defenders of the status quo habitually make such appeals and every organisation, revolutionary or not, naturally wants to be as effectively organised as possible (and most sewing circles and amateur theatrical societies are probably a lot better organised than REM). But it is quite wrong to see the organisational reflection of our confusion as the central problem instead of dealing with the confusion itself. (As for any who are not confused, they would have an even greater problem. Take off the blinkers!)

Communism is not the only ideology opposed to liberalism. Fascism opposes liberalism too. It is one thing to want to widen and deepen and ultimately transcend democracy by going beyond such mere forms as majority voting. It is quite another thing to declare that ones policies have proved their own correctness and deliberately exclude others from even a vote, let alone a real say, on the matter. Yet we have repeatedly experienced this kind of behaviour not just from enemies, but from comrades who probably really do want to be revolutionaries.

The fact that people like Lin Piao or Ted Hill could turn out to be fascists and that we could go along with a load of shit for a long time should alert us to the dangers. When people on the left start acting like people on the extreme right they must be pulled up sharply and told “You’re Ill” before the disease becomes incurable and before it spreads.

*******

Unemployment and Revolution (Part 3): What regulates unemployment? (written by Albert Langer in 1981)

Part 3: What regulates unemployment?

– What Do the Unemployed Actually Do?

– How Unemployment Regulates Wages

– Booms and Busts

– Wages and Class Struggle

– Union Solidarity

– Arbitration and Wage Indexation

– Capital Accumulation

– Technological Change

– Job Creation and Destruction

Somehow, the size of the pool of unemployed itself must regulate the rates of job creation and destruction. Otherwise the number of unemployed would fluctuate wildly all the time. We shall find out later how the regulation works normally, and why it is not working now. But we already know that unemployment must be some sort of regulator. The larger the pool of unemployment, the more jobs must get created and the less must get destroyed. Otherwise we cannot account for the usual balance eventually reached between these two quite independent rates.

Moreover, we know the mechanism usually tends to reach a balance with only a relatively small pool of unemployed. Therefore the mechanism must continue increasing the rate of job creation and/or reducing the rate of job destruction, as long as there is a certain amount of unemployment. It does not usually stop working with half the workforce still unemployed, just because unemployment is not still increasing.

Finally, we know that whatever this mechanism is, it does not always work. Right now, a small pool of unemployment is not balancing the rates of job creation and destruction. We await each month’s statistics with bated breath to find out whether unemployment has risen or fallen, and we usually find that it has risen. We know that periodically capitalism goes through major upheavals called economic crises, in which a large part of the labour force does get left unemployed for a long period. Our explanation of the balancing mechanism must account for that too.

Whatever the mechanism may turn out to be, we know that as long as it still is not working normally, no amount of artificial “job creation” can prevent the continuing mismatch between normal job creation and destruction from quickly recreating a large pool of unemployed. The only effective remedy for unemployment must be one that gets this balancing mechanism to work again. On this point we can agree with conservative economists. But what is the mechanism, why is it not working normally, and how can it be made to work again?

According to conservative economists the mechanism is simply that increased unemployment tends to pull down wages until it is profitable for capitalists to employ more workers. They conclude that the remedy is push down wages and increase profitability until the unemployment is absorbed.

That sounds quite plausible. If it is true, communists have no reason to deny it. We never claimed that capitalism could permanently maintain full employment without periodically pushing down wages to boost profits. Our answer would simply be that we do not feel like pushing down wages and boosting profits, thank you very much. We would prefer to abolish wages and profits and establish communism.

But a mystery remains as to why the mechanism should not be working, and why the remedy does not seem to work either! To resolve that mystery we shall first have to examine how unemployment regulates wages, and then how wages regulate employment and unemployment. We shall find that there is indeed a close connection between unemployment and wages, and between wages and job creation. But it is not as simple as the conservatives make out, it mainly works in one direction, and it does not work all the time. Most important, we shall find that we can not increase employment simply by pushing down wages. First let’s look at what the unemployed actually do to see how unemployment can regulate wages.

What Do the Unemployed Actually Do?

Under normal circumstances most of the unemployed are not just a stagnant “pool” but an active part of the “stream” moving from one job to another. They form a part of the stream that is temporarily banked up looking for outlets. They are an active part of the stream because they spend their time looking for jobs, not just rotting.

Unemployment is normally a period between jobs rather than a permanent status. When there was “full employment”, half the unemployed at any given time got jobs within four weeks. By 1978 more than a quarter had been waiting for over six months and another quarter for over three months. In a sense, one can measure how “normal” unemployment is, by its average duration, more than by the total numbers involved. It really is not a big problem if the economy is so dynamic that large numbers of people are changing their jobs each year, and they are spending a couple of weeks unemployed between each job. But it is very different when there are actually less people changing jobs than usual, but they are spending a longer time looking.

When unemployment increases slightly, it usually means that people moving from one job to another, or from school to work and so on, have to spend a longer time looking. But it does not immediately mean that a larger number of people are outside the labour force altogether.

Of course some unemployed workers do end up outside the labour force altogether, and even become permanently unemployable as a result of demoralisation. The larger the pool of unemployment, the larger the section of it that ends up stagnating instead of flowing back into employment, and the more peoples’ lives are ruined in this way.

Increasingly the unemployment we have got is taking on the features of a stagnant pool, rather than a flowing stream. This is compounded by the sharp reduction in normal labour turnover as people are reluctant to leave their old jobs unless they have new ones lined up. This stagnant unemployment is a different thing altogether from the “normal” unemployment that somehow regulates the rates of job creation and destruction. Nevertheless, we must first understand how “normal” unemployment does regulate these rates, before we can understand why the new unemployment does not.

The important thing about normal unemployment is that a larger part of the labour force is spending more time looking for work, and not that a section of the population has ceased to be part of the labour force. Hence the concept that the unemployed form a “reserve army of labour” that plays an active role in capitalist production, just as reserve armies play a vital role, and are not simply “inactive” in military battles. Some soldiers are in battle, and others are available to be deployed where required. Some workers work, and others are available to work where they are required. Both those in active service and those in reserve are necessary for things to go smoothly.

An important difference is that reserve armies of soldiers are deployed where their officers decide they are needed. With conscious military planning, reserves can be kept to a minimum and troops transferred directly from one front to another as required. Unemployed workers have no officers and are expected to find their own jobs. (Although there is now a fair bit of “manpower planning” and so forth).

The economic function of the unemployed is to look for work. Those that do not are no longer “unemployed”, but are “not in the labour force”. Those that do will normally find a job eventually. Their place in the unemployment pool may then be taken by someone else looking for employment. How long it takes, and what proportion miss out entirely, depends on the level of unemployment. But the unemployed individuals economic function does not change, their basic situation does not depend on the level of unemployment.

It is important to realise this when attempting to organise the unemployed. One reason they are very difficult to organise is that even now, most of them are not permanently unemployed – and the ones with enough initiative to get organised are also likely to get jobs quicker than average. On the other hand those that do become permanently unemployed can end up getting demoralised and dropping out of the labour force so they are no longer “unemployed” either, and are pretty hard to get involved in anything.

Let’s face it, unless things are really desperate, an individual unemployed worker can get more immediate benefit out of looking harder for a job than out of agitating against the government. The harder you look, the more chance you have of eventually getting to the front of the queue leading back into employment.

How Unemployment Regulates Wages

By looking for work, the unemployed play a vital role in the labour market. Their number determines the ease with which employers can recruit labour for expansion or replacement. That recruitment is going on all the time, even when there is a net reduction in the total number of jobs. There are always vacancies as well as people unemployed (and isolated examples of unfilled vacancies are always pointed to even though there are many times as many people looking for work as there are jobs available). The proportion of unemployed workers to job vacancies determines the average speed with which vacancies can be filled, just as it determines the average length of unemployment.

If vacancies cannot be filled fast enough any other way, then employers will bid up the price of labour by competing with each other to fill their vacancies. As in any other commodity market, this will continue until the supply of labour increases to fill the vacancies, or until the demand for labour has fallen (more likely, since the size of the labour force is relatively inflexible). The demand for labour will fall when the price has been bid up high enough, because investments that would have required more labour will cease to be profitable at the higher wage rate. So less jobs will be created and more will be destroyed. This includes of course the accelerated shift to less labour intensive production techniques.

We will examine the details shortly, but the important point to note is that unemployment only regulates wages in one direction. In fact unemployment only regulates wages when there hardly is any! As soon as there is enough unemployment to avoid a “wages explosion”, additional amounts will not significantly increase the ease with which employers can fill their vacancies.

There is no reason to believe that increased unemployment will cause employers to bid less for labour, or will cause unions to accept less. It may be that with really massive unemployment, union solidarity will be broken down. It may also be that the same slack demand for labour that has created unemployment will also make it unprofitable for employers to bid as much for labour as before. But these are both entirely separate questions. All we know for sure about unemployment as a regulator is that lack of unemployment will drive wages up and that will in turn force employment down.

This one-sided regulation is quite sufficient to explain the observed fact of a normal balance between job creation and destruction with very little unemployment. As long as markets are expanding and there is a tendency for the demand for labour to increase, that tendency will be checked by the size of the available labour force, but will permit full employment and real wages rising together with productivity.

This leaves open the question of whether other factors can also push unemployment and wages up or down and whether unemployment can coexist with high and low wages. That is as it should be, since we know that something other than the normal mechanism must account for the abnormal situation of high unemployment.

By way of contrast, the usual explanation that low wages will increase demand for labour, and high unemployment will push wages back down, explains too much. This would imply that any unemployment will correct itself, when it manifestly does not.

The usual explanation also implies that we should never expect to find increasing demand for labour alongside increasing relative wages. Yet that is exactly what has been happening with increased female labour force participation alongside equal pay.

Finally, the mechanism we have described gives no reason to believe that lowering real wages will automatically produce an increased demand for labour. All it says is that excess demand for labour (more than is available), will cause wages to go up. It does not follow that reduced wages would cause demand for labour to go up. That is also as it should be. Despite all predictions from the conservative camp, unemployment has continued rising while real wages have continued falling.

Since our unemployment regulator only explains one side of wages and unemployment, we need to look elsewhere to find what causes the abnormal movements in a crisis.

First, let us look at what happens before a crisis, namely a boom.

Booms and Busts

In a boom, real wages can even increase faster than productivity, so that the share of wages compared to profits will rise and the rate of exploitation will fall. This actually happened in the 1974 “wages explosion”. That was certainly a “boom” even though there was considerable unemployment at the time. Conversely, when demand is slack, unions have little bargaining power and the share of wages, or even the absolute level of real wages, will fall. That is happening right now.

When the economy is booming there is a general tendency for firms to increase their demand for labour power, raw materials and other inputs, in order to meet the demand for their output. This drains the pool of unemployed, reduces warehouse stocks, increases plant capacity utilisation and drives up wages and other prices. The increased demand for inputs and increased consumer spending can itself feed the boom to a certain extent, by further increasing demand.

But when the price of labour and other inputs is rising faster than the price of firms outputs, profit margins are reduced. There is then a general tendency for firms to cut back their investment and expansion, or even undertake contraction. This reduces the demand for labour and other inputs, and eventually recreates a pool of unemployed as well as stockpiles of other commodities and excess production capacities. Prices and wages are then forced back down (relatively).

These movements occur in individual sectors, but also in the economy as a whole. One firm’s inputs are another firm’s outputs and changes in demand act across the board. The balance between production, consumption and investment depends on movements in wages, prices and the rate of profit. This “balance” is always dynamic since it is precisely the imbalances that bring into play the factors for restoring a balance. Hence there is an unending succession of booms and busts in the economy as a whole and in particular sectors of it.

A problem with the above description of booms and busts is that it seems to describe a self-regulating mechanism that would automatically correct for unemployment or labour shortages by moving wage rates, or the capital intensity of investment, in the appropriate direction. So one would expect things to never get all that far out of balance. Indeed capitalism does work like that, a lot of the time, and normal “fluctuations” in the economy can be adapted to quite smoothly. But there must be more to it than that, when we have a “crisis”. Before going into that, we will look at wages, and then look at the normal balancing mechanism in more detail.

Wages and Class Struggle

Conservative economists assume that left to itself, capitalism always works smoothly, and when it does not, they therefore argue that there must be some institutional factor which is preventing prices from clearing market – for example, unions preventing wages from adjusting to the level of unemployment. Hence the calls for “wage restraint” and polemics against the unions.

To some extent this is hypocritical. Conservative economists are generally well aware that the level of wages is determined by the demand for labour, and not vice versa. They could not really believe that wages are greatly influenced by the effect of polemics against unions. They know that the only effective way to bring down wages is through reduced demand for labour, and that means increased unemployment. So it is quite illusory to talk of unemployment and “wage restraint” as alternatives. They go together.

Even though union leaderships might be very willing to go along with “wage restraint”, the employers themselves will bid up the price of labour power if there is not enough unemployment to hold it down. The propaganda for bringing down wages is really propaganda for accepting mass unemployment.

References here and elsewhere to “unemployment” holding down wages are not meant to imply that competition from the unemployed is the restraining factor. While union solidarity remains effective, there is little such competition. It would be more accurate to say “slack demand for labour” holds down wages. But generally (although not always), slack demand for labour is closely associated with unemployment. So the shorthand reference to”unemployment” is near enough.

Illusions about what determines wages are often spread from the labour movement, and especially its left wing, who sometimes picture the level of wages and conditions as primarily determined by the outcome of sharp class struggles on the shop floor.

This is certainly true to a greater extent than for other commodities. Because of the social elements in wages determination, worker militancy can effect wages more than farmer militancy can effect the price of wheat or supermarket rapaciousness can effect the price of groceries. A militant union can secure more for its members than a weak one and a militant workforce can enjoy a higher standard of living than a more servile one in a country with a comparable level of economic development.

There is an element of real bargaining, and extra-economic factors can also influence the outcome – for example fascist governments that suppress unions, or the threat of revolution. Even so, on a world scale it is clear that the level of wages corresponds very directly to the level of economic development in various countries.

Union Solidarity

The main variable in wage determination is the degree of unionisation and solidarity among the workers. If they are solid, they can get the full value of their labour power – its monopoly price. If they are not solid, they can be forced to accept anything below that – right down to minimum physical subsistence level. Unionisation has been and remains enormously important in raising workers above physical subsistence level and securing the value of their labour power. Smashing unions is still a goal for employers to force workers wages below their value and extract surplus profits.

But once unionisation is well established, unions cannot secure any more than the value of labour power. Like any other monopoly, they cannot charge what they feel like, but only “what the traffic will bear”. In this case “the traffic” is what employers will bid to secure extra labour.

In particular, the main effect of the “level of class struggle” is in determining the overall level of labour conditions for the whole nation. It has much less effect on wages in any particular industry or workplace. Even at a national level, class struggle probably has a greater impact on normal working hours and work intensity and on “social conditions” generally, than on actual wage rates.

Since there is free movement of labour between occupations and industries, the level of wages and conditions in any industry is influenced far more by the overall state of the labour market, than by the level of militancy in the particular industry. Workers in low paying industries will look for jobs in high paying ones, producing a labour shortage in the low paid industry which can only be eliminated by offering higher wages.

The bargaining position of a union also depends more on the demand for its members labour than on the dedication of its leadership. We are talking about variations a few percentage points above and below the wage rate determined by “market forces”. Failure to fight could halve wages compared to their “market” rate. But fighting harder could not double them above the market rate, because the market rate is not some arbitrary figure, but the maximum employers can be made to pay before their investment would be diverted elsewhere. Provided a union does fight, it will get more or less the market rate.

There is a parallel with land rent. Landlords can surrender part of their rent, or have it taken from them in taxes. But they cannot compel capitalists to pay a rent that will leave them with less than the average rate of profit on the capital they invest in the land. The capitalists just would not invest in that land.

Real wages have doubled in Australia since World War II, yet it is not a fundamentally different kind of society. They doubled because of economic development, not because of a sudden upsurge in militancy. Indeed the value of labour power has probably not changed very much. The increase in real wages has resulted directly from the relative cheapening of consumer goods, due to increased productivity.

Arbitration and Wage Indexation

The Australian Arbitration system provides elaborate rituals according to which wage rates are supposed to be determined by impartial judges on the basis of principles of equity. Token 24 hour strikes are an important part of those rituals and feed the illusion that wages are determined by some combination of industrial strength and skill in advocacy.

But arbitration is simply an attempt to measure the bargaining strength of the two sides, without them having to actually waste energy to prove that strength by fighting it out each time there may have been some change. The factors investigated in Arbitration Commission hearings, include the “state of the economy”, “productivity”, “capacity to pay”, “cost of living” and especially “work value” and “relativities”. These are precisely the factors that effect the market determined wage rates. The token strikes are a part of that measurement process rather than a form of real class struggle.

The Commission is trying to determine what the market wage rates objectively are. It does not “set” them. When the Commission guesses wrong, it is soon proved wrong by industrial trouble and/or over award payments and/or sectoral labour shortages or unemployment. Adjustments in the “awards” are then required.

The farce of “wage indexation” is a good illustration. When the Commission really did try to “set” wages according to uniform “guidelines”, it failed miserably. Unions and employers, and finally even the government urged it to allow wages to reflect market forces.

There is no reason to believe that the overall level of wages has been kept either artificially high or artificially low by the Arbitration Commission. The Commission itself is well aware that its centrality in the wage fixing process depends critically on how well it estimates actual labour market conditions. It has as much power to “set” wages as the Prices Justification Tribunal had to “set” (or even “justify”) prices, and less power than the Reserve Bank and the Treasury have to “set” interest rates. These institutions can help smooth things out in their respective markets, and they can stuff things up. But they cannot change the overall direction of market movements.

“Rigidities” have allegedly been introduced into the Australian wage structure by the Commission’s fixed “relativities” between occupations and skills. But this has not prevented wages moving in response to changing demands for labour, nor has it prevented labour moving in response to changing demand. It has simply ensured that the wage movements are slowed down and take the form of over award payments rather than awards. Less flexible “relativities” have encouraged more “manpower planning” to cope with shortages and surpluses of particular occupations, instead of the clumsier process of a change in relative wages having to indirectly attract labour from one occupation to another. Likewise, any “rigidity” in overall wage levels could only produce a time-lag in the effect of underlying market movements.

Leaving aside the hypocrisy, conservative economists do believe that bringing down real wages is an essential part of any program for economic recovery. They have masses of quite genuine statistics to prove that wages have increased more than productivity, the share of wages in Gross National Product has increased and so on. They rightly conclude that there is a “real wage overhang” keeping the economy out of balance, even though the purchasing power of wages may be declining.

Therefore, they see unemployment as necessary to bring down real wages, although they prefer not to emphasise that aspect, but just talk about “wage restraint”. But if more unemployment will bring down wages, why hasn’t it? Why is any “program” for economic recovery necessary at all?

The weak point in conservative arguments is that they do not explain what has changed. It is not good enough to just point out that there is a “real wage overhang” since the “wages explosion”. Why is there, and why have “market forces” not corrected it? Before answering that, we need to look at the normal adjustment mechanism in some detail.

Capital Accumulation

Capitalist production is always a process of production for the purpose of accumulating more capital. One part of profits is spent unproductively by capitalists, maintaining themselves and their retainers “in the manner to which they have become accustomed”. That can be fantastically expensive if you look at the lifestyles of Jackie Onassis and the like. But is a very small proportion of total profits, because there are very few really wealthy capitalists.

The more important part of profits is accumulated as new capital. This does not mean it goes into their pockets, or is hoarded into a pile of gold. It is invested in expanding the wealth and power of the individual capitalist, and incidentally developing the productive forces of humanity.

Capital investment means buying more labour power and raw materials to produce more goods, to be sold for more profits (some of which will allow the capitalist to “become accustomed” to an even more lavish lifestyle, and most of which will be invested to expand further). It is a process of continually expanded reproduction. If there was a fixed supply of labour and a fixed technology, this expanded reproduction would become impossible. The new capital would be trying to recruit workers already employed by the old capital, and it would have no market for its products. Only simple reproduction would be possible, with no net investment.

Even if we allow for increasing supplies of labour, a fixed technology would still only permit expanded reproduction at exactly the rate of labour force growth, with no increase in capital or output per worker.

In fact some “models” of the process of capital accumulation are based on assumptions like that. Naturally, they have not been able to explain very much about real economic growth, which always involves new technology with an increasing social division of labour and more capital and more output per worker.

Real capitalism is always expanding. Hence imperialism. Capital can expand intensively or extensively. It can expand extensively by employing more workers, even with the same technology and the same capital per worker. That is important in the third world where there are still reservoirs of peasants who are not employed as wage workers, and it has been important in pulling women out of the household and into wage labour. It also absorbs population increases.

But capitalism also expands intensively, by investing more capital per worker. This implies new technology and a development of the productive forces, and has made capitalism a far more dynamic and progressive social formation than previous ones which went on reproducing themselves without constantly revolutionising the technique of production.

The increasing organic composition of capital implies a falling rate of profit. Here is not the place for a detailed discussion of that, but it is worth mentioning that the difference in internal rates of profit between more developed and less developed countries is equalised by imperialist capital export and import.

A fuller treatment of capital accumulation should examine it internationally. This is very necessary to combat the narrow nationalist outlook so common in the Australian “left”. Suffice it to say that the unemployment we are suffering in Australia is clearly part of a worldwide problem and will require a worldwide solution. Our industries are not just “foreign owned”. They are part of an integrated world capitalist economy. We should think big.

Technological Change

At any given time, there is always a range of known techniques that can be used for production. This range is also always being extended by the discovery of new techniques, which usually involve the use of new intermediate products and hence an increasing social division of labour. But even without new inventions, there is a range of different ways of doing things, some of which will be economic while others are not.

At lower wage rates and a higher average rate of profit, a given labour intensive technique may be cheaper than a capital intensive technique for doing the same job, even though the capital intensive technique is more productive.

For example, third world countries with little capital invested in roads and so on, are forced to use more labour intensive techniques, even though the more advanced methods used in wealthier countries are already known. It can actually be cheaper to use donkeys for transport until capital is available for investment in building roads and truck plants, producing trucks, training drivers and so on. That capital will not be available until the rate of profit on that kind of investment is higher than on alternatives. As more capital is accumulated, the alternatives with higher rates of profit become saturated, the rate of profit goes down, wages go up, and eventually it becomes cheaper to use a truck. It was always more productive to do so.

One day it may be cheaper to use aircraft for regular inter-city transport. We already know how to, but truck drivers’ wages are not high enough, and the rate of profit is not low enough to justify the massive capital investment required.

Increasing returns to scale often dictate a change in technique when a market has reached a certain size. A road will then be replaced by a railway for example. The railway has greater productivity, but the capital investment required is not economic at low volumes of traffic.

Often increasing returns to scale are associated with a greater social division of labour. Special functions are split away from general purpose establishments and achieve a higher productivity while handling the greater volume. A special repair shop will only become economic with a certain level of repairs. Designs will be produced in-house until their volume permits a specialised design firm to do the job more efficiently.

An increase in the scale of operations as more capital is invested and markets expand, may not be regarded as a change in technique. But there will almost always be changes associated with it, like those mentioned above. In most industries the days are long gone when expansion simply meant that more establishments would be set up using essentially the same techniques.

This increasing social division of labour implies more interconnection between different sections of the economy. Each is producing for all, and all for each. It does not imply greater occupational specialisation. On the contrary it requires greater flexibility in the labour force as they change repeatedly from one job to another.

New capital can be invested in the same old techniques to employ more workers using the same old sort of plant to turn the same old raw materials into more of the same old products. But this is only possible if more workers are available. It always creates jobs, provided there is a market for more of the old product. But it creates no new market and assumes that for some reason the market for the old product has increased.

Otherwise new capital can only be invested in more productive techniques that allow fewer workers (usually using more fixed plant and machinery) to turn more raw materials and intermediate products into more products per worker. This destroys some of the old jobs and creates more or less new ones according to whether the output is increased faster or slower than the labour productivity is increased. That depends on how fast the market expands, which depends partly on how much the new techniques cheapen the product (relatively).

New capital intensive investment is always expanding the market, since it does relatively cheapen the product (or the old technique would continue in use), and since it creates a demand for the additional new plant and intermediate products required by the new technique. If there was no technological progress, capitalism would in fact reach the state of stagnation implied by most economic models, since there would be no expanding market for expanded reproduction.

If output is expanding slower than productivity, the result of capital intensive investment will be less workers employed in that sector of industry. If that is happening overall, the result will be an increasing pool of unemployment since more jobs are being destroyed than created. If output is expanding faster than productivity, then labour intensive investments must be expanding employment.

Job Creation and Destruction

Now we can see how a small pool of unemployment normally maintains a balance between job creation and destruction. As profits are continually being invested to become new capital, old jobs are continually being destroyed and new jobs are continually being created. The balance depends on the relative profitability of capital intensive and labour intensive production techniques in new investment.

As long as wages keep increasing at exactly the right rate to keep on gradually tipping the balance towards capital intensive techniques, investment can continue, with increasing capital per worker, even though the labour force is not growing as fast as capital is being invested (provided there is a market for the products).

Otherwise, if wages fail to grow fast enough, the existing techniques would continue being used by new investments, and this will absorb the pool of unemployed until competition for labour drives up wages and restores a balance.

If wages grow too fast, due to labour shortages, there will be a tendency to switch more rapidly to capital intensive techniques which reduce the demand for labour. Slack demand may then force wages down, but even if it does not, there will be no renewed upward pressure until the labour market has again been tightened by further accumulation.

The point is that in “normal” balance, the demand for labour is directly regulating wages so that demand equals supply. It follows that there can be no such thing as “too many workers” or “too few jobs”. The number of jobs will adapt to the number of available workers as capital accumulates. Likewise, wages will not be “too high” or “too low”. They are determined by the demand for labour. It seems then that “everything is for the best, in the best of all possible worlds”. Mass unemployment is impossible as the textbooks insist.

But this process of adaptation only applies to new capital investments. The existing capital investments can only adapt to labour shortages and surpluses, or changes in wage rates and the rate of profit, within fairly narrow limits. A steel mill cannot employ very much more or less labour according to wages rates. Its design is more or less fixed. Changes can only effect the design of new steel mills, or extensions to plant capacity, and the decision to expand steel production at all.

Lower wages will not encourage existing steel mills to hire more workers. It will only encourage designers of future steel mills to continue using more obsolete, labour intensive techniques. That will only create more jobs when, and if, an increased demand for steel causes more investment in expansion of steel mills.

Thus if there is some disturbance to the normal relationships, unemployment can increase, regardless of wage rates. Contrary to the conventional wisdom of economists, there is no automatic mechanism that would quickly restore a balance. The automatic mechanism can quickly cope with labour shortages, by choking off new labour intensive investment. But it cannot quickly cope with labour surpluses. The unemployment will be absorbed when, and only when, new investment has created new jobs, and that may take some time.

(Next instalment: Technological unemployment)