Letters
Marxs method
Nick Rogers says he does not understand the philosophical argument in relation to time and the temporal single-system interpretation (TSSI) “on the impossibility of fixing a single point in time” (‘Rooted in capitalism’, August 16). It’s rather important to grasp if you are advocating a theory whose basis is temporal!
Trotsky explained it in his demolition of the ideas of the third camp: “Or is the ‘moment’ a purely mathematical abstraction: that is, a zero of time? But everything exists in time; and existence itself is an uninterrupted process of transformation; time is consequently a fundamental element of existence. Thus the axiom ‘A is equal to A’ signifies that a thing is equal to itself if it does not change: that is, if it does not exist” (In defence of Marxism).
It is perhaps no coincidence that several proponents of the TSSI are connected with the ‘third camp’, whose ideological basis was provided by the anti-Marxist philosophy of James Burnham. Burnham rejected dialectics and historical materialism. It was a rejection accepted by its other founder, Max Shachtman.
The approach of the TSSI is to consider things subjectively from the perspective of the individual capitalist. Just how far this subjectivism and humanism is remote from Marx’s objective method can be seen by considering just two comments:
“In the course of our investigation we shall find, in general, that the characters who appear on the economic stage are but the personifications of the economic relations that exist between them” (Capital Vol 1, chapter 2).
“Time is everything, man is nothing; he is, at the most, time’s carcase” (The poverty of philosophy).
If capitalist A invests capital X on January 1, and at year end finds that X is now worth X+n, due to a revaluation of capital, the TSSI accepts this as a profit, and proceeds on the basis that a discrete period of time has elapsed, the capitalist can now sell up their capital and take their profit. This is the position Nick adopts when he says, “For the purposes of the equation, Arthur (along with the majority of mainstream Marxists) can revalue the input C to 2,000 (irrespective of what was paid for it) if he wishes, but that does not change the reality of the situation - only 1,000 was actually paid.”
This has absolutely nothing to do with Marx’s analysis, which is based on capital as self-expanding value, and on the basis of continuous and continuing production. Once that is accepted, and concern for the plight of individual capitalists is discarded, it can be seen just how flawed the TSSI perspective is. Now the ‘profit’ obtained by the capitalist from this revaluation is no profit at all, because, when the capitalist replaces the capital consumed in production, all this additional ‘profit’ is needed to buy the replacement at its new, higher price! As others have pointed out, the TSSI involves hidden inflation/deflation, by holding nominal money prices constant. Any revaluation/devaluation of capital involves not just a change in its exchange value, but also of the money commodity, which acts as its equivalent value. Marx explains that necessity in chapter 1 of volume 1 of Capital.
I don’t agree with Nick when he says, “So, if every single producer of K has paid 1,000 for C, it does not matter if the price of C subsequently changes before, during or after the commodity (or aggregate output) has been produced: competition will ensure that K will reflect the price that was actually paid for C.”
Suppose, we have C 1,000 + V 1,000 + S 1,000 = K 3,000. Let us grant Nick that all capitalists have bought means of production at this price, and, in line with his argument, they price accordingly despite the value of C rising to 3,000. When the new cycle of production begins, the capitalist has to lay out C 3,000 + V 1,000 = 4,000. They are 1,000 short, because their income has not covered the current replacement cost of the capital they have laid out! Nick’s surplus has turned into a loss. They have a cash-flow crisis, and may go bust.
I have practical experience of this. A long time ago I worked for a company producing protective clothing. It had to buy cloth, to find and bid for contracts, and do costing and invoicing. Whenever, I bid for a contract, the first thing was to calculate the cloth needed, and then get a current price for it. Costing was done on that current price, no matter how much cloth we had in stock, and what we’d paid for it. There is no other sensible way to proceed. If you price on the basis of cheap cloth in stock, then you will not be able to reproduce the material used up at current prices. If material prices have fallen, and you price on the basis of the cloth in stock, you will be undercut by others who have bid at current prices.
Marx knew all this from Engels, which is why he uses current replacement cost for valuing capital, not historic prices. It is competition, and the need to reproduce capital consumed at current prices that forces the value of the end commodity to reflect the replacement cost, not the historical cost of capital.
But there are other reasons why Nick’s argument fails here. For most commodities, the capital used in their production is not bought at the beginning of the year and then used during the rest of the year. It is this view of time as discrete blocks that is wrong with the TSSI. Capital is bought and used continuously throughout the year, and it is bought at current prices. A fundamental aspect of Marx’s theory of value is that commodities of the same kind existing in the same period of time have the same value. According to Nick, we would have a whole series of different values for commodities of the same kind, perhaps even sitting in the same stock room with different exchange values, depending on when they were bought, and an average price arising from them.
Nick says: “So the rise in the price of constant capital would be expected to lead to a fall in the rate of profit. However, those capitalists who bought stocks of the raw material before the price rise will not experience that fall. Sounds as if the historic price might just be relevant to the determination of the rate of profit after all.” But that is not what Marx is saying. He is saying that the rate of profit will fall, but that some capitalists may be compensated for this fall by making a capital gain, and vice versa.
Nick’s comments about the identity of prices and values also speaks against him. If some market prices (because there was a lot of finished products on the market produced with lower priced inputs) are lower than their values dictates, then the ‘losses’ made are cancelled by the gains of other capitalists who buy those inputs. From the perspective of capital in general it can have no effect on the rate of profit.
Nick takes me to task for not dealing with arguments put forward by Andrew Kliman, but I was writing a response to Nick’s article, not to Kliman. In fact, I debated the deficiencies of the TSSI directly with Kliman some months ago (see https://thenextrecession.wordpress.com/2011/12/08/andrew-kliman-and-the-failure-of-capitalist-production).
Nick quotes what I said about crises of overproduction and concludes: “Sounds like a fairly unambiguous statement of the underconsumptionist case to me.” Well, if it is then Marx and Engels must have been underconsumptionists too, because its pretty much verbatim what they say!
“Overproduction of capital … is therefore simply over-accumulation of capital ... The same occurs when there is an overproduction of commodities, when markets are overstocked. Since the aim of capital is not to minister to certain wants, but to produce profit, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, a rift must continually ensue between the limited dimensions of consumption under capitalism and a production which forever tends to exceed this immanent barrier.” (www.marxists.org/archive/marx/works/1894-c3/ch15.htm).
The answer to Nick’s dilemma over why in the 80s rates of profit could be high, yet accumulation low, is simple. The rate of profit does not just depend on the volume of surplus value. It also depends on the value of capital. The whole point is that during this period capital was devalued! It was devalued because of the economic slowdown, because real wages were falling or stagnant, because existing capital was being replaced when it wore out with cheaper, more effective capital. In addition, changes in consumption and production occurred.
Nick’s argument relies on a view of productive industry as the old smoke stacks and assembly lines. In fact, modern productive industry is based on knowledge and skill. The most valuable company in the world is Apple. It has relatively little in the way of constant capital. It has a relatively low organic composition of capital, because its value derives from the thousands of highly skilled programmers and developers it employs. The same is true of Microsoft, Google and dozens of other IT companies, as well as the many bio-technology and pharmaceutical companies. The same is true of productive enterprises in the media, leisure and entertainment industry - Manchester United, for example.
Nick oddly argues that planning by firms and states implies the end of competition! On the contrary, such planning has raised competition to new heights! That was what Marxist economists discovered during the 1980s. The point is that it is not the kind of competition that existed in the first half of the 19th century, the kind of competition that is central to the neo-classical view. Moreover, given that Marx describes the law of value as a law of nature that exists throughout man’s history, during most of which production of use values was planned, it’s hard to see how such planning could abolish it! Indeed, it’s hard to see how capitalist planning of the production of exchange values even challenges the form of the law!
I’ve responded to Nick’s arguments in more detail on my blog (http://boffyblog.blogspot.co.uk/2012/08/in-time-of-nick-rogers.html).
Marxs method
Conciliator
I note with no great astonishment that the Morning Star has tried to play the role of conciliator between the oppressed and oppressors following the horrific massacre of 34 striking South African miners by the police.
So on its website on August 23 there is an offensively bland and neutral report entitled, ‘South Africa mourns shot miners’. Here we read that more than more than 1,000 people attended the “government-arranged memorial service” in Marikana, where they listened to president Jacob Zuma calling “on the nation to commemorate not only the miners, but all victims of South Africa’s violence” - who then went on to say that the day “should be an opportunity” for the nation to “mourn and promote a violence-free society”. Furthermore, the unnamed journalist quotes Zuma piously maintaining that now was “not a time for pointing fingers”. Therefore he will not “judge the incident” - rather the “judicial commission of inquiry will do so”.
You would almost think from reading this snippet that Zuma was absolved of all responsibility for the killings - hey, nothing to do with me - or that he and the African National Congress were not part of a thoroughly corrupt and repressive government ruthlessly determined to serve the interests of capitalism. An impression reinforced by another anodyne online article from September 2 concerning the decision by South Africa’s prosecutors to provisionally withdraw the murder charges brought against 270 miners using apartheid-era ‘common purpose’ laws - a damning indictment of the ANC government if ever there was one. Surely any self-avowed socialist or communist newspaper would be denouncing those who front or excuse capitalist exploitation and violence?
But, no. All we read in the above article by the Morning Star’s “foreign desk” is that the “announcement follows a huge barrage of criticism from political parties, trade unions and legal experts” and that Lonmin is “desperate to restart production at its mines, which have been idle for three weeks”. No doubt. The rest of the piece merely informs us of the following:
“And unrest in South Africa’s mining industry seems now to have spread from the platinum sector to the goldfields. Mining company Gold Fields have said that about a quarter of its 46,000 workers have walked out on strike, apparently over the extent of a funeral cover agreement. Around 12,000 miners have been on an ‘unlawful and unprotected’ strike at the KDC mine near Johannesburg since Wednesday. And workers at a mine east of Johannesburg run by another gold producer, Gold One, are said to be preparing to go on strike tomorrow to demand higher wages. Meanwhile, South Africa’s police are facing pressure from the watchdog, which has received nearly 200 complaints from arrested miners of being assaulted and abused while in police custody.”
Monstrously, but with a certain logic, the Morning Star just cannot bring itself to unambiguously condemn the anti-working class ANC government because to do so would also mean criticising the Congress of South African Trade Unions and most of all its ‘sister’ party, the South African Communist Party - both of which are in formal alliance with the ANC - SACP members are part of the ANC government. But for the likes of the Star’s Communist Party of Britain just about the worst crime imaginable is to violate the ‘official communist’ norms of diplomatic internationalism - far worse, in fact, than shooting dead striking workers.
Principled communists would not only unambiguously condemn the police massacre, but demand the immediate withdrawal from the alliance of Cosatu and the SACP.
Conciliator
Conciliator
Dishonesty
Whenever the Unite trade union bureaucrats need a champion, Jim Denham is never far away. In a thoroughly dishonest piece on the Workers’ Liberty website (‘London bus strike a defeat?’, which also appeared as a letter in the August 22 issue of the Alliance for Workers’ Liberty’s Solidarity), he rushes to the bureaucrats’ aid. He was defending them against an attack by myself in the August 1 issue of Solidarity that was also carried on the Weekly Worker letters page (August 2).
The dishonesty consists of the title and the way Denham twists the August 1 article - headed ‘London bus workers’ victory is bittersweet’ - to make it sound as if I had called it a defeat. He says: “Okay, the author of the Solidarity piece didn’t use the word ‘defeat’, but he might as well have done, given the negative, carping (and none-too-honest) tone and content of the article.” He then goes on ridiculously to liken the Len McCluskey leadership of Unite to US Trotskyist leader Jim Cannon and his action in accepting a compromise in the 1934 teamsters struggle in Minneapolis.
Jim Denham championed the United Left stitch-up meeting that elected Len McCluskey as their candidate for general secretary, pouring scorn on Jerry Hicks for walking out and those who objected that the meeting was packed with full-time officers who were in effect voting for their own careers. In the Socialist Unity blog on September 6 2009 he said that the participation of full-timers “may or may not be a good thing”.
Now Jim is outraged because I put the victory in its proper context: three years of below-inflation wage settlements and the London-wide introduction of a two-tier workforce with appalling pay rates and conditions for new starters, without a peep of opposition from Unite.
He says: “That’s why [‘bus driver’] cannot bring themself to acknowledge that a real victory was achieved - one that can and must provide the basis for further united action, including an all-London pay claim next year.” If Unite does put in an all-London pay claim next year, I will be absolutely amazed and delighted, but, given that it abandoned the all-London campaign for parity in 2008 and championed the exact opposite ever since, I would examine that claim very closely. Only one rate and one set of conditions for all bus drivers constitutes a real fightback and you can only do that by fighting the competitive tendering of all routes - another basic demand Unite never makes.
In July 1934 James Cannon defended the compromise made by union branches to secure a settlement which won union recognition in the whole region. The Stalinists were still in their ultra-left third period (it would last another year before they adopted the abandonment of class politics in the popular frontism which remains their politics today. They attacked Cannon, saying: “The two Minneapolis strikes have in a concentrated and very clear form exposed the Trotskyite policies on the united front, on the question of social-fascism, on the question of revolution, as well as their reformist conception of strike strategy and tactics” (www.mltranslations.org/US/archive/dunneminn.htm).
Then it was a matter of a rank-and-file movement forcing a union leadership into action and then accepting less than was asked for because a compromise was necessary. The vital question of union recognition was won. On the London buses it is a matter of a bureaucracy, defended by a fake rank-and-file movement, the United Left, which is the trade union bureaucracy to all intents and purposes. Jim Denham strains at a gnat, but swallows a camel. They do absolutely nothing as the bus companies press forward with major attacks on their members and then mount a one-off campaign to win a minor concession, whilst leaving the rest of the major problems unaddressed. Every bus driver knows this. The more militant ones complain about it, but Jim Denham is so defensive of the bureaucracy that he thinks they should ignore all of this, because it is “negative, carping (and none-too-honest)”.
Dishonesty
Dishonesty
Barrels
David Walters says he prefers Arthur Bough’s optimism to my “rather gloomy outlook” when it comes to energy (Letters, July 19). Arthur previously based his optimism on the long wave and the market. Now he adds to this the law of value. As for me, I have never taken a gloomy outlook, because I have always argued that moving away from capitalism provides a basis for finding a solution to any challenges we may face as a result of the decline in oil production.
It is Walters who now argues that the market will solve the energy problems we face. He says that “… it’s amazing how much oil becomes available at $100/bbl versus $60/bbl. Imagine what it is at $150/bbl. That’s capitalist economics and it’s real.” Obviously David does not yet understand the implications of the peaking of global oil production. In 2008, when oil prices rocketed to $147/bbl, the world economy began to collapse. In other words, long experience has shown that rising oil prices lead to recession, which in turn brings down the price of oil.
What’s surprising is that oil prices even now are still relatively high, even though the global economy has slowed down. A return to global economic growth, if this is possible, will result in the highest oil prices the world has ever seen. In financial terms peak oil means that economic growth leads to rising oil prices, which in turn leads to recession.
Capitalism is facing a problem of growth because of rising oil prices due to the difficulties the oil industry is having in raising oil production. The late LF Ivanhoe, a petroleum geologist, estimated that the date when global oil demand would exceed supply would fall between 2000 and 2010. This prediction may be coming true now, and would represent a turning point for humanity.
According to David, there are hundreds of billions of barrels of oil in the sands of Alberta, Canada, and in the Orinoco, Venezuela. True. But this unconventional oil doesn’t flow nor can it be pumped. It has to be dug up - an expensive process. In other words, unconventional oil is going to be more costly oil, which means it can only marginally replace depleting conventional oil.
David also paints a rosy picture for nuclear energy. However, Michael Dittmar, a scientist at the Institute of Particle Physics in Zurich, has presented a paper with the title, The end of cheap uranium. This study estimates a possible peak for uranium production by 2015.
David calls on Marxists to wake up. Well said, but what they need to wake up to is the fact that capitalism is a product of cheap energy from fossilised fuels and is bound to decline and collapse with rising energy costs. Marxist economics doesn’t take energy into account in its theory of society so is unable to grasp the essence of the present crisis facing capitalism.
Barrels
Barrels
Value-free?
Tony Greenstein’s excellent article (‘Comment is not always free’ Weekly Worker August 16) on the censorship of Moshé Machover by The Guardian over the ridiculous claim of anti-Semitism follows other worrying developments at the paper - the most recent of which is the appointment of Joshua Treviño to its United States political commentary team.
Treviño is a rightwinger whose response to the Gaza flotilla of 2011 was to call via Twitter for the Israel Defence Force to ensure the immediate death of all of those participating: “Dear IDF: If you end up shooting any Americans on the new Gaza flotilla - well, most Americans are cool with that. Including me.” This was subsequently followed by tweets arguing that the flotilla was “not morally different from a Nazi convoy”.
Surprisingly The Guardian’s decision to appoint a journalist who has urged the IDF to shoot unarmed Americans has provoked strong reactions from all, resulting in a hastily assembled non-apology from Treviño for “giving the impression that I welcome killing” - alongside a rewording by the rag of Treviño’s job description to that of a “freelance writer”.
This embarrassed backtracking aside, all this perhaps reflects a significant development in the political direction of the paper. So much for “value-free” commentary.
Value-free?
Value-free?