Letters

Rate of profit

Like Arthur Bough, I too was not entirely sold on Michael Roberts’ analysis (‘A world of declining profit’, January 27). For example, how is turnover calculated? But I have more of an issue with comrade Bough’s response (Letters, February 10) and that is what this letter will focus on.

First off, let us deal with his use of the term, ‘catastrophist’. This is simply code for scientific socialism, as outlined by Marx. So, when Bough attacks ‘catastrophism’, he is simply attacking scientific socialism - or, more precisely, he is attacking an historical economic perspective from an essentially ahistorical econometric perspective. It should be noted here that, when comrade Bough says ‘catastrophism’, we could easily replace this with ‘leads to socialist outcomes’.

Comrade Bough seems to think that Marx was really interested in what caused recurring crises, as if crises were like the tides or something. No, Marx was interested in the barriers to the continuation of capitalist production, because Marx viewed capitalism as an historical development and analysed how capitalism would pass from its current stage to socialism. This is why the falling rate of profit is so important to Marx.

Comrade Bough opens his criticism by saying that for Adam Smith, David Ricardo and Thomas Malthus the falling rate of profit was important because it led to ‘catastrophic’ conclusions - as mentioned earlier, we could say because it led to socialism! He counterposes Marx’s position as being anti-catastrophist: ie, anti-socialist!

The problem here is that this was not Marx’s position or that of his predecessors. Indeed, in Capital volume 3, Marx explains how bourgeois economists console themselves with the fact that the mass of profits rising will save the day, and Marx details why this is really beside the point. In other words, the truth is the exact opposite of what comrade Bough claims it to be!

Comrade Bough then claims that for Marx the law is important because it “is the basis of the average annual rate of profit, and prices of production, and so explains the allocation of capital to different spheres of the economy”. To translate what comrade Bough is saying, the falling rate of profit is the basis for everything that causes imbalances and disruptions within the system, but is somehow itself immune for being the cause of crises! Marx is clear and explicit in chapter 15, volume 3 of Capital that the falling rate of profit causes crises. What is even more important for Marx is that the falling rate of profit also causes centralisation and concentration of ‘wealth’, etc, and analysing it demonstrates the historical character of capitalist production. This is what horrified Ricardo, Smith, etc.

Comrade Bough criticises the data used by Roberts as essentially ignoring the constant capital. This is just wrong. It should be noted that Marx, working with inadequate data, did not dispute the conclusions. He accepted that the data was showing a falling rate of profit.

Comrade Bough really shows his ahistorical, essentially bourgeois criticism with his contention of the use of historical costs, as opposed to current reproduction costs. By using the latter, Bough essentially describes the result by the result! He strips out the historical analysis. The rate of profit is measured over time, by using the current reproduction costs Bough removes time from the measure, leaving us with an econometric worthy of the marginal school, and in the process he obliterates Marx’s historical method and narrative.

All bourgeois criticisms of Marxian economics use the same tricks.

Steve Cousins
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Mangled

My last letter (February 10) was badly mangled by the editor, by the addition of one small word. In the published version it reads: “That means that he omits the value of constant capital from the calculation of total output, as he does GDP and national income data ...” What I actually wrote was: “That means that he omits the value of constant capital from the calculation of total output, as does the GDP and national income data ...”

Roberts clearly does not omit the gross domestic product or national income data, as it is that which forms the basis of his calculations. This is the whole point of why they are wrong, and amount to a calculation of the rate of surplus value, not the rate of profit - although he modifies it by measuring against fixed capital stock, valued on the basis of historic prices, not current values.

As Marx explains, GDP is not equal to national output. Assuming simple reproduction, so as to avoid the complication of net investment, GDP is equal only to the value of the consumption fund - or, as Marx sets out, in his reproduction schemas, the value of department II output. It omits, therefore, all of the value of department I production. Department II output, consisting of c + v + s, can be bought solely out of revenues consisting only of v + s: ie, of the new value created by labour in the current year.

The value of GDP/department II output comprises c + v + s, but the element of c in this output is not value created in the current year. It is the value of the stock of constant capital (raw materials) and the wear and tear of fixed capital, which is merely preserved and transferred to department I output in the current year. Only v + s (wages and profits) contained in department II output is new value created during the year. That leaves the question then of where the demand for the element of c in department II output comes from, and the answer to that is that it comes from the revenues (wages and profit) created in department I. The workers and capitalists in department I obtain these revenues because they sell constant capital to department II, equal to the new value they create in department I during the year, and which thereby replaces the consumed department II constant capital, forming the stock of materials, and worn-out fixed capital, ready for the next year’s production.

None of the department II output, therefore, represents the value of c produced in the current year. And so it cannot appear in GDP data as such. In terms of incomes/revenues, department II output has no equivalent in constant capital, because it resolves entirely into revenues: ie, the wages and profits of both departments I and II, equal to the new value created by labour during the year. None of the value of items of constant capital produced in the current year appears in the GDP data. The constant capital produced by department I, and sold to department II, does not appear in GDP data until the following year, when it is consumed by department II, and its value is then transferred to the value of department II output.

This department I production, which forms what is termed in GDP data “intermediate production”, as Marx describes, itself contains no particle of value of constant capital, because it is equal in value only to department I revenues: ie, the new value created by department I labour. It’s for that reason that those department I revenues find their equivalent in the portion of department II output that is equal to the value of its consumed constant capital, and which department I replaces in terms of use values on a like-for-like basis.

In short, as Marx describes in Capital volume 2, chapter 20, GDP constitutes only the value of the consumption fund (department II), which is equal to the new value created by labour during the current year, whereas national output is equal to the value of output of both department I and II. Any calculation of the rate of profit which omits the value of department I output, therefore, and which instead bases itself on GDP or national income data is necessarily wrong, because it omits the value of constant capital in output value: ie, the value of department I output. Given that the whole basis of Marx’s analysis of social reproduction - and ironically the material basis of the law of the tendency for the rate of profit to fall - is that department I output rises relative to department II output, it’s clear that any calculation of the rate of profit based upon GDP or national income data is necessarily wrong. And adding in the fixed capital stock simply bastardises the calculation further, especially when the valuation of that stock is based upon historic prices rather than current values.

In Marx’s schemas, department I output is equal to 6,000, whereas department II output/GDP is equal to only 3,000. That gives an idea of the extent of the error that arises by omitting the value of department I output from the calculation. As Marx sets out, the demand for this department I output does not come from revenues (wages and profits), as Roberts wrongly implied in his earlier article, but comes from capital itself. A portion comes from department I capital, which replaces it in kind (for example, a farmer who replaces their own seed) or else by mutual replacement, where a coal producer reproduces the constant capital of a steel producer, and a steel producer replaces the constant capital of the coal producer. Similarly, the demand for constant capital by department II does not come from revenues, but is bought out of department II capital, as it replaces on a like-for-like basis that element of value contained in its output and sold to department I workers and capitalists.

As Marx points out, the demand cannot come from revenues alone, because they are simply inadequate. 3,000 of revenues cannot possibly form the demand for 9,000 of output. Total output is equal to 9,000, whereas total revenues/national income/GDP is equal only to 3,000. The remaining 6,000 of demand comes from capital itself. It is also why national expenditure only equals national income/GDP if expenditure is considered only as expenditure out of incomes, and not expenditure by capital itself.

And, for the current discussion, it’s also clear that, given the predominance of department I output, not only does omitting it mean that the calculation of the rate of profit is wrong, but if (as required by the law of the tendency for the rate of profit to fall) there is rapid technological development, the fall in the value of constant capital - particularly the moral depreciation of the fixed capital stock resulting from such innovation - means that it has a dramatic effect on the annual rate of profit itself, which cannot be captured by calculations that do not take into consideration this department I output.

Arthur Bough
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Powerful weapon

At what point exactly did Marxism become a convenient narrative to aid the imperialist bourgeoisie’s criminal activities?

Daniel Lazare plays the ultimate colonial settler apologia by equating the boycott, divestment and sanctions campaign with the punishment of “Israeli workers” (Letters, February 10). His formulation basically cripples any credible and effective means of challenging the gangsterism of the imperialists by the international working class. Maybe that is Lazare’s objective! Meanwhile the suffering of the Palestinian working class goes on unchecked, which Lazare disgustingly blames the Palestinians for! Does he work for Fox News or something?

It should be noted that the entire point of economic boycotts is to punish. The imperialist nations - ie, the leading bourgeois - continually use this tactic as a form of punishment and control. The advanced sections of the working class understand that under capitalism boycotts are very powerful weapons - ones that any revolutionary movement should not think twice about deploying.

The advanced sections of the Israeli working class are fully supportive of the BDS campaign, and understand why it is used and why it is a powerful weapon. The imperialist ruling class understands this too, which is why they have reacted with so much hostility to the BDS campaign. It would appear that the only people who do not understand its power and importance are the backward sections of the working class and some so-called communists.

The BDS campaign would be a very powerful weapon if it was actually enforced by large numbers of people. It does not have a significant impact because workers across the world have not shown the kind of revolutionary independence, discipline and consciousness required to make it work.

Lazare looks into his crystal ball and sees an upturn of ‘revolutionary’ activity because capitalism has become unstable. We are apparently meant to take his word for this and just have faith. But capitalism is inherently unstable, and difficult questions remain. The very pressing question for Marxists to ask is, why have the working class and its leadership been so pitiful in responding to these blatant injustices? Where is the socialistic solidarity? Where is the socialistic conscience?

Why is the consciousness of the working class so utterly wretched? Why is the vast majority of the working class not independent of its own bourgeoisie and instead so loyal to its bourgeois master?

These are the questions Marxists need to ask. Not asking these questions is about as unMarxist as anything I can think of!

Maren Clarke
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Workers’ sanctions

The sharp conflict between Daniel Lazare and the CPGB continued at the Online Communist Forum last Sunday (January 13). For the first time Lazare mentioned workers’ sanctions in counter-position to BDS.

I have strong methodological opposition to both sides here. In citing the World Socialist Web Site, David North and the Sparts, Lazare gave us some indication of where he is coming from on these issues. North has postulated since 1995 that all trade unions internationally are no longer workers’ organisations, before we even get to the question of bourgeois workers’ parties. And the ultra-sectarian methods of the Sparts have led to their collapse.

We should support all sanctions and boycotts of Israel, but also fight for workers’ sanctions; we campaign for the working class via their trade unions and Labour Party branches to fight to block arms shipments to Israel, etc. We should strive through workers’ organisations to block all cooperation and trade with firms engaged in war industries and in the occupation. We should support the BDS campaign, which uses economic and political pressure on Israel to end Israeli occupation and colonisation of Palestinian land, for full equality for Arab-Palestinian citizens of Israel, and campaigns for the right of return of Palestinian refugees.

However, the cross-class BDS campaign is inadequate. The myth that sanctions helped to end apartheid in South Africa is used to justify limiting this campaign to tokenistic gestures. The only time the world’s monopoly capitalists started to disinvest from South Africa was when they were faced with a mass working class rebellion there. Out of fear that they may lose everything, they changed the form of control to create local front companies to act on their behalf.

The Histadrut is not a legitimate trade union federation. It contains many employers in its ranks and itself owns a substantial section of Israeli industry. It is one of the main props of the Zionist state - it always defends Israel’s bombings of Gaza. The Palestinian General Federation of Trade Unions (PGFTU) acts as a Fatah front in many ways. It has not held elections since 1981 and its agreements with Histadrut are simply an extension of Mahmoud Abbas’s collaboration with Zionism against the rights and often the lives of militant trade unionists and liberation fighters. But it is a genuine trade union federation. We should campaign for the derecognition of the Histadrut by national and international trade union federations. Nevertheless, the Histadrut organises substantial proportions of the working class in Israel and revolutionaries should work within it, fighting to split it along class lines if there is no alternative available. We should not abandon the Jewish Israeli working class, whilst being conscious of the dominant Zionist, reactionary ideology - akin to loyalism in the north of Ireland, the old South Africa white working class, the Jim Crow white reactionaries of the southern USA and Pieds-Noirs of Algeria.

Many legitimate trade unions, which represent the majority of Palestinian workers, support BDS. The Palestinian Trade Union Coalition for BDS (PTUC-BDS) is the broadest and most representative body of the Palestinian trade union movement and includes the 290,000-member Palestine General Federation of Trade Unions, the General Union of Palestinian Workers, Federation of Independent Trade Unions (IFU) and the General Union of Palestinian Women. A conference of all these trade unions was held in April 2011 and it adopted a statement that endorsed BDS, but went further in urging workers’ sanctions too:

“The conference decisively condemned the Histadrut and called on international trade unions to sever all links with it due to its historic and current complicity in Israel’s violations of international law and Palestinian rights. The Histadrut has always played a key role in perpetuating Israel’s occupation, colonisation and system of racial discrimination … Calls on port workers around the world to boycott loading/offloading Israeli ships, similar to the heroic step taken by port workers around the world in suspending maritime trade with South Africa in protest against the apartheid regime.”

And let us remember the consequences of making half a revolution in South Africa after the 1994 election. In fact, it was only a quarter of a revolution, because Mandela abandoned the mass nationalisations part of the Freedom Charter and within two years of getting elected he was imposing the austerity programme of the International Monetary Fund, privatising apartheid-era state enterprises. Now South Africa is the most unequal country on the planet, with a Gini coefficient of 62.7. The mass of black African people are now worse off than under apartheid.

So some CPGB supporters are wrong to give BDS uncritical support without seeking workers’ sanctions. Moshé Machover is right to criticise BDS here, pointing to the negligible effects it has on the Palestinian masses. But he does not see the burning necessity to fight for workers’ sanctions.

Daniel Lazare is correct in pointing out the inadequacy of BDS, but wrong to reject it entirely - and wrong to say Histadrut is just a trade union like the British TUC or the US AFL-CIO. He is wrong to reject the role of Hamas in fighting Israel, but correct to point out its reactionary, anti-working class and anti-social attitude to women and the oppressed minorities. But he is right to point to the necessity to seek the leading role of the working class internationally. And, I’m sure, right to champion Trotsky’s theory of permanent revolution, which I assume he does.

Whilst we should be for a single, multi-ethnic workers’ state, we must be sensitive to the role that democratic demands might play in the revolutionary struggle, whilst integrating them into our transitional demands, which take us in the direction of the socialist revolution. Demands for a constituent assembly and the fight for secular democratic rights are very likely to play a prominent part in the revolution, but we know that these must be subordinate to the goal of overthrowing capitalism - in Israel/Palestine, but also in the entire region of the Middle East.

Gerry Downing
Socialist Fight

Class power

I am starting to work my way through the recent Online Communist University (Winter 2022) series of six talks on ‘The party we need’, so maybe everything will become clear, but I have always struggled with the Weekly Worker Group’s advocacy of a separate minimum and maximum programme. Some of this may well be down to terminology and I suspect a lot is down to detailed debates within the early congresses of the Communist International. The WWG claims its advocacy of a minimum and maximum programme is what distinguishes it from all other left and Trotskyist or Trotskyist-influenced groups, and that is probably true.

The first problem is the WWG’s argument that the minimum programme is the maximum which can be realised under capitalism. Two issues. One, why should workers limit their demands to what can be realised under capitalism? Two, while some of the WWG’s minimum demands are certainly realisable under capitalism, many are not. Demands such as “the end of the standing army and its replacement by a popular militia” and “disband MI5, MI6, special branch and the entire secret state apparatus” could surely only be carried out either during or following a successful popular mass democratic revolution. So, perhaps these minimum demands are not limited by what is realisable under capitalism at all.

I always thought our approach to raising demands in the here and now should be based on what the working class and working people actually need rather than what the system says it can or cannot actually concede. Raising and fighting for such demands can help transform working people’s consciousness towards thinking in terms of what they as working people actually need and deserve in the here and now and in today’s circumstances and conditions. If ‘the system’ (ie, capitalism) says it can’t or will not provide that, that helps people think: perhaps we should be questioning the system itself and thinking in terms of a far more sensible and rational basis for organising society - one based on working people, rather than a minority capitalist class, running it from top to bottom, and in our interests (ie, socialism).

Some of the demands we put forward might provide a tangible glimpse or taste as to what such a rational, democratic, socialist society might be like: eg, free, high-quality healthcare for all, housing for everyone, public utilities and services provided at low or negligible costs, production of goods and services determined by what working people want and need rather than production for capitalist profit.

Some might describe these sorts of demands as ‘transitional’, which I can accept, but they are very different from the approach put forward by Trotsky in his transitional programme and mimicked by the thousand and one Trotskyists ‘parties’, groups, sects and micro-sects in the present day.

Kevin Bean expressed this really clearly in the first talk. He identified the fundamental difference in approach between the communist, Marxist left and the Trotskyist left or ultra-left: the need for the development of working class consciousness - specifically revolutionary consciousness. The main task of communists and Marxists is to help the working class itself develop advanced and ultimately revolutionary consciousness, to become, in Marx’s words, “a class for itself, rather than just in itself”; to be aware and conscious of itself as a class, of its unique role in the production of goods, services and value in society, of the need to replace capitalism with socialism, and its own leading, revolutionary role in achieving this.

Kevin contrasted this with the two approaches of Trotskyism, which superficially appear in contradiction, but may be dialectically related and the flipside of each other (my opinion, not Kevin’s). One, especially in the late 1930s, was an assumption that the working class is inherently revolutionary and just needs to be steered or stirred through the putting forward of apparently reasonable demands, which either through struggle or achievement nonetheless throw capitalism into crisis and collapse. Two, the working class is essentially passive - unconscious of its existence or role as a class. Either it is too intellectually inferior (compared with the Trotskyist sect leaders!) to develop revolutionary consciousness or it is so damaged by years of capitalism and imperialism that it needs to be coaxed step by step, like a stubborn, recalcitrant donkey, over the bridge of the transitional programme through, first, very reasonable short-term demands; then more substantive demands, which make inroads into capitalist wealth and power; and then ultimately to the need to overthrow capitalism - or, more likely, capitalism will have collapsed and the Trotskyist parties will seize power on behalf of the working class.

The approach of the communists and Marxists is indeed fundamentally different. We see and take great pride and inspiration in the existence and essential role of the working class both under capitalism and in the achievement of socialism. The role of developing advanced and revolutionary consciousness within and throughout the class is completely central to our strategic conception. This requires an all-round combination of struggle, education, agitation, support, solidarity, organisation, fighting to defend existing terms and conditions, raising demands to improve the position of the class at the expense of the wealth and power of the capitalist class, and also making what Engels called “the basic case” against capitalism and for socialism in all our daily work, activity and living. All alongside each other, in a joined-up manner, not mechanically separated out, Menshevik-like, over some transitional bridge to nowhere.

The working class itself must make the socialist revolution and establish and run the socialist society we need. Indeed, we define socialism as the political, economic and state power of the working class. The working class must be encouraged, educated and supported to become the new (majority) ruling class. The communists and Marxists are part of and integral to the class and its tasks. In contrast, the Trotskyist groups stand on the periphery, often in their lonely ivory towers, variously preaching, shouting, patronising, hating, factionalising (against each other), creating confusion, division and peddling false theories and remedies. They hate each other - and the communist and workers’ parties - more than they do the capitalist class and hold a basic contempt for the working class as it really is, as illustrated by their two basic approaches described above.

Andrew Northall
Kettering

CPB frankness

Re ‘The police and standing army too’ (February 10), I have long suspected that the British left “make themselves aware of the home office list of proscribed terrorist organisations” and hence make themselves scarce from any entanglements that might prove problematic. The Communist Party of Britain actually saying so out loud is remarkable, however.

I am experienced with solidarity work, and the frequent tendency of various left groups and individuals to keep their distance from overtures is probably down to fear of the Terrorism Act 2000. Solidarity with Palestinians, revolutionaries from Turkey, the ‘wrong kind’ of Kurds, and so on, is potentially and in some cases in actuality criminalised by the act.

On the other hand, it is not like the British left to openly admit that home office lists and proscriptions are their guiding light. Perhaps we should be grateful to the CPB for such frankness. What they and others will do if things really do kick off in Ukraine will be interesting, but I doubt whether it will include defiance of British government proscriptions.

In 1936, rather remarkably, a British visitor was allowed to tour Dachau concentration camp in Germany - supervised of course. He wrote later that the inmates were clearly afraid to do anything that might put them up against SS authority.

It seems that the CPB don’t even need to be in a concentration camp to arrive at such a state!

Steve Kaczynski
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