Floodtide of capital

Mike Macnair locates the contradiction in capital's desire for free movement and its need to control labour

Capital tends to aspire to freedom of movement for itself, but does not fully achieve it. And it tends to produce both freedom of movement of labour and unfreedom of movement of labour - or at least aspirations to control the movement of labour. What is involved is a group of contradictions for capital as inescapable as the contradiction between the capitalists’ need as employers to pay the workers less and their need as sellers of commodities that workers should buy more.

What follows is necessarily tentative, both because what I have outlined here are tendencies, not absolute predictions; and because this is a hypothesis or sketch of an account, not a fully developed one.

Mobility of capital

It is appropriate to begin with freedom of movement of capital. Capital is both mobile and immobile. This reflects the underlying elementary Marxist point that capital is not a fixed thing, but a process: from money (M) to commodity (C), to changed commodity (C’), to increased money (M’). As M or M’, capital is highly mobile and rootless. No state has actually succeeded in making money immobile without turning it into pseudo-money like the Soviet rouble: even at the high period of Bretton Woods and exchange controls, there were a variety of devices which allowed big-money capital to move between countries. But in transition from C to C’ - or before the passage from C’ to M’ is completed - capital is embodied in, and tied down to, things and persons. As such it is vulnerable to local events. This is true even of shipping: seemingly classically mobile, ships are subject to shipwreck, to piracy and to arrest in port.

It may appear in our financialised world that money can be made out of nothing but money; and it is certainly the case that the financial markets, and their liquidity, provide a buffer for capitalists against the risks of material investments. But at the end of the day no-one can eat, wear, live in, drive, etc money: it is elementary Marxism that there have to be productive activities to provide the social product that money is able to buy. These material productive activities are also capital; and the extent to which they are mobile is highly variable.

Recent developments have indeed increased the mobility of material productive activities and it is important to recognise how this wizard wheeze has been pulled off. There are two elements. On the one hand, there are very substantial state subsidies to transport, in the form, first, of direct subsidies to rail and road networks; second, in that of tax breaks (eg, aviation fuel); and, third, in that of artificial legal limitation of liability for negligence, enabling ship-owners, airlines and cross-border road hauliers to externalise costs onto shippers, consignees and seafarers. By cheapening transport, the value of location advantages is reduced, and this inherently facilitates mobility of productive activities (ie, closure in one place to open in another).

On the other hand, there are simple and direct subsidies and tax breaks to ‘new business starts’ and foreign direct investment. These are large enough to make it profitable, for example, to build a new factory, run it for five years while the subsidies are still running, and then close it down and start up elsewhere.

Even so, this sort of operation is only feasible for the largest corporations, which were already operating on a world scale before the ‘new start’ subsidy shell-game reached the imperialist centres. Infrastructural enterprises like the Channel Tunnel or Network Rail, though large-scale, are effectively completely immobile. Small and medium-sized enterprises are also much more immobile, among other reasons because their goodwill may well be much more local. This is true a fortiori of the petty proprietors proper - those who own means of production sufficient to work themselves or to demand a rent from capital, but not enough to allow them to exploit labour. For the peasant farmer to leave his land, the shopkeeper his shop, or the lawyer the jurisdiction in which he has guild-monopoly knowledge, is to abandon most of his assets.

The old ‘official communist’ strategy of an ‘anti-monopoly alliance’ or alliance with national capital against imperialism was very much built around this contradiction, and a lot of leftist ‘anti-globalisation’ talk has the same character. The trouble is that, though this appears as a contradiction between capitals, or between big capital and the petty proprietors, it is actually a contradiction within capital as a process. The biggest corporation may get ‘caught short’ holding material assets when they revalorise; the smallest shopkeeper may be willing to sell up at a severe loss and get out of the country when facing a (real or apparent) threat that the working class will take over, or the state collapse into warlordism, and his fixed property entirely lose its value.

The contradiction nonetheless does produce mundane capitalist politics. The rhetorical opposition of the ‘landed interest’ to the ‘moneyed interest’ in British politics around 1700 is precisely an example. A group of politicians put together a coalition of landowners - a species of capitalist employer heavily committed to fixed and immobile capital - with a section of the petty proprietors. Similar coalitions or attempted coalitions are behind a great deal of nativist and anti-immigrant political rhetoric. What is expressed is the fixed and immobile side of capital.

Mobility of labour

If we now turn to the mobility of labour, we should start by saying that it is not true that a national market - and hence mobility of labour - is a presupposition of the capital relation. Rather the capital relation, once it comes into existence, tends to create expanding market relations. Not a ‘national market’, since, on the one hand, capitalism begins under feudalism with an expanding set of international market relations, centred on northern and central Italy, linking together the cities and towns of the European continent; and both Amsterdam and London are from the outset international market centres and the centres of states which contend for global power. On the other hand, differentiated local markets affected by specific conditions persist in even the most developed capitalist countries.

It is a presupposition of the capital relation that there should be, somewhere in the system within which capital operates, some free labour: that is, labour that is freely available to capital. This means labour which, firstly, is not owned outright by the members of some other ruling class (in which case the capitalist would probably have to pay for the rent of labour at a profit-sharing rate); secondly, which cannot be simply forcibly enslaved, and, thirdly, which has been freed from the peasants’ and artisans’ individual and collective proprietary control of means of production.

As capital expands, its demand for labour increases and this tends to put pressure on the existing, feudal, unfreedoms of the peasants and artisans. At this point we are discussing a process which Marx described as a limit to the dialectical mode of presentation: that is, that the process of formation of a working class out of the freeing - ie, dispossession - of the peasants and artisans is a concrete historical process not capable of explication within the frame of the unfolding of the contradictions of the commodity, which characterises his treatment in the Grundrisse and the early chapters of Capital volume 1.

Once this historical process is substantially complete - as was certainly the case in England by the late 17th to early 18th century, and probably earlier - the mobility of labour becomes a contradiction for capital. On the one hand, it is in the interests of every particular capital as anemployer to restrict the mobility of labour and its freedom relative to the particular employer, insofar as restrictions on the mobility of labour improve the employer’s bargaining position in the wage relation. This is true a fortiori to the extent that capital itself is mobile. On the other, it is also in the interests of every capital as an employer that the pool of labour available to it or, in other words, the number of workers competing for its jobs, should be maximised, since this also reduces the workers’ local bargaining power. This will commonly involve an interest in the mobility of labour.

We should expect that - like the contradiction between the mobility of capital and its immobility, to which this is connected - the result of this contradiction should appear in contradictions between capitals and, more distantly, in political contradictions. And so it does. Both the old Poor Law and modern attempts to control labour migration have been the subject of political contradictions in which different branches of capital have been ranged on opposing sides. Moreover, there are particular variations. Under some circumstances individual capitals have sought both to forcelabour mobility to bring workers to the job and to force labour immobility to keep them there: this is the context of several examples of regimes of unfree or semi-unfree labour.

In relation to the mobility of capital, it has been possible to treat the petty proprietors simply as (very) small capitalists. In relation to the mobility of labour, this is no longer possible. The basic reason is that petty proprietors actually depend on the exploitation of family labour. The shopkeeper gets wife and children to help in the shop, the family farmer makes them work on the farm. The self-employed artisan, or the professional or managerial owner of petty or guild-monopoly intellectual property, is freed to work longer hours than any but ultra-exploited workers by the intensified domestic labour of his wife and in some cases his children. The labour market, and in particular the mobility of labour, threatens to take away the petty proprietor’s control of his family labour force.

In addition, the reserve army of labour cannot simply be allowed to starve to death. Otherwise it would cease to exist as a reserve army (I leave aside here countries with a subsisting mass peasantry). Hence there have to be tax-supported Poor Laws and similar arrangements. But the greater mobility of large capital, and of capital in money form, allows large capital to pass off at least a proportion of this tax cost onto the petty proprietors.

Both these aspects drive the political expression of interests in the control of the movement of labour: from the Poor Law to immigration controls, for which the primary basis of political support is among the petty proprietors.

If, however, we look at the matter from the side of the worker, it should be obvious that the worker as such under capitalism has a clear interest in freedom to move in order to follow the available jobs. Workers move in order to satisfy needs. This is not to say that every worker wants to live a nomadic life of following capital: if anything, the contrary is the case. It is merely to say that the mobility of capital and the instability of firms, and hence jobs, in rising and falling markets makes workers need to be able to move if necessary.

Given this interest, however much capital may seek to control the movement of labour by legal means, it cannot actually achieve effective controls on actual movement. This is because the very conditions which allow the movement of capital - spread of market relations, mobility of money, improvement of transport and so on - also allow in practice the legal or illegal movement of workers.

The bureaucratic regimes achieved control on the actual movement of workers, as they did on the actual movement of money: but they did so at the price of substantial enserfment of the whole workforce, and interdependency of the individual factory managers (as a species of industrial feudalists) and their worker-serfs.10  These regimes resulted in an inability to compete effectively with capital, either in terms of the apparent material outcomes for the workers and the middle classes or at the military-geopolitical level. The price would be the same for any capitalist regime which seriously attempted to eliminate labour mobility.

What, therefore, capital achieves by its efforts to control the movement of workers is not actual control of this movement. It is, rather, to create a category of illegal, undocumented workers. This group of workers is subject to intensified exploitation which can - as in the case of trafficked sex workers and some people working for gangmasters - amount to de facto chattel slavery.

This is a tentative and hypothetical sketch. But it is enough to enable us to see that the current global dynamic of freedom of movement of capital and attempts to control the movement of labour can be grounded solidly in the basic logic of the Marxist critique of political economy and of historical materialism. Hence, the fact that this dynamic is not new, but endemic to capitalism, can be explained. Moreover, the last point - that capitalist states attempt to control the movement of labour, but succeed only in producing more or less large groups of ‘illegal workers’ - is critical.11 

These theoretical questions have important strategic implications, of which there are three aspects: internationalism, legality and class alliances. The first, and most important, of these three is the question of internationalism.

Strategy: internationalism

The strategies of the Second, Third and Trotskyist Fourth Internationals were built round a central idea of the construction of workers’ parties, and the working class taking political power, in a series of single countries successively.12  This, in turn, was justified by the idea that ‘uneven development’ between countries in capitalism implied that proletarian class-consciousness would necessarily also develop unevenly. Trotsky’s ‘combined and uneven development’ was merely a gloss on the underlying ‘uneven development’ idea. The whole strategic approach was founded on the concept of a necessary homology between capitalism and the nation-state. There is to be British capitalism, German capitalism and so on.

But in order to grasp the economic and political dynamics of capital mobility and labour mobility as phenomena endemic to capitalism as such - which, as I have said, is necessary in order to make sense of the historical evidence - it is necessary to abandon the idea of a necessary homology between capitalism and the nation-state. Capitalism develops simultaneously as a local, regional, national, continental and global order. Along with it, the proletariat develops as a local, regional, national and international class: from the beginning a class which is neither locally nor nationally homogenous, but composed of workers who have migrated from varying distances, both within and beyond national borders.

Because of this character, in order to conceive itself as a class for itself - as a class with interests independent of the petty proprietors and the capitalists - the proletariat has to begin to conceive itself as an international class. It is for this reason that the First International triggered the development of national independent class movements; that the widely-known existence of the Second International enabled the development both of the mass socialist parties and the scale of the class struggles throughout Europe in the early 20th century; and that the Comintern and the international communist movement became the (deformed) frame of working class politics in the colonial and semi-colonial countries for most of that century. The national strategies for power of the Second, Third and Trotskyist Fourth Internationals therefore tended to undermine their own objective basis in proletarian class-consciousness.

Today, it is more than ever obvious that a strategy for working class power, or even for serious reforms in a single country, is hopeless. The mobility of capital prohibits it. The attempts at such a strategy, on the largest possible scale, both in the USSR (socialism in a single country) and in the west (social democratic and ‘new deal’ reforms) have failed ignominiously. For the proletariat to take political power would have to be at least an act on a continental scale, and it would have to involve the combined action of workers from both imperialist countries and colonial countries.

At the same time, after a period between 1914 and the 1970s in which the mobility of labour was submerged in a dominant language of nationalism, the class composition of the proletariat in single countries has again become increasingly obviously mixed between ‘natives’ and migrants. The idea that it is possible to attain effective class unity, even at the local level, on the basis of a nationally homogenous workers’ movement, is exposed as a disastrous illusion.

The workers’ movement as such now urgently needs practical international collaboration under capitalism, in order to conduct elementary struggles over wages, etc and for reforms, effectively. Communists, who seek the class power of the working class in society as a whole, urgently need an international.

But such an international cannot be an international of nations, because the ‘national’ proletariats are already international. It would have to be an international whose organised parts organise all the workers in the places where they are, whatever their nationality of origin. To actually achieve quite elementary effective class unity, in other words, we have to take seriously the old tag that ‘the workers have no fatherland’.

Strategy: legality

The question of legality is posed by the fact that capital’s legal controls on the mobility of labour imply, as I have pointed out, the creation of large groups of ‘illegal workers’. The practical consequence is that it is decreasingly possible for the proletariat to construct its own unity - even at city level - or conduct effective elementary day-to-day trade union struggles, struggles against landlords, and so on, without organising the illegals. But if we are to work to organise the illegals, we have also to be willing to work to defend them against state action: that is, to commit ‘crimes’ against immigration legislation, and so on - to break the law.

I am not urging here some sort of Maoist-Guevarist strategy of military confrontation with the capitalists and the state in the developed capitalist countries. But it is necessary to recover the tactics and methods of illegal trade union organisation from the early history of the movement, and to be willing to try to organise among the illegals.

This, in turn, means that the movement needs a political party which devotes significant effort to undermining the political authority (or ‘legitimacy’) of the judiciary and the constitutional order. Attacking this legitimacy is a critical element in overcoming the division of the proletariat between ‘legal’ and ‘illegal’ workers, and in building positive legitimacy for illegal action. This is the exact reverse of the course followed by the Eurocommunists, which was to accept the legitimacy of the existing constitutions. It is also a long way from the efforts of the ‘movementists’ and Trotskyists to evade constitutional issues and focus on ‘direct action’.

Strategy: alliances

The problem of class alliances is posed by what I have discussed about the conflict between the interests of the petty proprietors and those of the proletariat, in relation to the mobility of labour (and class unity). Since Lenin’s formula of the ‘democratic dictatorship of the proletariat and peasantry’ it has been orthodox Marxism-Leninism to attempt a strategy to win the petty proprietors as a whole to the side of the proletariat.13 

This strategic line is opposed to Engels’ and Kautsky’s arguments that the most that is possible is tactics to divide the petty proprietors - and that even this must be subordinate to constructing the class unity of the proletariat - for example, by defending the interests of workers employed by small businesses and family farmers.14  The logic of this is that the interests of the proletariat as a class are deeply antagonistic to those of the petty proprietors as a class, and that on this question a return to the Engels-Kautsky approach is called for.


 1. The IMF background paper, ‘Offshore financial centres’ (2000), has an outline history of the development of ‘offshore’ from a pro-capitalist standpoint (see www.imf.org/external/np/mae/oshore/2000/eng/back.htm).

 2. There is some useful outline discussion of this phenomenon in M Woodin and C Lucas Green alternatives to globalisation: a manifesto London 2004, chapter 5.

 3. A pro-capitalist approach which nonetheless highlights ‘pitfalls’ in the phenomenon can be found, for example, in H Christiansen, C Oman and A Charlton, ‘Incentives-based competition for foreign direct investment’ (2003) OECD Working papers on international investment No2003/1, www.oecd.org/dataoecd/52/40/2500995.pdf. A convenient example of short-lived ‘new jobs’ attracted by subsidies is provided by P Rambert and R Trapert, ‘Bitter fruits of modernisation in Lorraine’ Le Monde Diplomatique October 1997, http://mondediplo.com/1997/10/lorraine.

 4. For a continuing example of the old ‘official communist’ strategy see, for example, The British road to socialism chapter 4: www.communist-party.org.uk/index.php?file=brs&brs=brs_ch4.txt. An approach which similarly seeks to rely on smaller and national businesses against bigger and international ones can be found in M Woodin and C Lucas Green alternatives to globalisation London 2004, n29 (for reasons for rejecting the Woodin-Lucas approach beyond those given here see my review in Weekly Worker November 4 2004).

 5. G Arrighi The long 20th century (London 1994) is helpful on the history. Serious objections have been made to Arrighi’s method and to his conclusions, but his historical evidence for the international character of financial systems from an early date has - rightly - not been disputed.

 6. See, for example, Jamie Gough’s study of shifts in the London economy, Work, locality and the rhythms of capital London 2001.

 7. R Rosdolsky The making of Marx’s Capital London 1989: “This point definitely shows how the dialectical form of presentation is only correct when it knows its own limits.” The citation there is to the Ur-Text in the German edition of the Grundrisse (1953); I have not been able to check this. That Marx continued to hold to the judgment made in this obscure draft text is reflected in the heavily historical character of the second half of volume 1 of Capital. Compare also GL Skillman, ‘Value theory vs historical analysis in Marx’s account of capitalist exploitation’ (2007) 71 Science and Society 203-226; though I would not accept Skillman’s particular reasoning, which in my opinion involves a petitio principii via reliance on Roemer, whose arguments presuppose the falsity of the labour theory of value, his point that the historical account is distinct from the value-theoretical account is legitimate.

 8. The extreme example is the Atlantic slave trade, on which see R Blackburn The making of new world slavery: from the Baroque to the modern 1492–1800 London 1997; this is also present in 18th century mill-owners’ use of pauper apprentices.

 9. Cf the arguments of Engels in On the housing question (1872): www.marxists.org/archive/marx/works/1872/housing-question/index.htm, against the Lassallean proposal that worker home-ownership should be encouraged.

 10. H Ticktin Origins of the crisis in the USSR (London 1992) lays out the phenomena, but does not draw the conclusion that this (in historical terms) short-lived regime was one transitional between feudalism and capitalism, not one transitional between capitalism and socialism.

 11. All this provides a fundamental reason to reject the idea implied by Jairus Banaji’s ‘spectrum of unfree labour’ that Marx and Engels were wrong to privilege the class movement of the working class (J Banaji, ‘The fictions of free labour: contract, coercion and so-called unfree labour’, 2003, 11 Historical Materialism pp69-95). See my comments in ‘Origins of fortress west’ Weekly Worker June 14.

 12. Discussed in my articles, ‘Political consciousness and international unity’ Weekly Worker May 25 2006; and ‘Comintern and the Trotskyists’ Weekly Worker June 8 2006.

 13. VI Lenin Two tactics of social democracy in the democratic revolution (1905) www.marxists.org/archive/lenin/works/1905/tactics/index.htm; for a recent ‘interpretation’ of the idea of an alliance between the proletariat and small businesses and farmers, compare the British road to socialism cited in note 4 above.

 14. For Engels on this question see The peasant question in France and Germany (1894-95): www.marxists.org.uk/archive/marx/works/1894/peasant-question/index.htm; For Kautsky see, for example, ‘Socialist agitation among farmers in America’ (1902) www.marxists.org.uk/archive/kautsky/1902/09/farmers.htm. The Engels-Kautsky line was also used as an argument against the Bolsheviks’ strategy on this front by R Luxemburg The Russian Revolution (1918); and J Martov The state and the socialist revolution (1919-23) www.whatnextjournal.co.uk/Pages/Theory/Martov.html.