Marxist (Communist) Discussion Forum / MCDF: Lilly

The basic economic principles of Marxism :
Marx wrote, “The devolopment of the productive forces is the absolute practical premise of communism because without it, want is generalized.”
Although the material basis for socialism exists, due to the rise of capitalism it is not distributed nearly as evenly as it should be. In the USA output per man-hour (an average for all economic sectors) in 1870 rose from 37 units to 100 in 1913, in 1938 to 207 and to just shy of 400 units in 1963. It is therefore surprising that in ‘under-developed’ countries productivity remains far too low – we can wholly blame capitalism and imperialism for this, as many economic problems arise from the transfer of goods from the under-developed to the developed, effectively by the power of competition.

‘Red’ china is not so very red, proved as early as 1950 by a Chinese economist who wrote, “ In the USA there was an average of about 600 times for industrial capital per head than in China, or more than 900 times if manufacturing capital alone were considered.” Even those on the furthest right, making every exception for industrial progress since then cannot possibly say (truthfully, without the use of spin,) that a classless society exists. The same is true for 2/3 of the world’s people – the third world. The only feasible plan to create the socialist/communist governments is by creating a worldwide revolutionary movement. Furthermore, it must spring form the working class; this is no about Marxist dogma, but is germane to Marxist analysis of society. It follows from life situations of working classes as compared to other previously exploited classes. Here again we see Marx’s firm belief to let the present dominate the past and never to let the past dominate the present. Although inequality and injustice in pre-capitalist times was caused by low productivity of labour there is a far more important and relevant explanation. Frequent rebellions and protests took place in small groups, scattered in different places. No real long-term impact could be made because people were not functioning together as a class. Marx wrote of the French peasantry, “ Insofar as millions of families live under economic conditions of existence that divide their mode of life… From that of other classes, and put them in hostile contrast to the latter, they form a class. Insofar as there is merely a local interconnection among these small peasants, and the identity of their interests, begets no unity, no national union, and no political organization, they do not form a class. They are consequently incapable of enforcing their class interests… they cannot represent themselves, they must be represented. “

If any real social/political change is to be achieved, groups must be concentrated into organizations in large cities by means of communication. A true socialist society is one based on voluntary cooperation between working people, and therefore cannot be established if there is no working class imposed on a higher class.

The Paris commune of 1871 is an ideal model of a working class society, it was a “worker’s state.” However, the rise of large-scale industry increased the importance of worker’s councils, which were based on productivity over area organization. Marx said of the Commune, “The Commune was formed of municipal councillors chosen by universal suffrage…responsible and recallable at short terms. The majority of its members were naturally working men… The commune was to be a working, not a parliamentary body, executive and legislative at the same time… The first decree of the Commune was the abolition of the standing army and the substitution of it for the armed people. “

So we are immediately made aware of the necessary movement by the working class in order to transition to socialism (in itself a transitory stage), and to communism. This movement cannot occur when capitalism crushes and represses workers within a relatively small hierarchy.

In Marx’s analysis of capitalism he shows most importantly the exploitation of workers and the “economic law of motion” of the system, and this is the area of capitalism I have chosen to focus on and to compare with communism.

His first argument is already relatively clear when compared to slave labour. In the Middle Ages a man worked part-time on his own land and the rest of the time on his lord’s land. The majority of his work was completely unpaid – he never received the fruits of his labour, and hence, we see exploitation.

Scientifically the worker today is not exploited. The is paid for however many hours he works a week, regardless of whether he is seen to be underpaid or overpaid by modern standards. On paper there is almost no sign of exploitation. To reveal this I will briefly discuss Marx’s theory of value.

Capitalism is essentially a theory of production of goods, which are priced on the relative amount of work needed to make them. These ideas, however, did not originate with Marx. An economist wrote, “The labour theory is one of the most powerful truisms in classical economics…. And it apparently would have been still current – with refinements, to be sure – among orthodox economists if Marx and some of his forerunners had not put it to such effective use as the touchstone of working class ideology.”

To explore this theory, let us take as an example the car. ‘Socially necessary’ labour time is man-hour time. The cars made in 1900 should, by this theory cost a great deal more than the cars of today. The quality and technological advance of materials differs from producer to producer. An average must be taken to create a general ‘standard’.

The end product is valued by the sum of all the materials, objects and time that were needed to make it. A capitalist gains revenue by selling his commodities, which seem to be approximately close to their actual values.

An unskilled labourer does not usually have material commodities to sell, rather his expertise and time. Here we see that wages are the cost of work and therefore work is a commodity traded like any other. Marx was well aware that wages were not necessarily held at the minimum level. “Besides this mere physical element… Not mere physical life, but it is the satisfaction of certain wants springing from the social conditions in which people are placed and reared.” Basically Marxists take a gamble with wages in that they depend on the outcome of the class struggle. There is a floor level below which they cannot decrease for long – this level being bare existence – but above this they can and should be raised.

This being said, Marx believed that there were mechanisms in the ‘system’ to check and throw back increases in real wages, (even allowing for inflation.) Again, looking at wages in Britain scientifically it is accurate to state that they have risen greatly in the 20th century but it is the share of wages in the total national income, which remains constant - at 42%.

I will now expose the fundamental and most important failure of capitalism both in principle and practise - the exploitation of the worker, through surplus value.

Surplus value is the difference between the value of commodities produced and the value of labour power used to make them – and with a high labour productivity this difference can escalate to a very high level. And it is owned by the owners of the means of production. It is their income. Hence I have, even in this brief analysis, proven the dangerously high level of exploitation within the capitalist system. We will now look at surplus value in a little more detail.

Capitalist society has reached an uncontrollable extreme in terms of means of production. It results in commercial crises and puts the existence of the entire capitalist infrastructure on trial.

The capitalist system has, surprisingly, at times represented very closely Marx’s ideas, but most notably in the last 25 years, it could not be more different. A popular right-wing rhetoric is to say that Marx’s analysis of capitalism is wrong, but in fact, it has a tendency to create severe crises but their action “has been modified by the action of certain other factors.” Orthodox Marxism teaches that there are two main reasons for economic crises in a capitalist system; overproduction and a tendency for the rate of profit to decline. If there is no accumulation of capital, if every year the same quantity and value of goods is produced; i.e. all products are sold at actual values, i.e. “simple reproduction”. The capitalists receive the total income, out of which they must purchase materials and pay wages. The remainder is surplus value, and they should spend it all on consumer goods, which make overproduction impossible. However, if the total income is not spent on goods then overproduction is inevitable. They do not make the equivalent purchases to maintain equilibrium. The irony of the situation is that it never could/did exist, but we have, yet again, exposed a central problem with the system; there is no overall plan of production. Yet there must be an invisible person to direct consumption and production to maintain equilibrium.

The essence of capitalism is the increase of capital, which is the surplus value. IT can be used to raise wages (variable capital) or to expand business (fixed capital.) Marx named all expenditures except wages “constant capital.” Accumulation is a rapid growth of constant capital.

The repercussions of this are perhaps even more important, one being the need for labour power. Wages must rise at the same rate as accumulation, and surplus value is diminished until nothing is left.

In practice, various factors have been increasingly important. In the history of capitalism, immigration of labour on a massive scale has existed at most times, i.e. millions of men and women are ‘imported’ from the third world as cheap labour into the capitalist heartland.

The substitution of “dead labour” for living labour is the most important factor, the raising of productivity by using more and more fixed capital/man. Marx called this the “organic composition of capital”, and its increase is forced onto capitalists by the necessity to offset he rise in the demand of labour power during accumulation. And therefore, the rate of profit, which is the ratio of surplus value to total capital (constant and variable) must decline as more constant capital is employed with the exception of when there is a more than proportional rise in productivity.

This very brief examination of capitalist and communist economics forms the basis of Marxist theory – Marxism as a response to capitalism. It is fair to say that very little in the aims of the communist has changed in the 101 years since Marx’s death. All that has changed and increased is the growing urgency for the communist revolution to take place and to end the era of capitalism forever.

Lilly

Lilly, good post

Re: Lilly