Marx's Economics and Lord Desai's "revenge": A response to the book "Marx's Revenge" by Meghnad Desai - Part Two

Marxists believe that the principle contradiction of the capitalist system is between the increasingly social nature of production it opens up and develops, and the retention of private appropriation. This is a very general proposition, which will be enlarged on and explained throughout this article.

The case for socialism in the twenty-first century

In debating whether capitalism can go on forever Desai taps in to one of the contradictory seams he claims to find in Marx’s writings. Here is a quote, from the Introduction to the Contribution to a Critique of Political Economy, which appears to support his position. “No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.” (p 21) Note that, even in his apparently most objectivist mood, Marx opines that outdated social orders have to be destroyed by human agency. They do not just crawl away to die, as we sometimes get the impression is the case from Desai’s writings. Marx goes on, “Mankind thus inevitably sets itself only such tasks as it is able to solve, since a closer examination will always show that the problem itself only arises when the material conditions are already present or at least in the course of formation.” (ibid p 21)

Desai remarks on these two important sentences. “Practically all commentary on Marx since his death, but especially since 1917, has been an attempt to deny this. This statement, denounced as a crude – indeed ‘naïve’ – theory was vindicated at the end of the twentieth century. Socialism was premature, since capitalism had not as yet exhausted its capacity for development. We lost sight of this simple truth only because of contingent factors – now fortunately removed – that characterized the short twentieth century: 1914-89.” (Marx’s Revenge p 44) This is a bit vague, but presumably the Russian and Chinese Revolutions and the stormy class struggle that marks out the whole of the last century were ‘contingent factors’.

But, once Desai has finished his two chapters on Marx, he deals next with the emergence of mass Marxist parties in most of Europe. The emerging mass working class embraced Marxism as the theoretical summing up of their hopes and aspirations. The working class developed as the other pole of capitalist industrialisation. Industrialisation and a mass working class are the material and human preconditions for a new social order. Now this is a massive vindication of Marx’s ideas (at least to the end of the nineteenth century). When he died, Engels described Karl Marx (at a funeral attended by a handful of expatriates) as the ‘best hated man in Europe’. Twenty years later millions laid claim to his name and ideas. Doesn’t this show that as the problems of capitalism were emerging, so was their solution? Doesn’t this show that ‘the material conditions’ for a new society were ‘already present or at least in the course of formation?

The development of the productive forces

Marxists believe that the principle contradiction of the capitalist system is between the increasingly social nature of production it opens up and develops, and the retention of private appropriation. This is a very general proposition, which will be enlarged on and explained throughout this article. If we consider petty commodity production, which preceded capitalism in history, the economy was mainly composed of small farmers and craft workers labouring on their own account. Usually a surplus was extracted from them by landlords, merchants and moneylenders, but production was on a small scale. Capitalism brings into existence huge factories, sometimes drawing thousands of workers together in the production process. The capitalists who own these factories aim at producing for one world market. Not only does capitalism produce a concentration of capital. Still more, it causes capital to become centralised. Even while formally separated on different sites capitals, rather than behaving like economic atoms drifting around the market, pursue policies of strategic alliances and co-operation to enhance their market power. This is all part of the reason why we believe market relations are increasingly undermined as capitalism develops. This notion is explored in more detail later in this article.

The workers defend their interests by combining together for strength. Trade unions are an elementary form of working class struggle. This collective consciousness makes working people susceptible to the ideas of socialism. They seem like common sense. So the evolution of large scale production for the world market and the creation of a mass working class movement sympathetic to socialism indicated that the capitalist class, who were less and less involved in the day to day management of the enterprises, were becoming historically obsolete. Moreover their rule actually held back progress and prevented the emergence of a democratic planned economy run in the interests of all.

So how come we haven’t got socialism yet? That, of course, is Desai’s ace in the hole. Doesn’t that show that the optimism we might have experienced at the end of the nineteenth century would have been entirely misplaced? The confident perspectives of 1900 were proved false. Capital had a lot more momentum than could have been conceived at the time.

Desai counterposes the Bolsheviks, who he regards as usurpers of the mantle of Marxism, to ‘the real’ Karl Marx. But it is Desai who caricatures the economic perspectives outlined by the Russian revolutionaries and the tasks flowing from these perspectives. He contrasts them to his own conception of Marx’s thought. “(Marx) did not see capitalism as eternal but nor did he see it as incapable of change and innovation and adaption…The limits to capital will be reached when it is no longer capable of progress, but it will be in the daily practice of the people working the machinery of capitalism that its limits will be felt and it will be overcome by them…The continued dynamism of capitalism at the beginning of the twenty-first century is Marx’s revenge on the Marxists” (Marx’s Revenge p 10).

‘Final crisis?’

It is difficult to answer the question as to why capitalism still exists without furnishing a complete history of the twentieth century. Meghnad Desai often gives the impression that Marx just expected the capitalist system to die of old age, and of course it hasn’t. Why don’t modes of production just expire? Because people make their living inside them, of course. If a mode of production goes into crisis, then that threatens the livelihood of every human being living under it. The inevitable outcome of this is an intensification of class struggle – ‘a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes’ (Communist Manifesto p 41)

Socialism won’t just ‘emerge’: it must be fought for and won. By the same argument there is and can be no final crisis of capitalism. Capitalism won’t just collapse: it must be overthrown. Nowhere was this expressed more trenchantly than by Trotsky in his series of speeches and writings, The First Five Years of the Communist International Volume II.

“There was a rather indefinite grouping whose contention it was that the commercial and industrial crisis – and it was extremely acute – through which we were passing on the eve of the last Congress constituted the final crisis of capitalist society, and that this final crisis of capitalist society would inexorably worsen right up to the establishment of the dictatorship of the proletariat. This conception of the revolution is completely non-Marxist, non-scientific, mechanistic. There are some who reason as follows: since we are living in a revolutionary epoch, and since the crisis must unfailingly worsen until the complete victory of the proletariat, it therefore follows that our party must attack on the international arena, and the heavy proletarian reserves, lashed by this worsening crisis, will sooner or later come to our party’s support in the final proletarian assault. At the World Congress our delegation fought against this line of reasoning, pointing out that such conceptions were neither correct nor scientific”. He then poses the possibility that, “the blind interplay of the economic forces would, availing themselves of the passivity of the working class and the mistakes of the Communist Party, restore in the long run some sort of new capitalist equilibrium upon the bones of millions upon millions of European proletarians and through the devastation of a whole number of countries. In two or three decades a new capitalist equilibrium would be established, but this would at the same time mean the extinction of entire generations, the decline of European culture, and so forth.” (Speech on Comrade Zinoviev’s Report pp 52-53)

As the reader will have realised, I have quoted at such length because Trotsky not only handled the ‘final crisis’ concept with such skill, but in effect foretold the victory of fascism and world war as the result of the deadlock in the class struggle in the years after 1917. But for anyone who thinks capitalism simply rises and then falls, like an animal which grows in vigour and then declines to his death, he adds this thought. The normal course of capitalist development is for an increase in production year on year, though at different tempi. This, according to Trotsky, is as true in a phase we called capitalist development as one we characterise as capitalist decline!

 “The movement of economic development is characterised by two curves of a different order. The first and basic curve denotes the general growth of the productive forces, circulation of commodities, foreign trade, banking operations, and so on. On the whole this curve moves upward throughout the entire development of capitalism. It expresses the fact that society’s productive forces and mankind’s wealth have grown under capitalism. The basic curve, however, rises upward unevenly. There are decades when it only rises by a hairbreadth, then follow other decades when it swings steeply upward, only in order later, during a new epoch, to remain for a long time on one and the same level” (Flood-tide pp 79-80).

Stalinism – from capitalism to capitalism?

Desai seems to regard the October Revolution as a putsch. He is certainly incapable of explaining its success. After his discussion of the three different people called Karl Marx who wrote the different volumes of Capital he interjects, “Then, against all expectations Lenin and his Bolsheviks won power in Russia” (Marx’s Revenge p 42). That the Russian Revolution literally pops up in his account like a jack in the box is surely an indication that he does not understand the processes that shaped and produced it.

How can Desai claim to understand the history of the twentieth century without looking at the stresses imposed by World War particularly on weak and backward economies like that of Russia? Of course Russia also had a group of people – the Bolshevik Party - implanted in the working class movement who knew how to take advantage of the crisis.

The Russian Revolution degenerated. It became a bureaucratic dictatorship. But this happened for material reasons, not because the revolution was led by evil people. In fact almost the entire Central Committee of 1917 had been wiped out by Stalin twenty years after the revolution. He feared people remembering the inspirational years when working people took their destinies in their own hands for the first time. When Meghnad discusses Marx’s writings on Russia, he notes that it was part of the periphery of capitalism (that it was not ready for socialism). But Marx had observed revolutionary stirrings in Russia late in his life. He hoped and believed that this could ignite revolution in the capitalist heartlands. That this did not spread after 1917 is largely due to the desperate counter-revolutionary actions of co-thinkers of Desai like Philipp Scheidemann.

Desai’s book offers two explanations for the bureaucratic degeneration of the revolution. “The civil war caused irreversible damage: through hunger, through death in combat, through sheer fatigue. This exhausted, decimated working class was ripe for defeat by the bureaucratic forces of Stalin.” (Marx’s Revenge p114) This is the Trotskyist explanation that Desai attributes to Deutscher. Despite Desai’s sceptical tone, this is all true.

His second explanation is what he calls the ‘classical (that is pre-Lenin) Marxian model of the transition to socialism.’ Actually this was also Lenin’s view. “How could Russia move on to socialism from such a weak capitalist base? The working class was numerically small and concentrated. How could one hope that in the absence of a mature capitalism, which Marx took to be the necessary precondition for socialism, could Russia have socialism?” (ibid pp 114-5) This is also true.

Russia was left isolated, incapable of building socialism in one country, specially a poor land devastated by civil war and wars of intervention. The Stalinist bureaucracy emerged and wiped out the democratic gains of October. The country was industrialised but at tremendous cost, and with a ‘plan’ that was completely overcentralised, squandering resources because the bureaucracy could not trust and democratically involve the working class. A real plan can only be put together with democratic involvement of local and central organisations of the working class, industry associations, and other interest groups who would all make bids for resources and be involved in successive plan iterations. Stalin’s plans, on the contrary, were edicts from the centre cemented together with terror.

Was the Russian Revolution premature? This seems to be Desai’s conclusion. As Lenin explained, world capitalism broke at its weakest link. Russia, left to its own devices, was not ready for socialism. Socialism has to take advantage of the world division of labour imposed by capitalism. Russia was not going to get any readier under capitalist rule. The Bolsheviks were right to seize the opportunity to take power and try to begin the world socialist revolution. Rosa Luxemburg, one of their severest critics among the revolutionary socialists, recognised that.

One thing is for sure. Capitalism was not what the ailing Stalinist system in Russia needed after 1989. So far from unleashing productive powers, the restoration of capitalism has seen the biggest collapse in output since the invasion of the Mongols. Russia is now ruled over by a kleptocracy (a government of thieves) with no perspective for national recovery – only an instinct for lining their own pockets.

According to Maddison (World Economy: Historical Statistics) Gross Domestic Product per head in 1989 in the former USSR was $7,098. By 1996 GDP per capita bottomed at $3,854 (all figures in 1990 dollars). This was a fall to less than 55% of the level under Stalinism. For Russia capitalism has been a catastrophe.

What about China?

Meghnad Desai’s optimism for the future under capitalism reflects that of the late billionaire James Goldsmith, who said, ‘During the past few years, four billion people have suddenly entered the world economy.’ We are tempted to enquire where these people have been living all this time, if not in the world economy. ‘Globalisation’, as we have had occasion to point out elsewhere, is a buzzword – not a serious analysis of the world economy. But the word captures an enthusiasm current among many commentators on the possibility of capitalism growing and growing – and solving ordinary people’s pressing material problems as it does.

Nowhere is this enthusiasm more apparent than in discussions on China. And the figures are striking: China, the world’s most populous country with 1.3 billion people, grew last year by 9.2%. If that level of take-off is maintained for a generation, the world will be an unrecognisably different place in a few years’ time. We can forget Desai’s science fiction about ‘outer space as colonisable land’- capitalism would be offered juicy new markets here on earth.

Our first qualification must be about the nature of the Chinese economy and society. Though capitalists are making Klondike fortunes in the Chinese interior at present, the People’s Republic cannot yet be regarded as a capitalist country. Its future is still to be determined. It will be determined by class struggle. All the makings of terrific conflicts are in the process of coming into being alongside headlong industrialisation. China has probably the highest proportion of publicly owned industry in the world. In particular many of the ‘capitalists’ who are running rings round their competition on the world market are actually managers of township and village enterprises (TVEs). Though ownership and control are a mystery to outside commentators, these TVEs still seem to be part of the public sector. So capitalism has much to achieve, and much to overcome, in China.

Secondly China is conventionally treated as a bottomless market for imports from the advanced capitalist countries. But how can a person, or a country, keep buying without ever selling? The Chinese see themselves as newcomers to world trade forcing their way into markets abroad. In other words they propose to sell without buying (except for the capital goods temporarily required to help them bombard other countries’ consumer goods markets into extinction). There’s nothing new here, of course. This is capitalist competition between countries as usual – except on a much fiercer scale. So there is a vast market for capital goods in China. But the countries supplying them are in effect providing the heavy artillery for their own economic destruction.

The point is, China is expanding fast at the expense of other countries. Economists who favour free trade will deny this. If Chinese low wage competition destroys the UK toy industry and our garment manufacture, they argue, then we will have to specialise in something we have an aptitude for – high wage, high tech stuff. Any remaining workers in the toy and clothing industries will recall that workers, or ‘factors of production’ as economists call them, do not instantaneously and costlessly turn up at the other end of the country in the ‘right’ industrial sector with the appropriate skills. Capitalist competition hurts.

So Chinese economic expansion is precarious. It threatens a world trade war. And it’s the only example the capitalist economic optimists can hang on to. The East Asian ‘Tigers’ that preceded China’s awakening are too small to make a fundamental difference to the world economy. Japan seems stuck in permanent torpor. Sub-Saharan Africa is going backward. The restoration of capitalism in Russia and Eastern Europe has been a catastrophe. Latin America is in turmoil because it has taken economic body blows over past decades. The European Union slips in and out of recession, with permanent mass unemployment in the biggest countries, not least because of the Stability and Growth Pact, the ‘iron maiden’ the European Central Bank has shut their economies in. The USA booms at the expense of the rest of the world. It could turn out the way the optimists suggest. But the odds are against it.

A world ready for socialism

Marx did believe that the capitalist system of his time was progressive – progressive relatively to the socio-economic formations that preceded it. It is no longer progressive in that sense, since the outlines of a socialist system that can develop the productive forces faster can clearly be discerned under the surface of capitalism. We do not and cannot measure the development of the productive forces purely in terms of National Income per head. National Income accounting is a twentieth century invention. When Marx referred to the development of the productive forces in the nineteenth century, he was pointing above all to the creation of large scale industry and the creation of a mass working class as the preconditions for a new society.

The International Labour Organisation recently issued its World Employment Report 2005. This revealed that 2.8 billion people, nearly half the world’s population, now work for a wage. What a tremendous confirmation of Marx’s prediction that the major trend in his time was proletarianisation! The downside is that half of these workers are living on $2 a day or less. And 550 million are living on $1a day or less. The Report adds that 185.9 million are unemployed. The ILO estimates this is the tip of the iceberg, since more than seven times that number have got a job but still live in poverty.

Meghnad asks what the case for socialism can be, since capitalism continues to develop the productive forces. (We assume he means National Income per head continues to rise year on year.) The ILO Report encapsulates our case for socialism. Capitalism continues to fill the pockets of the rich very satisfactorily – for them. We are not just criticising the unequal distribution of income and wealth under the system here. On the contrary. We take our stand on the fact that production is increasingly social, in other words that the outline of a new society is evident on the profile of the old one.

Are they still developing the productive forces?

How about Microsoft? Haven’t they developed the productive forces? Certainly, as a firm, Microsoft has innovated. It has innovated because, despite its supremacy, it feels itself under threat from relative minnows such as Google. It haltingly introduced a poor e-mail facility in response to competitors. It used its power and money to see off the Netscape browser in favour of Internet Explorer. And it is currently trying to develop a proper search engine to rival Google. As Maarten Vanheuverswyn puts it, “Time and again its predatory strategy has been to enter the market fast with an inferior product to establish a foothold, create a closed standard, tie people to their system and grab market shares.”

 I use Microsoft Word because you use Microsoft Word and I want to be able to discuss with you. This is called a network effect. In other words I use because Microsoft because it’s a monopoly, not because it’s the best. This example shows that capitalist competition would produce a fragmented infrastructure and hold society back. But Microsoft’s supremacy comes from market power, not technological superiority.

There are some bright people working at Microsoft. They have all signed away their rights to the benefits of any innovation they come up with when they joined the firm. They still come up with new ideas – because it is in the nature of human beings to come up with new ideas. Microsoft’s main assets are not physical capital. They are intellectual property rights. Microsoft is using the ideas of their employees and other ideas they have bought as capital. It has picked the brains of workers and will not let the rest of us use their ideas unless we pay Microsoft for the privilege. That is how they make their money. In doing so, they slow down the spread of new ideas. While the workers collectively strive to take humanity forward, Microsoft owners, like the rest of the capitalist class, are holding back the development of the productive forces. [For more detail on Microsoft, see Bill Gates, saviour of the world? By Maarten Vanheuverswyn on this website.]

To show how capitalism has moved into a different era from the time of Marx, we propose to look briefly at the business activities of two modern capitalist concerns – Capita and Jarvis.

Take Capita. This firm has not come up with a single new idea since they were founded in 1986. They describe themselves as being involved in ‘management and marketing consultancy’. In 2003 they had a turnover of more than $14 ¾ billion. They were last in the news because they screwed up the upgrade of Sims, the all purpose IT system used in our schools. Before that, they were sacked by Lambeth council from running their Housing Benefit system. Their incompetence, taking up to 74 days to process claims, caused people to be threatened with eviction and homelessness. They made a mess of the congestion charging into London. They were also responsible for the computerisation of Criminal Records, another long running farce.

Jarvis has recently been in the news because it was on the brink of financial collapse. We were threatened with a stoppage of work on all manner of Private Finance Initiatives in October 2004 – meaning that schools and hospitals would not be built. Yet PFI means we have paid a private firm up front to do a job of work. Our money had inexplicably disappeared. Jarvis evaded bankruptcy by selling its share in the tube consortium Tube Line for £146 million. Most people would regard the contract to repair and keep up the London Underground as a licence to print money. Jarvis runs schools in Twickenham. They own the Whittington Hospital in north London. What do they know about it? They are basically a construction company

Another thing they don’t know much about is rail safety. This is a worry, since Jarvis has won contracts for rail replacement. They have been fined £400,000 by the Health and Safety Executive for negligence leading to a derailment near Rotherham. Despite the evidence to the contrary, they still claim the fatal rail crash at Potters Bar was caused by sabotage, not their homicidal neglect.

So why do such firms keep getting awarded the contracts? Mark Casson makes this point about railway franchises. “The main factor that explains why bus operators acquired franchises is that they had previous experience of the privatisation process when it was applied to the bus industry. Their special skills were in bidding for franchises, rather than in operating railways.” (The future of the UK railway system: Michael Brooke’s vision p 204)

The same is true of education and other public services. Colin Crouch comments that, “(A) number of firms are emerging who are specialists in the general art of government contracting and pursue contracts across a wide diversity of sectors…Clearly such firms have no initial expertise and therefore no substantive value added to offer within a new field.” He concludes, “What they possess rather is a specialist skill in winning, and possibly managing government contracts” (or possibly not!) “from politicians and civil servants. This is not necessarily a skill which passes value added and service quality to the ultimate consumers. After all, the need for the skill could have been avoided simply by not bringing the private agent at all.” (Commercialisation or Citizenship: Education Policy and the Future of Public services p16)

Crouch is delicately suggesting that Jarvis, Capita and the like are expensive parasites. What are they good at? Getting the contracts, not doing the job!

British readers who keep up with the papers may suspect I have deliberately picked the most incompetent and useless firms possible. They may feel that the stupidity of Capita and Jarvis management (the Laurel and Hardy of British capitalism) is not really a good argument for socialism. This is not the point being made here. All their profit opportunities come from work done in what used to be, and should be, the public sector.

The London Underground, for instance, was set up by a Labour-controlled London County Council. If they had not acted, we would still have no public transport network and London roads would be at gridlock. That would not do much for the profits of capitalist firms located in the capital, of course. There is no country in the capitalist world where money-making capitalists have developed an adequate comprehensive education system – which capitalism needs. Nowhere can we find a universal health system based on the profit principle. In a later section, we explain why these things cannot be provided by capitalism.

It was public provision, fought for by the labour movement, that made possible health, education and all the rest of the infrastructure modern society needs. In Marx’s time capitalism developed the technology to provide cheap textiles and sell them all around the world. Now firms like Jarvis and Capita look to new markets – by taking over sectors pioneered by the public sector. Capitalism is surviving by eating its own entrails!

Are the privateers doing a better job? Many of the activities such firms supervise – hospital cleaning and prison wardens, to take two – are no-tech in nature. The only way private firms can make money from their tender is to pay the workers less and use less staff, so reducing the service. Call this progress?

If we survey the development of capitalism since Marx’s time, we agree with Lenin, “production becomes social but appropriation remains private. The social means of production remains the private property of a few.” (Imperialism, the Highest Stage of Capitalism p 23) After quoting from the German economist Kestner’s book Compulsory Organisation on the cartels and trusts of the time, he adds, “Translated into ordinary human language this means that the development of capitalism has arrived at a stage when, although commodity production still ‘reigns’ and continues to be regarded as the basis of economic life, it has in reality been undermined.” (Imperialism pp 23-24). This may seem a paradox, when the ‘final triumph of the market’ is celebrated by the apologists of capitalism. But, as we shall show, it is true.

Two divisions of labour

We hear a lot about the 'magic of the marketplace'. We need to remind ourselves that generalised commodity production is a late and recent development in social evolution. For hundreds of thousands of years humans made their living without the aid of markets.

Marx realised that there are two divisions of labour within a capitalist economy, one in the marketplace and the other within the firm. "The very same bourgeois mentality which extols the manufacturing division of labour, the life-long annexation of the worker to a partial operation, and the unconditional subordination of the detail worker to capital, extols them as an organisation of labour which increases productivity – denounces just as loudly every kind of deliberate social control and regulation of the social process of production, denounces it as an invasion of the inviolable property rights, liberty and self-determining genius of the individual capitalist. It is characteristic that the inspired apologists of the factory system can find nothing worse to say of any proposal for the general organisation of social labour, than that it would transform the whole of society into a factory." (Capital Vol I p 356)

Both divisions of labour just impose themselves on us as workers. But the division of labour within the workplace is consciously planned by the boss. He doesn't just hope that there are raw materials for you to work on somewhere out there. He makes sure they are stored up ready for you before you get in. And he makes sure there's a worker in place to do what's needed. All this is done in advance. He may say markets are wonderful, but he's not so stupid as to rely on them himself if he can help it. But the only way he can make money is by selling into the marketplace. And here nothing is done in advance. You lay out your stall and hope someone wants your stuff. If they don't, then all you work has gone to waste. But you only find out after the event.

Economic growth and socialist possibilities

So capitalism wastes resources. It is not as economical as we are led to believe. How would things stand under socialism?

“Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs…Thus economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production.” (Grundrisse p 173)

What is different about capitalism? “(T)he old view , in which the human being appears as the aim of production…seems to be very lofty when contrasted to the modern world, where production appears as the aim of mankind and wealth as the aim of production. In fact, however, when the limited bourgeois form is stripped away, what is wealth other than the universality of individual needs, capacities, pleasures, productive forces etc, created through universal exchange? The full development of human mastery over the forces of nature, those of so-called nature as well as humanity’s own nature. The absolute working out of his creative potentialities…In bourgeois economics – and in the epoch of production to which it corresponds – this complete working out of human content appears as a complete emptying out, this universal objectification  as total alienation, and the tearing down of all limited, one-sides aims as the sacrifice of the human end-in itself to an entirely external end.” (ibid p 488)

So capitalism takes us to the threshold of a society of abundance – and slams the door firmly in our face. “The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure…The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head.” (ibid p 705)

Nor is this all just a utopian vision of the future. “Today Marx’s insights, if not his words, have a contemporary ring. We can find them echoing in the pages of Business Week or the Harvard Business Review, which observed that the ratio of direct labour costs to total costs in the US is about half as large as it was in the middle of the 19th century…According to a Business Week report, automation has reduced labour costs to around 8 per cent to 12 per cent of total production costs for the average plant. The share of direct labour costs is even smaller in many industries In electronics, the third largest industry in the US, which is also the fastest growing industry, labour costs are only half as much as the average.” (Perelman – Devalorisation, crises and capital accumulation in late 19th Century US )

So the words quoted above from Marx are prophetic. First automation has rendered labour an insignificant cost of production. Secondly the logic of this development is that labour ceases to be the measure of wealth. Thirdly the nature of labour has also changed. When first explaining the labour theory of value, Marxists are careful to emphasise that labour is not the same as ‘sweat’. But of course in the nineteenth century labour very often was brutally hard physical work. There are still millions of workers all over the world who continue to do sweated labour for capitalism. But, when we consider the workers who are exploited by Microsoft, they are performing what Marx called ‘general scientific labour’. Marx explains how the productive powers which workers collectively have developed confronts them as an alien force. This process “is completed in modern industry which makes science a productive force distinct from labour and presses it into the service of capital.” (Capital Vol I p 361) He goes on to assert that, “universal labour is all scientific work, all discovery and all invention.” (Capital Vol III p 104)

We can see now that it is collective labour that is actually developing the productive forces and the useful functions formerly performed by capitalist managers have just dropped away like booster rockets. In effect all they do nowadays is count their money. Furthermore the development of general scientific labour alongside of the productive forces poses the possibility of eliminating sweated labour from the face of the earth.

The end of the ‘golden age’ of capitalism

Desai produces figures on pp 85-86 of Marx’s Revenge to show that growth was faster in the twentieth than the nineteenth century. There is no doubt that this was the case. But what does that show? In the nineteenth century there was only one failed revolutionary situation – the Paris Commune in 1871. During the last century the working class had dozens of opportunities to take power in different countries. Higher growth rates don’t push socialism off the working class agenda!

In any case if we disaggregate the statistics for the twentieth century, we get quite a different picture. The good times have gone for good. Here is what Angus Maddison has worked out for the two periods 1950-73 (the golden age) and 1973-98. They show that the golden age, and with it full employment and rising living standards for everyone, was a freak in the history of capitalism. The figures are for national income per head in constant prices.

  • Western Europe 1950-73 4.08%   1973-98 1.78%
  • ‘Western offshoots’         2.44%                  1.94%
       (this includes the USA)
  • Japan                                8.05%                  2.34%
  • Africa                               2.07%                  0.01%
  • World                               2.93%                  1.93%

To conclude: the world is ready for socialism. It’s not going to get any readier! What is lacking is a widespread perception of the need for, and possibility of, a new and better society. This review article is a modest contribution aimed at increasing that awareness.

(to be continued...)

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