Technology, innovation, growth, and capitalism

The Marxist analysis of history – that is, the dialectical and materialist analysis of history – explains that the main motor force in history is the need for society to develop the productive forces: to increase our knowledge of and mastery over nature; to reduce the socially necessary labour time needed to produce and reproduce the conditions of life; to improve lifestyles and raise the standards of living.

As Marx himself writes in his preface to “A Contribution to the Critique of Political Economy”:

“In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness.

“The mode of production of material life conditions the social, political and intellectual life process in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.”

Marx goes on to explain that it is precisely in those periods when society can no longer develop the productive forces – when science, technology, and industry stagnate; when economic growth, employment, and rising living standards cannot be guaranteed – that revolutions occur, in order to remove the barriers standing in the way of progress:

“At a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production, or — what is but a legal expression for the same thing — with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution.”

The epoch of social revolution has clearly arrived: from the Bolivarian revolution in Venezuela, to the Arab revolutions and the marvellous movements of the masses in Spain, Greece, Brazil and Turkey; all of these are a clear symptom of the current crisis and the inability of capitalism to provide a future for the vast majority of workers and youth across the world.

But now even the serious bourgeoisie are worried; not only because of the social turmoil caused by the crisis, which increasingly threatens their own privileged position within this system, but also because of evidence of a longer term inability for this same system to provide growth, jobs, and a decent standard of living – i.e. to develop the productive forces.

“Innovation pessimism”

An increasing number of mainstream commentators are now seriously questioning whether our ability to innovate – to develop science and new technologies – has fundamentally slowed down. Exemplifying this “innovation pessimism” was a leading article in The Economist (January 12th 2013) with the title “Has the ideas machine broken down?”, which states that, “a small but growing group of economists reckon the economic impact of the innovations of today may pale in comparison with those of the past.”

Such commentators claim that behind the obviously apparent and relatively recent “Great Recession” lies a less obvious long-term decline in the contribution made by technological progress and innovation towards economic growth – a so-called “Great Stagnation”. Indeed, evidence given in The Economist’s article shows that there has been a slowdown in the growth of productivity – i.e. the economic and productive output per person – that precedes the crisis and goes back several decades to the 1970s.

In their article, The Economist explains how economic growth can primarily be broken down into two categories: extensive and intensive. Extensive growth refers to the increase in output due to an increase in the factors of production; for example, by expanding the workforce – as has happened in many periods in the history of capitalism through the growth in the population, the use of migrant labour, the introduction of women into the workforce, or in modern times by increasing the retirement age – and increasing the amount of capital (e.g. machinery and factories) in proportion to this expanded workforce.

Intensive growth, by contrast, is the increase in output for a given size of the workforce. This reflects an increase in the productivity or intensity of labour – what Marx refers to as an increase in “relative surplus value” in terms of capitalism. The difference between “extensive” and “intensive” growth, therefore, is a difference of quantity and quality: extensive growth merely increases the quantity of the productive forces; intensive growth increases their quality.

Capitalism and growth

Marx explained how capitalism, in its early, progressive phase, gave a huge impetus to the development of the productive forces. Competition between different capitalists, in the pursuit of increased profits and greater markets, led not only to extensive growth – through accumulation and reproduction – but also to intensive growth, as the capitalists reinvested profits into the development of new machinery, technologies, and productive techniques. Those who could not keep up with the application of the latest technology and technique produced at a higher cost and were undercut by their competitors. The weak went under and were consumed by the strong, leading over time to a concentration and centralisation of capital in the hands of the few, as Marx describes in Capital:

“Hand in hand with this centralisation, or this expropriation of many capitalists by few, other developments take place on an ever-increasing scale, such as the growth of the co-operative form of the labour process, the conscious technical application of science, the planned exploitation of the soil, the transformation of the means of labour into forms in which they can only be used in common, the economising of all means of production by their use as the means of production of combined, socialise labour, the entanglement of all peoples in the net of the world market, and, with this, the growth of the international character of the capitalist regime.” (Capital, Volume One, Chapter 25, p929, Penguin Classics edition)

This then was the historical role of capitalism: to concentrate the previously scattered means of production into giant monopolistic firms; to establish an interconnected capitalist world market; to develop the means of production and thus lay the material basis for socialism – that is, the creation of a society not of scarcity, but of superabundance.

The laws of capitalism, in its heyday, were a powerful force in the development of innovation and industry. Marx and Engels themselves spoke in the Communist Manifesto of how capitalism “has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals.” The invention and application of the steam engine was, without exaggeration, an “industrial revolution”.

Many other qualitative leaps have followed under capitalism, from the invention of trains and telegrams, to the application and generation of electricity. But by the early 20th century, such leaps were few and far between. By this stage, the productive forces had far outgrown the market; the imperialist nations could expand no further without re-dividing up the world. Thus began a period of two world wars, with the Great Depression in-between.

The impetus of war

It is notable that the main development in technology and innovation from this period came not from capitalism and the competition of the free market, but from the state control over industry and the planning that capitalist nations were forced to adopt for the purposes of war. Nationalisation and public control of the key sectors of research and development were introduced in the advanced capitalist countries during the Second World War in order to innovate and develop new technologies. Aircraft, plastics, synthetic rubber, medicines, telecommunications, nuclear energy, etc., all of these technologies and many more were either invented or given an enormous boost due to WW2, alongside a general development of industry and the introduction of new production techniques for the purpose of the war.

This rapid period of development in terms of the research and application of new technologies and techniques, along with the destruction caused during the war itself and the expansion of world trade that followed, in turn led to the post-war economic boom – the so-called “Golden Age” of capitalism. Suddenly, whole nations, whose industrial base had been flattened during the war, were given Marshall Aid from the USA – which came out of the war greatly strengthened with its industry and economy almost untouched – and were able to import and implement the most modern industrial methods, providing a great leap forward in terms of productivity.

This, the tremendous qualitative development of the productive forces as a result of state control and planning during the war, and not the Keynesian policies of the reformists, was the real secret behind the post-war boom. Since the war, the military-industrial complex – both in terms of the war machine and the Apollo programme – continued to play an important role; today, total global military spending (at almost $1.8trn), outstripping estimates for total spending on R&D (between $1.0-1.4trn). This is not to mention the important research that takes place in universities – publically funded and nominally not for profit, although big business is increasingly dictating research agendas.

During the same interwar period, whilst capitalism was experiencing its greatest crisis in history, the planned economy in the Soviet Union, despite all the deformations introduced by the cancerous fetter of the Stalinist bureaucracy, was developing at lightning speed, going from being a backward, mainly peasant-based economy before the 1917 Revolution to putting the first man in space 44 years later.

What this all demonstrates is that, for almost a century now, the motor force of innovation has not been capitalist competition, but planning and public ownership. Capitalism, far from developing science and technology, has become an enormous fetter on the development of the productive forces. Private ownership over the means of production has become a gigantic barrier to innovation and ingenuity and must be replaced by a plan of production under the democratic control of society itself.

Stagnation and decline

At its post-war peak, economic output per person – a measure of productivity – in America was growing at over 3% per year. In the 1970s, with the collapse of the boom, this figure dropped to around 2%, and today this figure is under 1%. All of this slowdown in productivity has occurred despite tremendous technological advances, most notably the introduction of personal computers, mobile phones, and the internet. Hence, the talk of “innovation pessimism” by the bourgeois commentators today.

The Economist importantly notes that there is a difference between innovation and technology: innovation is the actual development of science and “know-how”; technology is the application of this “know-how” in terms of production and society. It is the latter that matters when it comes to actual increases in productivity and economic growth. Today there is innovation everywhere, but the actual impact of this on society is not dramatic.

As The Economist points out, whilst great advances have been made in some areas, in many respects society is still the same today as it was 40 years ago: domestic lifestyles are largely unchanged; we still travel around on the same trains, planes, and automobiles; and average life expectancy in the US has risen by less than five years since 1980, compared to a rise of 25 years between the turn of the 20th Century and 1980. There are more people today involved in research and development than ever before, and yet it is estimated that technology and innovation contribute seven times less towards growth than in 1950.

Again, it is the existence of private ownership, not only over the material means of production, but also over the ideas and knowledge generated by society (i.e. patents and intellectual property), that is stifling the actual development and implementation of technology. Rather than co-operating and sharing knowledge to produce the best phone possible, companies such as Apple and Samsung instead embroil themselves in an endless series of legal cases over the infringement of various patents. Rather than investing in education and applying the most modern techniques in the advanced industrial countries, the capitalists instead take advantage of the abundant supply of cheap labour in Asia and elsewhere; or simply choose to speculate parasitically in the financial markets. And rather than employing the most advanced production techniques, such as 3D printers, which have the potential to provide another industrial revolution, such technologies are held back for fear of exacerbating the already existing excess capacity – i.e. overproduction – in the system and generating yet more unemployment by replacing workers with machines.

Why invest in real production when there is already excess capacity and when you could make billions on the stock exchange or in various financial derivatives instead? Why spend on R&D in Britain and the USA when you could simply employ hundreds of low-paid workers in China? It should be noted that for many years, growth in China was largely of the extensive kind, fuelled by a move from agriculture to industry, with millions migrating from the countryside to the city, and by the importing of modern production techniques from abroad via joint-ventures between Chinese state-owned enterprises and multinational firms. Nowadays, there has been genuine innovation in China (think of companies such as Huawei and Lenovo) and investment in greater automation as Chinese workers become increasingly militant and more organised, demanding and winning wage increases and better conditions.

The increasingly parasitic nature of capitalism and the use of off-shoring in terms of industry have not helped innovation and technology. On the one hand, they have created greater inequality everywhere, with profits accumulating in the hands of the big multinationals at one end and with an ever more impoverished working class at the other. But on the other, they have also helped to create the largest and most interconnected working class that has ever existed.

“Race against the machine”

Alongside “innovation pessimism”, there exists amongst other bourgeois commentators the opposite tendency: the fear that rapid technological progress in the modern age could potentially lead to mass unemployment, with machines replacing workers in a vast range of jobs in terms of both manual and mental labour, particularly with the advent of advanced computing techniques, such as machine learning and voice recognition. As The Economist (25th May 2013) comments:

“There is a good chance that technology may destroy more jobs than it creates. There is an even greater chance that it will continue to widen inequalities. Technology is creating ever more markets in which innovators, investors and consumers—not workers—get the lion’s share of the gains.”

It is not, as many on the Right would have us believe, foreigners or immigrants who are taking our jobs – it is the machines!

Such fears of mass unemployment due to technological progress, however, are nothing new, as economist Michael Stewart discusses back in 1985:

“In the 1830s the hand-loom weavers of Lancashire were put out of business by the new power looms. In the same way, in the 1980s, semi-skilled car workers are being put out of business by robots...

“Because the scope for the displace of labour by the chip [computer micro-chip] is so vast, and the pace of change so great, it is difficult to see what kind of jobs large numbers of semi-skilled and unskilled workers are going to be needed to do.” (Keynes and After, Michael Stewart)

Meanwhile, John Maynard Keynes, the famous British economist, remarked in an essay in 1930 that:

“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” (Economic Possibilities for Our Grandchildren, John Maynard Keynes)

Today, this tendency has been expressed within recent books such as “Race Against the Machine” by two academics from MIT university’s Sloan Business School. The authors, Erik Brynjolfsson and Andrew McAfee state:

“The stagnationists [those who argue that innovation and productivity has been stagnating for several decades] correctly point out that median income and other important measures of American economic health stopped growing robustly some time ago, but we disagree with them about why this has happened. They think it’s because the pace of technological innovation has slowed down. We think it’s because the pace has sped up so much that it’s left a lot of people behind. Many workers, in short, are losing the race against the machine...

“It may seem paradoxical that faster progress can hurt wages and jobs for millions of people, but we argue that’s what’s been happening...

“How can so much value creation and so much economic misfortune coexist? How can technologies accelerate while incomes stagnate?” (Race Against the Machine, Brynjolfsson and McAfee)

In other words, improved technology and increased productivity, rather than raising living standards, have actually lowered them for the vast majority, creating stagnant wages and permanent structural unemployment. As Brynjolfsson and McAfee point out:

“There have been trillions of dollars of wealth created in recent decades [in the US economy], but most of it went to a relatively small share of the population...over 100% of all the wealth increase in America between 1983 and 2009 accrued to the top 20% of households. The other four-fifths of the population saw a net decrease in wealth over nearly 30 years...

“There has been no stagnation in technological progress or aggregate wealth creation as is sometimes claimed. Instead, the stagnation of median incomes primarily reflects a fundamental change in how the economy apportions income and wealth. The median worker is losing the race against the machine.”

The authors of “Race Against the Machine”, however, are only half correct when arguing that technological development is responsible for unemployment and inequality. The problem is not technology, but the application of technology under capitalism.

Artificial surplus population

Marx long ago explained how the laws of capitalism – the anarchic competition between capitalists for greater profits – force each capitalist to try and reduce their costs, in order to sell at a lower price, by increasing productivity through the replacement of labour with machinery. This in turn, creates an “artificial surplus population” of the unemployed:

“The fall in prices and the competitive struggle, on the other hand, impel each capitalist to reduce the individual value of his total product below its general value by employing new machinery, new and improved methods of labour and new forms of combination. That is, they impel him to raise the productivity of a given quantity of labour, to reduce the proportion of variable capital [wages] to constant [machinery, tools, equipment, raw materials, etc.] and thereby to dismiss workers, in short to create an artificial surplus population...

“The same causes that have raised the productivity of labour, increase the mass of commodity products, extended markets, accelerated the accumulation of capital, in terms of both mass and value, and lowered the rate of profit, these same causes have produced, and continue constantly to produce, a relative surplus population, a surplus population of workers who are not employed by this excess capital on account of the low level of exploitation of labour at which they would have to be employed, or at least on account of the low rate of profit they would yield at the given rate of exploitation.” (Capital, Volume Three, Chapter 15, p363-364, Penguin Classics edition)

And again:

“It is capitalist accumulation itself that constantly produces, and produces indeed in direct relation with its own energy and extent a relatively redundant working population, i.e. a population which is superfluous to capital’s average requirements for its own valorisation, and is therefore a surplus population” (Capital, Volume One, Chapter 25, p782, Penguin Classics edition)

It is, therefore, not technology itself, but the use of technology under capitalism, implemented in an anarchic and unplanned way, which leads to mass unemployment, and which in turn places pressure on those still in work to accept lower wages, as competition for the remaining jobs increases.

Alongside the creation of an “artificial surplus population”, therefore, there exists also a super-exploitation of those remaining in work, again in the name of increasing profits for the capitalists. Thus arises the contradiction in which mass unemployment can sit side-by-side with millions who must work 50-60 hours per week or take multiple jobs just in order to scrape by:

“The over-work of the employed part of the working class swells the ranks of its reserve, while, conversely the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital. The condemnation of one part of the working class to enforced idleness by the over-work of the other part, and vice versa, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the progress of social accumulation.” (ibid, p789-790)

The existence of such a contradiction emphasises the fact that such a surplus population is entirely “artificial”. Those who are unemployed are not “surplus” to the needs of society, but merely “surplus” to the needs of capital. Capitalism is unable to use the human resources available, and instead consigns millions to forced idleness. Big business refuses to invest and factories, shops, and offices lie empty, all because of the already existing excess capacity – i.e. overproduction. The productive forces outgrow the “effective demand” of the market; commodities cannot be sold at a profit, or even sold at all; the economy grinds to a halt, not for any lack of “needs” in society, but simply because there is no profit to be made for the capitalists.

In addition, capitalism cannot even use the knowledge and technology that society has discovered and invented over millennia of history: innovation is not realised in any practical application because of the private ownership over ideas themselves, whilst new technologies are not introduced for fear of the further excess capacity, unemployment, and fall in demand that they would generate.

Under capitalism, the individual capitalist introduces technology and improves productivity in order to increase their own individual profit, without any regard for the living standards of workers or the needs of society. Hence the fear of bourgeois commentators, such as the authors of “Race Against the Machine”, that it is technology that is responsible for unemployment and inequality.

Under socialism, the anarchy of competition and the market would be replaced by a rational plan of production, allowing technology to be introduced, and productivity to be raised. Man and the machine could co-exist in harmony rather than in competition. Rather than generating the contradiction of unemployment alongside extreme toil, work could be shared out equally and the hours of the working day could be reduced for all, with further investment and improvement leading to an ever increasing amount of leisure time.

We see, once again, that it is not technology that is the source of social ills, but the capitalist system itself, and the enormous barrier to progress that this system imposes due to private ownership and production for profit.

Two sides of the same coin

But how can these two separate tendencies amongst bourgeois economists and commentators exist side-by-side? How can there be both too much innovation and technology, and yet apparently also too little?

This contradiction between “innovation pessimism” and the “race against the machine” is a reflection of the contradictions of capitalism itself: the barrier of private ownership; the tendency for the productive forces to outgrow the market; and the juxtaposition of extreme planning of production within firms alongside anarchy between firms.

The paradox of both too much and too little innovation at the same time simply expresses the dialectical laws of capitalism – laws based on the “rational” pursuit of profit by the individual capitalist, which in turn leads to an outcome that is wholly irrational for the capitalist class as a whole.

The individual capitalists invest in research and technology to improve their company’s productivity and undercut their rivals, reducing wages and replacing workers with machinery in the process. But each capitalist is pursuing the same “rational” aim, and in doing so the capitalist class as a whole cuts away at the very market that it is trying to sell to. With commodities unable to be sold, the crisis of overproduction reveals itself and production stops. The individual capitalist benefits, in the short term, from technological innovation; but the capitalist class as a whole ends up generating unemployment and crisis.

With a glut of excess capacity in the system and no effective demand for further goods and services, there is no incentive for any capitalist to invest in the development and implementation of new technologies. Innovation and productivity, in turn, therefore slow down also. Capitalism, in other words, cuts away at the very branch it is sitting on: competition drives investment; investment creates unemployment; and unemployment leads to a vicious cycle of no demand, no investment, and further unemployment.

Capitalism, whilst creating mass unemployment on the one hand, is unable to create the conditions for innovation on the other. Innovation is not an exogenous manna from heaven; it does not simply fall from the sky. Innovation requires certain material conditions, above all, the ability for the system to be able to divert and dedicate labour towards science, research, and development.

In this respect, we can see how the crisis forces capitalism to eat away at the very source of its own growth. For example, across the advanced capitalist countries, spending on higher education is being slashed and students are being asked to take on a tremendous burden of debt, all because of the crisis, which has forced governments to cut public expenditure. Meanwhile, these same governments are having to cut military “defence” budgets, another traditional source of innovation under capitalism.

In addition, the application of technology also requires certain material conditions in terms of the socio-economic system present and the ability of new technology to meet the interests of the ruling class in a given system. For example, the concept of steam power was known to the ancient Greeks, and yet this potentially revolutionary technology was not implemented since the economy was based on the labour of the abundant supply of cheap slaves. Labour-saving machinery was, therefore, of little use. Similarly, there was little incentive to develop technology under feudalism, a system based on the labour of the serfs who were tied to the land of their lords.

It is only with capitalism, a system in which competition and the profit motive provides an incentive to invest in new machinery and technology, that we see the Industrial Revolution and the development and application of steam power on a mass scale. Suddenly, society is given an enormous boost and the productive forces are rapidly developed as labour-saving technology is discovered and used.

But now these same forces that were once progressive have turned into their opposite. What incentive is there for the capitalists to invest in labour-saving technology when there is an abundance of cheap labour across the globe? Why develop and apply technology to increase productivity when there is already excess capacity and piles of unsold goods? Why should private firms spend on research and development when they can piggy-back on the successes of publically funded research?

Far from being an “incentive”, therefore, competition and the profit motive – arising due to the private ownership of production – have become an enormous barrier to the development of science and technology. The need to transform society and overthrow the rotting social relations of capitalism has never been more evident.

Creative destruction

We see, therefore, that “innovation pessimism” and the “race against the machine” are two sides of the same coin; a dialectical unity of opposites that reflect the contradictory, anarchic, and irrational nature of capitalism – a system in which progress and development of the productive forces can only occur in an extremely chaotic and destructive way.

Remarkably, the capitalists do not deny the destructiveness of their system – rather they revel in it, coining phrases such as “creative destruction” to make the boom-and-slump of capitalism seem not just necessary, but desirable. According to such theories, crises are needed to rid society of old industries and obsolete jobs, which must first be destroyed before new-and-improved – i.e. more efficient and productive – industries and technologies can be created.

In this respect, the ruling class – and in particular the monetarist, neo-liberal wing of the capitalists – consistently pushes for “supply-side” measures, e.g. the abolition of trade unions, the elimination of the minimum wage, “labour market flexibility”, etc. According to such monetarist theory, these measures are required to ensure the free movement of labour and encourage workers to retrain in search of more productive jobs. The truth, however, is that “labour market flexibility” is simply a euphemism for “exploitation flexibility” and an excuse for the mass unemployment that capitalism creates.

Importantly, the preachers of such dogma should check their theories against reality! One can see plenty of destruction from the “supply-side” policies of Thatcher, Reagan, and the IMF, etc., but where is the creation? And where destruction has paved the way for growth, as discussed previously in terms of WWII and the subsequent post-war boom, the creation of new, more productive technologies was not led by the private sector, but by the state, which took control over the main levers of scientific research and development.

The so-called “creative destruction” of Thatcherism in Britain has destroyed industry and unbalanced the economy in favour of a reliance on speculation, financial gambling, and credit-fuelled growth; it has destroyed vital skills, but provided no training in order to help people develop any new skills, leaving millions without any hope of a job. As Marx says:

“Capital demand more youthful workers, fewer adults. This contradiction is no more glaring than the other contradiction, namely that a shortage of ‘hands’ is complained of, while, at the same time, many thousands are out of work, because the division of labour chains them to a particular branch of industry.” (ibid, p795)

Today, such complaints are more common than ever, with the spokesmen of industry and their bourgeois mouthpieces constantly talking of the need for more engineers, more scientists, more computer programmers, etc. But what do these same ladies and gentlemen do about such a shortage? Retrain those who they have previously made unemployed? Provide more money to higher education? No – the complete opposite! Unemployment increases; educated graduates stack shelves; and those looking for a future are denied an education due to larger cuts and higher fees.

Capitalism, due to its anarchic nature, based on competition and the individual pursuit of profit, is inherently unable to introduce new technologies and innovative methods except in an unplanned, chaotic, and destructive way, in which new conditions of production and life are imposed upon society, as if by a force from above. Under socialism, a system based on a rational and democratic plan of production, society can make a harmonious and smooth transition to new technologies and techniques, with lifelong education and training available to everyone, and with the latest labour-saving methods used to create not forced idleness, but voluntary leisure.

Not liberating, but enslaving

Marxists are not against technological progress; we are not luddites who believe in the “lump of labour” fallacy – i.e. that there is a given amount of work in society and that the application of labour-saving technology must necessarily result in unemployment. Marxists are fully in favour of innovation and technology – in fact, we are the most consistent and ardent supporters of new technologies, which are vital for the development of the productive forces and thus of society in general.

The problem is that under capitalism, such technological progress is riddled with contradictions. The result is that the vast majority are alienated from the fruits of society’s innovation. Technology, far from liberating us, is used to enslave us. Mass unemployment exists alongside those working 50-60 hours per week; meanwhile, the rich get even richer. Inequality widens, with a greater accumulation of profits at one end and increasing misery and toil at the other:

“Within the capitalist system all methods for raising the social productivity of labour are put into effect at the cost of the individual worker; all means for the development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers; they distort the worker into a fragment of a man; they degrade him to the level of an appendage of a machine, they destroy the actual contact of his labour by turning it into a torment; they alienate from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power; they deform the conditions under which he works, subject him during the labour process to a despotism the more hateful for its meanness; they transform his life-time into working-time, and drag his wife and child beneath the wheels of the juggernaut of capital. But all methods for the production of surplus-value are at the same time methods of accumulation, and every extension of accumulation becomes, conversely, a means for the development of those methods. It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse. Finally, the law which always holds the relative surplus population or industrial reserve army in equilibrium with the extent and energy of accumulation rivets the worker to capital more firmly than the wedges of Hephaestus held Prometheus to the rock. It makes an accumulation of misery a necessary condition, corresponding to the accumulation of wealth. Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalisation and moral degradation at the opposite pole, i.e. on the side of the class that produces its own product as capital.” (ibid, p799)

This rising inequality is aptly demonstrated by the graph below, which shows the change in household income and GDP (economic output) per person for the USA, with 1975 as the baseline reference year.

graph a aug2013Click to enlarge

This figure shows the enormous divergence between the wealth created in society, due to increasing productivity, and the benefit (or lack of benefit) that ordinary working families gain from this. We see that whilst output per person almost doubled in the three decades between 1975 and 2005, household income remained fairly stagnant. The authors of “Race Against the Machine” highlight this growing inequality also, stating that, “corporate profits as a share of GDP are at 50-year highs. Meanwhile, compensation to labour in all forms, including wages and benefits, is at a 50-year low.”

In the passage above from Capital, Marx refers to the “industrial reserve army” – the unemployed workers whose ranks swell and subside with the boom-slump cycle of capitalism. But with the Great Depression of the 1930s and today’s even greater crisis, we see a new phenomenon: no longer that of a reserve army of labour, but permanent mass unemployment due to the organic crisis of capitalism.

In particular, young people today have suffered from the crisis. The Economist (27th April 2013) estimates that, “Around the world almost 300m 15- to 24-year-olds are not working... almost a quarter of the planet’s youth”, with advanced capitalist countries such as Spain and Greece seeing youth unemployment rates of over 60%.

The Economist recognises the crisis as being a factor in this high youth unemployment, but again points to “supply-side problems”, complaining about “the mismatch between the skills that young people offer and the ones that employers need”. But the question must be asked: who is providing training? Which governments are increasing the funding for education? And what problems are there in terms of “labour flexibility”? In Britain, where the youth unemployment rate is over 20%, more than double the national average across all age groups, real wages have been stagnant at best and even business leaders state that the country has one of the most flexible labour markets.

The reality is that capitalism has nothing to offer the youth of today except a future, as Marx said, of “misery, the torment of labour, slavery, ignorance, brutalisation and moral degradation”. A system that cannot provide a future to young people is a system that has outlived itself; a system that needs to be overthrown.

Ebbs and flows

Innovation and technological progress are not a linear march onwards and upwards. Like all developments in history, the development of the productive forces – of science, industry, and technique – moves in ebbs and flows.

In certain periods, technological progress and economic growth can feedback upon each other to create a virtuous circle of development: economic growth fuels the demand for labour, absorbing the “surplus population”; the demand for labour strengthens the working class and their demands for better wages; the increased cost of wages creates a greater incentive for labour-saving techniques; and new machinery boosts productivity and thus economic growth also.

But as explained earlier, these same forces that propel the economy forward in one period can turn into their opposite and cause the virtuous circle to become a vicious one: investment in labour-saving technologies creates unemployment, putting downward pressure on wages; effective demand is cut; profit rates decline; the system, driving with pedal-to-the-metal, hurtles itself over a cliff. Thus growth and progress under capitalism can only develop in an anarchic and contradictory way.

In periods of ebb in history, it is typical for pessimism of all kinds to be expressed in the ideas expressed by the ruling class. In such times, the whole concept of progress in general is denied, and the possibility of further development is refuted on the grounds of this-or-that insurmountable barrier.

The “innovation pessimism” of certain bourgeois economists is a reflection of this: rather than seeing the slowdown in innovation as a temporary phenomenon arising from the limits of the current social relations – i.e. private ownership of the means of production – society’s lack of technological progress is painted as the inevitable result of having reached a certain level of development, of having “picked all the low-hanging fruit”. But this innovation slowdown is only “inevitable” within the confines of capitalism, which, having reached a certain level in the development of the productive forces, is no longer able to utilise these very same forces that it has created.

The current pessimism of this tendency within the bourgeoisie is idealistic, imagining that innovation simply falls from the sky and failing to see the material, economic basis required for technological progress. The current lack of progress, like all ebbs in history, reflects the fact that the forces of production have come into contradiction with the relations of production – in other words, the ability for society to produce has come into conflict with the laws of production itself, i.e. of private ownership and production for profit.

But like all previous ebbs, the barriers to further development of the productive forces can be removed and will be removed. This is the meaning of social revolution. And, as in all previous epochs, such a revolution will be accompanied by great advances, not just in science and technology, but in all areas of life – in ideas, art, and culture – which are currently held back by the absolute fetter of capitalism.

Far from having “picked all the low hanging fruit”, there is a whole world of possibilities and potential awaiting humanity. In this sense, socialism will not be the end of history, but merely the beginning. One only has to think of all the potential Einsteins, Picassos, and Beethovens, who are currently forced to a lifetime of drudgery in factories and fields, to imagine the potential for science, art, and culture under socialism, a society in which billions would, for the first time, be able to develop and apply their individual creativities to the maximum. As Engels explains:

“With the seizing of the means of production by society, production of commodities is done away with, and, simultaneously, the mastery of the product over the producer. Anarchy in social production is replaced by systematic, definite organisation. The struggle for individual existence disappears. Then, for the first time, man, in a certain sense, is finally marked off from the rest of the animal kingdom, and emerges from mere animal conditions of existence into really human ones. The whole sphere of the conditions of life which environ man, and which have hitherto ruled man, now comes under the dominion and control of man, who for the first time becomes the real, conscious lord of nature, because he has now become master of his own social organisation. The laws of his own social action, hitherto standing face-to-face with man as laws of Nature foreign to, and dominating him, will then be used with full understanding, and so mastered by him. Man's own social organization, hitherto confronting him as a necessity imposed by Nature and history, now becomes the result of his own free action. The extraneous objective forces that have, hitherto, governed history, pass under the control of man himself. Only from that time will man himself, more and more consciously, make his own history — only from that time will the social causes set in movement by him have, in the main and in a constantly growing measure, the results intended by him. It is the ascent of man from the kingdom of necessity to the kingdom of freedom.” (Socialism: Utopian and Scientific, Engels)

A society of superabundance

Marxists are fully in support of developing technology: replacing labour with machinery; producing more wealth for society with less work; and reducing the hours of the working day. In the science fiction of the past – influenced by the rise of automation in production at the beginning of the 20th Century – writers imagined a future utopia in which the biggest problem facing humanity would be what to do with all our leisure time whilst machines did all the work!

Such a society has been made entirely possible by capitalism, which played a most revolutionary and progressive role in the past in terms of its development of the productive forces. But now capitalism is unable to use these productive forces and has become an absolute fetter on further progress. Rather than realising the dream of a life of leisure for all, millions are consigned to forced idleness by a system that cannot create jobs, whilst millions of others work round the clock in order to feed themselves and their families.

What’s more, those increases in living standards that have been seen under capitalism – of better incomes and increased leisure time – have not been benevolently granted by the ruling class, but have been struggled for by the masses. The welfare state and the minimum wage; the weekend and the eight-hour working day; healthcare and education: all of these were fought for by the working class, and are now under attack from the ruling class due to the crisis of their system.

The potential for a society of superabundance is more real now than ever. One only has to look at the official economic statistics of the bourgeoisie to see what would be possible with a socialist plan of production. The figure below shows “capacity utilisation” in Britain – that is, the percentage of the productive forces that are utilised at any time. It can be seen that even in the best of times over the past five years only 76% of our productive capability was used. In the worst periods, this falls to 50%. In other words, capitalism is only able to produce half as much as it could!

thumb graph b aug2013Capacity utilisation in Britain - click to enlarge

To put this into perspective, the UK’s GDP is currently around £1.5 trillion. Assuming this represents, on average, only around 60% capacity utilisation, this means that under a socialist plan of production, where society’s ability to use the productive forces is not held back by the need to only produce for profit, and where now 100% capacity utilisation would be possible, we could overnight increase the national economic output to £2.5 trillion.

What could we do with an extra £1 trillion (i.e. £1000 billion)? To put this in context, £1000 billion is double the combined amount that the UK government spends on pensions (£130bn), healthcare (£121bn), education (£87bn), welfare (£114bn), transport (£20bn), and other public services (£47bn). In other words, we could double pensions for the elderly, double spending on hospitals and schools, and double the budget for infrastructure, etc., overnight by adopting a rational plan of production and utilising society’s full productive capabilities.

Suddenly the so-called “problem” of old-age would disappear. No longer would the elderly be painted as a burden on society. Proper care and a decent pension could be provided for all. A massive programme of construction could be implemented immediately to build council homes and improve the country’s creaking infrastructure. Schools and hospitals, rather than being closed and privatised, could be built and renovated. And green energy could be rolled out across the country to provide a clean environment for future generations.

The figures above in fact underestimate the actual potential, as in reality the unemployed would now be able to find work; the welfare bill would thus plummet, and all these extra working hands would create yet more wealth for society. And with a plan of production in place, the surplus in society could be ploughed back into further production; for example, the £800bn worth of accumulated cash that currently sits in the bank accounts of big business in Britain – wealth that is idle due to the “excess capacity” that exists under capitalism – could now be put to use and invested in new industry and infrastructure.

To put these figures in a different context, by increasing the capacity utilisation from 60% to 100%, society could produce the same amount of wealth using less than two-thirds the amount of labour. This means that the working day could be slashed from (a nominal length of) eight hours to less than five hours, creating an enormous amount of leisure time for all. In addition, under a rational plan of production, work would be shared out equally, eliminating unemployment and reducing the working day yet further. Meanwhile, with further investment in research, technology, and productivity, further labour-saving methods could be applied, reducing the hours of the working day even further still.

For the first time, the vast majority of the population would have the time, not only to develop themselves educationally and creatively, but also to actively participate politically and economically in the democratic running of society. Thus is laid the material basis for genuine democracy – the creation of free time; time that no longer must be spent on meeting the immediate demands of life.

Socialism, having done away with class society – i.e. the exploitation of a majority by a minority – would in time do away with the working class altogether by doing away with work itself. Such a future is no longer the mere dream of science fiction, but is a genuine possibility. The task facing us is to consciously fight for this future and make it a reality.

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