Capital & Class. - 1978. - Issue 4

EDITORIAL

With this issue of Capita! & Class, the CSE's new journal enters its second year of publication . The process of transition from the production and distribution of a Bulletin for subscribing members only to a subscription-based organisation whose journal is also available to the wider public, has more than doubled CSE membership . This expansion of membership is reflected by a growth in both local-based and subject-based working groups, and we are continuing to aim at a close relationship between journal and groups, each feeding off the other in order to produce both preliminary and tentative pieces, and more polished statements of position . The journal does not aim merely to offer finished articles to a consuming public ; we rather see the journal as produceroriented, organically linked to the development of the CSE as a whole . These concerns are reflected in the contents of this (larger than usual) issue . Makoto Itoh's piece gives a useful overview of recent developments in the world economy, and is related to the theoretical position he proposed in the Bulletin (February, 1975) . Kevin McDonnell's paper is a product of discussion in the Ideology Working Group, and somewhat revised from the form in which it was given at the 1977 Annual Conference . McDonnell considers the arguments surrounding the recent U .K . public expenditure cuts, using commodity fetishism as the integrative conceptual link between his empirical material and his theoretical analysis of the crisis . In a complementary piece, three CSE comrades provide some short remarks on the impact of the cuts themselves . Michael Ball's article attempts a theoretical response to work produced by the Housing Group . His focus is on the production of housing, and he considers the low productivity of the housing industry as a major constraint to capital's ability to increase relative surplusvalue, because of housing's importance as a component of the value of labour-power . The second half of Robin Murray's article

EDITORIAL

on rent, begun in Capital & Class 3, is printed in this issue, and concludes his critique of Neo-Ricardian positions on rent and his proposal for a general theory of modern landed property . All of these pieces attempt in differing ways to apply value theory to current problems, and none of them is uncontroversial . Indeed, theoretical developments in and applications and concretisations of the Marxist theory of value, and their corollaries for the theory of capital accumulation and crisis, are of critical concern . Consequently, these articles should provoke considerable disagreements, and we hope that the ensuing debates in the CSE will produce replies for future issues of Capital & Class . The understanding of Marx's own theoretical development has been aided considerably by the translation of the Grundrisse into english in 1973, and of Rosdolsky's commentary upon it in 1977 . Part of what is at'issue'is the specification of Marx's debt to Hegel, and relatedly Marx's methodology and epistemology . An understanding of this is fundamental to the comprehension of Marx's theory of value . To this end, we continue our Archive Section by publishing a new and revised translation of Marx's appendix to the first German edition of Capital, (previously published in English in 1976) . According to his letter to Engels of June 22, 1867, Marx here develops the value-form "as simply as possible and as schoolmasterly as possible" . He subsequently incorporated his treatment into the rewritten first chapter for the second edition of Capital . We see the piece as particularly useful to the many Capital Reading Groups which are being established through the CSE for the valuable light it throws both on the development of Marx's theory of value and on the dialectical methodology which he employed . Also published in this issue is an article from Warsaw which analyses the Polish events of 1976 from an independent working class perspective . Finally, this issue establishes a Debates Section, with comments and criticisms on the articles by Clarke and by Holloway and Picciotto in Capital & Class 2 . We regard the development of this section as a major priority . We also hope to start a series of pedagogic notes and polemical articles on alternative working class strategies . The latter in particular will help to provide a focus for the CSE's Annual Conference, "The crisis of Capitalism and Working Class Strategies in the 1970s" which is advertised elsewhere in this issue .

CSE CONFERENCE 1978 The Crisis of Capitalism and Working Class Strategies in the 1970's Bradford July 14-17, 1978

Please note change of date Booking details in Newsletter or from : Teddy Brett, School of Social Science, University of Sussex, Brighton BN1 9QN Booking deadline :1 June `78

THE INFLATIONAL CRISIS OF WORLD CAPITALISM Makoto Itoh

I . THE INFLATIONAL CRISIS OF THE 1970s . Modern capitalism after World-War II was often viewed as a successful system able to avoid economic crises, and to maintain employment and incomegrowth through the effective operation of Keynesian policies . Such a view seemed adequate in the 1950s and '60s when the capitalist countries kept on a path of relatively sustained and stable economic growth . Of course, even in the U .S ., which was the leader of the post-war world economy, there were economic recessions, such as in 1953-54, 57-58, 60-61, and 69-70 . However, they did not become very deep and were soon overcome . Especially in the 1960s, the U .S . economy appeared to prove the success of Keynesian financial policy (called the "New Economics") under the Kennedy and Johnson administrations . A radical change occurred in the 1970s, when world capitalism has generally suffered a most serious economic crisis . Let us review the outline of its process in chronological order . The International Monetary Fund (I .M .F .) system, which had worked on the basis of the convertibility of dollars into gold, at least when requested by foreign public authorities, finally collapsed when Nixon entirely stopped this convertibility in August 1971 . Even though not a few people anticipated an immediate disturbance in the world economy, instead the business activities of major capitalist countries rose in 1972 and '73 . The system of floating exchange-rates was celebrated as successful in making Keynesian policy universally more elastic by removing the restrictions of the international balance of payments. But meanwhile, inflation within capitalist countries was accelerated through increases in their money supply consequent upon a rapid growth of international liquidity .( 11 At the same time, a sharp rise in prices began, especially in basic raw materials such as agricultural raw products, non-ferrous metals, rubber, and petroleum . The annual rate of increase of wholesale price indices of all major capitalist countries except West Germany was already exceeding 10% before the autumn of 1973 . A vicious inflation was making its appearance . After the petroleum price was quadrupled by OPEC in four months from October 1973, the rate of increase of wholesale price indices of capitalist countries (including West Germany) gained speed in 1974 . The increase of consumer



2

CAPITAL & CLASS

prices followed it, and reached an annual rate of more than 10% in these countries (except W .G .) . Under these circumstances, the economic activities of financecapitals could not avoid acute disturbances . After June 1974 when the Herrstadt Bank became insolvent in West Germany, various banks such as Hessenlandes Bank, Frankfurthandles Bank (in W .G .), Lloyds Bank International, London County Securities (in G .B .), Union-Bank (in Switzerland), Franklin National, and U .S . National Bank of San Diego (in U .S .) made a big loss and/or fell into similar difficulties . Stock-market indices of major countries fell sharply . Universal unrest spread over all money and capital markets . At the same time, financial policy was forced to tighten generally in order to check inflation . Thus, credit mechanisms became extremely stringent everywhere, pushing up interest rates . This very tight financial situation coupled with disturbed price relations increased the number of failures and the severe difficulties of business enterprises . The contraction of reproduction began to accelerate . The scale of production of countries within O .E .C .D . fell 13% between the end of 1973 and the autumn of 1975 . The unemployed of the six major capitalist countries reached 14 million even in the official data . The quantity of international trade was reduced by 10% in 1974-75 . World capitalism had clearly fallen into its biggest and longest economic crisis of the Post-War period ; a crisis which can be properly called inflational crisis . It is obvious that Keynesian policy had failed to achieve its aim to prevent or to avoid the increase of unemployment, the decrease of effective demand, and the vicious inflation of this period . Indeed, did it not rather worsen the situation? Hence a great loss of confidence in every capitalist government occurred regarding the operation of economic policy . This loss of confidence deepened the theoretical crisis of Neo-Classical Economics . Neo-Classical theory was not only unable to offer in practice effective means for preventing or mitigating the economic crisis, but was also found theoretically incapable of providing an analytical basis for understanding why such an inflational crisis should occur . The socalled Neo-Classical Synthesis was already losing its prop of micro-economic price and capital theory during the 1960s through the criticisms of Neo-Ricardians and Marxians . The recent discredit to another prop in the form of macro-Keynesian theory seems to dissolve any remaining basis of that shallow Synthesis . The main stream of modern economics is showing evidence of its narrow limitations, imposed by the weakness or rather absence of theories of value and crisis within it .

II . HOW TO APPLY MARX'S THEORY OF CRISIS . The position of Marxian Economics is quite different . Unlike the NeoClassical theory, it does not regard the capitalist system as given and eternal, nor does it attempt to supply political means to maintain the present system . It rather aims at a critical analysis of the inner contradictions and their development which are characteristic of past and present capitalism . Marx's theory of crisis in Capital can serve as a proper basis for such an analysis . However, Marx's theory of crisis in itself still remains incomplete, and



INFLATIONAL CRISIS

3

contains views not easily reconcilable, as I have discussed in another paper .(2) A correct understanding of the characteristics of modern capitalism and its recent crisis may not be attained, if the improper side of Marx's crisis theory is used, or if the basic theory is applied too directly without specifying the concrete conditions of recent world capitalism . For example, P . Baran & P . Sweezy's Monopoly Capital (1966) seems to have generalized the apparent success of U .S . spending policy in the 1950s and 60s, saying that the increasing economic surplus under monopoly capital can be absorbed by the sales-effort of giant corporations and especially by government civilian and military expenditures . Such an analysis leads to the conclusion that there is now only a slim prospect for revolutionary action by the proletariats of advanced capitalist countries, and that any expectation of world revolution must be situated with the resistance movements and revolutionary wars of the underdeveloped countries . The excess capital theory of crisis, which Sweezy once attempted to extract from Capital in Chapter 9 of his Theory of Capitalist Development (1942) is not at all utilized here . The excess commodity theory of the underconsumptionist type, which is not original to Capital, is applied to deduce the tendency of the surplus to rise under monopoly capital . As a result, a more fundamental difficulty of coping with the excess of capital itself, not merely of an economic surplus nor of commodity supply, cannot be studied in its concrete development . Especially because the seeming stability of U .S . capitalism in the 1960s is overgeneralized as a theoretical model of the monopoly capitalist system, the concrete, and therefore historically tentative preconditions which enabled the pressure toward the outbreak of over-accumulation of capital to be absorbed tend to be unduly overlooked . Thus, it is no wonder that Baran & Sweezy's Monopoly Capital is hardly applicable to the process of world capitalism in the 1970s . Another example of applying an inadequate side of Marx's theory of crisis are the works of D . Yaffe and P . Bullock .(3) They properly reject the excess commodity theory of crisis, but develop the excess capital theory directly from the law of the tendency of the rate of profit to fall, not relating the notion of overaccumulation of capital to rising wage rates . However, the law of the tendency of the rate of profit to fall due to the rising composition of capital does not in Itself prevent the process of capital accumulation . The increase of the volume of surplus value based on the production of relative surplus value and its conversion into capital can continue under the working of this law . Thus, Yaffe and Bullock's attempt to deduce the necessity of economic crisis from this law seems to show only an abstract need for capital to mitigate the decreasing pace of accumulation . As long as it is directly based on such a crisis theory, their analysis of modern capitalism tends to reduce all the concrete developments of world capitalism to an abstract result either of the law of the tendency of the rate of profit to fall or of the uncertain need to resist it . Therefore, historically specific preconditions, the inevitability and meaning of the Post-War Boom and its recent collapse tend to be left outside their main concerns . As I have stated before(4), Marx's theory of crisis must be completed as a theory of excess capital wherein the notion of overproduction of capital is in relation to the labouring population ; this to be done in close connection with Marx's theories of capital accumulation and the credit system . Applying this crisis



4

CAPITAL & CLASS

theory, a better analysis of the inflational crisis of recent capitalism will be attained . However, a basic theory of crisis at such a research level of basic principle should not be directly applied to the concrete analysis of recent capitalism . Nor must the latter be treated as if the former were the final aim . Uno's systematic division of levels of research in Marian Economics into Principle, Stages Theory, and Empirical Analysis is very relevant here .(51 In a study of recent capitalism at the level of Empirical 'Analysis, the concrete, historical situations of the world market and their dynamic changes should be taken into consideration, together with the study of theoretical notions at the more basic levels .

Ill . THE OVER-ACCUMULATION OF WORLD CAPITALISM. In our analysis of the recent inflational crisis from the point of view stated above, we must notice the following historical facts . Inflational policy by means of currency control originates in the highly nationalistic attempts to relieve the effect of the Great Depression of the 1930s by the segregation of foreign and domestic economic relations . Therefore, Keynesian inflational policy was originally most suitable to the U . S . economy which was the most self-reliant . All the other capitalist countries, as most radically shown in Nazi Germany, politically organized their foreign territories into blocs while tightening direct control of their domestic economies . However, after World War II, when the politico-military blocs were dissolved, the inflational policy of the U .S . could no longer as a political device give complete priority to the domestic economy . The U .S. government had now to mobilize its inflational financial expenditure, primarily in order to maintain and build the whole capitalist world as a "free" world bloc against various attacks from socialism . World War II itself already had had a complicated character including socialist and anti-socialist elements both in international and domestic relations. Hence the U .S . government successively spread a huge amount of dollar funds over the Post-War capitalist world, in the forms of aid programmes for European and Japanese capitalistic reconstruction, development aid for underdeveloped countries, and military expenditure to maintain military alliances and bases and further to carry out anti-socialist wars . For example, the sum total of U .S . aid, such as the Marshall Plan, during 1946-52 reached 35 .9 billion dollars, the foreign expenditure of the U .S . government even excluding military aid during 1952-60 was 41 .5 billion dollars, and the Vietnam war expenditure of the U .S . until 1975 amounted to 139 billion dollars . In contrast with the world capitalism of the 1920s where war debts and reparations formed heavy burdens, the economic reconstruction and growth of West European countries and Japan after World War II was clearly facilitated by such successive showers of dollar funds . Capitalist countries other than the U .S . could supplement their foreign exchange reserves rather easily, while operating Keynesian inflational economic policies, keeping fixed exchange ratios under the I .M .F . system with the dollar as the key international currency . The politico-military spending of dollar funds was also useful for U .S . finance-capital, which had enormously increased productive capacity during the War, to deal with its excess capital in international relations . As long as U .S .



INFLATIONAL CRIS15

5

finance-capital maintained its competitive export superiority, the spending of international dollars brought favourable repercussions on effective demand for U .S . exports . As for the effect of military spending on U .S . domestic employment, Sweezy calculates that at the end of 1970 the number of people in the military forces (3 .1 millions) and in the military industry (3 .0 millions) plus the indirect effect of their employment probably amounted to 22 .0 millions, and that if we add to it the unemployment of official statistics (7 .9 millions), the total number of people who might have been unemployed without the military spending reaches 25 .6% of the whole labouring population, a ratio above the highest unemployment ratio (24 .9%) reached during the Great Depression of the 1930s .(6) We must notice here that the seeming success of Keynesian policy was closely related to such anti-socialist military expenditures . However, even such an enormous supplement of effective demand through politico-military spending could not fundamentally remove those restrictions on new investments in industrial equipment imposed by the excess of fixed capital built up by U .S . finance capital during and after the war-time expansion . Thus, U .S . equipment investments have tended to stagnate since the end of the 1950s. A third large scale merger movement in U .S . history took place in the 1960s, reflecting such a stagnant tendency of industrial real investment . The movement reinforced the stagnation of equipment investment by stiffening the monopolistic character of U .S . finance-capital . In contrast, West European (in particular West German) and Japanese capitalism showed a rapid reconstruction and growth, continuing active equipment investment until the 1960s . In these areas, the industrial equipment damaged and superannuated during the War could easily be abandoned and renewed . New industrial technologies, together with new industries such as petro-chemicals or electronics, developed in the U .S . during and after (partly also before) the War, were imported continuously, increasing productive power . Besides, the burden of military expenditure was small in West Germany and Japan . Relatively cheap labour-power was available from agricultural areas In Japan and from nearby countries of the E .E .C . for West Germany . As long as these conditions held, West Germany and Japan maintained rapid economic growth . In such an asymmetrical process, the international hegemony of U .S . industry was obviously diminishing during the 1960s . The U .S . share of industrial exports went down from 28 .7% in 1957 to 18 .9% In 1970, when it was surpassed by that of West Germany. The Japanese share also doubled from 5 .5% in the same period . In addition, the U .S . economy saw the acceleration of inflation in the latter half of the 1960s, aggravated by the Vietnam War . Therefore, the surplus of U .S . International trade balances fell radically from 6.68 billion dollars in 1964 to 0.63 billion dollars in 1968, and reversed to become a loss in 1971 . At the same time, the U .S . lost large amounts of international balances due to government expenditure and the export of private U .S . capital . Hence, the supply of U .S . dollars under the I .M .F . system, promising convertibility of 35 dollars into one ounce of gold, was losing its former substantial basis in the form of the big surplus of U .S . and international trade balances . The International gold rush and the dollar crisis became serious at the end of the 1960s, and the I .M . F . system with the fixed exchange-ratios finally collapsed in 1971 . Thus, on the one hand, the international mechanism which enabled the



6

CAPITAL & CLASS

seeming success of Keynesian policy among advanced capitalist countries until the 1960s was not simply a universal welfare system to assure employment, but largely dependent on U .S . politico-military spending of dollars to counter socialism . On the other hand, the unequal development among the advanced capitalist countries through such dollar spending under the I .M .F . system made it more and more difficult to maintain that same international system which had served to cope with the excess capital of world capitalism . In this sense, the post-War international economic and monetary system until the 1960s basically included a contradictory motion towards self-destruction, despite its apparent stability .(71 The collapse of the I .M.F . system at the beginning of the 1970s symbolizes the breakdown of an apparently stable international mechanism of world capitalism . From that time on, under floating exchange-rates, a massive speculative outflow of U .S . funds to escape the devaluation of the dollar, together with the loose inflational policy of other capitalist countries aimed at adjusting exchange-rates as advantageously as possible for exports, very much accelerated inflation and caused a sharp speculative boom until 1973 . This seems to form in a sense the last speculative phase of prosperity, after the relatively prosperous accumulation of world capitalism in the 1960s had almost reached its limit . Underneath the process, however, there were still two more basic difficulties, along with the imbalance among the advanced capitalist countries stated above . One of them was the over-accumulation of capital in relation to labouring population within the advanced capitalist countries . Through the continuous economic growth in the 1960s, a relative shortage of labour-power was appearing towards the end of the period . Profit rates of the advanced capitalist countries began to be narrowed by rising wage rates . For example, the pressure of wages in the U .S . economy, which was aggravated by the direct and indirect absorption of labour-power for the Vietnam War along with stagnant productivity, has markedly increased unit labour costs and has decreased the capitalist share (as corporate profit) since 1966 .(8) Labour shortage began to be generalized even in Japan at the end of 1960s, continuously pushing up the real wage rate . Thus, a most important capitalist basis for continuous economic growth was already disappearing . Under the circumstances, the inflational policy could not be effective in suppressing the real wage rate . It turned out to cause a vicious inflation instead of real economic growth . The other basic difficulty was the universal over-accumulation of capital in advanced countries in relation to the supply of the primary products from underdeveloped countries . The underdeveloped countries had greatly increased their production and export of raw materials and foodstuffs, compared with their shortage during and just after the War . Their supply became relatively in excess in the 1950s, because, on the one hand, agricultural production in Western European countries had been restored under a protectionist policy, and on the other, substitute raw materials were widely developed by the petro-chemical industries . The terms of trade of the underdeveloped to the developed countries more and more turned for the worse until the end of the 19b0s . Unlike the industrial commodities produced by capitalist firms, most primary products are produced by various types of non-capitalist producer such as small peasants, who cannot elastically reduce their supply even under unfavourable market conditions . Small peasants often increase the production and the supply of farm products, even by



INFLATIONAL CRISIS

7

cutting down their own consumption, in order to secure necessary money income when the prices of their products are falling, and thus are forced, through commodity relations, to make their own position, as a whole, worse . In addition, productivity in underdeveloped countries tended to stagnate. Therefore, the unfavourable motion of the terms of trade to underdeveloped countries directly caused economic difficulties in these countries . A serious shortage of foreign currency prevented their governments from taking effective policy action to relieve these difficulties . The frequent occurrence of economic and political crises in the underdeveloped countries since the latter half of 1950s was inevitable . Already in the inter-war period, the agricultural problem, which appeared as a general oversupply of farm products, formed an Important focus of the world economy . It reappeared in the 1950s as the north and south problem, having the west and east problem . behind it . Even though the old colonies had obtained political independence, their economic situation could not easily improve, so long as they ' were being exploited through commodity relations . The stable economic growth of advanced capitalist countries in the 1960s, while on the one hand causing such economic difficulties in underdeveloped countries, utilized them as an essential premise, on the other . But, dialectically, the continuous economic growth of advanced countries in the 1960s worked also in ways destructive to this premise, by absorbing the excess supply of primary products . At the outset of the 1970s . the prices of these products began to rise sharply . The inelasticity of their supply compared with capitalist products now intensified the rise in their market prices . Industrial accumulation of finance-capital in advanced countries became overaccumulated in relation not only to their domestic labour-power but also to the supply of primary products from underdeveloped countries . OPEC, which had been said to be ineffective for the ten years since its start, was enabled in such circumstances to raise the price of crude oil every year since 1971, and became so successful as to be able to increase its price four times in the few months after the autumn of 1973 when the fourth Middle-East War broke out . Not only had all capitalist countries converted their main energy source from coal into petroleum during and after World War 11 but their industrial raw materials had also become highly dependent on the petro-chemical industries . Hence, a rapid rise in the petroleum price, together with the rising prices of various other primary products and labour-power, generally dealt a heavy blow to capitalist production in advanced countries, substantially squeezing the profit rate . The over-accumulation of world capitalism was just breaking out .

IV . THE BREAKDOWN OF THE RELATIVE STABILITY OF POST-WAR WORLD CAPITALISM The typical economic crises of the mid 19th century, from which the basic principle of capitalist crisis should be abstracted, occurred when British industrial capital became overaccumulated in relation to both the domestic labouring population and the foreign supply of agricultural products . As the cotton industry was a decisively leading sector, the relative shortage of cotton and a rise in its price along with a rise of wage-rates used to squeeze the profit rate of British



8

CAPITAL & CLASS

industrial capital in the last phase of prosperity, and also caused large-scale speculative trading on the basis of the expansion of the credit system, which in turn became inevitably tightened through the reduction of reserve funds in the banks . Thus, the difficulty of over-accumulation of capital developed into the basic raising of the prices of labour power and raw materials, the contrary downfall of the profit rate, and a rise in the interest rate . Then a sharp crisis had to occur, usually starting from a collapse of large-scale speculation in the wholesale trades . The over-accumulation of capital today, substantially very similar to the basic process of such a classic type of crisis, appeared at the beginning of the 1970s as an inevitable result of the economic growth of the 1960s in advanced countries . Its development overlapped the collapse of the international U .S . dollar spending mechanism in the form of the I .M .F . system, which had served for supporting the apparent success of Keynesian inflational policies among advanced countries in the 1960s . Under such circumstances, speculative trading in raw materials and related products on the basis of the over-accumulation of capital greatly increased . The money supply of capitalist countries, and therefore also the elasticity of credit expansion, were enormously expanded, no longer restricted by the fixed exchange-rates of the I .M .F . system ; rather their expansion was accentuated by mutual competition to float exchange rates in as favourable a way as possible for each nation's exports . Especially after the end of 1973, when the price of crude oil was pushed up, the inflation connected with speculation became universally vicious . In the classic type of crisis, excess-accumulation of industrial capital converted its inner difficulty into a shortage of loanable money capital, and thus caused a sharp destruction of reproduction in forms of both absolute scarcity of money and superabundance of commodities . In contrast, the disturbance of reproduction appeared this time in the utterly reverse forms of superabundance of currency and scarcity of commodity goods, for the inflational credit expansion still continued . Even though the industrial firms nominally gained high rates of profit, they were forced to reduce substantially their activity of production, as it became difficult to obtain means of production due to the run on goods caused by the rapid devaluation of currency . At the same time, labourers' real income, and hence their effective demand, began to be cut down since, in addition to the violent rise of consumer prices, work-hours and employment decreased . The tight-money policies, which were adopted and strengthened since the end of 1973 in order to curb the vicious inflation, also accelerated the reduction of effective demand from both production and consumption . The speculative trades, expecting the expansion of effective demand, were losing their substantial basis, and came in difficulties from the financial sides as well . The number of commercial and industrial firms, especially of middle and smaller size, that were either nearly insolvent or really bankrupted, increased in 1974 . As we have seen before, even bank failures began to spread over Western Europe and the U .S . in the summer of 1974, and all stock-exchange markets collapsed . A universal crisis of confidence appeared in the financial mechanisms of world capitalism . The economic activity of capitalist countries thereby deteriorated further in 1975, decreasing work-hours and employment yet more . Thus, the over-accumulation of world capitalism has clearly unfolded its inner difficulties into inflational crisis since the end of 1973 .



INFLATIONAL CRISIS

9

Nevertheless, the process of this inflational crisis lacks the full violence and decisiveness of the classic type of crisis or the great crisis of 1929 . lust as the process of over-accumulation of capital and the development of its difficulties were accelerated by inflational policies, the destruction of excess capitals in the economic crisis has been held back also by an inflational money supply . Even under the tight-money policy, necessary money of settlement has often been supplied to various firms as an emergency relief directly and indirectly from commercial and central banks . Government expenditure has also tended to be maintained at a high level ; the shortage of taxes being supplemented by borrowing money in various forms . There is no doubt that such inflational financial policies together with the large accumulated reserve funds of finance-capitals have prevented the economic crisis from taking the more drastic forms of chain reactions of insolvencies and sacrifice sales . However, the indecisiveness of the crisis by no means assures the smooth recovery of economic activity . On the contrary, it may delay the disposal of excess capital based on superabundant equipment for production, and make the successive depression chronic . We have such an historical example in the Great Depression of 1873 .96, which started just a hundred years ago with the British economy at its centre . The way out from that Great Depression was found in a new development of capitalism to form finance-capitals and imperialist foreign policies ; but fundamentally no similar way out nor new style of capitalist system is obtainable any more from our present capitalism . Of course, the business activities of capitalist countries can be more or less improved by shifting the economic difficulties both to the domestic labourers in the form of a reduction of real income and to the developing countries in the form of reduced prices paid for primary products . In fact, the U .S . economy, which realized the former shift most radically, and which had the advantage of least dependence on the imported crude oil among the advanced capitalist countries, was the first to stop its downward spiral, in the summer of 1975, and began to recover its business activities, if only very slowly, utilizing also the exchange-rates floating in a direction advantageous for its exports . Then Japan and West European countries followed it . However, this recovery cannot be a reconstruction of the stable economic growth mechanism of world capitalism of the 1960s . Even in the U .S ., private investment in plants and equipment has scarcely been activated . The superabundance of fixed capital in the form of idle capacity, which had been accumulated through the continuous economic growth prior to the beginning of the 1970s, now in turn prevents such basic investments . The same is true also of other capitalist countries . Under these circumstances, Keynesian devices are narrowly limited, on the one hand by fiscal crises of the states . and on the other by the risk of fuelling inflation again without substantial improvement in economic activity . The recovery of international trade also cannot be smooth . The newly deepening economic crisis in the developing countries of the south, except the oil producing countries, does not directly improve but rather tends to aggravate the economic situation of advanced countries in these present conditions . The recovery and improvement of real incomes of labourers in capitalist countries will now clearly be very difficult . The conflict between capitalists and labourers cannot but increase universally .



10

CAPITAL & CLASS

Keynesian policy can no longer in general be effective . Labour disputes may now depressively react upon the economic process of capitalist countries . Thus, the recent inflational crisis and the successive chronic depression clearly show the breakdown of the relative stability of Post-War world capitalism until the 1960s . They are certainly putting heavy burdens on the capitalist class . But the labour movement and the political party based on it are also facing in a sense more and more critical problems of how to overcome politically the severe economic situation . Sweezy substantially correcting his former conclusion in Monopoly Capital wrote in 1972, "We are presently entering a period in which the working class in the advanced capitalist countries will once again become revolutionary" after the past hundred years of non-revolutionary reformist period . "Up to now the working classes of the advanced capitalist countries have gotten off relatively easily, but henceforth it is probable to the point of near certainty that the burdens of the system's disintegration will fall even more heavily on their shoulders"(9) . I would like to acknowledge that the process of world capitalism is endorsing this revised perspective of Sweezy's . At the same time there is no doubt that the whole relevancy and the task of Marxian Economics in studying the historical limitation of the capitalist economy, systematically, on the basis of its principles, is growing decisively .

NOTES Makoto Itoh teaches Economics at the University of Tokyo, Japan . The reserves of gold and foreign currency held by six industrial countries, (i .e . U .S ., G .B ., France, Italy, West Germany, and Japan) increased from 48,381 mil . to 87,514 mil . dollars during the two years since July 1971 . A substantial part of such an increase was due to the speculative outflow of dollar funds from the U .S . in order to escape or rather to utilize the devaluation of the dollar . 2 M . Itoh, "The Formation of Marx's Theory of Crisis", B .C.S .E . vol . IV-l . (Feb . 1975 .) 3 David gaffe, "The Marxian Theory of Crisis, Capital and the State," B .C .S .E . Winter, 1972 . Paul Bullock and D . Yaffe, "Inflation, the Crisis and the PostWar Boom", Revolutionary Communist, 3/4, (Nov . 1975 .) 4 M . Itoh, op . cit . 5 See also T . Sekine, "Uno-Rison : A Japanese Contribution to Marxian Political Economy", in I .E .L . Vo . xiii-3, (Sept . 1975 .) 6 P . Sweezy, Modern Capitalism and Other Essays, (Monthly Review Press 1972), p . 27 . 7 . Cf . A . MacEwan, "Changes in World Capitalism and the current crisis of the U .S . Economy," in Radical Perspectives on the Economic Crisis of Monopoly Capitalism, (URPE, 1975 .) 8 Cf . Economic Report of the President, 1975 . p . 262, p . 286 . 9 P . Sweezy, op . cit . Forward, pp vii & viii . 1

VALUE AND THEORY OF RENT : PART TWO Robin Murray

USE VALUE AND EXCHANGE VALUE . In the first part of this essay I approached the relation of capital to the land principally through a discussion of the form taken by this relation in the value sphere - namely rent . I suggested that we could only understand this form - its origins, its limits and tendencies - if we analysed it in terms of a) the law of value in the capitalist economy as a whole, and b) the contradiction between use value and exchange value in the landed branches of production . The second of these requires clarification . There are two characteristics which distinguish land as a use value in the agricultural labour process . First it is possible for labour to produce its own means of subsistence on the land with few if any means of production . This poses an Immediate challenge to a society that demands that labour be separated from its means of subsistence so that it is forced to sell itself as labour power on the market . Second, from the point of view of capitalist agriculture, land as a use value (and its twin partners, climate and livestock) present barriers to the increase in output per acre . This holds for all parts of the production process . Agriculture is essentially a transforming Industry . It has to 1) create and maintain conditions for the transformation ; ii) supervise the transformation ; iii) appropriate and separate the transformed elements ; iv) transport them . Capital's main technical problems in such circumstances are diminishing the production period, shortening the times between production periods, separating the commodities into usable forms, and transporting them without deterioration . In this It shares the concerns of all chemical industries . Unlike many chemical processes, however, agriculture has until recently proved remarkably resistant to major technological improvement . As far as the transformation period is concerned, nature and its rhythms still dominate ; grain needs sun to grow and ripen ; cows take nine months to produce a calf ; sidcar spruces need a full 20 years before they are ready for cutting. For most of the globe, winter, the drought, or the composition of the soil preclude immediate replanting . During harvesting (separating) night and the dew interrupt the labour process . Rubber can only be tapped between sunrise and 1 .00 p .m . Moreover many parts of the agricultural process are resistant to standardisation -



12

CAPITAL & CLASS

one of the basic requirements of mechanisation . This is particularly noticeable in picking - fruit, root crops, tea, coffee, tomatoes . Capital in its drive for speeding up its turnover time runs head on into nature's rhythms and variety, into the material awkwardness of the soil . The consequence is that it has been impossible to produce total output on confined areas of similar quality . Agriculture has been extensive, covering soils of different fertility . Labour productivity and rates of return on capital have thus varied between plots . These two characteristics of land as a use value are not confined to capitalism . Other modes of production face the same awkwardness of nature. By themselves they cannot explain the forms taken by landed property under capitalism . What we have to analyse are the consequences of these characteristics for a society where the division of labour is established indirectly by the exchange of commodities on the market, where the commensuration of human labour takes on the abstract form of value, and where labour itself is a commodity . It is to this that I refer when talking of the use value/exchange value contradiction . When the market acts as the dominant social nexus of a society, and when as a result social relations take the form of value, we have to ask how these forms relate to the many different labour processes and material products of the social economy, what forms of property and of productive organisation, and what contradictions, are thrown up as a result . In agriculture the institutional form of modern landed property is the expression of the contradiction between the use value of land as an element in the agricultural labour process, and the exchange value form taken by social relations under capitalism . First, since capital's control of the means of production offered no barrier to labour on the land, labour had to be excluded by property rights which had no necessary relation to capitalist production in agriculture . from the first then property in land, and property over the returns to capital investment on the land were two quite distinct forms of property relations, and this was reflected in two distinct classes - of unproductive landowners on the one hand and capitalist tenant farmers on the other . Secondly, the (use value) fact of the awkwardness of the soil when married to the (exchange value) fact that agricultural products had to be sold as commodities at a general market price that tended to the value of production on the least fertile soil, meant that capitals yielded different rates of profit for reasons other than the investment of capital . Again the appropriation of this excess profit, like the property in land, could be separated from agricultural capital, and the excess profit could be taken - via the system of tenancy - by the unproductive landowner in the form of rent . The form of rent, therefore, like the form of ownership "modern landed property", has its material basis in the contradiction between the use value characteristics of the land, and the exchange value characteristics of the market as a means of commensurating agricultural labour to total social labour . I also argued in the first part of this essay that modern landed property was itself a contradictory form . It limited capital investment on the land - a limitation that gave rise to, among other things, absolute r ent . i t withheld a portion of social value from the fund for capital accumulation, and it limited restructuring . In the second part of this essay I want to examine the ways in which capital has attempted to overcome the fetter presented by modern landed property, and



VALUE AND THEORY OF RENT

13

the new forms to which these developments have given rise . My argument will be that - regardless of whether or not landed property stays in the hands of a separate class of landlords - property in the land will remain contradictory to capital as long as its material basis is reproduced . There are three main ways in which capital has tried to surpass the fetter of modern landed property in agriculture . The first is to extend geographically beyond the range over which the institution of modern landed property holds sway . The second is to transform the form of property ownership from within . The third is to attack the material basis of rent through increasing productivity and decreasing the significance of land itself as an element in the agricultural labour process . I will deal with these in turn .

CAPITAL AND MODERN LANDED PROPERTY 1 . Capital and the movement to new lands . Marx discussed landed property in a theoretically closed economy . He was concerned with the economic forms which arose where landed property did not exist . This ruled out cases, such as that of the early colonies, where it did not . When we come to analyse the relationship between capital and landed property in the long term, however, we must recognise that the assumption of a closed economy is no longer adequate . There have always been wide areas of the globe - on land, at sea, in wastes and marshes - where landed property has not been established. These areas have been separated from the capitalist spheres of production by the barriers of nature . At certain periods distance, inaccessibility, climate, even disease have conferred realism on the assumption of a closed economy . But the development of technology presses against these barriers, opening up the new lands to capital . Capital in its turn has always shown a tendency to expand to these new lands . One reason is that in doing so capital can escape the shackles of rent on the old lands . The drive is based on the avoidance of rent . A second impulse, however, is founded not on the avoidance of rent but on its appropriation . Any extension of capital and its attendant social relations will require, too, the extension of landed property . The experience of Mr Peel at Swan River testifies to this . In surpassing landed property capital is forced to create it anew . It acts as a vanguard for the territorial expansion of landed property . Herein lies the incentive. For any body which can lay claim to the new land and establish the rights of landed property upon it, thereby becomes a landlord and a potential recipient of rent . This second incentive for expansion I will call the drive for founder's rent . The term "founder's rent" has an affinity to Hilferding's concept of founder's benefit, which he used to describe a parallel situation arising from the centralisation of industrial capital . Large capital, he suggested, would buy up small firms at a price reflecting the latter's expected profitability at the old level of organisation . It would then re-organise (centralise) them, raising their level of productivity and future profitability, and then realise the increase of value by issuing shares . The capital payment for these shares he called the founder's benefit, and It could be seen as the capitalised form of industrial superprofits . A similar benefit is open to those who can establish the rights of landed



14

CAPITAL & CLASS

property on new land . In this case the benefit will result from the new proprietor's access to rent . This rent may be of two kinds : absolute or differential . Absolute rent on new land, however, is dependent on the absence of further new land at the given level of technology . If further land is available we can expect new capital to flow in and equalise profit rates in agriculture and industry . The new landed proprietor will be unable to establish his control as a fetter . But if no further land is available, and if the product of the new plot can be sold above its price of production without cutting out the previous marginal plot, then even the new proprietor will enjoy absolute rent . The greater the monopoly on the new land established by the extending capital, the greater the likelihood of earning absolute rent by virtue of its new proprietorial rights . Secondly, the new proprietor may derive his benefit from privileged access to differential rent . This occurs where the new land is more productive, and is introduced into commodity production as an intra-marginal plot . The situation is shown in figure 1 . Here we have three pieces of land with different productivities yielding outputs AB, CD and EF respectively, at prices of production OA, PC and QE . For the moment we will assume away absolute rent for the sake of simplicity . New land is now introduced which produces at price of production QH . Price falls from K to I (against the Ricardian trend) but rent remains constant (since KEDI = DGIH) . Capital, however, instead of having to yield up KEID to the old proprietors, now itself appropriates DGIH . Figure 1

P

Output

Not only can new lands earn differential rents, it is probable that they will do so . There are a number of reasons for this : (i) Agriculture can be organised on new lands in an optimal manner . All the difficulties of restructuring that we noted in the case of agriculture are absent in



VALUE AND THEORY OF RENT

15

new lands . Field sizes and shapes can be suited to the current level of agricultural technology, agricultural steadings can be laid out according to the most recent dictates of time economy, the size of the farm itself will be geared to the best use of fixed capital, particularly implements, and the available labour . (ii) The farmers themselves are likely to be modern farmers, pioneers . (iii) The land may have a certain stored up fertility where it has not been submitted to intensive cultivation (the same holds with forests and minerals) . (iv) Where the new holdings are sited in densely populated pre-capitalist subsistence areas, wage labour is likely to be potentially cheap since part of the subsistence costs may be carried in the pre-capitalist area . This is the case in southern Africa . Where the new holdings are in sparsely populated areas, wages can still be kept relatively low by suiting the "demographic composition" to the need of agricultural wage work .(1( The dependent : active labour ratio will be low, there will be an absence of the non-productive apparatus that is a feature of established agriculture (think of the employment composition of a southern Italian town or an old English village - the church, the state, quite apart from the retinues of the rentiers) . This is the case of the areas of new settlement in the 19th century, North America, Australasia . (v) The new settlers are liable to have a strong say in if not control of political power which will influence both the political control of labour (restricting the land rights of African peasants, "decomposing" farm labour) and limiting state taxes (and thus post-tax profitability) . There are many examples of the intea-marginality of new lands . In the Middle Ages, first the Cistercians and then the Carthusians converted extra-marginal lands into new lands yielding differential rent . The lands were granted by landlords to these monastic orders because of their low fertility and isolation . The orders were able to improve productivity for mainly organisational reasons (wide networks of inter-connected monastic holdings, centralised organisational structure, considerable geographical travel, literacy, work discipline), and had a labour force with minimal subsistence requirements (the lay brothers) .(2( The great Jesuit holdings in 18th century Colombia owed their advantages to similar features of religious organisation . In the 19th century the development of the great plantation economies on "new lands" (new to capital that is) allowed a topographical and social organisation of production which would have been impossible within the property and political institutions of an established capitalist order, while 20th century agribusiness is similarly benefitting from its "new settlements" in Senegal, and Kenya . in Brazil, Bolivia and Honduras . The balance between the potential rent and the capital cost of opening up the new land will constitute "founder's rent" . When this rent is capitalised either in the sale of the newly privatised land, or in the form of the floating of a share issue on the capital market, we may speak of landed (as against industrial) founder's benefit . Now if the above argument holds, we have a material basis for the inherent impulsion in capitalism for geographical extension and capitalist incorporation . It is an impulsion which is not related to underconsumption, or disproportionality, or the falling rate of profit, or even the search for specific use values . It is derived from the relation of capital to the institution of landed property, and represents an attempt by capital to surpass the disadvantages of this relation extensively .



16

CAPITAL & CLASS

In having this outward drive capitalism is not unique . feudalism was at its core a spatially expansive mode of production . The great slave empires were themselves the result of the expansion of the slave mode of production. The contemporary Eastern European regimes, notably Russia, have extended to "new lands" as part of their transformation of agriculture . All these examples of territorial expansion have been lumped together with capitalism by some authors, under the undifferentiated heading of imperialism . for the vulgar, imperialism is a common characteristic of all class societies and is explained by common causes . I have argued, however, that capitalist expansion is rooted (in part at least) to the contradiction of two structures characteristic of capitalism - namely capital and modern landed property . Our task then is to trace the specific forms taken by the geographical expansion of capitalism, and contrast them with the forms of expansion of other modes . With respect to these forms of capitalist geographical expansion I would like to make three points . First, the major expansions tend to take the form of politically pre-emptive claims on particular areas well in advance of specific economic exploitation . This has been the source of debate on the causes of colonial and neocolonial expansion . Immediate economic interests are set against political, cultural or ideological drives . If we acknowledge the role of rent, however, the problem is clarified . For the initial rights of landed property in general (they can be allocated to particular capitalists later) offer a founder's rent inaccessible to all who come after . Where modern landed property is concerned, the early bird catches the worm . Once this is recognised, all other elements of colonial monopoly become secondary . In principle the protective elements of colonialism, the preferential tariff and monetary zones, the specific investment privileges and legal discriminations, all could be done away with as long as the landed property rights were still vested and secured for the colonial landlord . Hence the position of the British Liberal Party on the Empire in the 1920's when they argued in favour of an empire free from economic discrimination - open to all capital, national and international : but (a point they did not bring out) with property rights secure in the hands of British rentiers . From this perspective we can see why trade should follow the flag, and why colonial powers are so concerned to establish an influence over the state as the regulator, allocator and enforcer of landed property rights . The second point about the form of expansion is concerned with the question of violence and its necessity in the expansion of capitalism into pre-capitalist areas . Barbara Bradby, against Pierre Philippe Rey, has argued against such a necessity and has shown how pre-capitalist areas can be broken down and incorporated through the mechanism of equal exchange-131 I think her argument against Rey holds, but at the same time an adequate theory of rent allows us to see violence as something far from accidental in the development of capitalism . Once the formal rights are established, they have to be secured . This is a question of political power against usurpers of established rights . Secondly they have to be utilised and the capitalist form of agrarian (or mineral) organisation is likely to come into sharp conflict with pre-capitalist forms of production . Some of the most pitiless episodes have come in the destruction of nomadic pastoralists, the Red Indians in the United States, the Aborigines in Australia, the Afars in Ethiopia. In other areas it is small peasant agriculturalists who have been expelled, killed,



VALUE AND THEORY OF RENT

17

converted to wage labour, left to drift to the towns . In all these instances there were traditional land rights but the controllers of the rights were weaker than the modern landed proprietors who were establishing their "rights" after expanding to the new lands . The opposition which Marx saw as characterising the landed property/ capital relation, the one representing exclusion and non-production, the other inclusion and production, the one monopoly, the other the law of value, is here carried over into the Rey/Bradby argument . Landed property brings with It the violence of exclusive rights, but force is not the exclusive form of relation between capitalist and pre-capitalist modes of production . The market violence of Bradby's law of value may equally reduce a pre-capitalist economy to the point where the conversion to modern forms of landed property can be achieved with the egalitarian independence of the law of contract rather than the authoritarianism of the gun . We can say something further . In the case of equal exchange, capital's concern is the use values it draws from the pre-capitalist area . In the case of property rights the concern is with exchange value . The exchange value may result from the introduction of capitalist relations into the production of the use values required . Or it may derive from rent, from the appropriation of the use value at a cost below the ruling world price . The factors underlying the choice between direct production and equal exchange will include the nature of the production process (raw material production will more usually be carried out through direct production, tree crops to which it is difficult to apply machinery will tend to remain pre-capitalist or peasant-run), the density of population (it is easier to "clear" a sparsely settled or nomadic area for ranching or mechanised crop production than to transform areas of densely populated subsistence farmers), the availability of sufficient force to create the conditions necessary for continuous direct production (either provided by the producing capital, or by a colonial or neo-colonial state), and the availability of an adequate labour force (either from local sources or imported) . The conditions for direct production are the conditions for the implantation of modern landed property and the conditions for realising ground rent . In these cases we may expect capital to expand with force . A third feature of the expansion of capital concerns the division of rent after the incorporation of the new land . For these expansions commonly require discontinuous expenditures of capital . Thus there tend to be epochs of capitalist expansion : the age of discoveries, the period of colonial expansion, and the settlement of the Australasian or American outbacks . In some cases the necessary capital has been provided by private capital, through the floating of shares on the stock markets of the West, or more recently through the mobilisation of corporate funds . The 19th century railway boom was an example where railways created potential founder's rent, and where the railway companies attempted to appropriate this by the sale of land along the line of rail, and/or by rail tariffs once commodity production was established . To take a more recent example, Northrup aircraft corporation is associated with the development of major agribusiness developments in Senegal, the realisation of whose value and rent depends on airfreight of the fresh vegetables to the European market, while there are similar linkups between aircompanies and the hotel industry in new "tourist" lands . The capital which opens up the land will attempt to appropriate the founder's rent in



18

CAPITAL & CLASS

capitalised form, and if this is not possible, aim to preserve monopoly concession rights and rates to prevent the flow of rents being captured by rival companies . Alternatively the new lands are opened up with the capital of the state ; the reclamation of the polders, or of the fens of England ; the eradication of malaria ; the development of hydro-electric schemes, and of the arteries of transportation . Here the founder's rent is commonly ceded to a new privileged agrarian class, either absentee rentiers in many contemporary African situations, or capitalist landlords .(4) These grants, as we would expect, are specific : to the ruling party, tribal group, entourage in power; to the race -Africans were excluded from holding land within ten miles of the Northern Rhodesian line of rail during the colonial period ; or to national rather than international capital (Britain has given preference to British concerns in the allocation of concessions in the North Sea) . If only "normal" profits were available, such grants would involve no privilege . It is the existence of founder's rent which gives them their status . Any general theory of imperialism should be able to explain the motive for expansion, the timing of expansion, the place of expansion, the forms of expansion, and the mechanisms of expansion . The contradiction between capital and landed property contributes some though not all of the explanation of these facts . What is important for our argument, however, is not to elaborate further on the role of rent and landed property in capitalist expansion, but to note firstly that this is one way in which capital does overcome the fetter, and secondly that in doing so it necessarily has to reimpose that fetter in the very act of surpassing it . For on new land, capital will have the same requirements as it did on the old . Wage labour will be needed, created from local or imported sources, and this wage labour will have to be cut off from the land . At the same time capital will require the ordinary rights of property to privatise the returns from its investments, quite apart from the concern to privatise the flow of founder's rent . Hence capital merely extends landed property . The fetter, in being overcome, is reposed anew but on a wider scale . Each extension can only offer a temporary way out of the contradiction . The optimal agrarian structures developed on the new lands will cease to be optimal as technology and social relations develop . Thus the creations of an old extension - for example the Latin American latifundia . become the fetters of a later age . As such, capital's conquest of landed property by extensive development will always be temporary, always limited by the given area of "feasible" land . 2. Landed property and owner occupation Where the transformation of production is limited by the fetter of property, capital will tend to expand externally before attacking the internal fetter directly . Internal areas have established economic and social structures, vigorously maintained . External areas are weaker, their freedom from modern forms of property allows unrestricted topological restructuring . Yet, as I have indicated, for any given level of technology, of development of the means of communication, of engineering, or of medicine, there exists a frontier beyond which it is difficult to expand . It is then that capital turns inwards . In all major capitalist countries we tend to get the same pattern : a period of expansion of cultivated land in the particular country, the opening up of the territory, through building roads, railways and canals, cutting forests, draining marshes, irrigating dry land, terracing



VALUE AND THEORY OF RENT

19

hills ; followed by a period of institutional transformation, and even decline of the cultivated acreage . This is the second great movement of capital against landed property . The institutional transformation is focused on making owners into farmers and farmers into owners, The former, turning landlords into capitalist farmers, has had limited success . There are cases where landlords have supervised the intensive application of capital on the land . The estates of the Duke of Buccleaugh in Scotland, run by managers and co-ordinated by agents, are a case in point . But for the most part, the landlords' control of property rights without obligation has insulated them from value and the observation of its rules . More significant has been the attempt - historically enforced by the capitalist state - to turn farmers into owners . In Britain the reform was carried out via a politico-economic attack on landlords through imports and taxes : forcing land sales to pay state debts . The effect was immediate . In 1914 about 10% of British land was farmed by its owners . By 1927 the figure had gone up to 36% and it is now about 50% .(4) In the United States the extension of owner occupation (the family ranch) from the North to the South was a direct result of the political defeat of the Southern States in the civil war . In Latin America the transformation has been tackled more directly through measures of land redistribution . The issue in all these cases is indebtedness . When owner occupation is established through the market, the farmer is from the first burdened with debt and new investment is restricted . (The selling landlords have effectively capitalised future differential rents in the sales price .) On the other hand an owner occupier free from debt is likewise insulated (to the extent of his differential rent) from the law of value . We find the land parcellisation and bad husbandry that characterises many peasant societies . For this reason capital has often ensured that new owner occupiers are from the first dependent on credit for the payment of the land purchase price or some form of compensation . The state then makes good the limitation of capital which results by extending credit, financing part of the improvements itself, providing support services, and so on . The problem in all these cases is that an owner occupier does not face a barrier to the application of his capital, but by the same measure is in a position to receive the differential (and monopoly) rent over and above a normal rate of return on capital invested . This differential rent acts as a cushion against the strict application of the law of value . So too does the tendency for increases in agricultural productivity to diminish the size of holding necessary to sustain a family, or for members of the farmer's family, including the farmer himself, to supplement the farm income through wage work elsewhere . In the United States in 1960 for example 25% of all farms were part-time (in the sense that the farmer worked 100 days or more outside the farm and drew more income from outside than in) while a very large proportion of other farmers drew substantial sources of income from outside (Renborg, 1969, p . 218) . In Japan in 1970 where there were still nearly 7 million employed in agriculture and fishing, 4 million had to find supplementary work, and 54% of agriculturalists' income came from work in the towns (Halliday and McCormack, 1973, p . 172) . These and similar figures for other capitalist countries can be read as the capitalist degradation of peasantry, part of the process of proletarianisation, lengthening the overall working day, increasing the intensity of labour . But they



20

CAPITAL & CLASS

can also be read, from capital's point of view, in terms of the difficulty of restructuring land . In the phrase of liberal economists, agriculture is an industry with severe barriers to exit . In overcoming the barrier of property by creating peasant proprietorship, capital finds itself in a new contradiction . For a rise in the general level of agrarian technology increases the need for restructuring, and expands the optimum size of holding . But in doing so it diminishes the minimum size of farm necessary to sustain a family and thus cushions the peasantry against restructuring . The optimum for profit increasingly diverges from the minimum for subsistence . In this lay the post-war problem for European agriculture . Not that farm expansion has been impossible . During the 30's and the second world war, farm structure was relatively stable . In the post-war period there has been a reduction in smaller farms throughout Western Europe and in the USA . In continental Europe it is farms under 10 hectares that are decreasing in number. In the UK this tendency includes farms up to 120 hectares, and in the US farms up to 200 hectares . Comparing 1900 with 1969, the number of farms in the US fell by 35% to 3 .7 millions . All categories under 260 acres declined by an average of 44% . The categories over 260 acres increased by an average of 53%, and rose from 9% to 22% of the total number of farms . There is a similar pattern if we rank farms by sales rather than acreage . In the 20 years between 1939 and 1959 the smallest farms by sales fell from a total of 4 .2m to 1 .6m, or 61% (Renborg, 1969, p . 213) . These transformations have been brought about through agricultural price pressures (as in Japan), by subsidies and other incentives to amalgamation, and by the extension of credit to "kulaks" to enable them to expand . Yet even the evident movement in the concentration and centralisation of agriculture within the capitalist countries does not negate the severe brake which "peasant proprietorship" places on the development of capitalist agriculture . To cite only one example : Japan had planned to reduce the number of farms to 2-3 million by 1961 . By 1970 the target was still far off, and 5'/ million households continued to be involved in agriculture (Halliday and McCormack, 1973, p . 171) . Capital's great attempt to overcome landed property by turning landlords into capitalists, and tenants into owner occupiers, is subject to similar limits to its extensive drive . Each land reform which aims to increase capital investment and productivity through a change of ownership from landlord to farmer, only succeeds in posing the fetter in a new form . In no way can capitalism solve the problem of landed property through the creation of an international peasantry, as some socialists have claimed . It merely shifts the problem to a different stage . 3 . Intensive Investment The other side of capital's intensive attack is its attempt to raise the productivity of the soil, to turn agriculture into a continuous process, an open-air factory, where land itself would decline in importance . This attempt to loosen the bond between agricultural productivity and the given structures of nature has been decisively advanced in the period since the second world war . The main elements of the revolution of the productive forces are as follows()) increased size and quality of the means of preparation : giant ploughs, artificial insemination ; (ii) shortening of the transformation period, through the elimination of natural



VALUE AND THEORY OF RENT

21

interruptions (greenhouses, mechanical grass driers, irrigation, artificial daylight for poultry) or shortening the biological gestation period (new seeds, cutting of tree-growing times - cocoa, rubber) ; (iii) diminishing interruptions between transformation periods (again artificial climatic conditions, development of winter grain, fertilisation of soil, and rotation to reduce fallow time) ; (iv) improved yields (high varieties, soil nutrients, increased litter sizes, control of disease through spraying, veterinary services, etc .) ; (v) mechanisation of the separation process (combines perform two separation processes, and can do so because of the relative standardisation of the crop ; other crops have had to be standardised and made suitable for mechanised picking, the shortening of trees, new types of tomato, etc .); (vi) improvements in transportation speeding up all parts of the transformation and separating processes (rationalised field systems) and relations with the market (particularly important is refrigeration) . Through the application of biological science and machinery the transformation, separation and communication periods have all been reduced, and yields increased . While most of these changes were initiated before the war, they have only since been widely diffused . As a result output per acre has increased sharply . In the UK it rose by 50% from 1900 to the late 30's and by a further 150% from then to the mid 60's . Output per worker has increased even more, with comparable figures of 60% and 210% (Robinson, 1969, p . 30) . In the post-war period agricultural productivity in the majority of advanced capitalist countries has been rising faster than that of industry - in the US three times as fast during the 1950's (Schultz, 1965, pp . 70-72) . In some sectors this reflects a move from the formal subordination of land under owner occupation to a real subordination of land as a material element in capitalist production . The development has gone farthest in the development of synthetic substitutes for primary commodities : rubber, cotton and potentially sugar . In the field of livestock there has been the extraordinary development of the broiler industry which has freed chickens from the farmyard, of the pig industry, and now increasingly of beef . No-land methods of raising cattle have been temporarily halted by the rise of primary commodity prices, but already by 1972 75% of US beef was produced on feedlots, the largest accomodating 125,000 cattle at a time .(5j In other sectors land remains important as a material base, but has been subordinated to capital through standardised flow processes, and through the speedup of the whole time economy of production . Grain crops are the most notable, as well as certain vegetables and fruits . For this reason capital's attack on the production of cattle has had the effect of substituting crops for grazing . No-land cattle farming does in fact require attendant corn lands (the link between the processes is more accurately captured in the British term, barley beef) for the farmer here is substituting mechanical cutting and gathering of food for the individual cropping of grass by the animal . Recently capital has attempted to sidestep animals altogether as a provider of protein by the supply of soyabeans, and their transformation into synthetic meat . In all these instances the transition from the formal to real subordination of land has tended to move in parallel with a transition from the formal to the real subordination of labour . Agriculture has at last broken through into the era of



22

CAPITAL & CLASS

machino-facture . Labour is deskilled, directly subordinated to the interconnected machinery, the head now divorced from the hand and concentrated with science in capital and its organisation . Agricultural technical labour (sited in towns, universities, agricultural stations) is now married with deskilled yet specialised labour under the hierarchical control of capital . And with the transformed labour process go the organisational forms characteristic of capitalist machino-facture : the limited liability company, the vertically integrated "agribusiness", synthesising, synchronising the agriculture into its later stages of processing . We find that 90-100% of the production of deep-frozen vegetables, seeds, sugar, cotton and certain fruits was vertically integrated, and a major part of broiler and turkey production (Renborg, 1969, p . 223) . Agricultural labour is increasingly indistinguishable from industrial labour and is socialised as such . The fact remains, however, that these are still only incipier.t tendencies . They remain confined both by geographical area and by product . From each perspective capital has "surrounded" the agricultural process : revolutionising the production of inputs, the processing and transportation of output, the organisation of an integrated line . But still for a large part of the globe, and for many commodities, the process of agricultural production remains at the stage of formal subordination . Indeed the particular relation of land, means of production and labour in agriculture has meant that even this formal subordination has been difficult . The simple co-operation and manufacture of plantations, for example, has been the scene of bitter struggles between capital and labour over the latter's subordination . This is the history of slavery, indentured labour, and pitiless colonial repression . It is also the material basis for the growth of colonial liberation movements (Indonesia, Malaya) and organised working class power . In the neocolonial period capital has commonly settled for a putting-out system . Firestone were forced to parcel out their plantations to independent peasant producers in Liberia ; Kalamazoo Spice Extraction do the same with pepper production ; even the new agribusiness estates in Senegal are considering this . For many commodities moreover even simple co-operation under the rule of capital was impossible . Capital could advise on inputs, offer credits for investment, encourage economies through "co-operatives" . What they could not do, and still cannot do for the majority of the world's agriculture, is to submit these processes of production to the direct domination of capital .

LANDED PROPERTY AND THE DEVELOPMENT Of CAPITALISM . The Neo-Ricardian theorists have tended to argue that landed property and the accompanying rent would diminish in significance with the development of capitalism . In this they were taking a position contrary to both Ricardo and Marx . The main threads of the argument concerned changes in relative monopoly power . Bortkiewicz suggested that the increase in intensive investment would lead to landlords bidding against each other, and therefore reducing rent, in order to have the privilege of the capital being applied on their land . Amin and Vergopoulos, as we have noted, both see the power of landlords declining, the former because of an alliance against them by capital and the working class under the umbrella of social democracy, the latter through the break up of estates and the replacement



VALUE AND THEORY OF RENT

23

of large landlords with an owner occupying peasantry . These shifts in class alliance are reflected in state policy towards agriculture, and are supported by direct monopolistic pressure by capital through sales of agricultural inputs and purchases of agricultural outputs . Certainly the figures appear to support this . Rent as a proportion of agricultural income declined from 31% in 1888 in France to 4% in 1962 (Vergopoulos, 1974, p . 167) . A similar decline is recorded during this century for the major advanced capitalist countries(6l . There are other indications too : the widespread legislations to secure tenure, to encourage owner occupation, to tax landlords and break up the landed estates, the decline of demands for land nationalisation, and so on . While I would not dispute the decrease in the relative significance of rent in advanced capitalist countries, the approach seems to me to suffer from the faults I earlier noted, of restricting analysis to the sphere of distribution without considering the developments in production . Our question should not be how does the proportion of rent change in agriculture with the development of capitalism, but rather, how does capital interrelate with the fetter of landed property in the course of its development . In the earlier sections I have outlined some general characteristics of this relationship . In this final section, I want to suggest certain changes in the relationship . First, with the development of intensive investment, and differential rent II, there is a tendency for rent to change its form, to agricultural profit and interest paid to banks . Hence, declared rent figures must be treated with caution . One interesting piece of evidence which supports the view that rent has not declined in absolute terms is the estimate made by lack Revell for the value of land In the UK . He calculated that the value of land grew from E 1 .3b . i n 1900 to E3 .6b . In 1948 . In as much as long-term land prices reflect discounted future rents, this suggests a rise In rent, a rise which exceeds inflation over the period (Revell, 1967, p . 64) . Second, while agriculture has still to enter the era of machino-facture In many of its branches, the application of chemical science and machinery has undoubtedly counteracted the tendency of rent to rise . The circumstances are the following . The second agricultural revolution had the greatest effect on labour productivity, but it has also increased output per acre . The rate of increase In land productivity was for many products in excess of the rate of increase in domestic demand, and with exports limited for technical and/or political reasons, we have seen the appearance of both surplus production (notably In grain) and a reduction in cultivated land area . It is this last point which is important from the point of view of rent . For the expansion of agricultural productivity has allowed marginal lands to be converted from grain to grazing, from corn riggs to rough hill, and now in Britain to forests . Almost all the advanced capitalist countries (as well as Czechoslovakia, Hungary, Armenia and Estonia) have shown a tendency for the .:ultivated area to declirie after an earlier period of land expansion (Bicanic . 1969, pp . 560-565) . Although we have not reached the stage when the whole of the English harvest can be produced in Soho Square, it can now be concentrated in the more "socially" fertile areas, and if these exhibit relatively small differences in fertility there will be relatively less differential rent . The increase in labour productivity, which is but a reflection of increasing organic composition of capital on the land, will also have the effect of reducing



24

CAPITAL & CLASS

if not eliminating absolute rent . This much holds for agricultural rent in advanced capitalist countries . In other countries, however, the case is different because the application of science and machinery to agriculture has been recent and limited . They are still in the process of land expansion and reclamation . The inherited structures of property ownership stand in the way of the adoption of many of the new techniques . Given the extraordinarily low level of development of much agriculture in Asia, Africa, and even Latin America, the introduction of the new techniques on intra-marginal or new land, creates a great gulf between the least and most productive . Agricultural rent, and the potential founder's benefit from establishing new property rights for commercial agriculture, are of major importance in these regions . This is compounded by products in which an international market, and therefore an international determination of rent, governs the range in which the law of value operates . The tropical products are old examples - sugar, rubber, bananas, coffee, tea, cocoa, palm oil and so on . During the colonial periods these were organised and ruled by a metropolitan rather than a world market . In the last 15 years the colonial insulation has been increasingly eroded, at the same time as revolutions in production and distribution techniques have taken place . Accordingly, the ranking of plots has been re-ordered at a world level, many new lands have been introduced, and differential rent in some of the sectors has increased . These traditional products have now been joined by others whose production is developing at a world level rather than on a metropolitan or national scale : meat (in which advanced capitalist countries are mostly not self-sufficient), fresh vegetables, haricot and soya beans, and seed production . In all these cases, rent and the rights of landed property remain important . Much of the development is in underdeveloped or still primarily agricultural countries, with international capital playing a leading role in operating, managing, financing, or supplying the new intra-marginal developments . It is the field of international agribusiness . The issue of agricultural rent and landed property thus diminishes within advanced industrial countries, but is reproduced in the underdeveloped countries in a sharper form . It also takes on an increasingly international dimension, not only in the traditional tropical products, but in spheres in which modern technology (air transport, veterinary and breeding improvements) permits capital to internationalise production . furthermore, the existence of surpluses raises the whole issue of internationalising "national" branches, notably in grain . The great American grain surplus has been seen by many commentators as a sign of the difficulty of restructuring agriculture and shifting marginal farmers from the land . It could equally be seen as a result of the difficulty of enforcing the law of value internationally, of developing international specialisation and permitting the "surplus" American products to outcompete the less efficient grain producers in the underdeveloped world . From this point of view we might see the American international grain policy as an attempt to realise rent on an international plane for products which within a national context are merely excess, nonvalorisable, supply . In these circumstances to portray capitalism as leading to the suppression of rent and landed property is misleading . What we have to trace through is the interrelation of rent and the law of uneven development, the internationalisation



VALUE AND THEORY OF RENT

25

of landed property, and of the formation of rent . Thirdly, even if agricultural rent has a tendency to decrease relatively with capitalist development, landed property will continue to have a contradictory relationship with capital . The difficulties of topographical restructuring will both limit the development of productive forces in agriculture, and maintain the tendency for expansion . I say this in spite of the evidence for the contraction of cultivated land, for the limits to intensive restructuring still leave more land cultivated than would be necessary if agriculture was conducted on a "rational" basis . Secondly, as the forces of science and machinery are applied to agriculture at the world level, the destruction of traditional "artisan" farms is likely to reach a dimension previously unknown in history . At the moment there are about 2 billion people engaged in agriculture, nearly two-thirds of them in the non-socialist world, and most of these in the underdeveloped capitalist countries . If capital succeeds in transforming underdeveloped-country agriculture as it has done in the advanced capitalist countries, nearly one billion people stand to be thrown off the land . The pace at which this takes place will depend on the pace of imperialist integration of the world market . What we do know however is that the faster that pace, the less will be the non-agricultural work available for those extruded from the land . Already the extent of under-employment in underdeveloped countries is one of the central political facts of to-day's world economy . The reserve army of the unemployed, determined now at a world level, is being concentrated in the underdeveloped countries . When this reserve army is swelled by the consequence of the agricultural revolution, the effects on the underdeveloped world will be discontinuous . The increasing productivity of the land will run parallel to an increasing hunger and poverty of those thrown off the land . And yet the evidence from the advanced countries suggests that less land will be required for capitalist cultivation . Landed property standing against labour as a bar to their access to means of subsistence, will now stand as a bar to the subsistence of a great reserve army . The process has already been seen on a small scale in the Highlands of Scotland . When set at a world level, with a magnitude so vast, the social force against the barrier of landed property will be as irrepressible in the countryside of the underdeveloped countries as it has been up to now in . the towns . Fourthly, at the same time as we witness an internationalisation of agricultural production, and an intensification of the issue of rent and landed property at the margins of world capitalism, the advanced capitalist countries, far from finishing with the contradiction of landed property, see it rather displaced to the mines and the towns . There is a structural shift, and in both cases it is a shift to areas in which capital may find it less easy to surpass the barrier . In the case of urban property, capital faces a problem similar to that in agriculture. In order to eliminate rent - in as much as urban rent is predominantly determined by communications time - capital would have to be able to reproduce "construction" space at the average cost of all construction in the sector, and at the average time-distance from the relevant urban nodes (work, city centre, shopping area and so on) . It would have to avoid meeting increased demand by moving to sites of (in communications terms) lower fertility . It could only do this if it : a) increased density per acre, either by concentrating more building space in an acre - tower blocks, skyscrapers - or decreasing building space per person



26

CAP) TAL & CLASS

(replacing nodal shopping with flow line supermarkets, decreasing the size of office and school classrooms); b) improved communications time, thus allowing the margin to be extended topographically without increasing travel time; c) decentralising nodes, through industrial dispersion, new towns . etc . In all cases capital has faced limits . The limit to expanded building space per acre is ultimately a technological one . The increased "intensity" of people per acre has been most successful and far reaching in retailing, and in office development, but it now seems there are limits to further substantial improvements . In housing there are demands for minimum standards which run counter to capital's requirement, and the more efficient use of housing space per person is crucially limited by the continued existence of the family . As the organic composition of capital in the home increases, there will be ever increasing pressures to communalise usage in some form (consider the excess capacity in the major items of the family house) . The above limits, the difficulties of restructuring commercial and residential property in the face of the barrier of landed property, have meant that most capitalist towns have tended to expand into "new" areas - that is, to "sprawl" . The effects of sprawl on property values have traditionally been countered by transport improvements but again there are definite limits to the extent to which a nodal town can accommodate extra-marginal expansions . The central traffic points get overloaded, journey times increase with congestion . Only a complete re-organisation of the town on a flow line basis could avoid these congestions . New purpose-built towns have been designed on this basis . But in the advanced capitalist countries few of these new towns have been able to break the established hold of the traditional cities . There is a material basis for this . There is a time economy in space which underlies the law of agglomeration in capitalism, just as the time economy of industrial production underlies the law of the concentration and centralisation of capital . In both cases there are limits to decentralisation and decomposition . In cities these limits are determined by the extent of faceto-face communication required for any aspect of expanded reproduction (how far can the telephone and letter substitute for personal meetings), and by the geographical and social range over which such personal meetings take place . Thus production tends to be more decentralised (in the suburbs, by ports, along roads) than department store and specialised shopping, central banking, head office management, state organisation (80% of Central London work is now white collar or services) . The city can extend, forming the modern metropolitan region, where the geographical hierarchy, division of labour and planned co-ordination parallels the technical (and political) structures of industrial production . This is not a breakup of the city, but an expansion of its sway, and in few of these expansions has the property barrier not stood in the way of that comprehensive redevelopment that the move from nodal to flow line organisation implies . As a result, total journey times to centres increase, and with them the level of differential rents . The fact that this is a general tendency in capitalism is reflected in the preference for investments in urban property by insurance companies concerned with the maintenance and indeed appreciation of their asset values over the long term (say forty years) . With minerals, the problem is not one of technology of production . Most



VALUE AND THEORY OF RENT

27

minerals are produced with very high organic compositions of capital . Rather it is a question of availability of resources to meet a demand which for many of the minerals increases at a rate faster than the rate of accumulation . Many of the revolutions in the capitalist labour process are only accomplished by the substitution of mineral-intensive products, oil for horses, metals for hand-power, oil-based fertilisers for manure . In the advanced capitalist countries, each person requires on an average eight tons of steel to reproduce him/her self per annum . In some of the modern electronic equipment, the elements required are in even shorter supply than, say, oil . The problem for capital then becomes not one of production, but of exploration, and of developing new methods of processing which would allow plentiful elements to replace the scarce . Wind, wave, or sunbased power to replace fossil fuels is an excellent example of this . This is the area of the doomsday forecasts, the laws of economic entropy, of the exhaustion of natural resources . Many of these analyses speak only of the use values involved . Our task is to trace the consequences of this limit of use values in a system governed by private capital and the law of value . Landed property, and the existence of differential and monopoly rent become central to any such analysis . Hence we observe the constant search for extensive founder's benefit by the international raw material companies, their collusion on monopoly pricing, their resistance to attacks on their rent by the state . Unlike general agriculture, the raw materials industry has for many decades been international, with its science being developed in the capitalist heartlands of the West, and its exclusive property rights being appropriated and defended at the world's extremities . Exploration has now been pushed to Alaska and Antarctica, to the continental shelves and the ocean bed . And following exploration has been landed property and capitalist force . Of the significance of rent there can be no doubt,. The exploration and development of the North Sea is hinged on the problem of rent . The expected tax taken from the British area by 1980 is likely to be in the region of E5 billion per annum, a figure which under current taxation terms leaves much rent to the oil companies, and which is likely to exceed the total profits from the whole of the British industrial sector . The global significance of the oil price rise, the massive international levying of differential and monopoly rent, the pivoting of imperialist policy around the rise - all these have merely to be registered to make the point . Both in urban property and in mineral exploitation, there will be a tendency for rent to rise with capitalist development . In the case of the former, landed property will also act as a fetter to the development of the productive forces, principally because of the barrier to intensive restructuring . With minerals the productive forces are already highly developed, and concentrated in the hands of international companies . Here the main contradiction does appear in the sphere of distribution, but this must still be seen as a reflection of capital's struggle in production to by-pass the restricted resource, finding new techniques of recovery, new methods of transformation, and even new products which are either freely available or open to appropriation at low cost . My last point concerns the significance of landed property for our understanding of the state in the contemporary world economy . In the advanced capitalist countries, the state's dominant concern is with the accumulation of capital and the reproduction of the capital-labour relation . Agricultural landlordism



28

CAPITAL & CLASS

has been subordinated . Agricultural capital becomes one more fraction of capital . The state's role in agriculture is not with the allocation of property rights and the distribution of rent, but with the reduction of landed property's power against capital . It is concerned with growth on the land, with good husbandry and with the provision of cheap means of subsistence . Only in the competition between national capitals does landed property and the realisation of rent become an important issue (the USA's attempt to realise rent by exporting grain, the disputes over fishing grounds, the debates on agricultural protection) . In urban property development, however, the state still has a considerable discretion over the allocation of property rights and the effective granting of "founder's rent" . For the state controls land-use . Given that sites can yield different levels of rent according to their use, and given that their optimum use in terms of the social plan for the town may change, the control of the rights of restructuring ("change of use") gives the state the power to license founder's benefit . Planning permissions are grants to capitalised rents, reflected in the change of land values . Until such founder's benefits are appropriated by the state through land nationalisation or the effective taxation of "betterment", there will always be an incentive for propertied capital and its associates (estate agents, builders, engineers, road hauliers) to enter and/or control that branch of the state with the power of permission - namely local government . No general theory of local government would be adequate without an explicit treatment of urban landed property and founder's rent . In underdeveloped countries, these same rights are also applicable to agriculture . For in many of them modern landed property has not been fully established, or if it has, it has not been established under national control . Thus colonial liberation is always attended by the tasks of redistributing property rights, and where land is not nationalised, this always raises the issue of the allocation of "founder's rent" . In Kenya, the first decade after independence was marked by the distribution of property rights to the Kikuyu and the appropriation of rents that ensued .(7( Preferential credit from the state has allowed the development of capitalist production on these lands, thus raising differential rent . Again the concern is not solbly with distribution, but distribution has an important place . When we add, too, the power of internal distribution resulting from tariff protection, preferential tax treatment and so on, we can see how the politics of certain underdeveloped-country states turn on the issue of rent .

CONCLUSIONS . The preceding discussion suggests the following : 1 . Agriculture, urban property and mineral extraction require a distinctive treatment from other branches of production . Capital has been unable to break the dependence of production in these sectors on specific plots and, given the different fertilities and the non-reproducibility of land, there is no general tendency for value to fall to the level of the least-cost producer, as there is in other sectors . This is one material condition for the existence of difterential rent, and it is this which distinguishes ground rent from other (temporary) excess profits such as "technological rent" .



VALUE AND THEORY OF RENT

29

2 . I have argued that in order to analyse these sectors we require a general theory of the capital/land relation in addition to that of the capital/labour relation, but that any such theory of capital and the land must take into account not merely the characteristics of the land as use value, but as use value within capitalist relations of production . The capital/land relation can only be understood within the terms of the capital/labour relation : the conditions of a labour force cut off from its means of subsistence ; the circulation of agricultural outputs as commodities with market prices ; and capital's difficulties in subordinating land and labour in the agricultural labour process . The form of property in land under capitalism is quite distinct from the forms of landed property in previous modes of production . 3 . Property in land under capitalism is a relation of distribution rather than a relation of production . This particular monopoly allows the proprietor a share in the quantum of value produced by social labour, but it is a monopoly which has no direct bearing on production . This explains the use of the term modern landed property rather than capitalist landed property . 4 . Modern landed property has a contradictory relation with capital . As a monopoly of land against labour it provides a condition for capitalist production, but at the same time it is also a monopoly against capital . It is a fetter on capital and its accumulation, and this holds even where the ownership of land is in the hands of capitalist farmers themselves . 5 . Capital has tried three ways of overcoming this fetter . First it has extended beyond the range of existing modem landed property rights to "new lands", but in so doing it has had to establish these same rights as a condition for its own new production . It has reposed the fetter on a wider scale . Second it has tried to reduce the separation of ownership and production on the land by the encouragement of owner occupation . This has merely displaced the contradiction from that between landlords and capitalists to one between capital in general and many (landed) capitals . Third it has bombarded agricultural production with new techniques, raising the productivity of labour and the yield of land . This alone can erode the material basis of the power of landed property and the appropriation of rent . 6 . In spite of the fact that much agriculture still remains at the stage of artisanal production, of simple co-operation and manufacture, as does the building of houses, the reproduction of labour in the home, or private transportation, nevertheless capital still has the same drive to pursue the economy of time in these fields, to establish machino-facture and the real subordination of labour, or in other words to increase relative and not merely absolute surplus value . The capitalist laws of production apply to land-using industries as they do to all other sectors . One reflection of this is the tendency for concentration and centralisation in these industries, measured in terms of the size of capital invested rather than simply the topographical size of holdings . Any reforms couched in defiance of these laws - notably to establish a poorly capitalised, independent small farmer class as the backbone of productive agriculture, is already archaic and will be treated by history as such . 7 . Until land has been "really" subordinated, landed property and rent will remain significant . In underdeveloped countries their importance is still evident in agriculture . In advanced capitalist countries, the intensive application of capital has meant that agricultural rent has a) changed in form, appearing now as interest



30

CAPITAL & CLASS

and profit, and b) declined in relative if not absolute terms . The focus of the contradiction between capital and landed property has increasingly shifted to urban land and minerals . 8 . The state has always played a central part in i) establishing the contradiction between capital and landed property -enforcing the rights of landlords against labour, and ii) sponsoring attempts to surpass this contradiction - changing the form of landownership, controlling investment, credit, pricing and taxation in order to minimise the barrier posed by landed property to accumulation . The state plays this part because the market is inadequate as a mechanism to ensure that the law of value operates . The state enters to enforce this law, but being itself insulated from the discipline of the market, its actions too become problematic . It becomes an arena for a transparent struggle over distribution . The state's power and its consequences in relation to rent and landed property must form an important part of any general theory of capitalist government, particularly local government . 9 . This same power must also form a part of any general theory of nation state rivalries, and, when coupled with the tendency for capital to expand beyond the limits of existing modern landed property rights, of any general theory of imperialism . 10 . Finally, the issue of distribution raised by the theory of rent must be seen not in the static terms of Ricardo, but in relation to the pace, form and location of further accumulation . This was the main argument of the first part of this essay, and my insistence on the importance of the concept of absolute rent . The argument of the second part has been that the subordination of distribution to production and to the requirements of accumulation has been and continues to be problematic .

NOTES

1 2

3 4 5 6

Part I of this article appeared in Capital and Class no . 3 . Robin Murray works at the Institute of Development Studies, University of Sussex, Falmer, Brighton . On "demographic composition" see Cramsci, 1971, pp . 280-287 . Slicher van Bath, 1963, pp . 153-155 . Van Bath suggests that some of the Cistercian monasteries had over-expanded by the late 13th century and were forced to break up . On agricultural development in medieval Europe see also Dubuy, 1968 . This is one of the functions of aid loans, to cement an alliance between international capital and a local propertied class . For earlier figures see Vergopoulos, 1974, p . 180 . The recent figure is from Revell, 1967, p . 324 and refers to 1961 . See the article on the largest of the beef feedlots in the USA, in fortune, January 1973 . See the figures in Bellerby, 1956, where he calculates the proportion of rent in farm income for major Western countries . The figures for rent and interest as a proportionof net farm annual average income are summarised in the accompanying table :



31

VALUE AND THEORY OF RENT

Table I Figures in Percentages of Net Form Annual A verage Income

UK

Eire

USA

NetherCanada lands France Sweden

Rent

c. 1910 mid 1920's late 1930's

18 13 12

n .a. 5 4

26 25 21

n.a . 16 15

34 32 27

22 13 14

n .a . n .a . 8

Interest

c. 1910 mid 1920's late 1930's

12 18 11

n.a. 14 10

8 6 6

n .a . 10 9

8 7 8

3 5 7

na . n .a . 6

Source: Bellerby p .205 More recent figures confirming the decline are presented in Denman and Stewart, 1959 . In as much as land values reflect rent, the decline in the relative significance of land in the total economy can be seen from figures in Revell, 1967 . The figures are summarised in the Table below :

Table 2 Figures in Current Prices, E billion

1900 1920 1937 1948

Land

All Physical Assets

Financial Claims

1 .3 2 .1 1 .4 3 .6

5 .8 19 .4 13 .6 18 .7

8 .5 16 .5 30.2 57 .2

Source: Revell, p.64 . In 1900 "all land" constituted 22% of Physical Assets . By 1948 this had fallen to 12 .5% and by 1958 to 9%, with agricultural land making up a third of the value of land as a whole (i . e . 3%) . The comparable figures in 1958 for the United States were almost exactly double (19% for all land, 6% for agricultural land) (see Revell, 1967 p . 295) . 7 Leys (1975) contains a wealth of material and a strong thesis supporting a "landed property" interpretation of the post-independence period .

BIBLIOGRAPHY Amin, S ., 1974, "Le capitalisme et la rente foncibre : Ia domination du capitalisme sur ('agriculture", in S . Amin and K . Vergopoulos, La Question Paysanne et le Capitalisme, Editions Anthropos-IDEP . Ball . M ., 1976, Marx's Theory of Rent and the Role of Landed Property, Mimeo . Bellerby, ) .R ., 1956, Agriculture and Industry, Relative Incomes, Macmillan .



32

CAPITAL & CLASS

Bicanic . R ., 1969, "Turning points in economic development and agricultural policy" in Papi and Nunn, 1969 . Bortkiewicz, L . von, 1910-11, "Die Rodbertus'sche Grunderententheorie and die Marx'sche Lehre von der absoluten Grundrente", in Archiv lur die Geschichte des Socialismus and der Arbeiterbewegung . Italian translation in L . von Bortkiewicz La teoria economica di Marx . Einaudi . Turin 1971 . Bradby, B ., 1975a, "The Destruction of Natural Economy in Peru . a problem of the articulation of modes of production" in Economy and Society . 1975b . "Equal Exchange and the Imperialism of Trade" in : Bulletin of the Conference of Socialist Economists, No . 12, Autumn . pp . 1-12 . Breugel, I ., 1975, "The Marxist Theory of Rent and the Contemporary City : a Critique of Harvey", in Political Economy and the Housing Question, papers presented at the Housing Workshop of the Conference of Socialist Economists, London . Buchanan . D .H ., 1929, "The Historical Approach to Rent and Price Theory", Economica, reprinted in W . Fellner and B .F . Haley . Readings in the Theory of Income Distribution, 1946 . Bye, C R ., 1940, Developments and Issues in the Theory of Rent, Columbia U .P . Byrne, D . and Bierne, P , 1975, "Towards a Political Economy of Housing Rent" in Political Economy and the Housing Question, op, cit . Catephores . C . and Morishima, M ., 1975, "Is there an Historical Transformation Problem?" in Economic Journal, June . (See also R . Meek's reply and C . Catephores and M . Morishima's rejoinder in Economic Journal, June 1976 .) Clarke, S . and Ginsburg, N , 1975, "The Political Economy of Housing", in Political Economy and the Housing Question, op . cit . Crotty . R ., 1966, Irish Agricultural Production : its volume and structure, Cork U . P . 1977, "Capitalist Colonialism and Peripheralisation : the Irish case ." Paper presented to the European Periphery Conference, IDS, Sussex . November . Cutler, A ., 1975, "Ground Rent and Capitalism", in Critique of Anthropology, 4 & 5, Autumn . Denman . D .R . and Stewart, V . F ., 1959, Farm Rents, Allen and Unwin . Denman . D .R . led), 1%2, Contemporary Problems of Land Ownership, Cambridge . Dubuy, G ., 1968, Rural Economy and Country Life in the Medieval West, Arnold . Edel, M ., 1976, "Marx's Theory of Rent : Urban Applications", in Housing and Class in Britain, papers presented at the Political Economy of Housing Workshop of the Conference of Socialist Economists, 2nd volume . Emmanuel, A . . 1972, Unequal Exchange, New Left Books . Fetter, F . A ., 1901, "The Passing of the Old Rent Concept" in Quarterly Journal of Economics, May . Ceorgescu-Roegen, N , 1960, "Economic Theory and Agrarian Economics", in Oxford Economic Papers, Vol . XII . Gramsci, A ., 1971, "Americanism and Fordism" in Prison Notebooks, Lawrence and Wishart . Harvey, D ., 1973, Social Justice and the City, Arnold . Ive, G ., 1975, "Walker and the 'new conceptual framework' of Urban Rent" in Antipode, Vol . 7, No . 1 . Kautsky, K ., 1970, La Question Agraire, Maspero .



VALUE AND THEORY OF RENT

33

Lafond, 1 ., 1976, "Paysannerie et Capitalisme : Analyse des principales tendances du developpement recent de ('agriculture francaise", Centre d'Etudes Prospectives d'Economie Mathematique Appliquees A la Planification, 142 Rue du Chevaleret, 75013 Paris . November, Mimeo . Lehmann, D . fed), 1974, Agrarian Reform and Agrarian Reformism, Faber . Lenin, N . Theory of the Agrarian Question, Selected Works, Vol . XII . Let's, C . . 1975 . Underdevelopment in Kenya, Heinemann . Lipietz, A ., 1974, Le Tribut Foncier Urbain, Maspero . Marx, K . Grundrisse, Penguin, 1973 : Capital Vol . III Moscow, 1%2; Theories of Surplus Value Vol . I, Lawrence and Wishart 1%9, Vol . II Moscow 1968, Vol . III Lawrence and Wishart 1972 ; Letters to Kugelman, 1934 . Papi, U . and Nunn, C . eds, 1%9, Economic Problems of Agriculture in Industrial Societies, Macmillan . Postel-Vinay, G ., 1947, La Rente Foncit re dans le Capitalisme Agricofe, Maspero. Renborg, U ., 1969, "Tendencies towards concentration and specialisation in agriculture" in Papi and Nunn, op . cit . Revell, 1 ., 1%7, The Wealth of the Nation, Cambridge . Rey, P .P ., 1973, Les Alliances de Classes, Maspero . Ricardo, D ., 1971, Principles of Political Economy and Taxation, Penguin . Ricci, D.M ., 1%9, "Fabian Socialism : a Theory of Rent and Exploitation" in journal of British Studies . Vol . 9. Robinson, E .A .G . . 1969, "The desirable level of agriculture in the advanced industrial economies" in Papi and Nunn, op . cit . Slicher van Bath, B .H ., 1%3, The Agrarian History of Western Europe, A .D . 500-1850, Arnold . Vergopoulos, K ., 1974, Capitalisme Difforme : le cas de l'agriculture dans le capitalisme, in S . Amin and K . Vergopoulos, op . cit . Walker, R .A ., 1974, "Urban Ground Rent : Building a new Conceptual Theory" in Antipode, Vol . 6, No . 1, April . 1975, "Contentious Issues in Marxian Value and Rent Theory : a second and longer look", in Antipode, Vol . 7, No . 1 . February . Witksteed, P ., 1933, The Common Sense of Political Economy, Vol . 2, Routledge .

Erratum - Beechey : Some Notes on Female Wage Labour . Capital and Class 3 . The following acknowledgments were unfortunately ommitted from the published text : . "This paper was originally given at the Communist University Feminist Weekend School at Bristol . It was strongly influenced by discussions in the Women and Labour Process Group and by discussions with Feminist and Marxist comrades and colleagues in the Coventry-Birmingham area . I am particularly grateful to Michelle Barrel, Simon Clarke, Simon Frlth, Martin Legassick and Barbara Taylor who gave me detailed criticisms of the original paper .00 The reference to Jean Gardiner : 'Women and Unemployment' In footnote 23, pp . 63-4 should be deleted .

IDEOLOGY, CRISIS AND THE CUTS Kevin McDonnell[l] I THE THEORY OF IDEOLOGY Ideology is one of the concepts of Marxist theory which has been developed the least . The most influential approach in recent years has been inspired by the work of Althusser who constructs a theory of ideology as a relatively autonomous level, focusing on the category of the subject (ideology constitutes individuals as subjects and subjects them to a unique Other Subject) and on Ideological State Apparatuses . This approach is an understandable reaction to the reduction of ideology to mere illusion or falsehood produced by deliberate manipulation by the ruling class, but the attempt to formulate a regional theory of ideology is misguided . In an earlier number of Capital . & Class . Clarke has argued that in capitalist society all social relations are subsumed under the dominant relation of production, becoming developed forms of that relation and moments in the total process of production . He continues : "The economic, political and ideological are forms which are taken by the relations of production . Political and ideological relations are as much relations of production as strictly economic relations, for they are specific forms of the social relations within which production takes place . The Marxist theory of ideology and the Marxist theory of the state have to show how and to what extent political and ideological relations are forms of the relations of production as moments of the total process of social production subordinate to the relation between capital and labour which is constituted in the immediate process of production" (1977, p . 10) . This article attempts to use a theory which relates ideology to the central dynamic of capitalist society, the accumulation of capital . It is intended to parallel the work on the state by Holloway and Picciotto who began by criticising Poulantzas' attempt to construct a regional theory of the state based on its role in maintaining social cohesion, because his approach tends to reinforce the separation between state and civil society on which capitalism depends for its survival (Holloway & Picciotto 1976a, pp . 4-12 . See also 1976b and 1977) . To find a theory of ideology which does,relate it to the process of accumulation, we must return to the writings of Marx and in particular to the concept of fetishism contained in his major work Capital . This concept is presented most



IDEOLOGY, CRISIS AND THE CUTS

35

clearly in the section on the fetishism of commodities(1( . There Marx shows that in commodity societies relations of production inevitably take the form of things and indeed cannot be expressed except through things . Thus things acquire a particular social form and play an important social role . In exchange, production relations across the social division of labour are established directly between products and only indirectly between producers . Producers appear in the market as owners of commodities, of things . In this way the fetishism of commodities tends to focus the consciousness of those involved in production on exchange and upon production in terms of the categories of exchange . Fetishism does not simply consist of social forms being ascribed to things, for commodities really do possess these social forms in commodity society ; but in failing to understand that these forms arise from the specific social relations of that society . Instead the social forms are explained in terms of the natural characteristics of the things themselves . As the social forms of things appear to be permanently fixed rather than the expression of relations of production, they are important in forming consciousness and therefore in maintaining the stability of society . The concept of fetishism lies behind the distinction between the outward appearance or surface of phenomena and their inner essence or internal connection which is continually invoked in Capital . This distinction implies that ideology arises from the opacity of the real . The forms of appearance in which social relations present themselves to people conceal the real relations which produce these appearances, but ideology is more than mere subjective illusion . The structure of the real social relations is such that it presents the forms of appearance as immediate and obvious . For these forms of appearance to be corfvincing, they must make reality intelligible and provide some guide for action . For ideology to be widely accepted, there must be a sense in which it "works", whatever its limitations . As the phenomenal forms provide a guide for thought and action no correct analysis can dismiss them, but must incorporate them as an aspect of the real relations . The phenomenal forms and the real relations are both part of the reality . Marx's analysis of capitalist production examines the form in which it appears to participants and is understood by bourgeois economists i .e . the categories of price, profit, etc . He does not simply dismiss these forms as mere illusion, but shows why things appear this way . Marx's discussion of the effects of exchange and competition on the consciousness of capitalists gives one example of the way in which the consciousness of individuals is affected by their place in the relations of production of capitalist society . The laws of capitalist production, and in particular the need to increase relative surplus value, are Imposed on individual capitalists not as a dynamic inherent in their own capital ; but as the pressure of competition from their fellow capitalists . Competition is merely the form in which the pursuit of surplus value is manifested and not its origin . At the same time however, while competition only realises the laws of capitalist production, It is the necessary form in which they are realised . It is the mechanism whereby individual units of production are made to conform with the interests of capitalist production as a whole (thus, like other phenomenal forms, it is more than an illusion) . Production relations impress themselves on participants as exchange relations . To the individual capitalists it seems that the surplus originates when they realise the value of their commodities . For them the cost price, because it is the price they



36

CAPITAL & CLASS

must realise for the conservation of their capital, constitutes the value of a commodity and the excess value comes from selling a product above its value . The excess value appears to arise in the process of circulation . Surplus value then seems to derive from the total capital invested, to uniformly result from its parts . This means that no distinction is made between constant and variable capital . The relation between the surplus value and the component parts of capital fails to interest the capitalists . They make their calculations in terms of the rate of profit rather than the rate of surplus value . The former may appear at first as merely a slightly different way of expressing the latter, but it is a . form in which the origin and existence of surplus value is mystified and obscured . Competition reinforces this process . It produces an average rate of profit as the prices of commodities oscillate around what Marx calls their prices of production and not their values . As the profit added to the cost price is not determined solely by the limits on the formation of value in the capitalists' own particular spheres, it seems to them that it derives completely from outside influences . Of course prices of production are calculated on the basis of values and value remains the dominant moment in production, but for the capitalists the basis for the value of commodities in the labour contained in them is completely obscured . As Marx writes : "Thus everything appears reversed in competition . The final pattern of economic relations as seen on the surface, in their real existence and consequently in the conceptions by which the bearers and agents of these relations seek to understand them, is much different from, and indeed quite the reverse of, their inner but concealed pattern and conception corresponding to it" (Marx 1974 Vol . 3, p . 209) . Marx's account provides us with an extremely convincing explanation of how the consciousness of capitalists is systematically engendered by their place in the relations of production and how this consciousness takes a form which corresponds to the surface appearance of production and exchange in capitalist society which in turn follows from the real relations . There are two limitations on the value of the concept of fetishism for a theory of ideology . Firstly we have to include in any theory the use of ideology as a deliberate strategy . It does not simply emerge from the real relations, but is generated inside institutions such as government departments, political parties, trade unions and universities ; and these are areas of struggle themselves between conflicting ideologies . There are several different strands of ideas associated with both the bourgeoisie and the proletariat . The policies adopted by the Labour party today are significantly different from those implemented in 1964 or 1945, and Monetarism is quite distinct from Keynesian or Neo-classical Economics . Ideology must be examined both in its contradictory forms and historical development . However, the ideas that are struggling for dominance in these various institutions have a material basis . They do not appear out of the sky, simply thought up by a group of people sitting around a table in a discussion . They relate back to the understanding of reality engendered in the participants by their places in the relations of production . Fetishism is the thread which underlies particular ideologies and to understand them we must look at people's day to day experiences,



IDEOLOGY, CRISIS AND THE CUTS

37

the activities they engage in at work and outside . While some people remain completely confined within fetishised appearances, others who occupy a different place in the relations of production have a different potential for seeing through the phenomenal forms . Working class consciousness is both fetishised and contains elements which challenge the fetish . In it we can see aspects of both the surface appearance and the real relations . This article focuses on ideology as it is deliberately propagated, but we must remember that this level is possible only because of the first level - the way reality presents itself . The second limitation is that experience of fetishised appearances or the ideological forms which are based on them is not given, is not unproblematic . If it were automatic there would be no way they could ever be challenged . Different individuals will respond in different ways . Some will accept them unquestioningly, others with doubts and reservations, and still others will reject them . Militant workers will interpret their work experience differently from their fellow workers . However, these differences should not be reduced to qualities possessed by individuals (their intelligence, insight, etc), but depend on their previous experience and are thus related to class . On the whole, the categories people use to understand the situations in which they are placed come from activities and institutions (the family, school, mass media, etc) that are subject to the same fetishisation and tend to enforce acceptance of it . While there will be different responses to a particular account of social reality, it is the patterns of similar responses which are more significant . Therefore even given these limitations the concept of fetishism provides us with the best approach we have for the moment for a theory of ideology .

II CRISES AND THE RESTRUCTURING OF CAPITAL The aim of this article is to apply the approach to the theory of ideology outlined above to an area currently of considerable political importance . This is the debate for and against the cuts in public expenditure in Britain over the last few years . It must be seen in the wider context of the various concepts, facts and opinions which we have been saturated with, describing and explaining what is called "Britain's Economic Crisis" (the phrase is placed within quotation marks to question whether it is a uniquely British or economic phenomenon) . The best way to begin this analysis is to examine the most adequate theory of crisis provided within the Marxist tradition and the understanding it gives of the present crisis in Britain(2) . Capitalist production constantly replaces living labour by machinery (Marx referred to this as an increase in the organic composition of capital) and this produces a tendency for the average rate of profit to fall . There are various counter tendencies which tend to prevent this fall e .g . increasing the intensity of work, cheapening constant capital and depressing wages below the value of labour power . The tendency of the rate of profit to fall should not be interpreted the way some commentators have, as either an inevitable, deterministic law or merely an empirically observable decline over the recent period . The process of accumulation gives rise to both the tendency and the counter tendencies and what is observable is not necessarily an actual decline in the rate of profit, but the



30

CAPITAL & CLASS

effects of the contradiction between them . Accumulation is not a smooth, continuous process . The contradictions within it are ever present, but they are manifested in a much more acute form during periods of crisis . It is then that more widespread and large-scale attempts are made to mobilise the counter tendencies and by restructuring capital contain the contradictions of accumulation . A successful restructuring restores accumulation and provides a path out of the crisis . However, all the counter tendencies have their own inherent contradictions which serve ultimately to intensify the underlying contradiction expressed in the tendency . Therefore barriers to accumulation manifest themselves again leading to further crises and further restructuring . The continual mobilisation of the counter tendencies in the form of the restructuring of capital, seen in its most pronounced manifestation in times of crisis, is central to an understanding of capitalist production . Despite this it is neglected in many Marxist analyses of the crisis . Restructuring tends to reinforce two important tendencies in capitalist production - its concentration and its centralisation . During crises some capitals are physically destroyed through disuse while the value of others depreciates . This paves the way for a series of mergers and takeovers with the upturn in the economy . Restructuring takes place most obviously in the labour process . There we find such changes as : massive automations, deskilling and dividing jobs into parts, redundancies and manning agreements, speed ups, increasing the mobility of labour, longer hours, casualisation, restructuring the form of wages, increased use of job evaluation, tougher disciplinary measures and so on (for an account of these changes in a particular sector, the motor industry, see Institute for Workers' Control 1977 and Humphrey 1977) . The effect of these measures reorganising the labour process is to make work more regulated and remove the defence mechanisms (the so-called "restrictive practices") which workers have built up over years of struggle . The present phase of capitalism is characterised by increased state intervention in the restructuring of capital . This takes a number of forms . firstly there is state industrial policy, its provision of finance, advice and supervision to industry, seen in its most extreme form in nationalisation . Secondly the state can use various measures to encourage or postpone crises . Another approach adopted is to intervene in the struggle between capital and labour in distribution by means of incomes and fiscal policies . Yet another strategy is to cut public expenditure . This lessens the burden on capital of the amount of surplus value diverted to the state (either directly or indirectly via income tax) and, more importantly, ensures that it goes to areas more beneficial to accumulation (this account is rather crude and public expenditure cuts will be dealt with in greater detail in the next section) . The restructuring of capital then affects much more than simply the labour process . It should also be clear that it is wrong to see restructuring as a purely economic process consisting of the reorganisation of the value composition of capital . Crises involve the totality of capitalist social relations and threaten the continuation of the process of accumulation . Therefore restructuring is a complex economic, political and ideological process to ensure the survival of capitalism and must be understood as class struggle . It involves a struggle by capital to maintain the conditions of its existence and gives rise to a continuous struggle by the proletariat to resist and sometimes challenge the attempted reorganisation .



IDEOLOGY, CRISIS AND

THE CUTS

39

Capital uses the crisis as a new way of gaining the initiative . It seeks not only new ways of exploiting workers but new ways of command over them . Restructuring involves an attack on the working class by creating and exploiting new types of workers . Changes in the organisation of production produce changes in the structure, or decomposition, of the working class . In the twentieth century this has typically taken the form of the replacement of skilled workers by assembly line production begun in the USA by Henry Ford . Working class strength is an essential element in explaining the timing and intensity of crises . As Guttmann writes : "As long as labour is the source of wealth, appropriated by capital in the form of surplus, the required exploitation will face its limits through the working class - this is the context within which we have to tackle the Law of Value" (1976b, p . 2) . It is this strength, particularly in the production process, which poses a substantial barrier to capital's desire to increase profits . Crises and restructuring occur when it is no longer possible for capital to improve profitability without altering the balance of power between capital and labour, without a major attack on the working class . The effect of them, however, is to reproduce contradictions at a higher level . The working class is able to turn the new organisation of production to its advantage and recompose itself in a way which meets capital's initiative (for an example of this process' see the discussion of the replacement of piece work by Measured Day Work in the next section) . Some Marxists examine working class action without any analysis of the process of accumulation, when in fact the possibilities for struggle are contained in the stage of development of production . The approach developed here differs from the two Marxist theories of crisis which have received the most attention in Britain . One, associated with Yaffe, argues that the tendency for the rate of profit to fall follows logically from the concept of capital itself ; while the other, associated with Glyn and Sutcliffe, attributes crises ;o the wages struggle of the working class[3) . To reject these two accounts is not merely to argue that a complete explanation is one that adds analysis of class struggle to that of the accumulation process . Accumulation is the basic form class struggle takes in capitalist society (although to achieve socialism class struggle must transcend this form) . They are two levels at which the same object can be viewed. If we look at any of the counter tendencies, for instance the pushing of wages below the value of labour power, we see that this process is nothing other than a class struggle initiated by capital and resisted by labour . Holloway and Picciotto express the relationship between accumulation and class struggle well : "Capital is a social relation of exploitation, and the accumulation of capital is the form taken by the class struggle to recreate, develop or destroy that relation" (1977, p. 86) . Every crisis poses a potential threat to the fetishised social relations of capitalist society and restructuring involves a reimposition of those relations . As restructuring is a class struggle its outcome is by no means inevitable one way or the other . Although the word crisis of often used to mean a mess, muddle, difficult or dangerous predicament, it was first used to refer to those crucial turning points in the progress of a disease that are vital for the beginning of recovery or death (Gamble & Walton 1976, p . 2) . It is the sense of crisis as a turning point which must be stressed . There is no inevitable collapse as all the tendency for the rate of profit to fall guarantees is a series of crises . The tendency exists all the time at the



40

CAPITAL & CLASS

level of real relations, but only in periods of crisis is it manifested at the level of appearances in an actual empirical decline . As the outcomes of crises are uncertain what we can say about them in general is limited . It is more important to move on to historical analyses tracing how the counter tendencies were mobilised in a particular country at a particular time .

Ill THE CURRENT BRITISH CRISIS (a) From Boom to Crisis The crisis in Britain can only be understood in relation to the international crisis . However, this discussion will be largely confined to Britain, although there have been parallel developments elsewhere to many of those described . (An account of the international situation in the post war period can be found in the article by Itoh also in this issue) . The rate of profit is at the heart of the crisis of capitalism . Throughout the period since the Second World War it has declined in Britain and by the 1970s it was extremely low . Glyn and Sutcliffe estimate that between 1964 and 1970 the share of profits going to capital almost halved (1972, p . 58) . We also find that growth, increases in productivity and the level of investment were far lower than in the other major capitalist countries . The effects were a declining share in world trade, a chronic balance of payments deficit, accelerating inflation (both earlier and more severe than elsewhere) and numerous devaluations of the pound . One of the main causes of the decline was a lack of investment . It is not enough to attribute the fall in investment to greed or shortsightedness . Unless there are profits to be made capitalists will not advance their capital and they have been faced with declining opportunities for profitable investment . To explain this we have to trace a brief history of the post war period in Britain(4l . The Second World War solved the capitalist crisis of the 1930s and created again the conditions for profitable accumulation . In Europe fascism defeated the working class and destroyed much of industry, allowing it to be rebuilt with production organised to increase capital's control . In Britain the war revived the economy and post war economic policy was along Keynesian lines with the state fulfilling a new role as overall co-ordinator and stimulater of the economy. The policy was one of expansion, maintaining demand by allowing wages to rise and aiming to achieve full employment by increasing public expenditure . This enabled the working class to be integrated into a system that seemed to pay off . The trade unions co-operated closely with the Labour government elected immediately after the war and the Conservatives on their return to office avoided any direct challenge to them . Working class demands were allowed to become a motor of capitalist development . Wage rises were permitted with productivity increases and rises beyond them were covered by mild inflation . A number of other factors contributed to the post war boom : cheap raw materials from the colonies, decreased competition between capitalist nations brought about by the dominance of the USA, the opening up of new areas for investment and technological advances in the labour process . Simultaneously developments were taking place which would bring an end to the boom . Independence and increased actions in defence of their interests by



IDEOLOGY, CRISIS AND THE CUTS

41

many third world nations, as well as the rapid development of the economies of Japan and the German Federal Republic meant that Britain lost ground in the world market . The City's role as a financial centre and the attempt to maintain sterling as a reserve currency contributed to the difficulties . As the British economy had matured earlier than those of the other advanced capitalist countries, the scope for concentrating investment in new industries and new technique was less . However, the main factor was the strength of the working class . The British labour movement was not destroyed by fascism and during the post war period increases in pay came to be regarded as natural . As indicated in the previous section, it is resistance to changes in the production process, and not wages, which is crucial . The strength of the British working class was in the shop steward movement and its success in confining negotiations to the plant level where it is more difficult to control them . Capital found its ability to secure increases in productivity and to control wages without resistance strictly limited . The power of workers to successfully defend themselves against attempts to restructure production meant that the same machinery produced lower productivity when compared to Japan or the GFR . Economic policy under the Conservatives in the 1950s and 1960s followed cycles of stop-go . As each one was unsuccessful in producing any real increase in productivity and investment it was followed by another . Lack of any effective control over the working class led to attempts to introduce incomes policy, but these attempts met with only shortlived success . British economic policy largely consisted of reactions to the consequences of the underlying problems of the economy (balance of payments deficits, currency crises), without any real attempt to tackle these problems (low investment, low productivity) themselves . The Labour government came to power in 1964 bringing with them the "white heat of technological revolution" to tackle the "backwardness" of British industry . To restructure capital and solve the problem of the lack of investment their policy consisted of more direct involvement of the state in the production process . The first step had been taken by the Tories in 1962 with the setting up of NEDC and labour followed it with the National Plan, the Ministry of Technology, the National Research and Development Council and, most important of all, the Industrial Reorganisation Corporation . The latter held shares in and made loans to private industry, the main aim being to encourage mergers such as those which produced GEC and British Leyland . These were intended to increase international competitiveness and the possibilities for rationalisations . The aim was to tackle the strength of the working class in production at a time when reports such as that by the Donovan Commission stressed the need to deal with overmanning and restrictive practices which had become significant causes of strikes . The 1960s was a period of numerous productivity deals which increased wages without substantially affecting productivity . Another important attempt to change the organisation of work was to alter the wage system . The replacement of piece work by Measured Day Work was intended to shift negotiations to a national level and therefore to increase control over them . It has revealed drawbacks of its own leading to national strikes like that of the miners which demanded an across the board increase for all . Labour also took other counter measures to improve the economic situation . These included incomes policy and the attempted introduction of "In Place of Strife", which set



42

CAPITAL & CLASS

out a legal framework for trade unions that curbed the power of the rank and file . Inflation had grown . It was no longer a stimulus to expansion, but was out of control . The 1960s saw a major upsurge of strikes, most of them unofficial . The breaking of the incomes policy in 1969 which led to a wages explosion and the defeat of "In Place of Strife" coincided with a new period of class struggle during 1968-69 in many European countries like France and Italy . By the beginning of the 1970s all the advanced capitalist countries were suffering from a recession posing the first major international crisis for capitalism since the war . The Conservative government elected in 1970 introduced a totally new strategy . They dismantled the IRC and the interventionist structure set up by their predecessors . Economic crises were to be allowed to force unprofitable firms or "lame ducks" into bankruptcy . It was hoped that increased competitiveness, aided by entry into the EEC, would produce rationalisation and modernisation . The belief in a free market economy was once again to the fore . Statutory incomes policy was rejected as unemployment plus strict control of public sector increases would be used to achieve wage restraint . They also did what Labour failed to do and introduced the Industrial Relations Act to legally control the unions . A number of bankruptcies of major companies like Rolls Royce and Upper Clyde Shipbuilders forced the Tories to come to their aid, while strong working class opposition to the Industrial Relations Act led to the freeing of the Pentonville dockers after which the Act was rarely applied . The public sector wage increase limit led to a large number of strikes including successful ones by the miners and the railway workers . The effect was that by 1972 there was a complete reversal in Conservative policy . Acts were passed giving the government wider powers to grant aid to industry . They also brought in an incomes policy . Following the success of phase one of the policy there was a short boom during 1972-73 which subsided with no real improvement in the underlying weaknesses in the economy . To stand any real chance of being accepted the second and third phases had to give more scope for wage increases . At the same time a deflationary budget in December 1973 made cuts of 11,200 million in public expenditure . Then despite the fact phase three contained a relativities clause designed to avoid a confrontation with the miners, it was the second miners' strike which brought the government down . The boom of 1972-73 was the last attempt to restore growth by traditional Keynesian methods . Cuttmann in his analysis of recent economic policy gives the following reasons why the Keynesian approach has failed to solve the problems of the British economy (1976a, pp . 262-69) . Firstly, Keynesianism was never designed to solve serious structural problems, as it presupposes a long, continuous period of economic growth . Secondly, Keynesian methods have no direct effect on the crucial sphere of production and fiscal and monetary tools have proved increasingly inadequate . Thirdly, it involves a commitment by the state to a policy of full employment, which in times of crisis can be counter productive for capital . Fourthly, Keynesianism presupposes the integration of the working class and is unable to overcome the increasing resistance by labour to capital's efforts to restructure . Lastly, it does not succeed in resolving the contradictions of capitalist production, it simply covers over and delays them . Its continuous cycles avoid any real crisis which might serve as a "cleansing" mechanism for unprofitable capitals . Instead theeconomy proceeds from cycle to cycle with each one more inflationary



IDEOLOGY, CRISIS AND THE CUTS

43

and with less potential for growth than the last . This brings us to the measures adopted by the Labour government which came to power in February 1974 . The National Enterprise Board, while it does not possess all the powers laid out in the original Industry Bill, reasserts Labour's interventionist strategy . It is still intended to exert a greater influence over the policy decisions of the firms aided than did the IRC . Increasingly state aid is conditional on measures of restructuring being undertaken by these firms . A clear example is the recent NEB support for British Leyland, which was dependent on the introduction of the measures of reorganisation proposed in the Ryder and CPRS (Think Tank) reports and on agreements by the trade union leadership to refrain from industrial action . As a statutory incomes policy seemed impossible following the bitter struggle with the Tories, Labour negotiated a voluntary agreement or "Social Contract" with the unions . To create a suitable climate for agreement the March 1974 budget introduced various measures advocated by the TUC (food subsidies, higher pensions, etc), but did not restore the December 1973 cuts . Then in November 1974 it was announced that increases in public expenditure would have to be held below the average increase in national output and a limit of 2 .75% was set for the next four years . It soon became clear that the "Social Contract" was ineffective and leading to a wages explosion . From January 1975 onwards there was a long, sustained campaign by major politicians in the Labour party, aided by the press, to get a definite limit to wage rises . As a result of all the pressure the TUC agreed to a E6 limit from August 1975 . Two other factors were significant in enabling the government's victory : the defeat of the Labour left in the June referendum on the EEC and the deliberately created Sterling crisis in July . The E6 limit was followed in August 1976 by a second year incomes policy with a limit of 5% (maximum E4) . As well as incomes policy, the Labour strategy involved unemployment and cuts in public expenditure . While unemployment was never acknowledged to be a deliberate policy, its inevitability was continually stressed . In his April 1975 budget speech Denis Healey claimed that higher unemployment was part of the price we have to pay for the current level of inflation . The government has frequently warned that there can be no significant improvement in the immediate future . The April 1975 budget also cut public expenditure by E1,100m . Then, despite a statement by the Chancellor at the Lord Mayor's banquet in October that he planned no further cuts, public spending for 1976-79 was reduced by E4, 6 00m . i n February 1976 . This meant that expenditure for 1976-77 would be the same as the previous year, compared with increases of 5%, 5%, 8% and 4% over the previous four years (the first two of them under the Tories) . Further cuts followed in July 1976 of E1,000m for 1977-78 and in December 1976 of E2,500m for 1977-79 . The result is that expenditure for 1977-78 will be 3% less than the previous year, the first fall since 1969 . The present period has been one of working class retreat on many fronts . There has been no breach of the pay limits and the struggle against the cuts has been largely localised and fragmented . The workers involved in significant struggles have been either particular sectional groups or from small work forces e .g . Leyland toolmakers, Trico, Grunwick . Many capitalists have come to regard the Labour government as in their best interests, as witness the fall of the pound before the Liberal-Labour pact was sealed . In the discussions about a third stage of



44

CAPITAL & CLASS

the incomes policy the government, TUC and industry have been united in agreeing that the first two stages were too inflexible and differentials must be restored . As hopes for stage three have faded the government has relied increasingly on restricting the money supply and cutting public expenditure in the hope monetary controls, linked to the fear of unemployment, will produce wage restraint . Tax cuts were announced in March 1977 (they were said to be conditional on wage restraint, but were confirmed in July despite the failure to agree on a definite limit for pay rises) and again in November . In the November mini-budget for the first time in several years a rise in public spending, although a very small and not particularly significant one, was announced . We should not attach too great a significance to the defeats suffered by the working class . Capital has not succeeded in breaking their strength in the most important place, the production process, and it has still not found a strategy which solves the underlying problems of the economy . (b) Cuts in Public Expenditure

The cuts in public expenditure have become one of the most important nonKeynesian tools being invoked in the crisis, so it is worthwhile to examine them more closely . The two Marxist approaches to the cuts which have been most influential derive from the two theories of crisis mentioned above . These are Cough's analysis of the cuts as reducing the "social wage" of the working class and therefore part of the distributional struggle between capital and labour ; and Yaffe's account in which cuts are necessary because state expenditure reduces the amount of surplus value available for accumulation and thus inevitably intensifies the crisis(5) . The perspective on the cuts which is most consistent with the approach adopted in this article has been developed by Hirsch (1977) and Holloway (1977a and 1977b) . They argue that it is important, but not sufficient, to say that state expenditure diverts surplus value from accumulation . What is significant about the cuts is not only their quantative aspect, but also the way in which they attempt to render state expenditure more functional for capital accumulation . All spending is scrutinised in the search for "waste" . The cuts involve both the shifting of resources from one sector to another (e .g . from the social services to aid for industry) and changes within each sector to tie expenditure more closely to the needs of accumulation (e .g . the Great Debate in education) . The very term cuts is misleading as the reduction of state expenditure is only a particular historical form of its restructuring, and restructuring of state expenditure can occur without any quantitative change . To focus only on the quantitative aspect is to look only at the surface appearance . The fact that the most recent mini-budget actually included a small rise in public spending demonstrates the danger of campaigning against changes in expenditure only on the quantitative level . The needs of capital can only be determined in the most abstract terms . Failing accumulation may define a narrow corridor of possible actions, but no particular measures are inevitable . Hirsch argues that : "The concrete extent and precise manner of the performance of state interventions into the social process of reproduction can therefore not be fully determined by an analysis of the general structural relations and developmental



IDEOLOGY, CRISIS AND TILE CUTS

45

logic of capitalism . What reductions of accumulable surplus value by state taxation will still be accepted by capital, what restrictions on its standard of living the working class is ready to bear, to what extent damage can be caused to the environment - all this is also a question of historically changing relations of strength between classes" (1977, p . 4) . What is functional then will be determined by class struggle . Public expenditure will depend on the balance of forces between capital and labour and between fractions of capital, and this in turn will depend on developments in the accumulation process . This approach is more useful than the others mentioned because it sees the cuts as part of the restructuring of capital, which has been one of the main themes of this article . It also draws attention to the fact that different strategies for public expenditure will be advocated by different groups and this is what the next section will examine .

IV THE ARGUMENTS FOR THE PUBLIC EXPENDITURE CUTS In its struggle against labour in times of crisis capital makes increased use of ideological weapons . For most of the post war period it was assumed that crises were a thing of the past and that we had entered the age of the affluent society . While there was a continuous decline in profitability, openly manifested in the 1960s in balance of payment crises and devaluations of the pound, the major offensive to convince people they were in an economic crisis did not come until 1974-75 . It therefore coincided with various other measures to restructure capital like the increased aid to industry, the Social Contract and the cuts in public expenditure . As the campaign intensified "crisis" and "inflation" became household words . An atmosphere of imminent doom was created with talk of the future of "Democracy" being threatened . This section will examine .how a number of groups in Britain explained the crisis and what action they thought necessary to counter it . It will also consider their positions on the cuts . The groups discussed will be the Labour government, the Conservative party, the CBI and the Press . It helps us to understand the positions taken by these groups if we first look at recent developments in bourgeois economic theory . The previously dominant cost-push school, which attributes inflation and the crisis to the monopoly power of trade unions allowing them to initiate a wage-price spiral, has been increasingly challenged . The major alternative explanation of inflation has been advanced by the monetarists . They believe governments cause inflation and therefore the crisis by allowing the money supply to grow faster than output . This has occurred because governments since the Korean war have increased public spending to maintain full employment . The only way to prevent inflation is to drastically reduce this expenditure . Wage demands are not the cause of inflation, but the mechanism by which excess demand is transformed into price rises . Cutting state expenditure restores the responsibility of responding to wage claims to individual employers . This means trade unions do have the power to create unemployment . For if state aid and excess demand are ended, firms could no longer raise prices and excessive wage increases would mean bankruptcy . Another approach which has received considerable support is that of Bacon



46

CAPITAL & CLASS

and Eltis . They believe that the crisis is the result of the rapid growth of the nonmarketable goods and services sector, which is primarily the state sector . Their answer is to cut back on these services, thus releasing labour and productive capacity for the production of marketable goods . Both of these two new perspectives shift the emphasis from incomes policy to cuts in public expenditure . Many cost-push theorists are also beginning to see the need for the latter as well as the former, probably because the resulting unemployment makes cooperation with the incomes policies they advocate more likely . (a) The Government The first of the recent series of cuts were made in the Conservative budget of December 1973, but this section will only consider the positions taken since the election of the Labour government in February 1974 . Unfortunately it has been necessary to concentrate on government White Papers and speeches in Parliament, thus omitting other ways it conveys its views such as television broadcasts . It is likely that these would be similar in content but different in form, being more populist and exhortatory e .g . requests to give a year for Britain . To explain the crisis the government places the most emphasis on the series of oil price increases since 1973 which it believes contributed greatly to the increase in the public sector borrowing requirement (PSBR) and the balance of payments deficit (HMSO 1975a, p . 1 ; 1976a, p . 1 ; 1977a, pp . 1, 12) . This makes the crisis appear only a recent phenomenon, discouraging investigation of long term factors (as we shall see later the Conservative party finds an even more recent origin in the policies of the Labour government in 1974-75) . Making oil prices responsible for the crisis also attributes it to special circumstances not inherent in the British economy or capitalist production . Some factors which are long term and not external to the British economy are mentioned : slower growth (HMSO 1976a, p . 2) and lower productivity (HMSO 1977a, p . 11) compared with other countries, and sluggish investment and a declining share in world trade (HMSO 1977a, p . 12) . However, the poor performance in these areas is simply stated and never explained . The left of the Labour party, on the other hand, stresses similar factors but attributes them to the tendency of British capital to invest in fields which are profitable but do not benefit the British economy . The crisis is identified with "three acute problems" : inflation, the balance of payments deficit and unemployment (HMSO 1977a, p . 11) . Of these inflation is identified as the major problem (HMSO 1976b, p . 3), because the solution of the other problems depends on halting it and inflation "weakens mutual trust in our society and confidence in our institutions" . In his budget speech in November 1974 Denis Healey stated that he rejected cuts in public expenditure because the result would be a large drop in national output and a massive increase in unemployment . Now the government argues that expenditure is out of control and outstrips the growth in output . The acute problem of financing the public sector deficit is said to have led to the weakness of the exchange rate and the sharp increases in interest rates (HMSO 1977a, p . 12) . Apart from improving this problem, the cuts will make possible a shift of resources into industrial investment and exports (HMSO 1977a, p . 1) . If the demand on resources of public spending is contained the transfer of manpower and capital becomes possible . Another objective behind the cuts is to avoid the increase in



IDEOLOGY, CRISIS AND THE CUTS

47

taxation which is seen as the only alternative to a higher public sector deficit (HMSO 1977a, p . 1) . The discussion of taxation is intended to appeal to the individual taxpayer . It is unproblematically regarded as an evil, an undesirable interference with earnings . The word "tax" never appears in the White Papers without as its companion the word "burden" . Over the past few years the government has placed an increased stress on incentives . In his December 1976 minibudget speech the Chancellor referred to the problems already faced by people at work : "I do not believe that it would be right to burden them with the lion's share of the fiscal adjustment which is now necessary . Inadequate financial incentives to work and to invest could put our economic recovery at risk" (Hansard Vol . 922 No . 16 15th December 1976, p . 1526) . The cuts are also presented as part of a new strategy to eliminate waste and obtain value for money (HMSO 1975a, p . 9) . In practice increased efficiency is likely to mean redundancies, longer hours, more duties, keeping outdated equipment and so on . Little indication is given of why some areas of expenditure suffered drastic cuts and others less severe ones . This is especially so for those areas which did badly . All the White Papers do indicate two areas which would suffer least : measures in support of the industrial strategy and the social services (e .g . HMSO 1977a, p . 1) . The commitment to the social services, however, has undergone significant changes over the past few years . A very important part of the deal for the Social Contract was the subsidies in food and nationalised industries prices . By the 1975 White Paper these were being phased out, but some new measures on pensions, family allowances and housing subsidies were planned and welfare provisions were still presented as a key part of government policy (HMSO 1975a, p . 2) . Since then few important new measures have been announced and a statement declaring the welfare state to be essential in any civilised society is tagged on to the admission that there can be no improvements at present (HMSO 1977a, p . 14) . Similarly, despite various minor measures to reduce unemployment, its present "intolerable" level is tolerated . The only hope held out for increased employment is as a consequence of improved industrial performance in the future (HMSO 1977a, p . 14), when one of the main aspects of the restructuring of production is a reduction of manning levels . The immediate future is seen as a period of restraint, but in the long term there is the promise of prosperity helped by North Sea Oil, which is continually mentioned in the White Papers (e .g . HMSO 1977a, p . 14) . Success also depends on all members of society working together . In this the tripartite industrial strategy involving the collaboration of the trade unions and industry with the government has a key role . The continual use of the words "we" and "our" in the White Papers and - speeches is very significant . Phrases like "our endeavours", "our economic and industrial objectives" and how "we manage our affairs" (HMSO 1977a, p . 14) give the impression of a common national interest . Sometimes even the normally staid and academic White Papers attempt to strike a stirring note : "The programme set out in The Attack on inflation was designed to advert a threat which gravely menaced the prospects of our country . . . Above all, our people have shown that they have not lost the ability to work doggedly together in adversity . . so we can tackle with fresh hope the fundamental problems to be solved" (HMSO 1976b, p . 12) . The measures the government have advocated to tackle the crisis have



48

CAPITAL & CLASS

changed over the last three years . In the 1975 White Paper on public expenditure there were only a few scattered references to the problem of financing a debt . By 1976 there were more mentions of the problem, although these were mainly confined to a section on debt interest at the back of the White Paper . The PSBR is mentioned by name and the government's intention to reduce it clearly stated . Then in 1977 debt financing receives considerable attention in the opening introductory section and the PSBR is promoted to a key indicator of the crisis alongside inflation and the balance of payments deficit . Denis Healey began his December 1976 mini-budget speech by discussing the intended effects of his measures on the PSBR . Over the same period the commitment to tighter control of the money supply strengthened . One of the most important components of this mini-budget was the announcement of new limits on the money supply in the form of figures for the "domestic credit expansion" . The March 1977 budget gave prominence to the intention (reasserted in the July 1977 mini-budget) to keep within the PSBR limit and money supply range agreed with the IMF . The April 1975 budget had introduced for the first time cash limits and from 1976 onwards there has been an annual White Paper devoted to listing them . By his March 1977 budget speech the Chancellor was describing them as "new techniques of control which have proved their worth dramatically this year" (Hansard Vol . 929 No . 79 29th March 1977, p . 269) . There has also been a change of emphasis on the way to tackle inflation effectively . Measures to reduce the PSBR, control the money supply and introduce cash limits were initially taken without affecting the belief that incomes policy was the best way to reduce inflation . Thus the 1976 White Paper on public expenditure claimed inflation lay mainly outside its scope with good sense in pay settlements at the heart of the struggle (HMSO 1976a, p . 2) . Later the same year it was argued that pay restraint and price control would not be effective in reducing inflation unless the other aspects of economic policy were consistent with that objective . Control of the money supply and public spending including cash limits were specifically mentioned (HMSO 1976b, p . 9) . When hopes of a definite limit for stage three had faded cash limits assumed an even greater importance : "the assumptions used for cash limits will reflect the Government's policy on pay" (HMSO 1977b, p . 6) . The new emphasis placed on the money supply and cash limits shows the influence of the recent developments in economic theory described above and cast doubt on Denis Healey's statements in an interview on BBC television on 11th June 1976, when he described monetarism as a "trendy drug" some people have gone overboard for and stated that fixing a target and making it govern the rest of your policy did not make sense . This discussion of the strategies the government has adopted over recent years raises the question of whether or not the state has acted as an ideal collective capitalist and served the interests of capital in general as they are determined by the requirements of the accumulation process . There are a number of factors which discredit this view . Capitalism necessarily contains individual capitals whose interests contradict both one another and also their common long-term interest in the reproduction of the capitalist system . Hirsch has written : "The state's actions are reactions - even in the case of forward planning - to disruptions in the process of reproduction, if and to the extent that these disruptions give rise to (fractional) class movements, which potentially affect the conditions of



IDEOLOGY, CRISIS AND THE CUTS

4q

existence of the system of domination" (1977, p . 4) . The state reacts not to the contradictions of accumulation, but to their political consequences if these, actually or potentially, threaten its continuation . The reproduction of the interests of capital fractions within the state apparatus means that it cannot simply follow the interests of capital in general . Another consideration is that members of the state apparatus are not directly subject to the law of value . As the political is separate from the economic in capitalism, the state has developed its own external ways of intervening in accumulation . This mediation also distances the state's actions from the interests of capital in general . Holloway and Picciotto (1977, pp . 95-96) drawing on recent German theoretical work describe two of the most important forms used by the state as law and money . A third factor is that the state does not possess a sufficient understanding of the capitalist system to be able to pursue the interests of capital in general even if it desires to do so . This is because instead of perceiving the real relations which govern capitalist accumulation, it remains trapped at the level of fetishised appearances (this point will be developed in the last part of this section) . The state does not recognise that fundamental contradictions are inherent in the capitalist system, but believes the crisis can be solved if the correct policy decisions are taken . The fact that the state will take actions that can be seen to be counter to the interests of capital accumulation does not mean that it is neutral . It is both an arena for class struggle and a specific form of capital's domination . The rest of this article will describe some of the groups that seek to influence the state and the fetishised appearances to which they are also subject . (b) The Conservative party, the CBI and the Press

The problem faced in writing about the beliefs of the Conservative party is that what it says tends to be an inadequate guide to what it has actually done in office . There are various reasons for this : being the party of government has always been more important than any philosophical system ; the Conservative party has always been content to defend the existing order of society without trying to analyse it, as doing this might threaten the collaboration of the different groups which make up the party (see Gamble 1974, pp . 2-8 ; Harris, N 1972, pp . 13-15) . Despite many of its statements the post war Conservative government accepted the Keynesian consensus . It continued the role of the state as manager of the level of demand and emphasised growth and full employment . Most of the nationalised industries were not denationalised . Public expenditure was reduced only slightly and in 1958 the Chancellor Thorneycroft resigned when his policy of major cuts was rejected . By the 1960s public spending was increasing and the Tories lost the 1964 election on an expansionary programme . As the crisis developed the right wing of the party increased its influence . Enoch Powell was particularly successful in gaining support from the owners of small businesses and the lower middle class . The Conservative government elected in 1970 was committed to a non-interventionist state and cuts in public expenditure . The problems encountered forced it to change course, but after the 1974 election defeat and the election of a new leader in Margaret Thatcher the party swung back again, On BBC radio she declared herself in favour of a decisive break : "People felt we were becoming a pale version of the Socialist party . That won't do" (The Guardian 20th February 1975) . In its latest programme The Right Approach published in October 1976 the



50

CAPITAL & CLASS

Tory party, while acknowledging the effect of oil price rises (Conservative party 1976, p . 9), gives as the "major cause" of the crisis the policies of the previous Labour government (p . 21) . In particular it mentions the high proportion of resources taken by the public sector, the high rates of taxation and the various restrictions and controls on industry (p . 10) . Like the Labour government it identifies the crisis with inflation, the balance of payments deficit and unemployment . The key to prosperity is to restore the lost confidence and eroded profits of industry (p . 28) . Repeal of the 1975 Industry Act and abolition of the NEB are promised (p . 32) . In some exceptional circumstances intervention in industry may be necessary (p . 31), but the major role of the state is as "trustee of the whole community in any economic system, holding the balance between different interests" (p . 18) . This is done not by intervention but "dialogue and a constructive voluntary partnership" and providing a climate within which industry can thrive (p . 32) . If inflation is the key problem then a disciplined monetary policy and public expenditure cuts are the ways to deal with it (p . 24) . In her reply to the March 1977 budget Margaret Thatcher argued that inflation did not "come about in any way through wage inflation but, indirectly, through the level of Public Sector Borrowing Requirement and public spending" (Hansard Vol . 929 No . 79 29th March 1977, p 291) . The Tories stress that their argument is not that all public spending is bad, but that we can only spend as much as we can afford (Conservative Party 1976, p . 27) . They also believe cuts will discourage dependence on the state by making it pay to work (pp . 11, 58) . Like the Labour government they do not specify in detail which areas should suffer, apart from "identifiable Socialist policies", the various subsidies and measures which involve waste and extravagance (p . 25) . The Conservative party believes restraint in pay bargaining is necessary, but an incomes policy is rejected for the present (although it is not ruled out for ever) . The Social Contract is condemned as giving trade unions too much influence over government policies (pp . 37-38) . Much more emphasis is given to restrictive practices as a cause of industry's troubles than the Labour government does (p . 31) . The "doctrinaire Socialist" pursuit of equality has throttled initiative and the Tories promise to reduce the "tax burden" when elected (p . 41) . The Conservative party addresses its message to the "individual citizen" : "Our policies are designed to restore and defend individual freedom and responsibility . We mean to protect the individual from excessive interference by the State or by organisations licensed by the State, to stop the drift of power away from the people and their democratic institutions, and to give them more power as citizens, as owners and as consumers" (p . 71) . The Tories openly admit the consequences of some of the freedoms they want to safeguard : "So long as success and ability are rewarded - as they must be if we are not to become paupers - there will be classes" (p . 14) In a famous speech Margaret Thatcher said : "Opportunity means nothing unless it includes the right to be unequal . Let some of our children grow tall, and some grow taller still if they have it in them to do so" (The Guardian 16th September 1975) . One of the essential freedoms is to own property : "Private ownership of property is essential if we are to encourage personal responsibility and the freedom that goes with it . Property diffuses power, increases choice and is an important source of independence" (Conservative party 1976, p . 17) . Of course the Tory concern with freedom



IDEOLOGY. CRISIS AND

THE CUTS

51

is selective . The vast majority will not he able to make use of the choices in education or medicine if a private alternative is provided . and the effect of the cuts is to reduce the "freedoms" open to them . We find that the opponents of freedom who are always cited are the trade unions and the person whose freedom the Tories are most concerned about at the moment is George Ward of Grunwick . The Conservative party appeals to the idea of a national interest just like the Labour government . We have already noted references to "the whole community" and "the people" and the Tory programme is dotted with mentions of "national prosperity" and "the nation" and so on (pp . 28, 71) . As the measures taken by the Labour government have resembled more and more those advocated by the Tories, the Conservative response has been a mixture of "I told you so" and a questioning of whether Labour really believes in the measures . Replying to the December 1976 mini-budget Sir Geoffrey Howe welcomed the "reluctant and belated conversion" to Conservative policies on money supply and public expenditure, but attributed the change to the IMF . He criticised the concentration of the cuts on capital rather than current expenditure and called for more to be done to restore incentives . Margaret Thatches s response to the March 1977 budget was that she was glad the Chancellor was repenting the high level of direct taxation he had imposed on the people . She criticised the lack of help for those at the top of the tax scale and the increased tax on petrol . The contents of the budget . she thought, were due to the IMF and Labour's desire for political survival . Sir Geoffrey Howe welcomed the strict controls on the PSBR and the money supply in the July 1977 mini-budget . tie said he shed no tears at the death of the Social Contract which had done great damage to the country's economy, but was disappointed that public expenditure had not been cut more and doubted Labour's ability to secure public sector settlements in line with the policy . The measures proposed by the Tories are compatible with the new economic theories discussed . Sir Keith Joseph has clearly been influenced by monetarism and has in a speech demanded an end to "vulgar Keynesism" (The Guardian 16th January 1975) . However, we can overestimate the impact of economic theory . It is probable that only a few Conservative politicians have read Friedman and the opposition to public expenditure is based more on traditional beliefs about reward for effort and freedom from the state . Despite the general rightward shift there are still divisions in the Tory party . There is still considerable pressure in favour of an incomes policy and Margaret Thatcher has never come out as strongly against it as Sir Keith Joseph . The issue of the closed shop recently further demonstrated the existence of divisions in the party . Many observers at the 1977 Conservative party conference noted how the delegates have become more lower middle class over the years . While the leadership failed to select for debate all of the more extreme right wing motions (e .g . on Rhodesia, immigration) they proposed, the party's move to the right has been partly due to this pressure . There is still a left wing in the shape of the Tory Reform Group . They have issued a policy statement largely written by Peter Walker (The Guardian 20th December 1976) . While it supports party policy on nationalisation and tax cuts, there are also areas of disagreement . They favour an incomes policy and a voluntary one if possible . They are against public expenditure cuts as a reflex action as they lead to wage increases which cancel out any benefit . Monetarism is strongly criticised : "It is vital that primitive



52

CAPITAL & CLASS

but fashionable views of certain economists are not applied without recognising the complexity of monetary policy" . In a more recent speech Peter Walker has suggested that British industry should be revived by a mixture of tax cuts and an increase in public spending . He distinguishes his position from the Labour government's by proposing that the money should be channelled into industry by "a panel of experienced men of commerce and business" (The Guardian 13th October 1977) . Walker has also advocated a six-point programme to win trade unionists to the Tories (The Sunday Times 23rd October 1977) . Determining the views of industry is more difficult as the only organised forum for its views is the CBI . Divisions in the CBI are usually covered over and prevented from coming to public notice, but there has been a certain tension in the past between the membership of small and medium sized firms and the leadership who are closer to the larger companies . One of the few times a division has come to the fore was on the eve of the February 1974 election when Campbell Adamson, the then director general, criticised the Industrial Relations Act . The CBI attributes the crisis to mistaken government policies, such as excessive intervention in industry and inadequate control of the money supply and public expenditure, and excessive wage increases made possible by the increased power of trade unions (CB) 1976b, pp . 6, 15) . In 1975 it identified inflation as "the key problem" facing the country and argued that the fight against it should take priority over the maintenance of full employment . It wanted the Social Contract replaced by effective pay control (CBI 1976a, p . 7) . At the same time it was also calling for a reduction in the rate of monetary expansion and cuts in public spending (CBI 1976a, pp . 9-10) . A vigorous campaign was conducted against the proposed Industry Bill which contributed to changes in the Act . To encourage industry to make an adequate profit we need : "Less Government, less interference with market forces in both the public and private sectors, and no more nationalisation" (CBI 1977, p. 10) . Campbell Adamson has argued that the relationship between government and industry in a mixed economy must be close but can't be based on an ideological desire to extend state control : "Nor does the private sector require Government subsidies in order to invest and expand . The private sector needs, not handouts, but the ability to make and retain profits" (Adamson 1975, p . 37) . In its recent Programme for Action 77 (CBI 1977) the CI3I identifies inflation and the balance of payments deficit as key measures of the crisis . Unemployment is given less attention than by Labour and the Tories and its solution is left to an improvement in the economy . The policies advocated to produce this improvement will be familiar by now : a tight hold on the money supply, additional cuts in public expenditure, very large cuts in taxation and an end to price and dividend control . In its Road to Recovery in 1976 the CB1 left open the question of whether "market forces" (i .e . high unemployment and depressed profitability) would be enough to hold wages down or whether a third year of pay policy was needed (CBI 1976b, p . 72) . After consulting its membership it decided to press for a stage three, although recognising disadvantages with the inflexibility of incomes policy . Despite the lack of agreement its position is still that wage rises should not exceed 6% (Financial Times 21st July 1977) . The CBI like the Conservative party regards overmanning and restrictive practices as extremely serious problems (CBI 1977, p . 11 ; Adamson 1975, p . 38) . Like both them and the Labour government it does



IDEOLOGY, CRISIS AND

THE

CUTS

53

not present its views as a sectional interest : "This is a programme for the whole country ; the more closely it is followed the more everyone will benefit . we owe it to ourselves and our country to succeed" (CBI 1977, p . 12) The CBI response to recent budgets has been largely favourable . The December 1976 mini-budget was welcomed as "on the right lines", although it would have liked larger cuts and a promise to cut personal taxation (The Guardian 16th December 1976) . The March 1977 budget was a "step in the right direction" as the CBI would have preferred larger tax cuts, but recognised the government's hands were tied by the promises to the IMF (The Guardian 30th March) . Finally there was a generally optimistic response to the July 1977 mini-budget apart from annoyance at the decision to keep profit and dividend controls for another year (The Guardian 16th July 1977) . As the main concern of this article is with the ideological offensive which accompanied the cuts, it is very important to consider the mass media as this is the main channel the groups discussed have for transmitting their beliefs . The effect they have on policy decisions should also not be discounted . Lord Armstrong, a former Permanent Secretary at the Treasury, said on BBC radio on 4th July 1977 that he used to read and take note of the economic correspondents of The Times, Financial Times and Economist . Peter Jay (The Times) and Samuel Brittan (Financial Times) have played significant roles in establishing monetarist ideas in Britain . The Sunday Times devoted three weeks (2nd to 16th November 1975) to an article on Britain's economic plight by Bacon and Eltis and they have subsequently written in the Sunday Times and The Times . The press response to government measures must be judged in the light of their overwhelming affiliation to the Tory party . For reasons of space their reaction to the December 1976 and March 1977 budgets only will be considered . The papers' reaction to the former was almost unanimous hostility . They agreed that cuts were necessary and that those announced were inadequate . Many called for additional measures such as tax cuts . Two main reasons were advanced for the necessity of cuts . Firstly there was the straightforward monetarist analysis most coherently expressed by The Times . Controlling state expenditure, it argued, is an indispensable part of good management by the government (The Times 17th December 1976) . Too large a PSBR forces the government to either create more money which results in rising prices and a falling value of the currency or to borrow, thus crowding out investment In productive industry . Both are said to have happened in Britain (The Times 16th December 1976) . This is only part of a climate which is almost wholly unfavourable to the creation of wealth with high taxation, incomes policy and the monopoly power of trade unions which enables them to protect "wasteful employment" and keep productivity artificially low . Several other papers stressed the need to reduce public borrowing to thereby free resources . The other reason often given to justify cuts is the more traditional notion that we have become burdened with an excessively large bureaucracy : "The cuts in the bureaucracy are, alas, derisory . . the priorities here are upside down . It is silly to hang on to civil servants and cut roads" (Daily Telegraph 16th December 1976) . The majority of the papers attribute the failure to take necessary measures to the nature of the Labour party . The Daily Mail in its aggressive "stand up for the small man" style launched the most vicious attack on the "Chicken Chancellor" and the "Government without the guts to govern" who had bowed low before the



54

CAPITAL & CLASS

TUC and its own left wing (Daily Mail 16th December 1976) . The Daily Telegraph was unique in attributing the blame to the civil servants of the Treasury and the Bank of England who have never believed in monetary restraint (Daily Telegraph 17th December 1976) . The attacks on the package made by many papers portrayed sacrifice almost as a good thing in itself : "We were all ready to be hammered . Instead we have been hit with a leather . . It is a curious paradox that the nation is ready for the toughest measures - would indeed greet them with relief, but the government, for political reasons is too timid to do what is necessary" (Daily Express 16th December 1976) . It is not surprising to find the bourgeois press describing, and thus seeking to create, a climate in which "the nation" is only too willing to make tremendous sacrifices . Even the Daily Mirror, which might have been expected to support the Labour government, adopted this line in its blunt nononsense style : "What Britain needed this Christmas was Action Man . Instead we have been given a Rubber Chancellor . . . The whole country was yesterday geared up to make sacrifices . . . people don't want cheering up . They want to take the medicine like adults and get it over with (Daily Mirror 16th December 1976) . The only paper which agreed on the need for cuts, but thought the government had got the level right and strongly criticised the call for larger cuts was The Guardian . It did join the other papers in attacking the concentration on capital instead of current expenditure (The Guardian 16th December 1976) . One feature of the reporting of the mini-budget common to all the papers was that they gave the IMF a decisive role in determining it . Most of them described the cuts as the very minimum necessary to "persuade" or "satisfy" the IMF . The December 1976 cuts are significant in that there was a period of three months between 29th September when the Chancellor announced the application for the IMF loan and the mini-budget to create a climate in which they would be accepted . The press helped with a series of well informed leaks about the progress of the debate in the Cabinet and continual speculation as to whether or not the IMF would accept the level of cuts currently being favoured . Some of the left has taken a similar line by blaming the IMF and foreign confidence generally for the government's economic policy . This is consistent with the tendency to personalise everything by finding bogeymen such as greedy bosses and speculators but is misleading . While it would be wrong to deny any role to the IMF, there was never any doubt that it would grant the loan . It couldn't. refuse a request from its second largest member especially when the consequences might be a threat to the political and economic system in Britain . The portrayal by the press of the IMF as "the country's bank manager" (e .g . The Guardian 29th September 1977) invokes the authority of a rational, neutral figure who can tell us what is best for us . At the very least the denial of complete responsibility makes the cuts seem inevitable and opposition useless . All the papers gave a much better reception to the March 1977 budget . Although they were unanimous it was the best budget produced by the Labour government, their approval was grudging . Phrases like "grateful for small mercies", "two cheers" and (almost without exception) "a step in the right direction" were common . The Daily Telegraph made the most elaborate use of the last metaa short and rather lame one" phor : "A step in roughly the right direction and (Daily Telegraph 30th March 1977) . All agreed on the need for greater incentives but most argued that the tax cuts wouldn't restore the purchasing power lost to



IDEOLOGY, CRISIS AND THE CUTS

55

inflation in the last year and that nothing was done for those at the top of the scale. The Daily Mirror joined in (he support for the tax cuts but instead of seeing them as measures to improve the position of middle management, as did the other papers, they were said to give "people" more choice in how they spent their money (Daily Mirror 30th March 1977) . The press was careful to balance any praise with references to Labour's record of failure in the past . Another way of compensating for their lack of disagreement with the measures was to attack the government's motives in introducing them . Many papers thought they were entirely due to Labour's desire to stay in office . The Daily Mail asked : "Is there anything this man would not say or do to winkle a few more votes?" (Daily Mail 30th March 1977) . Several papers again saw the government as bound by the strict, limits imposed by the IMF . Most of them believed agreement on another stage of pay policy to be vital and criticised the Chancellor for not specifying the limit he wanted . The Daily Mirror speculated whether the unions would dare defy "the nation" which had been promised conditional tax cuts by not agreeing to another stage (Daily Mirror 30th March 1977) . Only The Times would have liked Denis Healey to recognise that incomes policy can have at best a limited life and emphasised its disadvantages (The Times 30th March 1977) . It therefore came closer to the Financial Times and the Economist which have stressed the disadvantages of the Social Contract, primarily in the power it gives unions to influence government policy . The attitude of the press to the budget is best summed up as patronising approval clearly shown in the Daily Express's "It's nice to learn that the old rogue is behaving himself" (Daily Express 30th March 1977) and the Daily Mail's "This looks like a dying government and a death bed repentance . But better late than never" (Daily Mail 30th March 1977) . Unlike the press which is overwhelmingly aligned with the Conservative party, the BBC and ITV are bound to a position of neutrality by the terms of its licence and an Act of Parliament respectively . In asserting that this Is by no means the reality we must not suggest a simple conspiracy, but emphasise the way the news is organised in terms of certain explanations taken for granted by news personnel . For instance strikes are fitted into the categories militant minority moderate majority, damage to the nation and so on . Also television is not neutral between capital and labour, but only the major alternatives for organising capitalism (e .g . between the dominant positions in the Tory and Labour parties and related positions) . In terms of explanations for the crisis serious access to the field of debate is allowed to the cost-push approach and (to a lesser extent) monetarism . This privilege is denied to the Labour left account let alone a Marxist one . Some members of the Glasgow media group have written an essay on the way television represented the economic crisis between January and April 1975 (Philo, Beharrell, Hewitt 1977) . They show that news bulletins concentrated on the phenomenon of inflation which in turn was attributed to excessive wage increases . Alternative explanations are sometimes misrepresented (e .g . Saying the Tribe group called for an "opposite give-away budget"), but more frequently their status is devalued by tagging them on to the end of the news after the careful presentation of other accounts, or portraying them as appeals to emotion as opposed to the rationality and realism of these accounts . This section has shown that between, and also within, the press, CBI, Tory



56

CAPITAL & CLASS

party and (as will be seen in the next section) Labour party there are different strategies for explaining and overcoming the crisis . The positions taken are being constantly modified as the economic situation and the political process themselves change. We never find one strategy acknowledged by all as the one in the best interests of capital . New strategies are continually being formulated . Some are adopted, some not . Some are total failures, some like Keynesianism succeed for a long period . Today there are divisions amongst capital on a whole range of issues : the size of public expenditure, the degree of state intervention in industry, incomes policy, cooperation or confrontation with the unions, the EEC, nationalism and many more . It may be objected that strategy is too strong a word to use to describe the various formulations, but there does not seem to be a better one . Using it is not meant to imply that they are totally conscious and coherent plans . Linked to the crisis of Keynesian economic policy in practice there has been an ideological crisis . While there are still some adherents to modified versions of the Keynesian position, others have returned to the old attitudes of laissez faire and others have adopted similar attitudes in the gloss of the new theories of monetarism and Bacon and Eltis . Even within these various positions there are differences . Also very few people now advocate a pure Keynesian or monetarist position . Most follow the government in adopting a synthesis of the two . The closest we find is the Tory Reform Group and The Guardian on the one side and Sir Keith Joseph and The Times on the other . To give an analysis of the material basis for these various divisions would be a difficult task . It is highly probable that the various strategies proposed are related in some way to the interests of particular capitals or capital fractions, but the relationship can only be very complicated and subject to constant modification . To reduce the differences to the division between large and small capitals for instance would be an oversimplification, but this division does seem to play an important role in the Tory party and CBI . (c) Fetishism and the Crisis

Despite their differences the various positions considered in this section do have things in common . firstly, we have seen that all the groups address their message to the individual, whether the "individual citizen" . "individual taxpayer" or whatever . The focus on the abstract isolated individual is a feature of bourgeois thought . Secondly, and related to the portrayal of society as a mass of individuals, is the presentation of "the nation" as a united entity with its own interest . The principal fetish attached to the state in capitalist society is precisely the apparent equality of all citizens with regard to it and thus its appearance as neutral . It is this which conceals its class character . It enables the term "sectional" to be applied to any activities which threaten the "national interest" . As all aspects of capitalist society are permeated by capitalist social relations, then any action which does not support it seems irrational and anarchical (Tronti 1973, pp . 118-19) . A third theme concerns the relationship between the state and the individual . With some exceptions state intervention is still regarded with a horror equal to that of the nineteenth century advocates of laissez faire . The state bureaucracy is at worst an insidious threat, at best a subject of jokes about its inefficiency . In recent months Freddy Laker has received unstinted admiration as the typical "small man" fighting against the state . Bourgeois thought maintains a strict separation of the economic and political which results in state intervention appearing as interference .



IDEOLOGY, CRISIS AND THE

CUTS

57

To the individual capitalists it seems a limit on their freedom and a drain on their profits . Therefore even if bourgeois thought does not attack state intervention, it is an unfortunate reality which it prefers to refuse to recognise . These themes all highlight the importance of the notion of fetishism for an understanding of ideology in capitalist society . Many of the major elements in bourgeois ideology can be traced back to the way capitalist society is manifested on the surface . Another common factor in the positions of the groups examined is their identification of the crisis with inflation and the balance of payments deficit . Over the last few years we have been constantly informed of the progress of these two measures by the mass media . One way capitalists can respond to a reduction in the profitability of their capital is to raise prices . However, in the present period the result has been higher wage claims and inflation spiraling out of control, creating confusion and instability in the economy . Inflation can at best postpone a recession, but the falling rate of profit can only be remedied by a process of restructuring . While inflation is a phenomenon of the sphere of exchange, it can only be understood in relation to the crisis of profitability in production . It is only an expression of the crisis, the form in which it is manifested at the level of appearance . Like all appearances, however, it is an important part of the reality . Identifying inflation as the main problem is only a natural result of the way living in capitalist society affects us (e .g . finding prices have risen everytime we go shopping) . Harris has convincingly criticised the dominant view of the balance of payments deficit as a constraint on and objective of economic policy (Harris, L 1977) . This view is based on the assumption that the nation is the fundamental economic unit . In capitalism the fundamental units are capital and labour and economic activity is frequently organised in a non-antagonistic way across national boundaries . A deficit may be the result of the export of capital to countries with higher rates of profit and need not lead to depleted reserves and bankruptcy, as it can be financed by borrowing . The emphasis on the balance of payments is linked to the idea of a national interest and makes the crisis appear a British rather than an international problem . Like inflation it represents only a symptom or phenomenal form of the crisis . Both of them belong to the sphere of exchange and, as noted above, it is there fetishism tends to focus consciousness . Fetishism also presents the various phenomena of the crisis as "things" separate from each other . Not only are their connections with each other lost, but their historical character is obscured and they are made to appear inevitable . The fetishised view of the crisis does not go beyond its mystifying appearance as to do so would bring into question the capitalist mode of production itself . The crisis is therefore explained by erroneous state actions or various external shocks and not by the contradictory nature of capitalism . As the crisis is only identified with its most obvious manifestations it appears only as a recent phenomenon and its long term origins are lost . By concentrating on the quantitative dimension of the cuts and not explaining the specific measures, their real nature as restructuring is obscured . Only seeing the surface appearance, therefore, has important political consequences .



58

CAPITAL & CLASS

V THE ARGUMENTS AGAINST THE PUBLIC EXPENDITURE CUTS (a) The Labour Party Not every group in Britain supported the cuts . This section will examine some of the positions from which they have been attacked . One of the most important groups in the Labour cabinet which opposed the December 1976 measures (but which capitulated when it was made an issue of confidence) was led by Anthony Crosland . Crosland was the principal theorist of the social democrats or "revisionists" who have had a considerable influence over the Labour party in the post war period . They removed the main emphasis of socialism from public ownership and substituted equality . To aid the underprivileged they strongly favoured growth as this is needed to support the high public expenditure they favour on education, health and the social services . Now the Labour government has discarded the Keynesian consensus it is with the social democrats that these ideas survive . With the death of Anthony Crosland, Roy Hattersley has become one of the main representatives of the tradition . In a recent speech he warned that the success of the December 1976 measures might encourage the belief that they were right in themselves and reinforce the "simple superstition" that high levels of public expenditure are always damaging . He argued "Socialism is about equality and public expenditure is one weapon in the long campaign for its achievement . . . what we need most of all now is to reaffirm the values and the virtues of high levels of public expenditure" (The Guardian 7th October 1977) . Another source of attacks on the government from within the Labour party has been the New Statesman . It is difficult to attribute a definite position to this magazine, but it does tend to reflect the views of the older, Fabian left of the party . The New Statesman has made several vehement attacks on the declining standard of living and high level of unemployment produced by the policies of the Labour government (4th February 1977, 22nd July 1977) . The December 1976 and March 1977 budgets were seen as demonstrating that the government had abandoned socialism for capitalist orthodoxy (17th December 1976 . 1st April 1977) . The cuts were attributed to the views of the Treasury who have revealed themselves as "the most powerful men in Britain" (18th February 1977) . This position, like that of the social democrats, identifies socialism with a set of. moral values . The government is condemned for abandoning these principles : "Labour leaders of the stamp of Jim Callaghan are fond of presenting themselves as pragmatists, that the party unburdened by doctrinaire ideology . Yet they ought to know cannot exist without a firm rooting in the principles of social justice and social welfare" (25th February 1977) . Instead of cutting public expenditure they ought to have been brave and created a climate which could lead to agreement with the trade unions on a genuine socialist incomes policy (1st April 1977, 22nd July 1977) . There is one other major position opposing the cuts within the Labour party held by the proponents of what has come to be known as the "alternative economic strategy" . Geoffrey Sinclair in Tribune regarded the December 1976 measures as one further stage along a "slow, painful and humiliating retreat" to placate the Treasury and the bankers (17th December 1976) .(It is interesting that both the Daily Telegraph and the Labour left criticise the Treasury for exactly opposite reasons) . He argued that it was insane to introduce a deflationary package at a time of such economic hardship and that there was no evidence that



IDEOLOGY, CRISIS AND THE CUTS

59

similar measures in the past had succeeded in transferring resources to industry . The cuts created nothing but a "declining environment for the country's future" . According to Brian Sedgemore also writing in Tribune the language of the March 1977 budget was the "meaningless monetary targets of the IMF loan" and would please only the City and the CBI (1st April 1977) . He believed the measures would do nothing to help reflate the-economy or reduce unemployment, Elsewhere Stuart Holland has called for the restoration of the cuts (Holland 1977) . Like the two writers in Tribune he argues that the cuts will provide no real solution to the crisis and that a totally new approach is required . The Labour left, and particularly Tony Benn, have consistently argued that the only answer is the introduction of socialist policies (Benn 1975, p . 3 ; Benn 1976, p . 13 ; Benn and others 1975, p . 10) . The primary problem is that, left to its own devices, investment in industry has declined over the past thirty years . The approach advocated by "big business and the Tories" consisting of redundancies and declining living standards cannot in a deflationary situation lead to a transfer of resources to industry (Benn and others 1975, p . 9) . Therefore the state must itself ensure an adequate level of investment . The alternative economic strategy consists primarily of the provision of large funds for investment through the NEB . extension of public ownership, planning agreements, promoting industrial democracy, price controls and a policy of economic growth . It is often also made to include controls on the movement of sterling, nationalisation of the banks and the City and selective import controls . Unlike most other approaches it recognises that inflation and balance of payments difficulties are symptoms of an underlying problem . However, one question it fails to ask is why this decline in investment has occurred . One of the few articles that addresses itself to this question is by Geoffrey Wainwright in Tribune (3rd December 1976) . He gives three reasons : bad management by the "mandarins" of the Treasury and the Bank of England, especially the policy of stop-go ; the attempt to maintain sterling as a reserve currency and the "absurd class system" stemming from the educational structure, which means that those who hold power are indoctrinated with conservative attitudes and adverse to taking risks (he neglects the possibility that education reinforces and provides a rationale for divisions that already exist) . The account he provides is only a surface description of the decline rather than a real analysis of the underlying causes . In another article Stuart Holland examines the causes of inflation and concludes "wage demands are but one of at least ten major factors in the recent inflation which has gripped the capitalist economies world wide" (Holland 1975) . Most of his factors relate one way or the other to monopolies . He concludes : "We have to show that the current inflation stems fundamentally from the classic capitalist mechanism of monopoly power and pricing, aggravated by the multinational dimension of modern monopoly power, and the perverse effects of old style deficit financing and ineffectual anti-monopoly policies" . Even if we accept his analysis, he still does not explain why monopolies act the way they do . This is the main weakness of the proponents of the alternative economic strategy . They fail to explain why industry has failed to invest and has constantly



60

CAPITAL & CLASS

increased prices . The argument of this article is that the reason lies in the inability of capital to halt declining profitability by reorganising the process of production because of the level of working class resistance . Investing more is only of any use if the working class is defeated at the same time and accepts the reduction of manning levels, speed ups and so on . The Labour left ignores the effects of restructuring on the working class . They seem to believe that machinery has magical properties to produce extra wealth while leaving everything else unchanged . The criticisms of the alternative economic strategy already made elsewhere such as the chauvinism of import controls (as attacks have focused on them it is worth remembering that they are not a central feature of the strategy and are not advocated by all of its supporters) and the implicit belief in the neutrality of the state (that it can be taken over and used to implement genuine socialist policies) will not be repeated here . The Labour left believes that correct policies by the government are all that is required to solve the crisis . It does not perceive the origin of the crisis in the contradictory nature of capitalism and makes its solution a purely technical matter, not the reimposition of capitalist social relations or (a genuine solution) their overthrow . For the moment at least the power of the Labour left is on the decline . The 1976 party conference carried a series of motions hostile to the government, including ones opposing the cuts, supporting Labour councils who refuse to implement them and calling on the NEC to support trade unions opposing them . By 1977 the government, aided by the prospect of an election soon, enjoyed a week of endorsement for its policies and dissent switched to constitutional change . (b) The Trade Unions The most important source of opposition to the cuts has been the trade union movement . The 1975 and 1976 Trade Union Congresses passed motions opposing cuts in public expenditure, but the response of the General Council has been poor . Its Economic Review for 1977 devoted only one page to a section on public expenditure compared to a very lengthy section on industrial policy (although this was an advance over the previous year which had no such section) . The attack made on the December 1976 package can hardly be described as devastating . It recognises that the government had no real alternative to seeking support from the IMF and it praises the government for limiting the deflationary impact of the conditions laid down (TUC 1977, p . 15) . More important than the TUC leadership's words are their actions and they have done little to organise a campaign against the cuts . Little support has come from unions in manufacturing industry like the TGWU and the AUEW whose leaders have publicly condemned the drift of manpower from manufacturing to service industries and called for greater emphasis on those who make or sell . It has been left to the unions in the public sector who are most directly affected to fight the cuts . They have united together to organise a campaign which has included large demonstrations in London and a series of days of local action . The main explanation of the crisis given by the trade unions is the one emphasised by the Labour left, the low rate of investment in British industry (e .g . NALGO 1977a, pp . 4-5) . Another argument put forward particularly by NUPE is that much of the responsibility lies with monopoly, and especially multinational, companies (NUPE 1976a, p . 2) . This fails to account for the fact that the



IDEOLOGY, CRISIS AND THE CUTS

61

multinationals have not suffered dramatically less from the crisis of profitability than other companies and thus have no greater freedom than others in their response to it . In describing the crisis the unions give most attention to the balance of payments deficit : "The traditional constraint on Britain's economic policy has been and continues to be the balance of payments" (NALGO 1976, p . 2) . NALGO reduces this "threat to the nation's livelihood" to a lack of patriotism, blaming Britain's "enormously high appetite for foreign manufacturers" (NALGO 1977a, p . 4) . "Foreigners" are also held responsible for Britain's problems with the burden of the sterling balances . What seems to rankle most is that "foreign" manufacturers and currency speculators are ruining "our economy", not that industrial and financial capitalists are making profits at the expense of the working class . NUPE manages to make the same argument sound less chauvinistic by referring to multinational companies rather than foreigners, but the remedy of import controls is the same (NUPE 1976a, p . 7) . The unions give much less attention to what the representatives of capital see as the other key indicator of the crisis - inflation . As they do not reject the capitalist system they are not prepared to admit that working class struggle to defend and improve its position may threaten the system . Instead they argue that wage increases are only one factor contributing to inflation (NALGO 1976, p . 11) or prefer to forget about it altogether . The unions' arguments against the cuts can be divided into two types : those which emphasise the social cost of the cuts and those which challenge the government's economic case for them . There is a difference between the unions' agitational leaflets and their pamphlets, which seem to be concerned more with gaining academic respectability for their case . The latter contain more economic arguments than the former . For example both NUPE and NALGO make considerable use of the notion of the social wage in their leaflets, while totally ignoring it in the pamphlets . The main social cost argument is that the cuts create unemployment in both the public and private sectors (NALGO 1977b . ASTMS and others 1976) . Little attention is given to their effect on working conditions which is also important . A policy of growth is advocated as the only way to reduce unemployment . The question of whether the full employment policy they demand is now compatible with the interests of the capitalist economy is not considered . The second aspect of the social cost of the cuts the unions stress is the notion of the social wage : "The social wage is important to you and your family . The social wage is the benefit you get from public expenditure . So the social wage is as good as the money in your pay packet . And according to the government it is worth about E20 a week to every family in the country . But the government is cutting back on public expenditure, which means that it is going to cut your social wage" (ASTMS and others 1976, NUPE 1976b) . The unions devote more attention to replying to the government's claim that the cuts although unfortunate are an economic necessity . Firstly, they argue that the figures for public expenditure are misleading or no different from other industrial countries . Even if we accept this (and the evidence that there has been a dramatic growth in state spending up to recently seems undeniable) it still does not answer the question of whether the cuts are a good or bad thing . A more important argument made by all the unions is that cuts do not automatically shift resources to private sector investment . However, the government would concede this point but also argue that they have introduced a series of other measures to



62

CAPITAL & CLASS

try to ensure that the resources released are transferred . That the cuts by themselves do not guarantee this transfer doesn't mean that the government hasn't a good reason for making them . The unions also argue that there is plenty of evidence that funds are already available for industry (CPSA/SCPS 1976a, p . 10) and that the public sector is not depriving industry of its labour force which is declining anyway and that, even if public sector workers are made redundant, they do not have the skills required by industry (NALGO 1976, pp . 20-21) . Another argument used is that the cuts are in themselves costly as they create unemployment and therefore result in the increased payment of benefits and reduced taxation (CPSA/SPCS 1976a, pp . 14-15) . If the cuts will not solve the structural problems of the British economy, then the unions also believe that the alternative economic strategy can . As presented by them it is somewhat modified with much more emphasis being placed on the need for growth and import controls . Different unions also give different interpretations . NALGO sees the way to provide more incentive for investment as mainly consisting of low interest loans and believes that "the best incentive of all" would be a growing economy (NALGO 1977a, p . 22) . There seems to be little here for most capitalists to fear . On the other hand NUPE regards the NEB as an emasculation of the original intention contained in the Labour party's 1973 programme. The government's desire for "the rebuilding of profit margins" to ensure industry has sufficient profits for investment is regarded as a long way from the mechanism for extending public ownership and making industry publicly accountable (NUPE 1976a, pp . 2-3) . All the arguments considered so far are improvements on the line sometimes taken by unions in the face of incomes policy that goes : Of course we realise that these are difficult times and we accept the need for sacrifices, but our members are a special case and should be excluded . NUT have adopted this type of approach over the cuts : "We accept that all members of society will be required to make sacrifices and work hard in co-operation if we are to beat unemployment and inflation . We cannot ignore the economic situation" . But, they continue, as "the health of an economy like ours is based on the skills of its people it is inviting disaster to cut the schools and colleges which lay the basis for that skill" (NUT 1976a) . The argument itself is dubious, for little training that can't be acquired on the job is needed for most jobs in industry especially with the trend of deskilling, but worse are the implications of adopting this sort of line . One of the better aspects of the present campaign against the cuts is that seven unions have joined together in united action . (c) Reformism and the Crisis The alternative economic strategy constitutes a third approach in addition to Keynesianism and the various anti-Keynesian positions . therefore it deserves serious consideration . We have already seen that its industrial strategy doesn't break with the boundaries of capitalism . The same is true of the arguments against the cuts which seek to find fault in the economic case for them . Disputing the economic case for the cuts tends to leave you on the same terrain of capitalist rationality as those you are arguing with You too are interested in restoring capital's profitability and assessing the cuts in terms of whether or not they succeed in this aim . The only difference is that you are claiming to know the



IDEOLOGY, CRISIS AND THE CUTS

63

interests of capital better than the capitalists and their representatives . The analysis presented by the trade unions is far from a Marxist analysis which would take as its starting point the production of surplus value . This allows us to see that the cuts are totally consistent with capitalist logic . The trade unions have not been able to say why some areas like the social services have suffered more . Unless you understand that cutting state expenditure is a way of reducing the deduction from surplus value and reimposing dominance over the working class, then these areas simply appear to have been unlucky . The cuts cannot solve the underlying contradictions of the capitalist economy, but in the short term they can be part of a strategy to restore profitability . They do not tackle the labour process itself, but they can help to pave the way for an attack there . As we have seen the alternative strategists urge a restructuring of production while ignoring the class struggle which it would entail . They are wrong to say there is only a socialist solution to the crisis . Among the possible solutions that would benefit capital is one which would in many respects strongly resemble their strategy . It is not enough to say that the alternative economic strategy serves the interests of capital and leave it at that . The hostility shown by most sections of capital towards it and Tony Benn in particular is not completely irrational . While the aim of the Labour party strategy, even as originally formulated in the 1973 programme, was to restore profitability to private industry, there were certain aspects capital had reason to be wary of . It would give the state new powers which in the future could be used by somebody more hostile to industry than Benn . These powers would mean that any state mismanagement of the economy would have far more serious consequences . There is no reason to believe, and capital certainly doesn't, that every state intervention must be successful . Even if every intervention is beneficial to capital, it is still afraid of becoming too dependent on the state thereby losing its freedom of decision with no way back to the free market . Finally in its original form the strategy sought to integrate the working class by involving it in the running of industry . Capital opposes this as it fears that it would lead to too many concessions to the unions and limit the possibility of an all-out attack on the working class in the future . Both the Labour left and the trade unions talk in terms of the national interest . Nearly every page written by Tony Benn is dotted with references to "the British people" and "Britain" who will benefit from the new strategy . The unions also present a picture of one undifferentiated nation with one set of economic interests . For instance NALGO refers to "our general prosperity", "the nation's prosperity", "the nation's livelihood" and "the nation's needs" (NALGO 1977b ; 1977a, p . 7 ; 1977a, p . 17) . There is a complete absence of the categories of class and class struggle . The Labour left and the unions find different ogres than the representatives of capital to blame for the crisis - "foreigners", "monopolies" and so on - but these too are only surface appearances . In many ways their analysis resembles the fetishised consciousness of the bourgeoisie . However, the positions which are thrown up by the labour movement contain elements which are fetishised and elements which transcend the fetish . There are also significant differences between their ideas and those of the bourgeoisie . Despite the talk of a national interest, at the level of the workplace it is recognised that there are two different interests and workers have to fight to even maintain their position . Of course the extent of this awareness varies . On the one hand NALGO seems proud



64

CAPITAL & CLASS

and thus complacent about the sacrifices workers have made so far (NALGO 1977a, p . 17) . On the other NUPE warns the government about making workers pay for a crisis based on the "inability of capitalism to plan rationally" (NUPE 1976a, p . 15) . Ideas can only have any credibility if to some extent they provide an adequate guide to experience . Those which have dominated the labour movement have in a sense worked . They have been partly responsible for the gains workers have made and the position of great defensive strength many now enjoy . At the same time, though, they have frequently held back working class struggles . Their limitations are shown in the way the Labour left and the unions are evasive and defensive about class struggle . In particular they play down the effects of wage increases . The alternative would be to assert that it is perfectly reasonable for the working class to struggle in any way it can against a system that doesn't fulfil its needs . Gerstenberger has claimed that now capital has transcended the fetishised separation of economic and political in practice by incorporating the state into its attack on the working class, the labour movement maintains it by separating its struggle into two different objectives to be achieved by two different types of organisation (1977, p . 6) . To develop a complete analysis of the trade unions and their resistance to the cuts would require us to examine closely the ideologies of reformism and economism which cannot be done in the space available herel6) . The task of such an analysis would be to explain how the working class has been persuaded through its own institutions to accept the Social Contract, the cuts and so on . It would demonstrate how, given the nature of those organisations, arguments were necessarily presented in a particular way . The particular organisation of the labour process will also affect workers' consciousness . We would have to show how reformism remains trapped in everyday experience, in the level of appearances, and limits its demands to those which arise spontaneously in the day to day struggles of the working class and how this leads to a failure to separate clearly enough the long term interests of capital and labour . This analysis would have to be historical as there have been significant changes in reformism since the war in attitudes towards union involvement with the state, incomes policy, etc . Differences between and within trade unions would also have to be taken into account . In this section only the views of the union leadership have been presented, for obviously pamphlets and leaflets produced by the union will only give the authorised line . There will be some among the membership who would reject the arguments discussed . A final problem relates to the question posed earlier about the relationship between different capitalist ideologies and capital fractions : is there a connection, as many have argued, between reformism and the skilled working class?

VI IDEOLOGY AND THE CRISIS The aim of this article has been to demonstrate the following points : that ideology must be examined historically, that there is not one single capitalist ideology but various ideologies, that the concept of fetishism is a vital part of the theory of ideology and that both sides in the cuts debate remain trapped by surface appearances, although the labour movement breaks with them in certain

a



IDEOLOGY, CRISIS AND THE

CUTS

65

respects . The campaign over public expenditure cuts is one of the most important aspects of the ideological offensive by capital in the crisis . However, it also covers many other areas which include : (1) The fuss about the jubilee which is intended to unite the nation together ; (2) The campaign against the "scroungers" which serves to make unemployment financially and socially undesirable . Unless this is the case it will not function as a reserve army of labour ; (3) The attacks on blacks as in the publicity given to "muggers" and Asian immigrants staying in luxury hotels, which divides the working class and presents a simple explanation for the problems workers face; (4) The transformation of the trade unionist from a humourous figure stuck in the attitudes of the past into a mindless thug . The Conservative party conference in October 1977 demonstrated the deeply felt hatred of "union hatchet men" and "rent-a-crowd violence" amongst the ordinary delegates (The Guardian 12th October 1977) . At its most general level the offensive concerns the character of the capitalist system itself . The aim is to restore feelings of pride and responsibility in workers about their work and to make profits appear more respectable . The former is a reassertion of the old theme of the dignity of labour : "The key message is that it is a good and essential thing to make goods and provide services efficiently and thereby to create wealth . If we are to change attitudes we have to show that working in industry and manufacturing goods and providing services is worthwhile and necessary" (CBI 1976b, p . 12) . Three quotes from different sources illustrate the latter theme . Campbell Adamson, then director general of the CBI : "In a competitive economy high profits do not suggest workers and consumers are being 'exploited' . On the contrary they show companies are supplying consumers' wants efficiently and indicate where additional resources could be productively channelled" (Adamson 1975, p . 37) . The Conservative party programme : "it will be essential to demonstrate in the next few years . far more effectively than we have in the past, the essential role of profits . Every company can help to do this with its own work-force by better and closer communication" (Conservative party 1976, pp . 28-29) . Roy Hattersley, Labour's Prices Secretary : "There will be no prejudice against profits built into the criteria that govern the conduct of the Prices Commission" (The Guardian 14th May 1977) . Another very important part of the ideological offensive is the attempt to replace rising expectations with the expectation of a fall . When workers believe that everybody is suffering from a crisis and it has become impossible to win concessions, the level of struggles drops (Tronti 1972b, p . 40) . The left's response to the crisis has been to blame easy targets like greedy bosses and speculators or to view it simplistically as a return to the 1930s . It has produced a random set of demands of things to nationalise or abolish . It has tended to ignore the ideological dimension to the crisis or to see ideology as simply indoctrination and manipulation . The cuts have led it to the defence of the welfare state as the triumphant result of past working class victories, ignoring the fact that it is also an important source of power over the working class . Instead of focusing only on the quantitative aspect of the cuts, it should try to examine the particular measures taken and understand just what capital was attempting to do . This is the way to bring out the essential class character of the cuts . An adequate understanding of the cuts will not by itself lead to victory in the campaign against them, but it is a vital prerequisite .



66

CAPITAL

& CLASS

NOTES This article owes a great deal to discussions that have taken place in various CSE working groups and dayschools . In particular I would like to thank members of the "Capital, the State and European Integration" and "Ideology" working groups . I am also grateful to Simon Clarke for showing me his comments on trade union analyses of the crisis . This is a revised version of the paper 'The Representation of 'Britain's Economic Crisis' : The Debate about the Cuts in Public Expenditure" in CSE Conference 1977 Papers & Abstracts . I would welcome any criticisms or comments on this article which should be sent to Kevin McDonnell, 83 Amhurst Park, London N16 . 1 As well as Marx's Capital this section draws on Geras 1971, Mepham 1972 and Rubin 1972 . 2 In addition to Marx's Capital this section is greatly indebted to Holloway & Picciotto . Also useful were Tronti, Baldi 1972, Kay 1975 and (despite some major disagreements with their approach) Fine & Harris 3 See Bullock & Yaffe 1975, Yaffe 1972 and Clyn & Sutcliffe 1972 . Criticisms of these approaches have already been made elsewhere, so I will not repeat them in any detail . Yaffe has been accused of being unable to provide concrete analysis and objectifying the production process by abstracting tendencies from their historical manifestations (Kay 1976, pp . 70-75) . Clyn & Sutcliffe by concentrating on the distributional struggle over wages ignore the most important site of class struggle, at the place of production against measures to reorganise the labour process . Their rejection of the category of value means they are left with no explanation for the timing and intensity of class struggle (Edinburgh 1977, pp . 16-17) . We cannot ignore the counter charge made by supporters of Yaffe, that arguing class struggle is one of the crucial factors in explaining the crisis is to take the same position as the capitalists and blame the working class for the crisis . It is capitalism, which is based on exploitation and can only survive by increasing the rate of exploitation, that is to blame . If working class struggle to achieve control of their lives and products threatens it, the fault is not theirs . This is a more difficult line to argue than Yaffe's, as at first sight it resembles some aspects of bourgeois accounts, but the answer is not to advocate a line which does not adequately reflect the reality of the capitalist system . 4 This account of developments in Britain draws largely on Big flame 1974/75 and 1975/76 and Cuttmann 1976a and 1976b . Labour Research is also a good source of information on current events . 5 See Cough 1975 and Bullock & Yaffe 1975 . Again I will not devote much space to repeating criticisms which have already been made . As Cough excludes analysis of the process of accumulation, he is only able to deal with areas of expenditure like the social services, where changes are most obviously influenced by working class pressure ; and is unable to view the cuts as a form of restructuring (fine & Harris 1976a, Holloway & Picciotto 1976b) . Yaffe by basing his approach entirely on the distinction between productive and unproductive labour only considers the most obvious and direct effect of state expenditure . This ignores the effect of aiding the reproduction of the capitalist system which in the long term may lead to an increase in surplus value and



IDEOLOGY, CRISIS AND THE CUTS

6

67

various ways state expenditure may even be indirectly productive in the short term (Fine & Harris 1975a, pp. 10-11) . Yaffe is also unable to analyse how the form of a particular set of cuts is determined and how they are implemented (Holloway & Picciotto 1977, pp . 83-84) . I will return to discussion of this question in a future paper on "Reformism, Trade Unions and the Crisis" .

BIBLIOGRAPHY Adamson, C ., 1975, "The CBI View" CBI Review, 18 Autumn ASTMS and others, 1976, Fight the Cuts - Save lobs (leaflet) Written jointly by ASTMS, COHSE, CPSA, FBU, LCS, NALGO, NUPE, NUS and SCPS . Baldi, C . . 1972, "Theses on Mass Worker and Social Capital" Radical America, 6, 3 May-June . Benn, T ., 1975, Labour and the Slump, Institute for Workers' Control, Nottingham . 1976, A New Course for Labour, Institute for Workers' Control, Nottingham . Benn, T ., Morrell, F . & Cripps, F ., 1975 . A Ten-Year Industrial Strategy for Britain, Institute for Workers' Control, Nottingham . Big Flame, 1974/75, "Confrontation : The Struggle in Industry 1969-1974" Big Flame Journal, 1 Winter . 1975/76, "The Capitalist Crisis and the Working Class' Big Flame journal, 2 Winter . Bullock, P . & Yaffe, D ., 1975, "Inflation, Crisis and the Post-War Boom" Revolutionary Communist, 3/4 . CBI, 1976a, Annual Report 1975 . 1976b, The Road to Recovery . 1977, Programme for Action 77. Clarke, S ., 1977, "Marxism, Sociology and Poulantzas' Theory of the State" Capital & Class, 2 Summer . Conservative Party, 1976, The Right Approach : A statement of Conservative Aims . CPSA/SCPS . 1976a, Cuts that Puzzle . The Case against the Cuts . 1976b, Cuts concern You. The Case against the Cuts (leaflet) . Edinburgh CSE Group, 1977, "State, Restructuring, Local State" (mimeo) . Fine, B . & Harris, L ., 1975a, "On the Problem of analysing Current Economic .. . . ~, u : . History" (mimeo) . 1975b, "The British Economy since March 1974" Bulletin of the Conference of Socialist Economists, IV, 3 (12) October . 1976a, "State Expenditure in Advanced Capitalism : A Critique" New Left Review, 98 July-August . . 1976b, "The British Economy : May 1975-January 1976" Bulletin of the Conference of Socialist Economists, V, 2 (14) October . 1976c, "Controversial Issues in Marxist Economic Theory" The Socialist Register . Gamble, A ., 1974, The Conservative Nation, Routledge and Kegan Paul, London . Gamble, A ., & Walton, P . ; 1976, Capitalism in Crisis, Inflation and the State,



68

CAPITAL & CLASS

Macmillan, London . Geras, N ., 1971, "Essence and Appearance : Aspects of fetishism in Marx's Capital, New Left Review, 65 January-February . Gerstenberger, H ., 1977, fetish and Control in CSE Conference 1977 Papers and Abstracts . Glynn, A . & Suttcliffe, B ., 1972, British Capitalism, Workers and the Profit Squeeze, Penguin, Harmondsworth, Middlesex . Cough, I ., 1975, "State Expenditure in Advanced Capitalism", New Left Review

• 92 July-August . Guttmann, R ., 1976a, "State Interventionism and the Economic Crisis : The Labour Government's Economic Policy 1974-1975" Kapitalistate 4/5 Summer 1976b, "Industrial Policy and Economic Crisis" (mimeo) . Harris, L ., 1977, "The Balance of Payments and the International Economic System" in Green, F . and Nore, P ., Economics : an anti-Text, Macmillan, London . Harris, N ., 1972, Competition and Corporate Society : British Conservatives, the State and industry 1945-1964, Methuen, London . Hirsch, J ., 1977, What is the fiscal Crisis of the State? (mimeo) . HMSO 1975a, Public Expenditure to 1978-79 (Cmnd 5879) . 1975b, The Attack on Inflation (Cmnd 6151) . 1976a, Public Expenditure to 1979-80 (Cmnd 6393) . 1976b, The Attack on inflation : The Second Year (Cmnd 6507) . 1977a, The Government's Expenditure Plans (Cmnd 6721). 1977b, The Attack on inflation after 31st July 1977 (Cmnd 6882) . Holland, S ., 1973, "Whose Inflation?" Workers Control Bulletin 28 . 1977, "There is an Alternative to the Cuts" Workers Control Bulletin 36 . Holloway, J ., 1977a, "Some Comments on the Fiscal Crisis" (mimeo) . 1977b, "State Expenditure Cuts" (mimeo) . Holloway, 1 . and Picciotto, S ., 1976a, "Capital, the State and European Integration" (mimeo) . 1976b, "A note on the Theory of the State" Bulletin of the Conference of Socialist Economists V, 2 (14) October . 1976c, "Theses on the restructuring of Capital, Class Struggle and the State ." (mimeo) . 1977, "Capital, Crisis and the State" Capital & Class, 2 Summer . Humphrey, 1 ., 1977, "Notes on the Crisis in the European Motor Industry" in CSE Conference 1977 Papers and Abstracts . Institute for Workers Control, 1977, "A Workers Inquiry into the Motor Industry" Capital and Class 2 Summer . Kay, G ., 1975, Development and Underdevelopment : A Marxist Analysis, Macmillan, London . 1976, "The Falling Rate of Profit, Unemployment and Crisis" Critique 6 Spring . Marx, K ., 1974, Capital, Lawrence and Wishart, London, Three Volumes . Mepham, J ., 1972, "The Theory of Ideology in Capital" Radical Philosophy 2 . NALCO, 1976, NALGO Economic Review 1976 . 1977a, The Economic Situation and Cuts in Public Expenditure . 1977b, Public Expenditure Cuts : Our Case for an Alternative Strategy (leaflet) .



IDEOLOGY, CRISIS AND THE CUTS

69

NUPE, 1976a, Time to Change Course : An Economic Review . 19766, NUPE Says Don't cut the Social Wage (leaflet) NUT . 1976a . Why Worry about Education? 1976b, Say No to the Education Cuts (leaflet) . Philo, G ., I3eharrell. P ., Hewitt, I , 1977, "One Dimensional news" - Television and the Control of Explanation" in Beharrell, P & Philo, G Trade Unions and the Media, Macmillan, London . Rubin, I .I ., 1972, Essays on Marx's Theory of Value Black and Red, Detroit . Tronti, M ., His main work, Operai e Capitale . 2nd edition 1971, has not yet been translated into English, but parts of it are available as : 1972a, "Struggle against Labour", Radical America . 6, 3, May-June . 1972b, "Workers and Capital", Telos 14, Winter . Reprinted in CSE (1976) The Labour Process and Class strategies . Stage 1, London . 1973, "Social Capital" Telos 17 Fall . no date, "Lenin in England" (mimeo) Translated by Red Notes for Publication in a future pamphlet . TUC, 1977, Trade Union Congress Economic Review . Yaffe, D., 1972, "The Marxian Theory of Crisis, Capital and the State", of the Conference of Socialist Economists, 1, 4 Winter .

Bulletin

Socialist Challenge The Socialist Weekly That Removed Dobson Contributors Include Robin Blackburn ; Terry Eagleton ; Peter Fuller ; Sue Himmelweit ; Ernest Mandel ; Simon Mohun ; and Arthur Scargill . Sub rates :'

6 months £3 .75 - 12 months £7 .50 Overseas airmail £12 .50 - Surface £9 .00

SOCIALIST CHALLENGE, 328 UPPER STREET, LONDON N1 2XQ

NOTES EMPLOYMENT AND TRADE UNIONISM IN THE PUBLIC SERVICES : BACKGROUND NOTES TO THE STRUGGLE AGAINST THE CUTS Bob Fryer Tom Manson Andy Fairclough

- This note falls into six sections . In the first section we attempt to show the growth of public service employment in Britain over the past twenty-five years, drawing attention particularly to the concentration of female labour in the public services . The second section sketches in some salient features of public service employment, especially the kind of labour and structure of work, which present particular problems of organisation for workers in those services . In section three, we give some examples of the application in the public services of managerialism and capitalist rationality . Section four provides some background information on trade union organisation, drawing attention to the numerical significance of these trade unions within the organised British working class as well as to some of the divisions within and between them . In the fifth section we look briefly at some of the major struggles in the public services in recent years, and raise questions about the links and discontinuities between those struggles and the current fight against the cuts . Section six constitutes a brief reminder of the extent of public expenditure in certain sectors of the public services and the cuts now being imposed .

1

THE GROWTH Of PUBLIC SERVICE EMPLOYMENT

for our purposes, we have included in public service employment those tasks which are wholly or largely financed out of taxation and rates (excluding, for example, such significant groups of public sector workers as those in gas, The research on which this paper was based was funded initially by NUPE and subsequently by the SSRC .



THE PUBLIC SECTOR AND THE CUTS

71

electricity, posts and telecommunications, railways, mines, etc .) If our net had been cast wider, then some of the background and problems we wish to focus upon would have been radically different . We have also excluded the armed services and police force, who, whatever their similarities or dissimilarities with other public service workers, deserve separate treatment by virtue of their special positions within the apparatus of the capitalist state . We should like to focus attention upon three aggregations of public service workers - Local Authorities, National Health Service and Civil Service - with especial reference to the first two with whom our own research on trade union organisation has been principally concerned . In the twenty-five years between 1949 and 1974 employment in Local Authorities grew by more than 100% ; from about 1 .4 million to over 2'/, million . Within this overall growth, there has been an even greater expansion of employment in education, the largest group of local authority workers . Since 1949 education employment has grown by 200% and now 1'A million of the 2'A million local authority workers are to be found in education . Partly because of the predominance of education, where the majority of workers are women, and partly because of the more general increase in female employment, Local Authorities now constitute one of the major concentrations of female labour with some 1'h million women out of a total of 2'h million workers .f 1) The National Health Service is another employer which has both expanded and is a major employer of female labour, though the proportion of females employed has remained relatively stable (at least compared with Local Authorities) . Between 1949 and 1971 there was an overall expansion in employment of somewhere around 85%, with Nurses and Midwives, Professional and Technical Workers and Administrative and Clerical Workers all experiencing over 100% Increases . Ancillary workers however only Increased in number by about 50%, an Important point as will be seen below .[2[ The Civil Service did not increase employment at all over the 1949 figures because of a drop in Defence employment during the 1950s . There is heavy reliance on female labour in the Civil Service, especially in the lower ranks . In general, the Public Services have expanded employment since 1949 at a rate that is much faster than the overall growth in employment, and furthermore they must be by far the largest sector of female labour . If about 2'/, million women work In the Public Services, then that makes almost one in every three women workers a Public Service worker, since the figure for employed women is 8'h million .[3)

2 THE NATURE OF PUBLIC SERVICE EMPLOYMENT Public Service employment is marked by a number of divisions and separations which coalesce in such a way as to amount to a compounded fragmentation of labour. First, there are divisions between workers according to their relation to the main task of the service - ancillary, technical, clerical and administrative, professionals and quasi-professionals of greater or lesser degrees of autonomy . In Education, for example, there are 700,000 ancillary workers - school meals, cleaners, porters, etc . - and these outnumber teachers in primary and secondary schools . In the National Health Service there are almost as many ancillary workers



72

CAPITAL & CLASS

as nurses (272,000 and 370,000) while the para-medical staffs number 45,000 and clerical and administrative workers total 66,000 .[4) This initial functional division is often, though not always, reinforced and reproduced by parallel divisions in trade union organisation and collective bargaining, in degrees of autonomy and authority and, of course, along lines of non-manual/manual labour . This last point merits especial emphasis : despite common assumptions to the contrary, only just over half of these workers are white collar and the manual workers are concentrated in unskilled and semiskilled jobs, especially where women are concerned . Manual labour is not only predominantly female but there is also heavy reliance upon female part-time workers .[5[ Hall of all Local Authority manual workers and a third of hospital ancillaries are part-time workers . Male and female labour is often divided functionally, along lines of authority and in terms of a split between whole-time and part-time workers, although it would be wrong to assume that such divisions always correspond so clearly . The divisions already mentioned are compounded by the organisation of much of the work in public services . Unlike workers in manufacturing industry, public service workers often work in small, highly dispersed work groups with little or no means of rapid communication between them . Probably the most extreme example of such fragmentation is the home help . Home helps work individually in the homes of other people (aged and infirm) and seldom come together as a group . Similarly, civil servants work in small offices scattered around the country, dealing with taxation, social security payments, etc . However, against this general picture of division and dispersal, it is important to set counter-tendencies . Despite their functional differentiation, under certain conditions all groups find common purpose in defending their collective interests (no matter that those interests are restrictively defined), as, for example in fighting the closure of a hospital . Similarly, some trade unions, in cutting across occupational, service and authority boundaries, offer opportunities for unity and common action . Some groups of workers do not suffer the organisational problems common in the public services. for example, refuse collectors, by virtue of their collective strength built in part upon the organisation of their work, have been able to exercise influence out of proportion to their numbers (47,000) and were used to spearhead the 1970 "dirty jobs" dispute . Similarly, ambulancemen (15,000) have used their cohesiveness to press their interests (although seldom the interests of other public services workers) . It is also important not to overlook large concentrations of public service workers, as for example, in some of the civil service metropolitan offices, the giant office complex of the DHSS at Long Benton in Newcastle and the trend towards larger District Hospitals in the National Health Service . Local Government reorganisation, bringing the elimination of many of the smaller authorities, also presents opportunities for overcoming customary divisions .

3 MANAGERIALISM AND THE INJECTION OF CAPITALIST RATIONALITY All discussion of the Public Services has been up to this point in terms of employment . This is no accident since all Public Services are highly labour intensive . To



THE PUBLIC SECTOR AND THE CUTS

73

take one example : the Health Service, with all its sophisticated and expensive technology still spends about 70% of its current costs on labour, and in particular on the labour of ancillaries and nurses, the two largest groups . Despite weak unionism and low pay during the 50's and 60's, costs rose in the Public Service faster than in more capital intensive industries, creating pressure to do something about labour costs . The most widespread solution has been to treat these services as if they were profit-making industries and to apply all available managerial techniques to increase labour efficiency . Three basic features were common : first a rationalisation of management structure (e .g . Corporate management in Local Government following Bains, the reorganised management in the NHS, and the implementation of Fulton) . Second, a use of capital investment, centralisation and other economies of scale . The larger Local Authorities, the huge concentrations of civil servants (as at Long Benton) and the whole reorganisation of the NHS based on large district hospitals with centralised laundries, kitchens, etc . are examples . Third, an increasing use of work study and work measurement among the manual grades, especially in those occupations which were predominantly male (49% of Local Government males were receiving bonus in 1975 compared with only 35% of the females) .(6) In part, this third aspect of managerialism was a response to the use of power by the (male) cohesive workgroups - such as the refuse collectors . Bonus schemes were also seen by the National Board for Prices and Incomes as a way of improving efficiency by way of the elimination of low pay . Much of the management change was strongly influenced by state policy, and the role of the Prices and Incomes Board during the middle and late 60's is crucial here . Report 29 of the Board blamed low pay in these industries in part on bad management : and a report on nursing tied an increase in pay to a speedy implementation of the Salmon report on nursing management .

4 TRADE UNIONISM Trade unionism in the Public Service has grown at a rate significantly faster than the growth of employment . The growth in membership has been especially startling since the late 1960's . The growth of some unions who recruit wholly or mostly in the Public Services is enormous : (7) 1949 NUPE COHSE NALGO CPCSA/CSCA NUT

150,250 51,319 189,261 153,458 (1950) 184,100

1966

1975

248,041 67,588 348,528 146,324 253,884

507,826 143,479 542,918 231,790 264,349

The Public Services must be one of the few sectors which has both a high proportion of women, and is reasonably strongly unionised (38% of the female TUC members in 1975 come from Public Sector unions : this figure ignores those



74

CAPITAL & CLASS

women who are in the two general unions (TGWU and GMWU) who also recruit in the Public Services) . This strength of members is dissipated by a fragmentation into a large number of different ana competing unions and professional associations . The NHS is notorious for this fragmentation, but Local Government workers are split between NUPE, NALGO, T&G, G&M and the craft unions (there are about 75,000 craftsmen in Local Government and about 25,000 in the NHS) . This union fragmentation, long-standing competition and hostility between unions, together with the general problems of work fragmentation already reviewed, represent considerable limitations upon the likelihood of common action . However, two recent developments, representing an attempt to overcome traditional diversions, deserve mention . First, NALGO and NUPE have established a joint committee at national executive level (paralleled in some localities) to discuss common problems . Second, a number of unions - NALGO, NUPE, COHSE, ASTMS, NUT, CPSA, SCPS, NATFHE, NUS - who first came together jointly to organise the November 17th demonstration and parliamentary lobby against the cuts have maintained a joint Steering Committee to continue the campaign . Notable absentees from the Steering Committee are the two giant general unions GMWU and TGWU - both with substantial numbers of members in the Public Services . A further problem facing unions in the Public Services has been the relatively underdeveloped nature of local representation . The predominance of centralised, national negotiations has been accompanied by relatively weak systems of shop steward or workplace representation . Similarly, intermediate union structures, where they existed at all, played little part in establishing or policing union policy . The traditional form of organisation for NUPE was a reliance on the dominance of full time officials, who had the mobility and the independence from the control of the employers to deal with problems at the workplace . In NUPE there have been attempts to provide a system of shop stewards, a tendency encouraged by the negotiation over work study, by the experience gained in the disputes of 1970 and 1973 and in part at least by management . NUPE now has about 15,000 stewards . This development is still within a framework of strong national agreements and of course the straitjacket of the incomes policy hampers the activities of the stewards . Even so, the cuts campaign can now take advantage of this new level of union activity .

S STRIKES AND DISPUTES There have been three major national disputes in the Public Services involving widespread industrial action : the "Dirty lobs" strike of 1970, the Ancillary Workers dispute of 1973 and the Nurses dispute of 1974 . The latter was mainly confined to demonstrations (with a few notable exceptions) while the other two disputes had certain common features : neither were "all out" strikes ; both called out strong areas, either permanently or for periods of time ; both relied on maximising the impact of the dispute by demonstrations, days of action short of a full walk out which were orchestrated from the centre, both were strikes whose effect fell on the public but where the members asked for and often received public support ;



THE PUBLIC SECTOR AND THE CUTS

75

both were disputes where inter-union hostility and rivalry were evident . There was of course one major difference . The dirty jobs strike was won ; the Ancillary staffs dispute did not break Heath's pay policy, although other organisational gains resulted . Furthermore, both disputes were accompanied by a rapid growth in trade union . membership . Apart from these major disputes there have been others . Some of these have been National Disputes - such as those affecting Ambulance men in 1973-4, NHS technicians in 1974 and teachers . Others have been more localised, such as the Glasgow dustcart drivers or the various attempts to remove private practice in the NHS . These disputes, bothh local and national, have had important effects on Trade Union membership and organisation in the Public Services . In particular, the "dirty jobs" dispute and the Ancillary staffs dispute were accompanied by substantial union growth and our evidence shows that steward organisation in NUPE was improved by the experience of organising what was in essence a series of nationally co-ordinated local disputes . Furthermore, the strikes upset the balance of power with management, giving to trade unionists much wider influence and control than they had before . The realisation that they had this power has meant that many trade unionists feel able to mobilise against the cuts : ten years ago few would . have even suggested such a campaign, based as it is on local strength . A further result of the disputes is that the importance of raising wider issues than wages has been realised - though the extent to which this is widespread is difficult to assess . Certainly, if the campaign against cuts is to have any success . the consciousness shown in many areas in the struggle against private practice in the NHS will have to be maintained . The major lesson of the disputes has been that unions in the Public Services can gain some measure of local power especially by concentrating union resources on those areas where most impact will be felt by the public coupled with large scale demonstrations to educate a wider audience . In the struggle against the cuts the former is not only a difficult weapon to use in that it depends on a willingness for groups to use their power solely in the interests of others . It is also not so effective in that the withdrawal of labour helps the employers to save money the very objective of the cuts . Instead the tactic will have to be a close monitoring of the standards of the various services and enforcing current levels of manning and other job controls established in recent years coupled with demonstrations . The November 17th demonstration showed that the latter was possible, though the momentum is difficult to keep going . As for the monitoring at local level, that is even more difficult to maintain for the five years at least that the campaign against cuts will last .

6 PUBLIC EXPENDITURE AND THE CUTS Under the present Labour Government there have been four major announcements of cuts in public expenditure :



76

CAPITAL & CLASS

April Feb July Dec

1975 1976 1976 1976

E1,100 E4,595 E1,012 E1,513

million million million from 77/78 million from 78/79

These latter figures have been announced at "1976" prices, and, allowing for inflation, will obviously amount to a higher money value by the time they are implemented . In addition, the system of "cash limits" introduced in 1976 will prevent the adequate "topping up" of Local Authority budgets to take account of inflation . Examples of cutbacks are E300m off the housing budget in the period 1977/79, E50m off Education current spending, E30m off Health and Personal social services in the same period, and E40m off the Civil Service Budget . In addition Capital Expenditure in roads, education and water resources will be taking place within the Public Services, as well as the substantial cuts in investment in the Nationalised industries . These cuts will have a direct impact on employment given that 70% of this expenditure finances wages and salaries. The Treasury's estimate is that the December 1976 measures alone will produce a rise in unemployment in the Public and Private Sectors of 100,000, in addition to the expected loss of 100,000 jobs arising from the July measures . The important point to note, however, is that in

terms of actual spending the bulk of the cuts have yet to

be

implemented . The

Unions have so far insisted on cuts to areas other than employment - most job loss has been via "natural wastage" . A further problem is that, although the most visible and dramatic form of the cuts will undoubtedly be redundancy, it is highly likely that the cuts will also take a more insidious form : reduction in standards, a lowering of maintenance levels ; resort to poor materials, and intensification of work, all of which pose acute difficulties for the Trade Union struggle against the cuts .

NOTES 1

Local Authority employment figures came from two sources . The Department of Employment Gazette has published figures on numbers employed in Local Authorities every year since 1952 . (The 1949 figure is an estimation from the Industry Classification .) The second source of most of the detailed breakdown comes from a survey carried out for the Local Authority Whitley Council in 1973 and a copy of the results were supplied to the authors .

2

NHS figures came from Health Statistics for

England and

Wales, published by

HMSO .

3

Figures for female employment are derived from Women cal cal survey, manpower paper no . 9 (HMSO) .

4

It is instructive to note that hospital medical staff totalled only 31,000, of whom 11,000 were consultants .

and

Work, a statisti-



THE PUBLIC SECTOR AND THE CUTS 5 6 7

77

The number of female part time non-teaching staff in education has increased by over 250% since 1952 . Figures supplied to the Trade Union side of the Local Authority Manual Workers Whitley Council by the Staff Side . Membership figures for NUPE, COHSE, NALGO (1975) and CPSA/CSCA are derived from the TUC annual report . NALGO figures for 1949 and 1966 are from the Union's own annual report . The NUT figures should only be used to establish the trend as the numerous categories of membership - and the fact that the Union did not join the TUC until after 1966 - mean that no consistent figures are available . The figures were provided with the help of Bob Price from Warwick .

HISTORY WORKSHOP A journal of Socialist Historians Issue 3 and 4 (1977) Include :The Workshop of the World Raphael Samuel Steam Power and Hand Technology in mid-Victorian Britain . ligion of Socialism in The Stephen Yeo Britain 1883-1896. In Search of Carpenter. Sheila Rowbotham Theories of Fascism : Nicos Jane Caplan Poulantzas as Historian. Women & Abortion in Victorian Patricia Knight and Edwardian England . Women's Work and the ReguAngus McLaren lation of Family Size in 19th century England. Gareth Stedman Jones Class Expression or Social Control ? The Russian Peasantry in 1907Maureen Perrie 8 : A Survey by the SocialistRevolutionary Party. Edwardian Liberalism and Alun Howkins Industrial Unrest . Margaretta D'Arcy A Socialist Hero on the Stage James Connolly. and John Arden The Workers' Theatre MoveTom Thomas ment - memoirs and documents from the 1930s . Rediscovering Suffrage History . Jill Liddington Teaching of History. A Symposium Archives and Sources ; Local and Oral History ; Museums ; Enthusiasms ; Noticeboard. Subscription £5 a year (2 issues), $12 overseas, from History Workshop, P .O. Box 69, Oxford OX2 7XA .

BRITISH HOUSING POLICY AND THE HOUSE-BUILDING INDUSTRY Michael Ball INTRODUCTION Over the past hundred years the state has become closely involved in the provision of housing . It has manipulated the system of housing tenures, become a maior landlord . and spent vast sums perpetuating the current structure of housing finance . State intervention has not however solved the housing crisis but only partially transformed its nature . The recent Housing Policy government green paper (Housing Policy 1977) highlights yet again the current housing crisis and the attacks that are being made on working class housing standards . This paper will argue that the process . of production of housing is as important for an understanding of the development of state housing policy as is the analysis of housing tenures . And it will suggest that the class struggle within housing, and its resultant effect on state housing policy, can be examined only within the context of the relationship between the contradictions for capitalism produced by the housebuilding industry and the effects of specific housing tenures . Emphasis will be placed on the role of housing at the economic level . This is not to deny the importance of the other levels, not is it to suggest that a simple economic determinism will explain all . Even when considering the economic level political and ideological factors must be included . 2 . HOUSING AND THE ACCUMULATION Of CAPITAL Central to an understanding of the role of housing at the economic level is the influence of the value of housing on the value of labour-power and its consequential effect on the rate of surplus value . The value of a "physical unit" of housing is determined by the socially necessary labour time required for its production . This obviously does not correspond to the direct housing costs faced by households . Apart from the necessity to transform values into prices of production, the final cost faced by the consumer is also determined by land costs, monopoly pricing and by the structure of housing finance . The latter elements however concern the distribution of surplus value and will be considered laterlll . Housing in addition need not be provided as a commodity under capitalism .

The absence of the commodity form could exist in two instances : in production when a dwelling is produced only for its use-value, and at the point of consumption when an agency (e .g . the state) purchases housing in the commodity form but provides it free to households . In a specific social formation the actual relations of production of housing, and the forms in which housing is consumed, depend on the state of class struggle and the historical development of capitalism . In Britain, however, housing is mainly produced as a commodity under capitalist relations of production(2) and it is provided for consumption in the commodity form : either through private renting or purchase, or through renting from the state . Consideration of non-commodity provision therefore need not complicate this particular discussion . The value of labour-power is determined by the value of the necessaries of life habitually required by the average labourer . There are two sides to the determination of the value of labour-power : the composition of the physical bundle of commodities which constitutes it, and the value of those commodities . The size and composition of the physical bundle will be determined by the historical situation and the state of the class struggle . The value of that physical bundle will be determined by the prevailing abstract labour time required for its production . The value of labour-power does not represent a fixed quantity but will rise with an increase in the physical amount of commodities which constitute it and will fall within a fall in the value of those commodities . This latter aspect is particularly important as the decline in the value of labour-power over time, which results from a fall in the value of those commodities, represents one of the central dynamics of the capitalist mode of production . In order to understand the role of housing in a capitalist society, it is necessary therefore to consider its position at the economic level in relation to the production of relative surplus value . There is considerable evidence that productivity in the house-building industry has increased at a much slower rate than in other sectors of industry . This means that the fall in the labour time necessary to produce housing has lagged behind that for other commodities . As a result the value of housing will not have fallen to the same extent as many of the commodities contributing to the reproduction of labour-power . Now any such commodity, whose value does not fall, limits the ability to lower the value of labour-power and will therefore act as a restriction on increases in the rate of surplus value . The rate of accumulation will be slowed and counteracting tendencies to the falling rate of profit weakened . The extent to which this occurs depends, of course, on the importance of the commodity in the value of labour-power, and housing is a significant element in that value . So the low growth of productivity in the house-building industry becomes a crucial problem for capitalism . It is also a problem that cannot be solved by a redistribution of surplus value . It affects the total mass of surplus value produced and cannot therefore be seen simply as a distributional question . Its solution for capital as, a whole lies solely in raising the productivity of the housebuilding industry . Within Marxist value theory the productivity of labour expresses a physical relation : the physical amount of products produced by a given amount of socially necessary labour time(3I . This relation determines the value of a commodity and is itself determined by the labour process used to produce that commodity . The assertion that the rate of productivity growth in the British house-building industry

80

CAPITAL & CLASS

has been slow, compared to that in other industries, is thus to assert that the labour process has been relatively static in that industry . The development of the labour process is structured by the dominance of the relations of production over the forces ot production(4) The existence of a slow rate of growth of labour productivity in the production of a necessary element in the reproduction of labour-power consequently does not impose a technical determinism on the ability to extract surplus value . Before presenting evidence which illustrates the slow growth of productivity in house-building, the major implications of it for the role of housing in the British social formation will now be drawn out . 1 . Given that the value of housing has fallen comparatively slowly over time, the costs of housing the working class , at any given standard becomes progressively more onerous for capital in general, unless ways are found of allevi ating those costs . Economic pressures for state intervention into the sphere of housing intensify, not simply to ensure adequate provision of working class housing but in an attempt to reduce the burden for capital of its cost . 2 . The inability to reduce the value of housing is not necessarily detrimental to capitals operating in the building industry . Even with a slow change in the labour process in house-building, building capitals will still extract surplus value from their work force and will therefore still tend to earn the average rate of profit . With a relatively static labour process, however, accumulation in the industry will tend to take the form of a quantitative expansion of a given labour process rather than the form of revolutionising that process through changes in the technical composition of capital . As a result improvements in technical efficiency will not be a major source of surplus profits for individual capitals in building as it is in other industries . Instead such sources as land speculation will constitute the areas in which surplus profits can be earned and the rapid expansion of capital achieved . 3 . If decreases in the values of consumption goods occur, it is possible for the living standards of the working class to rise even though the rate of exploitation is increased . Gains in housing standards for the working class cannot, however, be achieved so painlessly for capital if the value of housing does not fall to the same extent as that of other items of consumption . Acquiescence to working class demands for improved housing will be more costly for capital in terms of its effect on the value of labour-power than will concessions over many other commodities . Housing is consequently an area of working class consumption over which there is intensified class struggle . 4 . State intervention in the form of subsidies which do not alter the value of housing will not be a solution to the problem for capital of the relatively high value of housing as such subsidies can only have a distributional effect . Nevertheless, this distributional effect can have a significant impact during specific periods (e .g ., during the demise of the private rented sector) temporarily alleviating the economic problem for capital, if the redistribution is at the expense of non-capitalist classes . Such redistributions can only be short-lived, however, as long-term distributional advantage for capital can be only at the expense of the working class, thus intensifying the class struggle . 5. The house-building industry has not been the only industry in Britain with a

low rate of growth in productivity ; a number of other activities necessary to reproduce labour-power have had similar small changes in their labour processes . The importance of housing as an item of household expenditure is substantial, however, and many other activities have been taken out of the commodity form by state intervention (e .g ., education and health) . Yet the private capitalist production of housing still remains, and its production as a commodity ensures its continued influence on the value of labour-power . The object of this analysis is not to suggest that housing is the most important problem for capital in the cost of reproducing labour-power . Instead it is to examine the effect of housing on the process of accumulation . The analysis of the effect of housing on the production of surplus value is nevertheless not a sufficient answer to the question of the role of housing provision at the economic level . The distribution of surplus value must also be considered and with it the role of the state . Before proceeding to these issues, the assertion that the labour process in the British house-building industry has changed comparatively slowly must be substantiated . 3 . PRODUCTIVITY IN THE HOUSE-BUILDING INDUSTRY House-building is an integral part of the construction industry, and it has represented between 25 and 30 per cent of total annual construction industry output over the past decade . Many firms within the industry tend to work in several areas of construction at the same time ; housebuilding being complementary to activities in other types of work . For this reason, and because of data limitations, there is a need to consider the construction industry as a whole . This is unlikely to lead to an underestimate of productivity changes in the house-building sector which has probably not experienced the productivity increases of, say, civil engineering . The industrial revolution and its aftermath did not fundamentally transform house-building techniques as it did the production of other goods . Cooperation and manufacture still predominate in the process of constructing dwellings . Changes in technique in the industry over the past two hundred years have been only gradual, with the most significant changes taking place in the materials used rather than the labour process itself . Jones suggested that the major development in the latter half of the nineteenth century was the introduction of machinery into the woodworking trades (he estimated that productivity in the building trades rose by a mere 17% from 1850 to 1910) (Jones 1933) . The inter-war period also saw only gradual technical developments, although these were augmented by innovations in building materials (Richardson and Aldcroft, 1958 . Bowley, 1960) . Since 1945 there have been additional developments in building materials, and mechanization has substantially affected certain on-site activities especially earth-moving, materials handling and concrete mixing . Off-site prefabrication also has become well established for certain components . Nevertheless, fundamental changes in the building process have not occurred, in part due to the failure of the attempt at widespread introduction of industrialized building methods[5J . Changes in the production process do not however necessarily imply fundamental changes in technique ; considerable improvements in efficiency can be achieved by reorganization and integration of traditional methods . In this context

82

CAPITAL & CLASS

it is of note that the building industry has not fully utilised such possibilities (Turin, 1975) . The absence of mechanisms which force builders to improve efficiency or strive for new production techniques, which, as Marx demonstrated, is characteristic of large-scale capitalist industry, is readily apparent . It is not surprising, therefore, that wide disparities occur in efficiencies between builders at any one point in time (Reiners and Broughton, 1973 1orbes, 1969) . The general picture of relatively slow development is corroborated by comparative data on productivity and costs . The usual qualifications about such data need to be made before presenting the evidence . Long term studies of costs and productivity are difficult as they face, on the input side, the problem of separating changes in the costs of inputs from changes in their use and, with regard to output, changes over time in the quality and nature of the commodity produced . These difficulties are compounded for both construction as a whole, and for house-building, by the heterogenequs nature of the goods produced and by the problems of measuring construction output and employment . The magnitude of the differences between this industry and other sectors of the economy is therefore the most useful indicator of relative changes . Particular problems are presented by the existence of a large number of selfemployed workers (the "lump") as this leads to an under-recording of output and employment . Much of this labour is used in sub-contracting work, and is therefore likely to affect the labour-force figures to a much greater extent than the output series . The Department of the Environment . for example . has estimated that the "old form" of contractors census, used prior to 1973, "missed" 389,000 of the industry's labour-force, (i .e ., 20% of total employment)(6) This has been rectified to a certain extent in recent years, and estimates are made of unrecorded workers ; however, the employment series have to be treated with caution . Self-employment in construction has been growing since the last war but the most rapid growth occurred between 1966 and 1973(7) . Tightening legislation and the slump in the industry has since then led to a decline in their number . When lump labour is rising, estimates of changes in total employment will be low; leading to an overestimate of productivity increases . These factors need to be borne in mind when considering productivity data for this industry . Lomax has produced the most comprehensive series on productivity in the building industry . He presents estimates of output per operative hour for a series of industry categories from 1907-1955 : Table 1 reproduces some of his findings . His estimates show that productivity in building and contracting rose between the years 1907 and 1955 at an average annual rate of only 0 2% compared with a 2 .1% annual increase for manufacturing industry . The low productivity growth of construction was not shared by the building materials industry which, unlike construction, is classified within manufacturing industry . Its annual productivity increase exacttly equalled that of manufacturing as a whole (2 .1%) . Much of that growth can be attributed to changed techniques in the building materials industry ; changes which coincided with an increased monopolisation of the sector (Bowley, 1960) . Increases in productivity in the building materials industry, unless accompanied by rising input costs for that industry, will reduce the value of the constant capital used in the house-building industry and thereby lower the value of the housing built by it . This will partially offset the effects of the relatively static process of producing housing .

Table 1 Average rate of productivity increase in the U.K. per cent, per annum, 1907-1955

Total manufacturing Building materials Building and contracting

1907-24

1924-35

2 .0 1 .9 1 .7

2 .0 2 .1 1 .2

Source : Lomax 1959, Table 8 .

1935-49 2 .0 2.3 -3 .6

1949-55

1907-55

3 .1 2 .5 3 .6

2 .1 2 .1 0 .2

Both world war! caused substantial falls in building productivity . Carter estimated that productivity had fallen by a third between 1939 and 1947 (Carter 1958) ; the estimates of Lomax given in Table 1 indicate that the fall could have been even higher . Recovery to pre-war productivity levels was slow, during the 1960's more optimistic reports on construction industry productivity appeared ; official reports were talking of actual annual rates of increase of around 4% (e .g . the estimates for the late 50's/early 60'5 given in the National Plan of 1965) . Stone produced estimates from 1958 to 1965 of average annual increases ranging from 2 .3% to 4 .4% ; he decided that a figure between 3 .0% and 3 .5% was most likely (Stone 1970) . (The range of estimates highlights the sensitivity of productivity data to the price index used to deflate the gross output series and to the estimates of labour-only subcontracting .) This optimism about productivity, however, could have merely reflected underestimates of the growth of self-employed fabour . This would explain the discrepancy between these more optimistic estimates and recent data published by NIESR, given in Table 2 . which show a much lower productivity increase of 1 .2% for 1960-65 . Table 2 Trends in output per employee, 1955-73 (per cent changes per annum)

Manufacture Bricks, pottery, etc Construction

`

1955-60

1960-65

1966-71

2 .2 n.a. 2.2

2.8 4.0 1,2

3 .6 4 .8 7 .0

Source : National institute Economic Review, February, 1975

1971-73 6 .7 8 .7 -2 .2

Even for this later data, though, the National Institute Economic Review points out that the spectacular increases shown for 1966-71 could be attributable to the rise in self-employment . The view of the National Institute is corroborated by the estimates of Sugden who concludes that, allowing for self-employment, the rate of increase in output per head in construction was considerably lower than in manufacturing for the period 1954-70 (Sugden 1975) . In summary, the available evidence would seem on the whole to justify the belief that the rate of growth in productivity of the construction industry in Britain has lagged behind that of manufacturing industry over a long period of time . The recent slump in construction activity gives no indication that the trend of 1971-73 has been reversed . In addition, the magnitude of the difference between

84

CAPITAL & CLASS

construction and those sectors classified as manufacturing industry is such that it is difficult to attribute it solely to the specific measurement problems of the construction industry . In view of the data presented above it is perhaps not surprising that construction costs have tended to rise faster than the general price level . (Fleming, 1966 . feinstein, 1972) . Feinstein's estimates show that the retail price index rose fivefold between 1913 and 1965 whereas the "buildings" price index rose eightfold . They also show that the cost of constructing dwellings rose faster than the cost of other construction activities . Since 1965, D .O .E . data show that construction costs have continued to rise at a faster rate : between 1965 and 1975, local authority construction costs rose 33% relative to the retail price index and new owneroccupier dwellings (including land costs) by 42% . Unfortunately no adequate explanation exists of the comparatively slow development of the forces of production either in the construction industry as a whole or in house-building . Most explanations that do exist have been provided from outside the problematic of historical materialism . Needleman places emphasis on the physical nature of the building process which, he argues, determines the structure of the industry inhibiting the adoption of new techniques (Needleman 1965) . This raises the question of why these physical constraints have not been overcome . Technical change itself implies a reconstitution of the physical aspect of the production process . Capitalist relations of production transform pre-existing technical constraints on production by reconstituting the labour process and changing the nature of the commodity produced . But this has not happened in house-building to any great extent . Capitalist relations of production exist but production methods are predominantly traditional, based on those which existed before the emergence of capitalist relations . Bowley, when discussing the building industry as a whole, argues that the main barrier to technical change is the separation of the functions involved in the building process, particularly those of the "professions" (e .g . architects, quantity surveyors, structural engineers) from each other and from the actual builders . This separation has led to the development of a building "Establishment" with an inherent conservatism in technique (Bowley 1966) . Once again this raises the question of why this structure has remained ; why competition from new, more efficient techniques has not broken this Establishment down as has happened in other industries . This aspect of the structure of the building industry must be seen as much as an effect as it is a cause . Other writers have placed emphasis on the role of land . Colclough argues that the speculative nature of private house-building is not conducive to cost efficiency, as the speculative builders profit is made out of the increase in land values upon development . Actual construction costs are therefore secondary to speed of construction . and consequent tealisation of the profit on land (Colclough 1965) . This, however, raises questions about the operation of the land market for which no answer is given . For example, why the initial land owner does not raise the selling price and acquire the builders profit on land . french Marxist writers have also placed emphasis on the role of land rent : by arguing that absolute rent has acted as a barrier to investment in the building industry, thereby restricting the development of more productive techniques with a higher organic composition of capital (Ascher, 1974 . Lipietz, 1974) . Absolute rent exists because the low organic

composition of capital in building enables the land-owner to extract this type of rent from the surplus value produced in building, which would otherwise be redistributed to higher organic composition sectors in order to equalise the rate of profit between industries . Absolute rent is therefore both a cause and an effect of the low organic composition of capital in the building industry . For Marx, however, in the chapter on absolute rent in Capital a low organic composition was a necessary condition for the existence of absolute rent but not a cause . The cause was the monopoly ownership of land which (in agriculture) resulted in a demand for rent on land which would otherwise pay no (differential) rent Marx consequently theorised the conditions under which the monopoly ownership of land would generate absolute rent in agriculture . Unfortunately this has not been done for the existence of absolute rent on building land, so its role for the building industry must remain an assertion . There is one other way of cheapening the cost of producing housing, apart from reductions in the values of either variable or constant capital, which does not require fundamental changes in the methods of production . This is to after the nature of the commodity produced . This happens to many commodities produced s under capitalism and represents an integral part of changes in methods of production which result in increases in productivity . In housing, the size of new dwellings, for example, is reduced in response to higher land prices, and low building productivity can be circumvented to an extent by putting increasing emphasis on internal facilities which tend to be factory produced and consequently not subject to the conditions of production in the building industry . 4 . PRODUCTION AND REALISATION The sphere of production has been sited as an area which generates contradictions for capital in its continual attempt to produce additional surplus value . This was revealed by the effect of production on changes in the value of housing . Most discussions of housing in Britain have tended to ignore the sphere of production : the problems of the building industry are treated as a separate question . In particular, much academic discussion of housing has concentrated on the process of realisation and consumption, concerning itself with differences in cost and consumption which result from the structure of the housing realisation process . This deflects discussion into questions of "need" and "equality" between individual "citizens" and away from the structural role in a capitalist society played by social relations in housing. Emphasis is placed on the "gatekeeping" role of certain agents in the realisation process, for example by the housing landlord or the building society, whilst the role of housing in the production of surplus value is ignored . , Housing does have ; however, a specific realisation process . One that is more complex than for most commodities, especially those commodities primarily destined for the reproduction of labour-power . There are different forms that this realisation process can take ; each of these forms having a separate juridical definition of tenure . Tenures represent the legal recognition of the separate sets of social relations which intervene between the production of housing and its consumption as a use-value . But why does housing have this complex structure of

86

CAPITAL & CLASS

realisation and consumption? The simple fact that housing lasts for a considerable length of time will not suffice . In any case, the same fact is true for many consumer durables(8I . The reason for the existence of the complex structure of realisation and consumption arises instead from the high value of housing . The statement that housing requires forms of finance over and above that derived from wages because housing is expensive to build is obviously a truism . But it is a truism which sites the reason for the necessity in the sphere of production and not in the sphere of circulation . This is, nevertheless, a complex set of interrelations between the spheres of production, realisation and consumption . The actual forms of realisation and consumption will be determined by the particular tenures in existence, and those tenures cannot be directly deduced from the sphere of production . Specific tenures will also have effects on the production process itself, for example, industrialised building systems have been developed only in the local authority housing sector . Finance and land show up these interrelations in a similar way . Loan capital will be required both to finance the construction of a dwelling and for its purchase on completion . The need for a source of finance provides an avenue through which surplus value can be appropriated, as does the price of land . Land has to be acquired by the builder but it does not represent a part of the value of the dwelling built, its cost is a deduction from surplus value . Both finance and land will influence the structure of the building industry and consequently the organisation and form of the [about process . They will therefore indirectly affect the value of housing as they constitute two of the elements that determine the nature, in the house-building industry, of the process of production and the ways in which that process can change(9] . Production should consequently not be seen as an isolated cause of major housing problems . But an analysis of the development of British housing policy must consider the effects caused by the production process . If certain forms of housing provision come into contradiction with the overall process of capital accumulation, changes in tenure forms which do not alter the value of housing will still perpetuate a fundamental problem for capitalism in housing the working class . (In Section 5 below, the example of the decline of the privately rented sector at the beginning of the twentieth century will be discussed in this context) . Consideration of the determinants of the value of housing will also highlight the ways in which the various factors in the sphere of circulation should be analysed . In housing, the sphere of circulation produces its own specific effects : political and ideological as well as economic : for example, the idiosyncrasies of the British building society movement are well known . The importance of these effects on the general provision of housing, however, and the very reasons lot their existence, cannot be deduced from an isolated analysis of any particular institution or of a form of realisation and consumption . It can be deduced only frorn the overall structure of housing provision and the state of the class struggle . In the absence of such an analysis, the mere empirical recognition of an effect produced by loan capital can for example lead to the assertion of the dominance of "finance capital", a position held in Harvey (1974) . Even if loan capital never operated in housing, a central contradiction of housing for capital would remain if the value of housing was unchanged . Only revolutionising the process of producing housing will affect that contradiction . So unless the removal of loan

capital can alter the process of production and, therefore, the value of housing, the result of its removal will only be distributional(101 . The surplus value appropriated through the financing of the housing realisation/consumption processes, and through housing land costs . i s a distribution of surplus value away from other sectors of capital to unproductive capitals providing loan capital or land . This redistribution is effected through wages and taxation : the total direct cost of housing to individual households, including interest charges, will have a determinant influence on the level of wages ; and the mass of state subsidies used to finance a part of these appropriations of surplus value will determine the level of taxation required . The working class is not however a bystander unaffected by these struggles over the distribution of surplus value . Instead these struggles might result in either a lowering of the value of labour-power or in a reduction in the provision of working class housing . The outcome at any point in time will depend on the state of the class struggle, and an important aspect of struggles over housing will be the forms of housing tenure . 5 . THE STATE AND HOUSING POLICY 5 .1 Housing and the role of the state The state intervenes in the sphere of housing in an attempt to overcome the contradictions for capitalism inherent in the production of housing in the commodity form . But these contradictions cannot be overcome simply by state intervention, as the state itself has contradictory functions which arise from its dominant role as the factor of cohesion in a capitalist social formation . This means that no simple explanation can be given of the state's role, and that its role cannot be treated as invariant . What will be attempted here will be the elaboration of certain elements which should form the basis of a comprehensive analysis of the role of the state in British housing, rather than that comprehensive analysis itself . The contradictory role of the state arises because it is a site of class struggle . Such contradictions include for instance : 1. It has been argued that housing costs limit the ability to reduce value of labour-power . Capital as a whole will be affected by this restriction but any potential solution will operate against the interests of specific individual capitals, or fractions of capital . Certain fractions might themselves have a contradictory relation to housing costs . Loan capital will want to reduce the cost of its labour force and to sustain the total surplus value produced in the productive sector . But, at the same time, it directly benefits from surplus value appropriated through housing and consequently would not want its removal . 2 . the state will also try to contain working class demands and channel those struggles into the established political apparatus . This will affect both the content of housing policies and the way in which they are presented . 3 . The ideological conditions necessary for the existence of a capitalist mode of production also have to be reproduced . As part of this, the state appears as the representative of the interests of the general public and above class struggle . Its concern over housing as a result might extend beyond the immediate economic interests of capital . ideological questions will also enter directly into housing policies . Some housing tenures, for example, facilitate the reproduction of the

flg

CAPITAL & CLASS

dominant ideology and will therefore be encouraged . The role of housing in the class struggle will alter over time . This results from the fact that both the structure of the social formation and the state of class struggle are not static . Two examples will illustrate this point . (i) The durability of housing means that its production need not be continuous, in the sense of regularly producing a certain amount of new stock each year . It is consequently possible to reproduce the capitalist mode of production at any specific point in time without much capital having to be applied to housing production Capital as a whole might therefore find expedient a severe reduction, or abandonment, of housing production during periods of crisis . (ii) The position of class struggle will affect the state's response to working class demands . During 1974, for example, the Labour Government was trying to contain strong militancy by the working class over economic demands . Part of its response included a rent freeze and a substantial loan to building societies to keep mortgage rates down . A year later this militancy had been weakened and the state's response to housing costs changed : rents have risen, mortgage interest rates reached unprecedented heights during 1976, and housing expenditure cuts have been implemented . Attempts by the state to increase the productivity of British industry are well-known . [lie state has intervened into many industrial sectors, aiding the restructuring of capitals in those industries . It has advanced capital in the form of tax relief or grants, and used many other methods all of which are specifically aimed at lowering costs through increased productivity Yet these forms of intervention have rarely been tried in house-building, though its rate of productivity growth is particularly low . Attempts by the state to increase productivity in this sector instead have been limited primarily to technical advice and the encouragement of new techniques (e .g . industrialised building), with the occasional use of public expenditure to sustain demand . At present it is only possible to assert that the structure of the house-building industry has not facilitated direct intervention by the state . Instead the housing problem has been treated primarily as a realisation problem : final consumers are seen as having insufficient funds . This emphasis on the realisation process is accentuated by the role played by capitals attempting to appropriate surplus value through that process . State policy is therefore directed at the minimisation of this realisation problem, via the manipulation of subsidies and tenures . Thus the state influences the cost of housing to the final consumer without attempting to tackle the fundamental problems in the production of housing . If objective conditions in the building industry limit the ability for state intervention, concentration on the tenure system rather than on production does not necessarily imply that the state has simply missed the correct policy prescription . Nevertheless it does mean that state policy is not directed to the fundamental cause of the high cost of housing . So the effects for capital, via the restrictions on relative surplus value, continue and intensify Working class strategies directed against state housing policy must be based, therefore, on an understanding of this central housing problem for capitalism and the contradictions generated by it . State policies towards different tenures cannot however be ignored . The form of the realisation process is dependent on particular tenure structures, and the latter will therefore determine whether and how much surplus value can be

appropriated in the realisation process . State policies towards specific tenures will consequently affect this . Again, some tenures might be more conducive to changes in the process of production of housing . Finally, the state's role is not solely economic . Even if it cannot confront, let alone solve, the central economic problems of housing for capitalism, it can operate in this sphere to further the ideological conditions necessary for the reproduction of the capitalist mode of production . And tenures provide ample opportunity for this activity . It has often been argued that changes in housing tenures are the result of either victories or defeats for the working class, at the expense or gain of the bourgeoisie (Byrne and Beirne, Merrett, and Clarke and Ginsberg in PEHW, 1975 . CDP . 1976a) . One tenure is classified as the working class tenure : namely local authority housing : and all movements towards greater encouragement of this tenure are treated as working class victories and all moves away from it as defeats . The role of the bourgeoisie at times when local authority housing has been encouraged is dismissed because no direct economic interest of the bourgeoisie in encouraging local authority housing was expressed politically . Instead the historical "facts" show that such housing policies were appeasements by the state of working class militancy(111 . In this section it will be suggested that this simple dichotomy of working class gains or losses in the housing sphere is misplaced, as it ignores the structure within which the class struggle over housing operates . The reasons for the demise of the dominance of the private landlord in the provision of working class housing illustrates the inadequacy of an explanation which relies solely on working class militancy . The above position also relies on the assumption that the economic interests of classes always result in their direct political expression . This ignores the importance of ideology . Capitalist calculation and bourgeois ideology cannot lead to a correct analysis . The understanding by the bourgeoisie of the "housing problem" cannot be read off from its objective economic interests, and the same is true for the economic interests of the other classes, fractions and strata . The ideological understanding by each social category of the "housing problem" will determine the political demands made by it . These demands in turn can be made only through some form of political representation, which will itself alter the nature of those demands . There is consequently a two-fold dislocation of the economic interests of classes before a class position is represented politically : within the class ideology and within the form of political representation . Furthermore . the state is the site of political class struggle, it does not operate in the immediate economic interests of any dominant class or fraction of a class ; including the intervention by the state into housing through its housing policy . An understanding of the development of British housing policy would consequently entail, as a prerequisite, a detailed analysis of class positions on housing and how those have changed over time, necessitating an understanding of the class structure of the U .K . and of the ideological and political representation of those classes . Nevertheless this conclusion does not entirely sever the theoretical links between the economic and political levels of a social formation . Certain conditions are necessary for the economic reproduction of the capitalist mode of production . State policies cannot continually operate against those conditions without destroying the basis of capitalist society . The class struggle over state

90

CAPITAL & CLASS

policies will consequently be constrained by the economic "needs" of capital ; something that reformism and successive Labour governments have "discovered" but refuse to recognise . The economic problems for capital over the provision of working class housing will consequently necessitate some type of state intervention and will constrain the forms it can take, but it will not determine the exact nature or timing of that intervention . When considering British housing policy it is consequently legitimate to consider the economic interests of specific classes in this sphere, including those of capital-in-general(121. The relation between the economic and political levels explains why it is possible to say, at the same time, that British housing policy has been ad hoc and that it has been overdetermined by the economic needs of capital . The existence of a specific contradiction at the economic level and the need for state intervention m an attempt to resolve that contradiction does not automatically result in state intervention . Yet that contradiction will remain and thus influence political class struggle and action by the state. With this in mind, an alternative interpretation of early twentieth century housing legislation will now be given . 5 .2 Private renting Private landlords purchase the commodity housing as an investment of capital . Their purpose is to appropriate surplus value in the form of profit on that capital by charging rents . Nineteenth century housing landlords tended to be petty bourgeois ; the renting of housing was a sphere of investment for small capitals . This form of investment was localised, required direct management, did not allow the spread ing of risk and was often difficult to resell . Its existence depended on the absence of investment alternatives rather than on its own inherent profitability (although substantial profits could sometimes be made) . Its petty bourgeois nature meant that the eventual demise of private landlordism did not lead to major conflict with any fraction of the bourgeoisie . This was an era of low technical change in house-building . As Section 3 showed, the only estimate of productivity for this period attributed most of the little productivity increase that did occur to the introduction of machines into the wood-working trades ()ones 1933) . The last half of the nineteenth century did, however, see changes in the relations of production with the emergence of speculative housing-estate development . Estate developers/builders made profits not only from the building process but also from rising urban land values (Richardson and Aldcroft, 1968) . Private renting in the nineteenth century always had limited success in housing the working class . Rents were tied to wage levels which were low, so that the accommodation provided was limited . The lack of improved methods of production meant the value of housing was not reduced . Improvements in conditions could consequently be achieved only by higher expenditure . Yet any increase in wages would not necessarily lead to a greater amount of money being spent on a larger quantity, or an improved quality of, housing . Housing costs, which had to be paid out of wages, also had to include a payment for the landlord's profit on capital and for the cost of land . Increases in wages, enabling increased expenditure on housing, might simply increase profits . The contradiction for capital imposed by the effect of the comparatively high value of housing

on the ability to extract surplus value was therefore considerably exacerbated by the existence of private landlordism . Poor housing conditions have health effects which directly limit the productivity of the labour force but private landlordism, given the process of production in housing, provided no guarantee that those conditions could be improved . Housing landlords therefore came increasingly into conflict with industrial capital in its quest for surplus value . In addition, poor housing conditions created the possibility of epidemics which frightened the bourgeoisie . Fxpensive, overcrowded and poor quality housing also had political repercussions, creating a demand around which working class agitation could form (Stedman-(ones, 1971) . The bourgeoisie consequently had a considerable "interest" in alternative forms of working class housing provision Other conditions had to exist however before this economic "interest" could find a response in state action . Victorian bourgeois ideology was strongly imbibed with the concepts of "self-help", the "efficiency" of the market mechanism, and explanations of poverty in terms of the personal characteristics of the affected individuals . The conception of the housing problem by the Victorian bourgeoisie did not consequently lead to fundamental attacks on private landlordism (Gauldie, 1974) . The first of the conditions which produced state involvement was a fall in investment in housing to rent . The decline of private renting started with the development of alternative forms of investment . This occurred towards the end of the nineteenth century, with the growth of financial institutions which could offer relatively secure returns for small capitals, drawing them away from the housing sector . The decline in private landlordism consequently started prior to state intervention and rent control (Bowley, 1945) . Rent control policies should therefore be seen as a reaction by the state to a shortage created by a decline in private landlordism that was already in motion . A rise in rent levels could have sufficed to increase landlord profitability but this would have necessitated increased wages, thus bringing housing landlords into direct conflict with the interests of the bourgeoisie . In the face of the existence of a massive housing shortage and a decline in private landlord investment, the bourgeoisie and the state gradually "realised" that direct state involvement in housing was necessary . Little published work exists on how this political change took place, or on the legislation which led to the introduction of council housing before the First World War . Nevertheless, this ideological transformation and associated political effect was undoubtedly influenced by the existence of working class agitation and its potential political repercussions . Although the first major economic involvement of the state in housing did not take place until the Rent and Mortgage Interest (War Restrictions) Act of 1915 and the first state housing subsidies were not introduced until 1919, the impending outbreak of war probably delayed the introduction of subsidies prior to 1914 . This conclusion is reinforced by an examination of pre-1914 government housing documents (Wilding, 1972) . The First World War undoubtedly exacerbated the housing problem and the delay changed the form in which the state intervened . The timirtg and form of state involvement did depend on the state of class struggle : the 1915 rent control legislation was preceded by rent strikes in areas vital for munitions production . But the structural role played by the private landlord and the pre-existing contradictions of private landlordism helps

92

CAPITAL & CLASS

to explain the response of the state to that outbreak of working class militancy, when other cases were dealt with so severely (Hinton 1973) . Similarly housing policy could play a different ideological role when introduced after the First World War (e .g ., "domes fit for Heroes") . Post-war conditions also enabled justification in terms of the "temporary" nature of state intervention and determined the type of intervention . But this does not alter the fundamental explanation of the involvement of the state in terms of a pre-existing contradiction, primarily at the economic level, in the provision of housing to maintain and reproduce the labour force . The object of all this was to demonstrate that the role of class struggle cannot be examined outside of the structure in which it takes place . If such a theoretical analysis of the class struggle is not undertaken, superficial examination of the historical "facts" of the class struggle can lead to serious political mistakes : for example, it can produce a misunderstanding of the nature of reformism and its role for capitalism . It can also lead to over-optimistic expectations of the spontaneous power of the working class . If particular periods of changes in housing policy are seen solely as victories for the working class, the capitalist nature of the new forms of housing provision (e .g ., in this case, local authority housing with substantial state subsidies) will be ignored . The gradual removal of the housing landlord represents the removal of one group of agents who appropriate surplus value from the provision of housing . One contender in the distributional struggle for surplus value has been displaced . But as the productivity of the house-building industry has not been directly affected this gain can only be a distributional advantage to capital . The question now arises as to whether the subsequent dominant tenures did still enable other mechanisms for appropriating surplus value . 5 .3 Local Authority Housing and Owner-Occupation . Ownership by the state represents the most direct form of housing intervention . Its prime function is to house the working class adequately, as cheaply as possible within the structure of costs facing the branch of government given responsibility for its operation . the local authorities . The provider of housing in this case has no interest in appropriating surplus value for itself through housing rent . This tenure also has beneficial effects on housing production by aiding attempts to increase building productivity . Here the builder does not have land acquisition costs ; projects tend to be large scale; non-traditional techniques are positively encouraged, the builder does not have to face a conservative market or a building society that is loath to lend on anything but the most traditional type of property ; and the speculative element in building is removed . At the economic level, therefore, this tenure might seem ideal . But even at the economic level this process is not successful . Surplus value can be appropriated through the provision of local authority housing, so that the housing realisation process still acts as a barrier to tire lowering of the cost of housing . Additions to the local authority housing stock are regarded by local authorities as capital investments, and money is generally borrowed to finance it . The loan charges have risen rapidly, and rents have risen accordingly . The size of the local authorities' outstanding housing debt depends on the amount of new building . Over (AM of local authority housing costs in 1974/75 simply represented

interest charges No other local authority service is faced with such interest costs . In 197 .3/74, for example, loan charges represented only 9% of English and Welsh local authority expenditure on education and 16% for highways, yet for council housing the figure was 68% . Local authorities borrow from two principal sources : central government in the form of the Public Works Loan Board, and private loan capital . The former essentially operates as an intermediary between private loan capital and local government, charging a rate of interest which reflects its management expenses and the cost to central government of borrowing . The need to pay interest represents the major mechanism through which surplus value can be acquired by private loan capital from the provision of local authority housing It obviously benefits those capitals who lend in this way but it operates against the economic interests of the rest of capital, which has to forego surplus value as a result : either through the need for higher wages to pay the rents, or through the taxes required to finance the state subsidies . In the case of owner-occupation housing is purchased in the commodity form, and unlike the other two tenures, it can be resold at anytime . The selling price will be determined by the current cost of newly constructed houses and the "state of the market" (i .e ., short-term shortages or gluts) . This market system involves the existence of various agents in the exchange process - solicitors, estate agents, surveyors, etc . - who are unproductive and paid out of surplus value . Purchase usually involves mortgage funds on which a rate of interest has to be paid, and consequently it represents another mechanism through which surplus value is appropriated . Owner-occupation in no sense removes the ability to appropriate surplus value; the expense of fees associated with purchases and sales and costs of mortgage finance ensure its continuing existence(13) . A number of comments about these two tenures need to be made : (1) Much discussion concerning these tenures has centred on comparisons between the costs of the two tenures for individual households, and on how much subsidy the average household receives in each of them . These exercises are essentially fruitless as they attempt to compare cost items which are not comparable . Arbitrary assumptions have to be made about which costs to include to make the comparison "fair", and, as the relative costs of each tenure vary over time, assumptions have to be made about individual subjective "time preferences" and, in the case of owner occupiers, their subjective valuations of socalled "capital gains" : an exercise which is as absurd as it is arbitrary . The main reason why such comparisons must remain arbitrary, however, is that they ignore the social relations within which housing provision exists . In the first place, there is a determinate relationship between housing costs and wages . If any tenure did result in reduced housing costs for the working class, this would lower the value of labour-power . Secondly, the comparison treats the structure of the tenures as eternal entities and not the product of class struggle . Households pay out costs and receive subsidies and benefits, it is implied . i n a socially neutral framework ; such that the individual local authority tenant, or owner-occupier receive for themselves, for example, subsidies . The existence of subsidies of any given magnitude might however be a condition for the existence of the tenure itself . A comparison of the costs to individual households must consequently be replaced by a mapping of the social relations that exist within any housing tenure .

94

CAPITAL & CLASS

(ii) It has been shown that both local authority housing and owner-occupation enable the appropriation of surplus value by loan capital . State subsidies to both tenures are explicitly designed to finance a part of those interest charges . State housing subsidies do not reduce for the household the high cost of housing which results from its production cost, but instead lower the high cost of finance imposed by loan capital . There is no necessary technical reason for the existence of loan capital in the structure of housing provision . By reducing the direct cost of loan finance, state subsidies facilitate political acceptance of tenure structures requiring loan capital . Subsidies are then treated ideologically as subsidies to households, and not as what they really are : mechanisms for the appropriation of surplus value by loan capital . (iii) Local authority housing is burdened with particularly heavy loan charges, which at times of general economic crisis produce intense strains on housing finance The state's response is to resolve the problem at the expense of council tenants, rents are raised and the sector is rundown as being "too expensive" . The ideological disadvantages to capitalism of local authority housing mean that there is little incentive for the state to reduce its overall cost . Attempts to alter the structure of state housing provision, removing the ability to appropriate surplus value through lending to local authorities, will meet with considerable opposition . Encouraging owner-occupation does not produce this effect, instead, it presents positive ideological and political advantages . The existence of this alternative tenure in consequence ensures that little positive political action will be taken towards local authority housing . This ideological context can explain the apparent paradox that in Britain over recent decades a greater rate of profit could be obtained for loan capital lent to local authority housing programmes than for capital invested in manufacturing industry, and yet state subsidies are seen as subsidies to council tenants rather than to loan capital . Demands could be made for the removal of loan capital and its replacement by finance through direct state grants and from rental income . Attacks on loan finance should form a major plank of working class political action in defence of the housing situation of council tenants( 141 This will not resolve the problem of rising building costs but it would remove an important cause of escalating local authority housing costs . Such demands would imply a complete restructuring of the nature of local authority housing finance, but it is a reform which is possible without capitalism . (vi) The setting of rent levels within each local authority has since the mid-1930's primarily been based on (lie existing level of subsidies and the "pooling" of rents . Rents are consequently determined by the overall cost of the housing stock, so that the rent on a council house bears no relation to its own construction cost . In effect, tenants in older dwellings help finance new construction through their rent payments This is often regarded as resulting in tenants subsidising each other . Alternatively it has been argued to be a progressive measure as it socialises (sic) housing costs (papers in PEtJW, 1975) . Once again such conclusions ignore the structure within which local authority housing is placed . The high cost of new council buildings and its concomitant loan costs result in dwellings whose rent levels would make it impossible for working class households to live in them, if the rents were directly based on the costs incurred by the local authority as a result of the construction of these dwellings, even given the level of state subsidies . New council building would in this case not be a way of housing the working class

unless that structure of costs were changed (e .g ., the removal of loan charges or vastly increased state subsidies) The pooling of rents solves the problem without changing the structure of local authority housing provision . The effect of the high cost of new building is resolved at the expense of current tenants ; in an ideological form which is acceptable : namely, rent pooling . In those circumstances. tenants are not subsidising each other but paying the loan charges and building costs imposed on local authority housing . The recent movement towards greater encouragement of owner-occupation in the U .K . can now be explained as a solution by the bourgeoisie to the "housing problem" . It has already been suggested that bourgeois ideology has perceived the high cost of housing as being primarily a problem in the sphere of circulation . In this conception the problem of cost can be ameliorated by manipulations of the tenure systems and the subsidies that they receive . The effects of the current structure of local authority housing provision on the cost of council housing has already been discussed . The encouragement of owner-occupation is a part of the "solution" to the problem of cost in the local authority sector, as it enables a rundown of the latter ; thereby avoiding the necessity to restructure the nature of state housing provision . Owner-occupation has ideological advantages for capitalism over local authority housing ; advantages which not only facilitate the continued reproduction of the ideological conditions necessary for capitalism . They will also be ideological advantages which enable households to be burdened with higher housing costs without necessarily creating struggles at the political or economic levels in attempts to offset these costs . But, whatever the advantages of owner-occupation for the bourgeoisie, the rundown of local authority housing and the tenure with which it is replaced depends on the political response of the working class . (v) Nevertheless, the economic advantages for capital of owner-occupation are limited . Owner-occupation is just a tenure and encouragement of it does not alter the basic relations, discussed earlier, that are involved in the production of surplus value . Owner-occupier housing is provided in a commodity form which leads to the perpetuation of the most traditional type of labour process in housing, for speculative house building faces considerable difficulties in transforming the process of producing housing . Owner-occupier house prices, moreover, are closely tied in the long-run to the cost of newly constructed dwellings, and the cost of the latter is rising over time . The price of previously built houses, therefore, is related to that of new ones, and, unlike local authority housing, loans will be incurred on exchanges of second-hand houses as well as on the purchase of new ones . In the long-run it is probable consequently that more loan capital will circulate in owner-occupation, and more surplus value will be extracted via it In addition, owner-occupation can fulfil only a limited role in slum clearance programmes so that in periods in Britain when the reproduction of adequate working class housing has necessitated substantial slum clearance, owner-occupa tion could play only a minor role in it . State housing was a necessary outcome of slum clearance programmes of the 1930'5, 50'5 and 60'5 . Private speculative building could not have achieved such a task without massive state subsidies and control over the process of production . The switch in state housing policy away from comprehensive redevelopment to improvement of the existing stock at the end of the 1960'5 was consequently interlinked with the policy of encouraging owner-occupation .

CAPITAL & CLASS

96

6 . CONCLUSIONS This paper highlighted certain factors which should be central to an analysis of British housing policy but which tend to be ignored . It has argued that the contradiction between the process of production in the house-building industry and the needs of the capitalist mode of production in general is a mayor "housing problem" for British capitalism . Any examination of British housing policy, and any political conclusions that are drawn from them, should therefore be structured around this contradiction . Much of the current debate over housing concerns its costs to the household . Discussions over which tenure is the most subsidised are a useful antidote to the image of the scrounging council tenant . Such discussions do however create problems and cannot in themselves form the basis of an adequate working class housing strategy . In the first place they get enmeshed in esoteric questions of what really constitutes a "subsidy" or even "equality" . Secondly, and more important, they do not break out of the ideological framework into which state policy has placed housing . The issue revolves around which household gets more subsidies or, alternatively, cheaper housing : the council tenant or owner-occupier . The two categories of household are consequently posed in opposition to each other . The divisiveness of bourgeois ideology in housing has not been overcome but instead it has been reinforced . The issued is sited in the costs to the respective households not in what causes those costs . A housing strategy which tries to break down the effects of capitalist ideology must consider why subsidies are necessary and who actually receives them . Loan capital appropriates more surplus value through local authority and owner occupied housing than the total amount of state subsidy to either tenure . State housing subsidies should be seen therefore as a transference of surplus value to loan capital, a part of the struggle between fractions of capital over the distribution of surplus value, and not as a subsidy to members of the working class whichever tenure they might live in . Moreover, loan capital only heightens the "housing problem", it does not create it . It is not enough to point out the role of loan capital in housing provision . The high cost of housing is primarily caused by its process of production and the role of loan capital arises only as a result of this high production cost . Attempts by the state to reduce the cost of housing are not undertaken solely to placate the working class but also to increase capitals' ability to extract surplus value . A housing strategy based on an understanding of these issues is necessary to aid tenants' struggles and to negate those ideologies, generated in housing provision, which divide the working class .

NOTES

1

Michael Ball teaches economics at Birkbeck College, 7-15 Cresse Street, London, W11' IPA The separation is not a total one, however, the distribution of surplus value can have repercussions for the sphere of production : c .f . comments later on

the influence of land rent on the production of housing . The exception is local authority direct labour organisations . They, however, produce only a small proportion of new housing output and consequently will not be discussed . 3 ' the degree of productivity of labour, in a given society, is expressed in the relative extent of the means of production that one labourer, during a given time, with the same tension of labour-power turns into products ." Capital Vol . I . p . 621 . 4 C .f . Bettleheim 1974 and Balibar 1970, p . 233 ff . 5 Industrialised systems have fallen from a peak of 41% of new local authority dwellings in 1970 to only 21% in 1975, and are still declining in importance . It is often argued that this decline was the result of "social objections" to the predominance of high rise designs for industrialised dwellings Capitalism is not, however, renowned for its concern for the living conditions of the proletariat . Reliance on such an explanation necessitates the demonstration of why complaints against this building form were so successful, and were the sole reason for the decline of industrialised building . Industrialised building systems do not require high rise designs, so that complaints against that design cannot be sufficient to explain its demise . By the late sixties it was apparent that industrialised building had failed to achieve the hoped for construction economies . An adequate explanation of the post-war development of industrialised building must concentrate on the reasons for this failure to reduce costs, by looking at the structure of the industry and the role of, and reasons for, the state encouraging the development of the specific forms adopted for industrialised building . Explanations which rely solely on "social objections" to a particular housing design simply reinforce the ideology of the benevolent state which is essentially reformable once the influence on the state of certain monopoly capitals is removed . (Dunleavy, 1977) . 6 Housing and Construction Statistics, no . 16, supplementarv table LV, HM50 . 7 Department of Employment Gazette, Dec . 1976 . 8 The rejection of durability as the prime cause of the realisation structure rules out an explanation in terms of the assertion that a house "releases" its embodied value gradually over time, as this also treats time as the determinant factor . 9 As stated in the previous section, no adequate explanation of the development of the building industry exists . So the actual impact of finance and land on the process of production remain to be specified adequately, and the description of their role in the text must be treated solely as schematic . 10 The political importance of such a distributional struggle for the working class could, however, be considerable . 11 The following quote summarises this position : "Whatever the interest of industrial capital in the reduction of the cost of reproduction of labourpower, it is the working class which has achieved such reductions as have been enforced by state action in the field of housing . Hence there is no direct relation between a reduction in the price of housing and a reduction in the cost of reproduction of labour-power . The gains have therefore, probably accrued to the working class rather than to capital ." Clarke and Ginsberg, PEHW, 1975, pp . 11-12 . 2

98

CAPITAL & CLASS

12

It is only in this structural context that the concept of capital in general has any meaning for at the political level, and in terms of capitalist competition, such a unity does not exist . Profits against Houses, CDP 1976b, gives an excellent description both of the cost of agents associated with house purchase and the role of building societies Merrett has suggested that "political attacks on the money lenders are easy to formulate but they rest on a complete misunderstanding of the manner in which council tenants are exploited" (PEHW, 1975) p . 75 . This is done by arguing that finance within capitalist societies necessitates repayment at rates of interest (industrial capital in receipt of state handouts, please note!) And that this is a "rate of exploitation", the magnitude of which depends on the rnoney rate of interest and the rate of inflation . Finally . it is concluded that the rate of inflation has been so high in the 1970's that the real rate of interest (i e "exploitation") has been negative . Council tenants are, however, not exploited through the need to pay loan charges because the rate of interest is not a relationship of exploitation . Exploitation occurs only in the extraction of surplus labour in the sphere of production . In addition . the concept of a "real" rate of interest relies on the bourgeois theory that interest is a reward for thrift or "waiting" so that inflation reduces the real reward below its nominal value . This conception of the rate of interest is dismissed by Marx in Capital, who shows instead that the rate of interest is a mechanism for appropriating surplus value . This will take place as long as the money rate is positive . The conclusion reached by Merrett is consequently untenable .

13 14

REFERENCES Ascher, F ., 1974, C .M .E . et Secteur de Production du Batiment et des travaux publics (B .I .P .) . In Urbanisme Monopoliste, Urbanisme Democratique, (Cahiers du C .E R .M .) . Althusser, L . and Balibar, E ., 1970, Reading Capital . Bettleheirn, C , 1974, Cultural Revolution and Industrial Organisation in China . Bowley, M-, 1945, Housing and the State . 1960, Innovations in Building Materials . 1966, the British Building Industry . Carter, C , 1958, The building industry . In D . Burn led .) . The Structure of British Industry, Vol . 1 . COIClough, J , 1965, the Construction Industry of Great Britain . C .D .I' , 1976a, Whatever happened to Council Housing? Community Development Project . 19766, Profits against Houses, Community Development Project . Dunleavy, P ., 1977, Protest and quiescence in urban politics : a critique of some pluralist and structuralist myths . International Journal of Urban and Regional Research, 1, No . 2 .

Feinstein, C ., 1972, National Income, Expenditure and Output of the U .K., 1955-1965 . 1 leming, M , 1966, The long-term measurement of construction (osts in the U K ., Journal of Royal Statistical Society, Series A Forbes, W , 1969, A Survey of Progress in House Building, BRS Current Paper (:P 25/69 . Gauldie, F , 1974, Cruel Habitations . Harvey, D ., 1974, Class-monopoly rent, finance capital and the urban revolution . Regional Studies, 8 . Hinton, I . . 1973, The First Shop Stewards' Movement . Housing Policy, 1977, Housing Policy : a consultative document . ( :mnd . 6851 . Jones, G . . 1933, Increasing Return . Lipietz . A , 1974, Le Tribut Ioncier Urban . Lomax . K ., 1959, Production and productivity movements in the t1 K since 19(10, loumal of Royal Statistical Society . Series A Needleman, L . 1965, The Economics of [lousing . P .E .H .W ., 1975 . Political Economy and the Housing Question, Political Economy of Housing Workshop of C .S .E . Reiners . W . & Broughton, H ., 1953, Productivity in House Building, National Building Studies Special Report, no . 11 . Richardson, H, and Aldcroft, D ., 1968, Building in the British Economy Between the Wars . Stedman-Jones, G ., 1971 . Outcast London . Stone, P ., 1970, Urban Development in Britain . Sugden, 1 ., 1975, The place of construction in the economy, in Turin (1975) . Turin, D . led .) 1975, Aspects of the Economics of Construction . Wilding, P ., 1972, Towards exchequer subsidies for housing, 190f>-1914 . Social and Economic Administration, 6.

FREE OFFER

to readers of CAPITAL & CLASS 6 Back Issues Free with a £5 .00 year's subscription No . 3 The CIA in Britain ' Jamaica Wandsworth -- Fight for Jobs' No . 4 The Duty Books Business ' Bomb Trials' Debate with bfilihand No . 5 NUSS - the classroom revolt Labour Party in decay ' c:FC Pay out No . 6 British Torture ' Psyops " Working with the Labour Party "

158e Drummond StrM London NW1 Phone: 01-387 0176

No . 8 Politics of Contraception' The British Car Industry ' No. 9 Dubal'iMrBig'State, Class and Courts' Life on the Dole

THE "REVOLUTION OF HOPE" AND ITS RESULTS : SOME REMARKS ON THE PRESENT SITUATION Stefan Horton

INTRODUCTION by Oliver MacDonald . I The article from Poland published below is a remarkable document . In the first place, any revolutionary Marxist text from Eastern Europe is a rarity . Secondly, Marxist investigations of social crises which follow through to definite political conclusions are more scarce than many people might like to think . Even less common are conjunctural analyses which contain genuinely testable political prognoses . And most unusual of all, Horton's analysis retains its basic validity as a guide to action a full year after it was written . Writing for a Polish audience, Horton assumes familiarity with historical, social and political facts about Poland which may not be known by English readers . Samizdat distribution creates another difficulty : a document whose circulation depends upon rapid retyping must treat the economic and political background to the crisis in an extremely compressed way . On both counts some introductory remarks may be useful . The article was produced in the aftermath of workers' strikes against government price increases in June 1976 . Within a day of their announcement, the 65% rises in food prices were withdrawn . But the strikes and subsequent repression opened the third major political crisis that has shaken Poland since the death of Stalin . These three crises were accompanied by mass working class upsurges, none of which was subsequently crushed in open confrontation with the regime . Indeed, both in 1956 and in 1970-71 new Party leaderships came to power attempting to head off such a confrontation and reach a compromise peace with the working class . The Poznan Uprising in the summer of 1956 and the 'Polish October' later that year swept Gomulka into power at the head of a mass movement . His later successful attempt to behead the movement and restabilise bureaucratic rule should not obscure the absence in Poland of any crushing defeat of the working class such as occurred in East Germany in 1953, in Hungary in 1956 or in Czechoslovakia in 1968 . And the workers' strikes that brought Comulka down in December 1970 were halted, but not broken, by the new Gierek leadership . Indeed



REVOLUTION OF HOPE

101

Gierek, like Gomulka before him, was able to establish his popular legitimacy and authority - such as it was - only by posturing as the workers' champion and even by negotiating directly with the strikers themselves . One consequence of this history is the existence in Poland of a public popular tradition of working class action . Horton is able to draw on the memory of these experiences in order to clarify the peculiarities of the present crisis and outline new perspectives for a socialist oppostion today . In the face of this spectre of mass working class struggle, the Polish Party leadership under both Gomulka and Gierek has been acutely aware of the limits of its own power and has sought to construct defensive positions through finding a modus vivendi with other social groups . After 1956 Gomulka stuck to his pledge never to collectivise Polish agriculture - Poland is thus the only Comecon country whose agriculture remains overwhelmingly in the hands of independent peasant proprietors . Gomulka also gave the cultural intelligentsia greater leeway than in other East European countries . And the powerful and prosperous Polish Catholic hierarchy was allowed to exercise an almost untrammelled ideological hegemony over both the peasant masses and a significant segment of the urban population . These relationships were a valuable supplement to the traditional constituencies of such regimes amongst technocratic and managerial layers and amongst the privileged 'labour aristocracy' . During the winter crisis of 1970-71 Gierek exploited them to the full in order to ride out the strike waves . The 'power bloc' as Horton calls it has tried to reactivate the same network of relationships in the new conditions of 1976-77 . But the relationship of forces confronting Gierek since 1970 has been much less favourable than that facing Gomulka in the 1960s . Caught between the armour-plated organisation of the shipyard workers in the North and the blitzkreig strikes of the loth women workers in the South, Cierek was able to regain the strategic initiative only by paying a very heavy ransom to the working class . He offered an uninterrupted rise in living standards, and a new regime of political "consultation" and openness as a substitute for socialist democracy and for a re-orientation of social priorities . The first half of the 1970s was characterised by what Horton rightly calls a huge gamble on an economic boom led by Western credits and a "populist" political style . Horton takes up the story where the multiple contradiction$ of this new strategy begin to appear in 1975 and push the Party leadership towards its foolhardy attempt to destroy the gains that the working class had made, through the price increases of June 1976 .111 II With the benefit of hindsight we could perhaps modify some of Horton's detailed judgements about the new situation that emerged in June 1976, Horton seems to assess the June protest movement largely on the narrow basis of the events in Ursus and Radom . This may give him a slightly one-sided picture of the character of the movement . Special local factors seem to have given the Radom events a dramatic and bloody character which was not typical of the movement in the rest of the country . The general pattern seems to have been very widespread work stoppages and mass meetings, especially in the largest factories and among highly paid and highly skilled workers . Even the Poznan-based international lorry drivers struck . The mass meetings formulated demands to off-set completely the impact of the price increases and demanded that high party officials come from Warsaw to negotiate .



102

CAPITAL & CLASS

Though less publicised than the Radom events, this general pattern was menacing for the regime in its long-term implications . If the government had persisted with its price measures, the initial working class response would have developed into a massive, increasingly militant and strongly organised challenge . Such a movement would have rapidly swept aside the flimsy official union structures, would have liquidated the Party at factory level and would have provided a tremendous impetus towards independent trade unions, not to speak of spiralling political advances . All this suggests a different view of the June movement from Horton's characterisation of it as a movement of despair . Despair and bitterness must have been strongly felt amongst lower paid workers . But it should not conceal another, and perhaps stronger impulse : a confident and determined response by workers who had made real gains since 1971 and were not going to allow these to be swept away by anybody . Such an interpretation of the June events also leads to a modification of Horton's conception of the form and tempo of subsequent political developments within the Polish working class . lie sees the possibility of political organisation as arising principally out of the efforts of the working class to defend itself against the repression launched by the regime in July and August 1976 . But this repression, though savage in Radom and Ursus and present elsewhere, does not seem to have touched the overwhelming bulk of the workers involved in the June strikes . There are indications of nuclei of workers forming in some places on a permanent basis as a result of the repression ; but another, and perhaps more fundamental flaw in the 'power bloc' system of controls over the working class seems to be emerging in the aftermath of the June strikes ; the emergence of a militant trade unionist current within the more highly skilled and highly paid sections of the working class, and within the largest factories . Investigations carried out since June have indicated that the layers within the working class most critical of the established social and political order, and most confident in their capacity for collective working class action, are precisely the more highly skilled and highly paid workers in the large factories . And very significantly this is also the layer which predominates among working class members of the Party . Furthermore the kind of layer within the working class that formed what Horton calls the "labour aristocracy" - a very important social prop for the regime in the 1940s, 1950s and 1960s - may have been seriously undermined in recent years : the career prospects opened for some workers by joining the Party have disappeared with the increasing ossification of the social structure . The new layers of skilled and semi-skilled workers feel the authoritarian and often incompetent regime in the economic apparatus increasingly frustrating . And collective action seems by far the most efficient instrument for defending working class interests against these structures . For such layers the June strikes were a brilliant confirmation of these truths . This points to another omission in Horton's political analysis . He does nut discuss the Party as an institution . Yet its role as an integrating and controlling mechanism within the working class can hardly be over-estimated . And when the working class membership of the party is being transformed from a privileged layer



RE VOL U HON OF HOPE

103

of "labour aristocrats" into a milieu of working class resistance . the power bloc faces a major structural contradiction . Indeed the problem bee onu's all the more acute in a period when working class living standards are officially planned to remain stagnant, if they do not actually fall . The result might be a slower, more broadly based . and more trade unionist development of independent working class organisation in the coming period in Poland . It is precisely in order to tackle this problem that some elements within the Polish regime are so interested in schemes for new "self-management" institutions to incorporate more flexibly the Polish working class in the months ahead . But is there time? Or would such schemes merely become new bridgeheads for working class advance towards socialist democracy? That is the question which is splitting the regime in Poland today while the organized forces of the Polish opposition continue to gain strength .(2J Out if such criticisms of Horton's prognosis are valid they in no way undermine the basic judgements in his article . The work that he has done is helping to coalesce a new Marxist opposition current in Poland . And it both assists and challenges revolutionary Marxists in the West to go further than the general theoretical debates on the nature of the Soviet Union and grapple with the theoretical and political problems of the practical struggle for socialist democracy that is underway in Eastern Europe . Notes to the Introduction (1) A more detailed account of the period between 1970 and 1976 can be found in "Poland : The Third Round" by Peter Green, in New Left Review, No . 101-102, February-April 1977 . (2) For more detailed information on political events in Poland since Horton wrote, see the first five issues of Labour Focus on Eastern Europe, a bi-monthly socialist bulletin produced in London .

THE "REVOLUTION OF HOPE" AND ITS RESULTS : SOME REMARKS ON THE PRESENT SITUATION The open economic and social crisis, started by the tune strikes by workers at the big industrial plants of Ursus and Radom, has as yet been unresolved . This means that neither the power bloc nor the working class and small circles of associated intelligentsia have been able to force a definite political solution thereby establishing conditions for the liquidation (or at least significant attenuation) of the crisis . This inability to find, in almost five months, a political "remedv", points to the considerably graver and deeper character of the present economic and social crisis as compared with those of the sixties or of 1970, despite the latter's accentuation by the coastal region working class riots . The remarks presented below attempt an introductory analysis of the most important features of the present crisis and of possible forms of its resolution .



1 04

CAPITAL & CLASS

A . ELEMENTS Of THE CRITICAL SITUATION Let us first outline the main economic and social aspects of the present situation, I1) On the economic plane the present crisis involves the collapse of the stability of the parameters of Polish development . These parameters comprise : a) a differentiation of the consumption market such that the basic interests of the working class are sacrificed to the advantage of the higher party-state bureaucracy, "workers' aristocracy" and technocratic strata ; b) accelerated modernization of the industrial structure, based on credits and other forms of financing provided by industrialised capitalist countries ; c) structural dis-equilibrium between industrial and agricultural sectors; d) preservation of the bureaucratic-centralist system of industrial management and national planning ; e) controlled inflation . The factors listed are an expression of both long-term tendencies of the economic system and conjunctural phenomena consequent upon the current economic policy . What interests us in the present "political moment" is the determination of the degree to which the power bloc is able to neutralise the political threat arising out of the cumulation of various particular aspects of both the unfavourable economic conjuncture and the long-term processes . Thus, how can the power bloc maintain such control over the economic demands of particular social classes and strata as to make their transformation into political demands impossible? Before considering this problem, let us further point to the social aspects of the present crisis, which find their expression, amongst other things, in the following factors : a) extensive income and property stratification both in inter-class and interstrata structures, and within particular social classes and strata; b) rise of a socio-economic interest group, interested in preserving its control of production and the consequent social stratification/2) ; c) a relative worsening of the socio-economic position of much of the working class and of other middle and lower urban strata (With reference to the second half of the current five-year plan) ; d) a relative worsening of the socio-economic position of the rural population, expressed in, among other things, the growing "income gap" between town and village during the second half of the current five-year plan ; e) violation of the "social security" principle in favour of a mechanism of an inflationary income corrector and marketability of social consumption goods ; f) growth of contradictions in enterprises between the workers and middle and upper managementl3) ; g) refusal of the working class and individual peasants to bear the costs connected with financing the crisis and macroeconomic waste ; h) rise of elements of economic-guild solidarity among those manufacturing industry workers who remain opposed to official representative bodies such as trade unions ; social and political mobilisation of sections of the urban intelligentsia . i) Each of the economic and social aspects mentioned could be found, to a



REVOLUTION OF HOPE

105

greater or lesser extent, in the crises preceding the tune strikes, especially in December 1970 . Most of them, after all, comprise integral elements of the socioeconomic system . Consequently, the present crisis is merely a modified form of preceding crises ; however, this form is currently accentuated by the various radical economic policies which have been pursued (e .g . with respect to credit, foreign trade, redistributional consequences of inflation, etc .) . Such policies, sometimes akin to gambling, were nothing hnt a desperate attempt to break the economic deadlock without altering the signific ant systemic characteristics . An analysis of the "development model" of 1971-1975 indicates that the achievement of the power bloc's "populist" goals in the first half of the five-year plan was possible only by throwing into the scale all extensive reserves, both domestic political and economic reserves, and foreign aid . This "populism", however, became an obstacle in the second half of the five-year plan, just at the moment when the new investment programme was started Although official propaganda continued to concern itself with its mythology of "big investments and big wages", in practice the rate of accumulation rapidly accelerated . This rate amounted in 1974 and 1975 to 38 percent and 37 .8 percent respectively, thus breaking all known records (Japanese and Brazilian included) .[4J Preservation of the high rate of growth of real wages has become impossible, but at the same time it also has become impossible not to maintain the fiction of "growing wages" . Thus the steam-roller of accumulation has had to he followed by the carefully hidden roller of inflation . Since the Polish Statistical yearbook does not recognise the concept "inflation", let us look at the data concerning currency circulation . In 1970 it amounted to 58 .64 milliard zlotys, in 1971 - 67 .32 milliard zlotys, in 1972 - 78 .19 milliard zlotys . The rate was increased in 1973 - 91 .31 milliard zlotys, in 1974 - 117 .15 milliard zlotys, and in 1975 - 141 .19 milliard zlotys .(5J Let us again recall the 34 milliard zlotys fluctuation in 1975 which was due to the extraordinarily high rate of accumulation - at the same time the share of agricultural investment in that accumulation (the problem of supplying the consumption market) decreased in the years 1971-1975 .(6) All the moves aiming at finding a compromise between the high rate of accumulation, the growing indebtedness to Western markets (a minimum of 9 milliard as far as loans and credits are concerned, and about 6 .5 milliard cumulated balance of trade debt over 1971-1975(7)), and the growing money balances in the hands of the population, have been frustrated by the very principle of the "new model" ; this principle consists in preserving intact the basic characteristics of the socio-economic system, based on centralised bureaucratic management and planning and on the monopoly of the bureaucratic-technocratic stratum in representing the social interest .[8) Despite the growth of per capita output which allowed a substantial increase of production, (in an atmosphere of trust in the power bloc) the socio-economic system itself frustrated such individual efforts, The efforts of the whole society were needed to gain an additional 20 milliards zlotys worth of production ; yet a decision of a particular group was enough to produce a crisis in agricultural production, to the waste of tens of milliards zlotys .(9) Similarly in industry . The fetishes of individual productivity, against the "idler", and the like, has served as a perfect vehicle for macroeconomic waste, thereby exposing the basic elements of the bureaucracy's "economic miracle" .



106

CAPITAL & CLASS

A bureaucratic "miracle", however, can only produce newspaper successes ; it cannot fill the shops with meat, butter or eggs . Looking for social support . the power bloc initiated, at a relatively rapid rate, the production of the "Fiat", medium standard electronic equipment, etc . However, the groups who demand these goods are not those who produce the bulk of national income . What are essential for these latter producers are, above all, "elementary" goods - food, cheap textiles, convenient mass transport and communications, flats and cheap furniture, the chance to educate their children up to university level, and thus the construction of dormitories in the chief scientific centres, easily accessible health care, cheap holidays, etc . But satisfying these aims requires the accelerated production of such "elementary" goods as cement, building materials, mass mechanical implements for individual farmers, etc . These goods are still in short supply, and their output grows much more slowly than that of the "elite" goods . In June 1976 the system could no longer contain its contradictions ; with an almost bankrupt government running out of arguments, a drastic rise of prices occurred, wages being compensated by the principle : to him that hath, shall be given . This process revealed the close interdependence between macroeconomic waste, mistakes in current policy, and long-term changes in the structures of demand and production . What was also revealed was the social basis of the power bloc, the best consumers of the system, those who are ready to add a few zlotys to the price of meat in order to keep their "Fiat", their imported durable goods, etc . And finally, what were also revealed were the most dangerous opponents of the system - the working class and the peasantry . On the peasantry see below .

B CHARACTERISTIC ECONOMIC MOMENT OF THE CRISIS This was the second time in the last six years that these protagonists had appeared in the open, but in a very different situation . Despite the heroism shown by the dockyard workers of Gdansk, Gdynia and Szczecin, their 1970 riots were liquidated in a traditional way by the power bloc - by a change in the leadership and the raising of hopes . But with the wave of unrest consigned to posterity, the old ways re-emerged . Yet the germs of the present events and the present crisis were already inherent in that "tradition" . Owing to the bureaucratic fiction which passed for society, (not infrequently deceiving the power bloc itself), the conservative radicalism of the economic policy of 1971-1975, attempting to defend the old system from changes, staked all remaining social and economic reserves ; but all the negative features of the system coalesced as a result of the one decision of June 24, 1976 . This radicalism released the social discontent, and at the same time left the system with no inner reserves that might make a "populist" manoeuvre possible, as for example in I ebruary 1971, after the decisive strike of the Lodz women textile-workers . Today, only "cordial" aid from East and West can make the return to short-term equilibrium possible, albeit an unstable equilibrium . There is nothing to choose between Last and West in their eagerness to preserve the status quo .110j (At present this aid is already given in various measures .) There are none of the inner resources that the power elite would like at the moment to have at its disposal . And this is one of the basic features that leads to the phenomenon that we



RI VOL U T ION OF HOPE

107

currently observe, an amazing, tragic and at the same tune cornicaI phenomenon : Poland has no government able to present today a programme for the economic improvement of the situation .

C REACTION OF THE POWER 13LOC The June 1976 workers' riots at Ursus and Radom were motivated, above all, by black despair . People were furious . Of course, a considerable improvement on many scores had ensued during the previous six years . but it had embraced particular social groups and classes in uneven degrees . Moreover, it has not sufficiently satisfied elementary needs : statistics are unanimous in this respect . In June 1976, the same government, which in December 1970 had initiated the ' .revolution of hope", decided to lower the standard of living of the major part of the population, to a degree comparable only with the 1c)53 decisions (initiating accelerated industrialisation) or Stalin's five-year plans from 1930 . So to the price rises projected by the Gomulka group in December 1970 has had to be added the present leading group's contribution of 1971-1975 . Thus, if Gomulka called for a 30-35 percent price rise, now, they say, to finance the crisis (and conjectured waste), we need a 60-65 percent rise . And that is why instead of the "revolution of hope" we have a "revolution of hopelessness" . In response to the workers' despair the power bloc reacted with equal distress : rapidly (within 24 hours) cancelling their decision, and at the same time attempting to organise support for themselves and to terrorise the workers with the help of the police and security services . Hundreds of workers were arrested, and the first court sentences were ruthless : from 2 to 10 years of imprisonment . In enterprises in which strikes had occurred the management, aided by the party and trade union civil servants, made a clean sweep of their workers : hundreds of families found themselves with no means of livelihood . This wave of terror, however, subsided relatively quickly There is nothing startling in this if we consider the fact that, apart from the aim of containing the strikes at any price, terror in the present situation did not fulfil any constructive, economic function . What the terror did do was to curtail the phenomena of crisis so as to render temporarily impossible their transformation into a generalised social movement, into a movement that would represent not only economic but also political demands . But the terror did not bring nearer a resolution of the economic crisis . Being unable "to offer" the working class any effective programme for the improvement of the economic situation (because of the lack of substantial reserves), the terror was only able to perform obstructive functions and these primarily on the political plane . This limited character of the terror unleashed after June 25, 1976, is reflected in the power bloc's policy towards the working class : at the end of August, and above all in September and October, the activities of the repressive machinery were curtailed considerably, and a number of court sentences were "reviewed", i .e . with no withdrawal of formal criminal charges, several of the Ursus workers sentenced were released from prison . It is also reflected in the power bloc's policy towards the peasantry and the urban intelligentsia . For at least 2 .5 years agricultural output has continued to decline . This has



108

CAPITAL & CLASS

been caused on the one hand by the power bloc's policy, which has led to a fall in the supply of agricultural produce because of the disadvantageous terms of trade for industrial produce faced by the peasantry, and on the other - under the influence of this pricing policy - by individual farmers reducing their investment and production activities . Because of the lengthy cycle in agriculture production, the effects of the power bloc's policy, so disadvantageous to individual farmers, only began to appear on a large scale in 1975 and, above all, in 1976 .1111 The power bloc can only seek a solution to this situation on the economic plane . For any attempt at terror aimed at peasants would mean an immediate deepening of the crisis in agriculture, and at the same time would necessarily involve the reorganization of the whole system according to "war economy" standards . Taking into consideration both internal and external factors, such a move by the power bloc is absolutely out of the question . That is why, to solve the crisis in agriculture, the power bloc has to change its economic policy towards the agriculture sector, in order to establish more favourable conditions of exchange, to increase the supplies of industrial products available to the agricultural population, to increase prices for agricultural products, etc . Thus, the power bloc's policy towards agriculture must aim at politically neutralising the discontent of the peasantry . (Indeed, this is already being done .) And this means policies of liberalism, "good will" and "care", and not terror . In the case of the urban intelligentsia, the power bloc's policy, however similar to that towards the peasants, is at the same time determined by slightly different factors Since this stratum as a whole does not represent a direct threat to the economic: basis of the system, and since also the significant part of this stratum is in one way or another either an organisational mainstay of the power bloc or a devotee of the economic policy pursued in the 1971-1975 period, the only concern of the power bloc is in isolating opposition groups of intelligentsia from the working class . Achievement of this aim is possible without introducing particularly drastic changes in the power bloc's policy, since at the present time the threat of an alliance between dissident intelligentsia and the working class seems, in the power bloc's estimation, relatively small .(12J On the other hand, the power bloc's singular sensitivity to the reaction of socalled public opinion, especially in the countries of Western Europe, is an element which considerably inhibits the policy of mass terror . This sensitivity has probably less to do with the will to realise the resolutions of the Helsinki Conference and more to do with the economic situation at home . Considering the fact that the power bloc has to a certain degree become dependent on the good will of the leaders from the West, and that more than 60 percent of Polish trade takes place on capitalist markets, only extreme situations induce the power bloc to play the game according to the old rules : with the use of physical repression, court sentences, in slim - a mass terror directed against all opponents . However, one should not make light of the pressure of the progressive forces in the Western countries Regardless of the political situation, this pressure initiates a process which results in a decline in the eagerness of particular corporations for collaboration with Eastern Europe (13J While even in the case of the U .S S .R this pressure has many times achieved marked successes, the power bloc in Poland has all the more reason to reckon with it, since Poland is considerably more subordinated to



RE VOL UTION OF HOPE

1 09

conjunctural variations in the capitalist world economy Of course, the system's "sensitivity" to external criticism grows proportionally to 1) the associated economic threat, and 2) the progressive character of the forces initiating that criticism . If, for example, Franz Joseph Strauss announces that in Poland basic rights of the working class are denied, and that the opposition is persecuted, it is of no major importance to the power bloc, since its propaganda as regards F J . Strauss is that he is a die-hard opponent of socialism and nothing but criticism is to be expected from such an enemy . Whereas, when the same is spread abroad by Enrico Berlinguer (PCI), Santiago Carillo (PCE) or Georges Marc hais (PCF) . the power bloc, willy-nilly, has to swallow this criticism . And if in addition the crisis situation is unsolved, it must show its good will as well (14) In sum, an analysis of the power bloc's reaction to the workers' strikes points to : a lack of any internal reserves, a deep crisis of trust in the group, who in 1970 promised a "constant" realisation of the workers' demands, and a need to gain time in order to win external aid (from East and West) . The result of all these was that, in a relatively short time, the power bloc's policy rapidly evolved from direct victimisation of the striking workers to a policy of gradual concessions and shortlived cease-fires . At the same time, conscious of the fact that not all the most obvious symptoms of the economic crisis have been abolished, that the "crisis syndrome" has not disintegrated, and that the next outburst of workers' protest is threatening, the power bloc is reacting in a much more flexible way it tries not to antagonise other social groups and not to make them join the stream of the workers' protest . This explains not only the short duration of any brutal repression, but also its selectivity and the fact that terror was not extended either to the peasantry or to the urban intelligentsia .

D . CHARACTERISTIC FEATURES OF THE WORKERS' PROTEST Before considering the subject of possible ways by which the crisis may be resolved, it seems useful to point to certain characteristic features of the Polish workers' protest, features which appeared both in December 1970-February 1971 and in June 1976 . This digression will make possible an understanding of the specific forms in which an independent movement of the working class in Poland is being born . Contrary to the events of 1956, called in Poland the "Polish October", the mass workers' strikes of 1970 and 1976 were an expression of a wholly autonomous movement of industrial workers from big plants . While in 1956 the workers' movement still had a certain base, in the form of the pre-war and immediately post-war tradition of independent work, and in the temporary support of the socalled anti-Stalinist faction within the party (whose outstanding representative was Wladyslaw Gomulka), in 1970 and 1976 the strike movement was joined by a working class disinherited of this tradition and deprived of active political allies . At the same time, however - continuing our comparison - while in 1956 the workers' movement, helped by groups of the socialist intelligentsia and by internal disarray within the power bloc, very quickly found the proper forms of economic and political action (workers' councils) - the 1970-1976 movement, while lacking a purely political character and unable quickly to appoint trusted leaders and



CAPITAL & CLASS

110

representatives, at the same time, gained a positive mass character and a relative independence As

the course of post-1956 events teaches us, the factor which in the period of

tune-October 1956 had been one of the chief sources of the workers' movement's strength - the support of the anti-Stalinist faction - subsequently became the source of their defeat, both political and economic . The political hegemony gained by this faction allowed them to preserve the fundamentals of the Stalinist system whilst only reforming its most striking features . Also, the autonomy of the workers' movement was constantly being eroded, and Comulka's law on workers' councils finished the policy of support for an independent vyorking class at the end of the 'fifties The workers' councils lost all their most important powers, to the state administration and the machineries of the party and trade unions-(151 The 1970 working class riots on the Coast proved to be the first independent symptom of the birth of a new mass working class, whose only tradition was to be their own struggle, waged within the framework of the present socio-economic system, This is a new working class for two reasons : firstly, because this class's members had been brought up in and first employed by the present system, they are thus not "burdened" with the necessity to compare their present socio-economic status with the circumstances of pre-war capitalism . In the years 1958-1968 the number of industrial workers increased from 2 .4 million to 3 1 million, reaching 4 million in 1975 .1161 Taking this increase into account and also the tact of a constant "replacement of generations", we may assume justifiably that the major part of the 1970-1976 workers were the "People's Poland generation" . Secondly, this new working class struggle is waged against a power bloc which is formed on the basis of state ownership of the means of production, and which declares - on the ideological plane - its socialist goals . Thus the specificity of the new working class consists in their contesting the power bloc's legitimacy as their ally and at the same time their representative, without simultaneously citing the myth of free enterprise and capitalist competition . All accounts of both the 1970 and 1976 events clearly show that the working class questions the power bloc's hegemony not on the strength of a "competing" ideology, but through appeal to the necessity of the practical realisation of the ideas preached by the power bloc's ideologists . In spite of the appearance at the

present time

of

the interpretation of the events in Poland as a movement towards

social-democracy and its economic equivalent, "die soziale Markt - wirtschah" 1171, in this context it seems indubitable that the new working class represents par excellence socialistic tendencies and goals However, the achievement of these latter is possible only in a workers' democracy, based on the economic power of the workers' councils and parliament, and having the direct support of large industry's working class . this type of democracy - it should be stressed - cannot be accomplished without spreading these democratic freedoms into the whole of the society, that is, without a previous rupture of the political monopoly of the power bloc .l III I However, at its present stage of development, the working class movement does not go beyond the stage of formulating immediate economic demands, and these, as a rule, in a negative form . On the other hand, this low "theoretical level" of the demands formulated is matched, at the times when it moves into direct and



REVOLUTION OF HOPE

111

open conflict with the power bloc, by much better developed organisational forms . Here we have in mind the spontaneous formation of strikers' committees, their seizure of administrative functions in the striking plants, etc . there is nothing astonishing in this phenomenon, however, once we take into account the technical structure of modern industrial production and the consequent high concentration of the working class in big industrial plants According to 1975 data there were in Poland at that time 18 .900 (state) industrial plants, employing about 5 million people (19) The plants employing above 2000 people (about 380 in number) produced 2 percent of total output and employed about 2 million people, i .e . about 40 percent of total industrial employment . If we enlarge this aggregate by describing as "big" the plants employing above 1000 people each, then in 1975 there were about 850 of them, and they employed over 2 .5 million people, i .e . about 57 percent of total industrial employees .120) Industries characterised by a high degree of concentration of employment and production are : fuel and energy, metallurgical, chemical and electrical engineering industries . In turn, the food industry and light industry in general have very low concentration coefficients . During the December 1970-February 1971 and June 1976 strike movements, organised forms of action - in the form of strikers' committees - appeared almost exclusively in the big industrial plants . For in these plants any manifestation of resistance to the power bloc, and any formulation of the simplest demands . are simply impossible without a minimum of organisation - not to mention the need to protect plants from the destruction resulting from the uncoordinated cessation of complex technological processes (for example, in the Petrochemical Works in Plock the strike caused no material damage ; the same is true of the plants of Ursus and Radom and the 1970 strike in the Repair Dockyard in Szczecin where the striking staff took particular measures to protect the yard from damage, whether accidental or deliberate) . In turn, the big strike of woman workers of the clothing and textile industries in Lodz in February 1971 (industries with very low concentration coefficients and markedly dispersed location) took place according to the traditional principle of a spontaneous strike, with none of the elements of organisation or leadership . Yet at this point there emerges a startling paradox in the development and effectiveness of the workers' movement in Poland . Remembering that it still remains at the stage of formulating negative demands ("down with the price rises", etc .), we may formulate the following thesis : the effectiveness of the workers' resistance is correlated in a positive way with its spontaneous character and with the lack of any organisation and leadership . In 1970 the new state leadership managed to convince the perfectly organised workers of the Szczecin dockyard of the impossibility of reversing the price rises . The lack of experience of the leaders of the strike and their helplessness against the arguments of the new state leadership brought about a de facto success for the latter . Several days later in Lodz an uncoordinated strike broke out It embraced the entire industrial centre, but at the same time representatives of the power bloc had nobody with whom to hold talks . They had either to give up or to attempt to quash the Lodz strike by force - risking in return a wave of strikes all over the country . So they chose capitulation . In June 1976, the strikers' movement embraced the majority of big industrial



112

CAPITAL & CLASS

plants, but only at Ursus and Radom did the strikers clash with police and security forces . The power bloc did not this time risk talks with strikers' committees, and leading rather than following the course of events, immediately rescinded the disputed decision this move led to the almost automatic self-liquidation of the strikers' committees However, the power bloc did not confine itself to the withdrawal of the decision, at the same time it undertook repressive measures . So the working class was faced with the new task of not only achieving the immediate economic goal, but also of defending their comrades, those thrust into prison and those deprived of their jobs . This type of action requires a much broader perspective than that prevailing until now . In this case, the goal is not immediate economic gain, but an "incommensurable" factor : solidarity, defence of fellow-workers, and at the same time defence of the right to unite, to undertake collective resistance . The accomplishment of this task requires "permanent action", and not a momentary strain . Organisation of this type of action is possible, in principle, only within a framework of a big industrial plant, ensuring at the same time that the movement has a mass character and is an important element of the whole economy Ihus, the spontaneity of the strike must be replaced by the consistency of the organised movement . The letter sent by 889 Ursus workers to the authorities demanding the reinstatement of their freed fellow-workers is testimony that it is possible to adapt the existing forms of resistance to the tasks that must be faced (21J It is possible also that we are witnessing a phenomenon of the development of an independent working class movement - independent on the ideological arid political planes, and therefore trusting in their own struggle only . However, whether this conjecture is realised is to a great extent dependent on the direction of development of the present situation and on the way the crisis will be resolved .

E . LIBERALISM AND THE ECONOMIC CRISIS In his "Note sul Machiavelli" Antonio Gramsci set forth an interesting hypothesis, saying that, contrary to the developed systems of class domination in the West, in Eastern societies class societiesare characterised by a despotism of the state apparatus . This juxtaposition served him as a point of departure for his analysis of the modifications necessary in the strategy of the revolutionary movement, and for his thesis on the necessity of replacing the "surprise" element by vastly developed alliances and a flexibly interpreted policy of creating a hegemonic power bloc 1221 Under Polish conditions in the years 1970-1976, Gramsci's hypothesis is material only inasmuch as the power bloc has not as yet managed to extend its political and economic hegemony to encompass ideology and culture (in the case of individual farmers, even its economic hegemony is . not complete), and so its domination by no means forms a compact system of "defences and trenches" . In consequence the whole system is susceptible to the severe shock caused by even the smallest resistance or discontent, and needs in such cases to mobilise the whole apparatus of repression_ To state, however, that the more than 30 years of the system's existence has



REVOL U LION OF HOPE

113

not increased the sphere of the power bloc's domination would be erroneous . The system has enlarged, among other things, the circle of its allies and beneficiaries . The dychotomic scheme based on a picture of the "dictatorship of a tiny bureaucracy" is as nonsensical now as is its counterpart - the conception of the "classless society", announced by Khrushchev at the beginning of 1960's . As we have already pointed out, the economic policy of the years 1971-1975 created specially opportune conditions for strengthening the bloc of economic and social interests to encompass not only the narrow stratum of the upper party-state bureaucracy but also the "labour aristocracy" and the upper strata of the urban population . That is why, although the 1976 crisis struck everybody, it struck . different strata with different force . And this means that the power bloc is facing the perspective of not only keeping the economic crisis within the limits of a merely "potential political danger", but also undertaking, to a limited extent, certain actions towards liberalisation, especially with regard to the intelligentsia . In mid-September 1976 in Warsaw the Committee for Defence of the Workers (KOR) was founded by a group of intellectuals . Its aim is to give financial and legal aid to victimised workers . The Committee published " Komunikaty ("Communiques") which give information on the scale and forms of repression and on the occurrence and spread of resistance . Until now the Committee's activity has not met wide-scale repression from the state machinery, and Committee members and sympathizers have managed to get financial and legal aid to numerous working class circles, particularly at Ursus and Radom . It is of course difficult to foresee when and how the power bloc would undertake repressive action against the Committee ; at the moment, however, it is neither convenient to the power bloc to do this nor is the Committee's activity especially threatening to the system . Still, it does not change the fact that founding the Committee is a serious departure from the hitherto "monolithic" socio-political system Also, the contact with the working class milieu into which the Committee has come is the first attempt, since the "Polish October", to break the impasse produced by the power bloc's policy of politically isolating particular strata and classes from one another . Thus in spite of the limited character of the Committee's activity and the "ideologies" represented by its members, the Committee's activity enjoys broad social support . We may justifiably say that the Committee's praxis is far ahead of its members' views . And it is in this sense that the foundation of the Committee and its activity will prove a hard nut for the power bloc to crack . The power bloc's passive acceptance of the Committee's activity is of course testimony to its weakness . It also shows the limits imposed upon any possible repressive action by the crisis and by external conditions . But on the other hand the trump cards at the power bloc's disposal are not to be sneezed at . The economic crisis followed a few years of extremely speedy economic expansion, together with a considerable rise in real wages during the first half of the five year plan . Although in June 1976 the working class's hopes and illusions met brutal police repression, this does not mean that they were absolutely destroyed . It seems that at the moment, in spite of common dejection and disillusion, the power bloc still holds ideological and political control over the working class . This is further reinforced by the fact that, though the Committee for the Defence of the Workers has been constituted, there has not as yet come into being a rival "ideological and political pole" to challenge the power bloc in the working class sector .



CAPITAL & CLASS

114

Paradoxically, prolonging the economic crisis, within certain limits, suits the power bloc's purpose, since, in the present political conjuncture, such prolongation strengthens the anxiety to restore stabilisation by all possible means . Considering at (tie same time that we may soon expect foreign aid, the power bloc will regain an at least temporary equilibrium and the most flagrant symptoms of the economic crisis (in the sphere of consumption goods) will probably be alleviated . It then there does not occur a rapid deterioration of the situation or an outbreak of open conflict in one of the sectors of basic industry (and this is not inconceivable) or within the ruling group itself in the coming months, a transformation of the present crisis into an open political crisis does not seem probable . However, considering the depth of the present economic crisis and the fact that implementation of certain changes into the structure of production requires time, it seems that the power bloc is not willing to undertake wide-range repressive action against the groups of urban intelligentsia, and above all against the Committee for the Defence of the Workers, before a sensibly steady equilibrium is achieved . From the point of view of the chances to create an independent workers' movement, the present crisis has drawn our attention to the necessity of much broader and more stable contacts between the working class sector and the groups of the urban intelligentsia . At the present stage of this movement's development, this contact must naturally be limited to a sort of "educational action" . It would on the one hand consist in informing the workers of the range of the rights to which they are entitled, and, on the other, in acquainting them with the traditions ,of the independent workers' movement, both of definite forms of struggle and of the ideological tradition . Particularly important is the task of presenting perspectives of resistance right now, pointing to the possibilities of struggle in one's own place of work - during elections to the plant and workers' councils (official), during the distribution of production tasks, during the performance of so-called "social works", etc This is the only way to create permanent and real prerequisites for solidarity it can be done only through joint action, by means of practical struggles and mistakes . And if our assessment of the present situation is correct, the capacity for undertaking such an autonomous action has been already created .

NOl ES

I

2

Stefan Ilorton lives in Warsaw . A broader analysis of some of the aspects of the crisis has been presented in : Nachzuholende Lntwicklung unter Bodingungen des Wehmarkt . September 1976 Fhe only attempt at a sociological analysis of this new phenomenon, known to me, is Winicjusz Narojek's Spoleczenstwo planujace . Proba socjologii gospodarki soclahstycznej . ( A Planning Society . An Attempt at Sociology of the Socialist Economy) Warszawa 1973 . Narojek writes : "An aspiration to



REVOLUTION OF MOPE

3

4 5 6

7

8

9 10

11

12

13

115

maximise (one's share in consumption) on the part of employees of the planned socialist economy in given economic and organisational conditions is in some respects comparable to class behaviour ( ) . In socialist society this phenomenon is presumably exclusively concerned with the sphere of economic behaviour in the strict meaning of this word ( ) and has comparatively small scope to provide a basis for political articulation ." (pp . 287288) Striking examples are provided by the articles published during the last months in the columns of the Polityka weekly, above all in the one of the November issues in which the memoirs of a worker from the "Warszawa" steel-works are printed . Rocznik Statystyczny (Statistical Yearbook) 1976, Warszawa 1976 . pp . XXXIV-XXXV, tab . 1 . Ibid ., p . 504 . tab . 788 . Ibid ., p 125 . tab . 180 (my own calculations) . In 1971 agricultural (state, coop and private) investments amounted to 15 4 percent of the whole investment fund, in 1972 - 14 4 percent, in 1973 - 13 .5 percent, in 1974 13 .1 percent, and in 1975 - 13 .2 percent . (According to current prices) Data concerning the cumulated negative balance of trade according to Rocznik Statystyczny 1976, p . 608, tab . 979 . The sums of loans and credits are according to Time, September 6, 1976 . Time wrote "To service loanseeking Communists, several American banks have opened offices in Eastern Europe . ( ) The business has been lucrative . Commissions and miscellaneous fees can add up to E2 million on a $200 million loan - and that does not count later collections of Interest ." (p . 41) At the present time the best analysis of this system is presented in : Wlodzimierz Brus, Ogolne problemy lunkcjonowania gospodarki socjalistycznej (General Problems of Functioning of the Socialist Economy), Warszawa 1961 . Some of the data was presented in the speech in parliament by primeminister Piotr (aroszewicz delivered after the suppression of the strikes . Symptomatic was the reaction of the Western liberal-bourgeois newspapers concerning the events in Poland : In spite of a specific "Schadenfreude", what dominated was a cordial worry for the "government to manage somehow" . See, e .g . P . Osnos, Poland : Balm for Angry Public, The Guardian Weekly, November 7, 1976 . Only because of the omission in propaganda of this important aspect of the agricultural cycle has it become possible to present the crisis in agricultural output as a sole consequence of the unfavourable climatic conditions . Cf . Nachczuholende Entwicklung, op . cit . After witnessing the complete disarray of the leftist opposition of the intelligentsia in 1968, and considering the intelligentsia's indifference during the 1970 riots, such a feeling is partly justified . Cf . A . Sampson, The Sovereign State of ITT, Greenwich, Conn ., 1971 pp . 294-295 ; P . L . Berger, The Greening of American Foreign Policy, Commentary, 1976, Vol . 61, No . 3, p . 26 . However nobody illustrated better the attitude of big corporations towards relations with the last European countries than one of the most reactionary trade union leaders, the boss of



116

14

15

16

17 18

CAPITAL & CLASS the Aft-CIO, G . Meany . He said : "American capitalists were rabid antiCommunists only so long as they saw Communism as a threat to their business interests - not because they were so concerned with democracy and freedom . ( ) Now that they see they can make a few bucks dealing with the commissars, they've changed their tune ." Quoted in Commentary, 1976, Vol . 61, No 6, p . 4 . The attitude of conservative critics is precisely reflected by theses presented by Norman Podhoretz, which may be summed up as follows : Economic power is sooner or later accompanied by the consciousness of that power . Podhoretz writes : "In fact, our fantastic agricultural productivity and continuing technological inventiveness have increased our power as against that of the Soviet Union ; and because of Soviet dependence on us for grain and technology, our leverage over the Soviets is now greater than ever . If we want to use this kind of power to hold them back, we are in a perfect position to take many measures ( ) ." N . Podhoretz, Making the World Safe for Communism, Commentary, 1976, Vol . 61, No . 4 . p . 41 . The forces of progress, and among them chiefly the mass communist parties of Italy, France and Spain cannot, for obvious reasons, appeal to the argument of economic power This does not mean, however, that their pressures are less important . Quite the contrary, these parties' voice has a decidedly greater importance than any economic blackmail by governments and big corporations . What is more, only these parties, and broadly, the working class movement in the main centres of the capitalist world, are - in the longer perspective - the main ally of the Polish working class and the democratic freedoms in our country The process of realising this perspective is the "moment" when the interests of an independent development of the workers' movement in the West becomes the direct and essential goal of the Western Communist parties . Of course, this does not eliminate the possibility of these parties adopting opportunistic policies towards the questions of the working class movement and democratic freedoms in the East ; however, the basic organisational, ideological and political obstacles have been already overcome . The Berlin Conference of the European Communist and Workers' Parties in 1976 speaks volumes for this ; similarly the reaction of the Italian Communist Party CC to the June 1976 events in Poland . Cf . J . Balcerek and L . Gileiko, Rozwol samorzadu robotniczego (The Development of Workers' Self-Management), in Polityka gospodareza Polski Ludowej (I lie Economic Policy of People's Poland), Vol . II, Warszawa 1962 . L . 13eskid and K . Zagorski, Robotnicy na tie przemian struktury spolecznej w Polsce (l he Workers in the Context of the Changes of Poland's Social Structure), Warszawa 1971, p . 70, tab . 44 ; Rocznik Statystyczny 1976, p . 182, tab . 248, and p . 184, tab . 250 . This kind of interpretation is presented actually by Jacek Kuron . In the context of the Soviet, Polish and other East European countries' experiences the remarks made by Rosa Luxemburg in 1918 are prophetic indeed She wrote : "The basic error of the Lenin-Trotsky theory is that they too, Just like Kautsky, oppose dictatorship to democracy . 'Dictatorship or democracy' is the way the question is put by Bolsheviks and Kautsky alike . The latter naturally decides in favour of 'democracy', that is, of bourgeois



REVOLUTION OF HOPE

117

democracy, precisely because he opposes it to the alternative of the socialist revolution . Lenin and Trotsky, on the other hand . decide in favour of dictatorship in contradistinction to democracy, and thereby, in favour of the dictatorship of a handful of persons, that is, in favour of dictatorship on the bourgeois model. They are two opposite poles, both alike being far removed from a genuine socialist policy The proletariat, when it seizes power, can never follow the good advice of Kautsky, given on the pretext of the unripeness of the country', the advice being to renounce the socialist revolution and devote itself to democracy . It cannot follow this advice without betray ing thereby itself, the International, and the revolution . It should and must at once undertake socialist measures in the most energetic, unyielding and unhesitant fashion, in other words, exercise a dictatorship, but a dictatorship of the class, not of a party or of a clique - dictatorship of the class, that means in the broadest public form on the basis of the most active, unlimited participation of the mass of the people, of unlimited democracy " (pp . 76-77) And, as a logical and necessary conclusion : "Freedom only for the supporters of the government, only for the members of one party - however numerous they may be - is no freedom at all . Freedom is always and exclusively freedom for the one who thinks differently . Not because of any fanatical concept of 'justice' but because all that is instructive, wholesome and purifying in political freedom depends on this essential characteristic, and its effectiveness vanishes when 'freedom' becomes a special privilege " (p . 69) Both from Rosa Luxemburg . The Russian Revolution, Ann Arbor, University of Michigan Press, 1961 . 19 Rocznik Statystyozny 1976, p . 184, tab . 250 . 20 Ibid . 21 The fragments of the text of this letter read as follows- "We, the workers of the 'Ursus' Mechanical Plants, appeal for the reinstatement of all those tried because of the strike and demonstration on lune 25, 1976 . ( ) We appeal for the restoration of their previous jobs together with all rights resulting from the continuity of employment . We are convinced that only then shall we be able, together with all Poles, to manage the difficult economic situation of our country at the present moment ." 22 Cf . Antonio Gramsci, Pisma Wybrane (Selected Works), Warszawa 1961, Vol . 1, pp . 585-587, 611 .

November 10-22. 1976

DEBATE A NOTE ON THE THEORY OF CAPITALIST STATES Colin Barker[1]

In Capital and Class 2, John Holloway and Sol Picciotto (hereafter H&P) published an important contribution to the ongoing debate on the Marxist theory of the state . The Note that follows criticises their article on a couple of points, so I should remark that their argument, taken as a whole, has very significant merits . In particular, its insistence that the capitalist state-form cannot be considered separately from the capital relation is exceptionally valuable . To summarise my argument : I suggest that there is a very significant weakness in H&P's article, a weakness which is however anything but peculiar to them . Their treatment of the state remains at an inappropriate level of abstraction, in particular in that it treats the state as if it existed only in the singular . Capitalism, however, is a world system of states, and the form that the capitalist state takes is the nation-state form . Any discussion, therefore, of the capitalist state form must take account of the state both as an apparatus of class domination and as an apparatus of competition between segments of the bourgeoisie . The failure of H&P, together with most other Marxist writing on the state, to integrate this perception into their account of the state is connected with a second problem in their article : their insistence on a conceptual separation between "state" and "capital", such that state economic intervention seems to be utterly problematic for the capitalist state . Indeed, their account rules out as theoretically impossible (or at least very difficult) what has actually been happening historically - namely, the tendency within 20th century capitalism for capital to be organised directly by nation-states, thus taking the form of state capital . Throughout their article, H&P refer to "the state" and "the capitalist state" in the singular . One might get the impression, from H&P as from a mass of other Marxist writing on the state, that capitalism has but one state . Where it is acknowledged that the beast is numerous, the implications of that very concrete fact are not developed at all. In fact, however, the very multiplicity of capitalist states is of great importance to the theory of the capitalist state form . H&P quote Marx's Capital Vol III : "The specific economic form, in which unpaid surplus-labour is pumped out of the direct producers, determines the relationship of rulers and ruled . Upon this, however, is founded the entire formation of the economic



DEBATE

119

community which grows up out of the production relations themselves, thereby simultaneously its specific political form " Now the central thrust of their argument (with which I agree) is that an adequate theory of the state depends on comprehending the form of the fundamental social relations of production . But, if we take Marx seriously, what is the "economic community that grows up out of the production relations themselves"? Taken as a whole, it is the world market, international capitalism, the global system of social relations that has grown up - for the first time in human history - on the foundation of the capital relation . And if we ask too, what is the "specific political form" that this economic community takes, we must answer that it is the set of nation-states that make up the "international political community" of world capitalism . The nation-state system is a product of capitalist development, and is global in scope in just the way that capital as a social relation is . In this light, we should conclude that some of Marx's summary accounts of the relation between capital and the state are, at best, misleading . Thus the Communist Manifesto : "The modern state is merely the executive committee for managing the common affairs of the whole bourgeoisie ." Take the last phrase : "the whole bourgeoisie" . The whole bourgeoisie is an international class, like the proletariat : both are formed as elements of a system of production relations that, from their commencement, were international in scope . The "common affairs" of the whole bourgeoisie cannot be managed by any single nation-state, yet this is the form that the capitalist state takes .(2) (Were this not so, the whole Marxist discussion of imperialism and nationalism would rest on thin air .) H&P suggest correctly that the problem in the Marxist theory of the state is to locate the state in terms of the basic social relations of capitalist production, in the capital relation : "The starting point for the analysis of the capitalist state is thus capitalist society, not the state in general" . Capitalist society, we've suggested, is not coterminous with the geographical space occupied by any one nationstate, but is rather the world . The problem is, how do we relate the form of the capitalist state to the society of which it is part and expression? To answer this, we need to understand the capital relation properly . There is a tendency within Marxism to treat the "social relations of production" as being only the relations formed at the moment and point of production itself : in other w ords . t o identify a mode of production with the immediate relations of exploitation in the productive process itself .(31 This, even if we restrict our discussion to capitalism alone, will not suffice . Marx's critique of bourgeois podlitical economy rested on an analysis of the forms of alienation developed within capitalism, one crucial aspect being the characteristic division of labour within commodity production, in which social production is out of the control of the associated producers . Social relations within commodity production are governed by mutual competition and antagonism among the producers . The materialist critique is aimed at capitalist relations, not simply as alienated exploitative relations, but also and simultaneously as



120

CAPITAL & CLASS

alienated competitive relations . The capital relation is a summary expression for the whole nexus of social relations, founded in the production of surplus-value, but embodied in the whole circuit of capital . That is, the capital relation is more than the moment of capitalist production : it is also the other moments of the capital circuit (exchange, realisation, price-formation, etc .) . Capital, according to Marx, can only exist as many capitals ; through the interaction between the many capitals the principles of capital-in-general are realised . A single universal capital is a contradiction in terms .)4) It is thus characteristic of capitalism that it develops through competition, which competition is the source and expression of the anarchy of capitalist production . Hence, Marx argued, the social relations of capital have a dual form : anarchy and despotism . Between the many capitals there is anarchy ; within each capital, despotism . Each relation, anarchy and despotism, is the condition of the other .)5) Now if the capital relation has this form, and if the state is an aspect of the capital relation, we might expect to find in the state form elements of this dual determination . As we do . The nation-state, capitalism's state form, is itself both a structure of despotism vis-a-vis its "subjects" and a structure of competition vis-avis its rivals . Its very form expresses the fact that the capitalist state is not something above and separate from the relations of capitalist production, but is itself directly part of those relations . Being anything but a state of the "whole bourgeoisie", each nation-state is never more than a state of some capital(s), of a segment of the whole bourgeoisie . Moreover, to insist on the partial, national character of the capitalist state-form is not merely a matter of adding on another "factor" to the discussion of the state . The dual determination of the state is a permanent presence in all aspects of state policy and activity . In a capitalist world, it becomes ever more the case that "forgetting" the international dimension of the capitalist state system puts the theorist in the position of a one-handed violinist . This is not the place to consider how the various nation-states were formed . All we need to note is that each separate nation-state represents an achieved fusion, or mobilisation, of a particular segment of the whole bourgeoisie and other classes into a nation, and a nation formed moreover in opposition to other nations . It may well be that the nation-state is a committee for managing the common affairs of its bourgeoisie - however we define "its bourgeoisie" and "its common affairs" . But it is a structure that is shaped, inter alia, by that bourgeoisie's competitive strdggles with other bourgeoisies, other nations, other capitals . More than an instrument of inter-class domination, the modern state is also an instrument of intra-class competition . That competition takes many forms, including trade, trans-national investment, imperialist domination, war, diplomacy, etc . And each nation's ability to compete depends on the relative size of the capital(s) that fall(s) within its orbit, however we define that orbit . In H&P's account, however, the state appears one-sidedly as a relation of force directed principally at the working class : "This abstraction of relations of force from the immediate process of production and their necessary location (since class domination must ultimately rest on force) in an instance separate from individual capitals constitutes (historically and logically) the economic and the political as distinct, particularised forms of capitalist domination ." (p . 79)



DEBATE

12 1

The state must appear in this one-sided form, since their whole article is concerned with an abstraction called "the state" whose connection with the actual states of the capitalist system is not adequately developed . It is as if we were to try to account for capital and its laws of motion without reference to its existence as many capitals . The above quotation illustrates a further problem in H&P's article . Their argument centres on the idea of the "separation" of the economic and the political as instances and forms . This "separation" is a point of principle with them : the concept of "state", though they argue it is founded in the capital relation, is so separated in their analysis from "capital" that "state" and "capital" are two opposed notions . In their treatment, the state always stands outside the immediate valorisation process, and must stand outside 11

the state must remain essentially external to the process of accumulation . While the purpose of state action must be to promote the accumulation of capital, it must, by reason of its form, remain external to that process ." (p . 96, my emphasis CB) .

That permanent externality of the state seems to me exceptionally dubious . Given the national form of the capitalist state, there is no "reason of its form" why it must be thus external to capitalist production and accumulation . IMP actually come close, in the last part of their article, to belying their own assumption about the separation of the "political" and the "economic", the "state" and "capital" . For in their own account, it seems that "the autonomy of state action from the immediate demands of the valorisation process" is itself threatened by the development of capital, even though that autonomy of the state is crucial to their account and is "implicit in the particularisation of the state as a distinct form of capitalist domination" . As they note, the British state "intervenes directly in the production process, taking over particular industries and reorganising the actual process of value creation and exploitation" . For H&P this kind of development (in no way peculiar to Britain) is a fundamental contradiction in the state's situation, for it threatens the "generality implicit in its form" . It is exactly this idea, that there is "generality implicit" in the capitalist state form, that I suggest is inadequate . In the sense in which H&P use the term, capitalism has no organised institution with generality implicit in its form . No state can have this implicit generality, for each state is merely a national state . Within capitalism, the only source of "generality" consists in its blind laws of motion, produced by the movements and interactions of the world's constituent capitals and constituent nationstates . Capitalism in this sense is ungoverned, anarchic . No central institution governs it, only the movement of its parts . Its "generalities" are only outcomes of anarchic relations between competing capitals . H&P are not, of course, alone in the view that "the state is not capital", which is repeated by numbers of writers, including Altvater, Offe and Ilabermas . In all cases, the strict demarcation line drawn between "state" and "capital" rests on an account of the state form in which the state is treated in the singular . (6) In all cases, for the purpose of analysing the capitalist state, the hounds of capitalism are treated as coterminous with the national frontiers . That is, rather than seeing capitalist society as a global "social formation", as a real totality, the world is seen



1 22

CAPITAL & CLASS

as a set of capitalist societies, a mere agglomeration and not a unity . If we hold firmly to the merely national character of the capitalist state, and reject the (residual Hegelian?) idea that the state has some principle of generality implicit in its very form, then we can abandon the highly restrictive assumption that "state" and "capital" are mutually exclusive terms . In which case, the discovery that some particular state is becoming more and more directly involved in the valorisation process is not in itself an implicit threat to its own logic or anything of the sort . And the kind of developments to which H&P refer can be accounted for in simpler and altogether more straightforward terms . Consider for example the limitations on state action to which H&P very properly draw attention . These limitations they derive simply from "the state's structural relation to, and separation from the immediate process of exploitation ." Yet these limitations also derive, surely, more simply from the inability of any single nation-state to manage the world economy . In this respect it is notable that David Yaffe's account (cited by H&P) of the growth of the state apparatus in terms of "the state's postwar commitment to full employment" is subject to just the same limitations as Keynesianism, in that it fails to explain how the British (or any other) state goes about encashing its "commitment to full employment" . Roosevelt in the 1930s seems to have been as subjectively committed to full employment as were Attlee and Churchill after the war, but he tailed . What brought "full employment" to western capitalism was not simply the separate "commitments" of the various national governments, but also - and crucially - the global situations which, while it was the outcome of their various national decisions, was yet more than the sum of the parts War, we should perhaps remember, restored full employment In their last section, H&P do make reference to the phenomenon of the system of capitalist states, but without recognising the problem it poses for Marxist theory I heir only theorisation of the question refers to processes of "convergence" affecting capitalist states, through processes of combined and uneven development and inter-state imitation . As presented, their "convergence thesis" is rather dubious . There may well have been elements of "imitation" in, say, German or Japanese capitalist development in the 19th century, but that imitation occurred not in contemplative isolation but as a response to pressures exerted on them by the more highly developed capitals of Britain and the USA . The term "imitation" suggests mere repetition, sameness, and is inappropriate : the German and Japanese "imitations" were competitive responses, whose character dictated to their states more centralised and less 'liberal" political frameworks than existed in the states they were supposedly "imitating" . In any particular branch of capitalist production, some capitals are "ahead" and others "behind" ; the "backward" experience the law of value as a coercive force dictating different methods of "catching up" from those adopted by the already "advanced" capitals . So too with the relations between nation-states . Latecomers and laggards, to succeed, seem to require a greater degree of centralisation than their more advanced rivals It we asked, what forces move the states of Western Europe towards "planning" and "nationalisation" in the present period, our answer would have to include the massive weight of US capital in the world economy . The shift towards national "planning", a marked feature of West European states since the late 1950s, is not an irnitauve response to the USA, where such processes have gone



DEBA T E

123

least far . It is a competitive response, an attempt to mobilise capital resources for competition in the world market . In H&P's article, though, the world market appears only as an occasional afterthought (as p . 93) . It is not central to their analysis of the state and its relation to capital, but is just one of the "myriad extraneous circumstances which affect the way the crisis presents itself, and may provide escape routes for particular national capitals" . But, what is an "escape route" for one capital is thereby a source of major disruptive pressure for another . Overseas investment by US multinationals like IBM may be, for them, an "escape route it's hardly been that for the British domestic computers industry . When H&P very properly suggest that state intervention does not do away with the anarchy of capitalism, they propose only that the inherent antagonisms of the market, where capitals meet as "hostile brothers", reproduce themselves within the state . They certainly do . But they also reproduce themselves between states, who also meet as "hostile brothers" whether in the IMF vaults or in the United Nations soup queue . The internal forms assumed by nation-states are shaped, not only by domestic class struggle, but also by the movement of capital on the world stage, a movement that includes themselves . The clear implication of my argument is that there is no abstract, theoretical reason why history should not have happened as it has : no reason, that is, why particular nation-states should not have become "capital personified" . "State" and "capital" can become a unity . Indeed, there are structural aspects to the state's form which suit it to this purpose : it has aspects of a homology of form with every individual capital, being doubly determined by the capital relation as anarchyplus-despotism . In most Marxist writing on the state, it is the second determination - the repressive aspect of the state - which is stressed . To that extent, Marxist understanding of the state has tended to continual one-sidedness . When Marx wrote Capital, any tendency to the assimulation of "state" and "capital" was still in its infancy . Yet in Anti-Dthring (1878) Engels was already discussing such developments . In any case, Capital itself stands incomplete in two respects vital to the present discussion : the planned volumes on the state and the world market seem never to have been even sketched out . What Marx did give us, however, was a clear account of the real historical tendency to concentration and centralisation of capital into the joint-stock company form and - by mere extension - into the form of "state capital" .(7) The development of state capital is a predominantly 20th century phenomenon, its emergence within world capitalism being characteristically uneven . At one extreme are those states where the means of production are more or less totally centralised into one national-state capital, whose development is only comprehensible in terms of their competitive interactions with the rest of world capital, and not simply in terms of their domestic class relations considered in isolation .(8) At another pole stand the nation-states of western capitalism, around which are formed more or less articulated and enlarged blocks of capital, which are either the direct legal property of the states (nationalised industries, etc) or are increasingly effectively state property (given their dependence on the state for investment capital, orders, etc) . Capitalism in the last quarter of the 20th century can no longer be described as if "capitalism" were synonymous with personal private property . The erosion of the apparent neutrality of the state, to which Ff&P



1 24

CAPITAL & CLASS

refer, is a real erosion : crucial to it are all those processes, including capital concentration, which press in the direction of a fusion of state and capital . Any such fusion of state and capital, achieved either partially or totally, in no sense abolishes the conditions of capitalist production, nor resolves its contradictions . T here are of course ideologues of late capitalist development who conceive that socialism is precisely national, single-state capital unified and concentrated into one block, a view of socialism shared of course by the bourgeoisie . The view of socialism as equivalent to single-state nationalisation, the equation of capitalist nationalisation with the Marxist idea of the socialisation of production, is widespread still within the workers' movement . That such a conception of socialism should continue with such strength, despite all the experiences of the working class in this century, is witness to the under-theorised condition of Marxist state theory . It is, seemingly, a characteristic of the 57 varieties of reformism that their conception of socialism stops at the local frontier posts . If the critique of political economy is to advance its attack on the capitalist state form, we must critically discuss the conceptions of "state" and "capital" that we've received, half unconsciously, from previous generations . I'm aware that this Note raises more problems than it solves . Nonetheless, today more than ever we should remember that the working class has a world to win .

NOTES

1

2

3 4

Colin Barker lectures in sociology at the Department of Social Science, Manchester Polytechnic, Aytoun Street, Manchester 1 . My thanks to the following for very helpful comments on an earlier draft : Claudia von Braunmuhl, Simon Clarke, Ian Cough, Peter Green, John Harrison, Bob Jessop, Doreen Massey, John Ure . They will agree that my responsibility is total . It is very odd what an "absence" there is in Marxist theorising on the state in this respect . To my knowledge, the only Marxist who has explicitly called attention to the matter is von Braunmuhl (1974, 1976, 1977) . Even Marxists whose other theoretical positions ought to have sensitised them to this aspect of the capitalist state seem not to remark on it . For example, Martin Shaw (1974) produced a very useful critical review of some problems in the development of the Marxist theory of the state without even mentioning the state's national form : yet his view, that Russia and Eastern European countries are state capitalist formations, depends theoretically on exactly this conception . There is a very useful discussion of this in Banali, 1977 Lg Marx, 1973, p . 421 : "Since value forms the foundation of capital, and since it therefore necessarily exists only through exchange for counter-value, it thus necessarily repels itself from itself . A universal capital, one without alien capitals confronting it, with which it exchanges - and, from the present standpoint, nothing confronts it but wage-labourers or itself - is therefore a non-thing . the reciprocal compulsion between capitals is already contained in capital as realised exchange-value ."



DEBATE 5

6

7

8

Eg Marx, 1976, p . 477 : " in the society where the capitalist mode of production prevails, anarchy in the social division of labour and despotism in the " manufacturing division of labour mutually condition each other In the case of Elmar Altvater, who is extremely explicit in theorising a conceptual gap between "capital" and "state", the problem is rooted in a misreading and misinterpretation of Engels' Anti-Duhring Engels , who admittedly did not theorise his point fully, wrote of the possibility of the centralisation and concentration of capital reaching the state itself, and gave a clear affirmative answer to the question, would such a national state capital still be capital? (Engels, 1959, p . 384) . The modern state, he explained, is "essentially the ideal personification of the total national capital ." Altvater does not notice that Engels is talking of a total national capital, and reads him as referring to the absurd notion of a completely centralised "capital in general" . Had Engels meant any such thing, he would - as Altvater suggests - have been uttering a nonsenselBut he wasn't : Altvater was misreading him, seemingly because he himself forgot that national limits do not coincide with capitalist limits . See Altvater, 1973, esp . p . 99 ; Barker, 1977 . It is sometimes argued, against the validity of the very concept of state capital itself, that capitalist production rests on a particular form of private property relations . Far from disputing the point, I would only point out that "private property" is not necessarily limited to "personal property" . The private conduct of surplus-value production is in no sense logically opposed to nation-state capitalist production . "Private" means simply "not-social", that is, not under the collective will and control of the associated producers . Whether capitalist production is carried out under the aegis of personal owners, churches, joint-stock companies, trusts or baboon colonies, or nation-states within a world market, is an important but secondary question . To treat it as the primary question is to reduce the concept of the social relations of production to the vulgar bourgeois sphere of concern with relations of distribution, and to add another "Marxist" head to the Hydra of reformism . The conception of Russian society as a "state capitalist" formation . which cannot be defended here for reasons of space, rests essentially on the view that - from the inception of the First Five Year Plan and the forced collectivisation of agriculture - the Russian revolution must be regarded as decisively "lost" . Thus, far from being viewed with Trotsky as a "degenerated workers' state", or with others as a "transitional formation", or a "bureaucratic collectivism", or a "statist socialism", Russia is seen as a single state capital, whose form of economic and social development under Stalin and his successors was conditioned above all by the accumulation needs of competition with the rest of world capitalism . If the theory - extended also to Eastern Europe and other "socialist" countries -has been left in a rather undeveloped state, I find it still the most promising approach to the notorious "Russian question" . The most easily available accounts are to be found in Cliff, 1970 and Harman, 1974 .

125



1 26

CAPITAL & CLASS

BIBLIOGRAPHY Altvater, Elmar, 1973, "Notes on some problems of state interventionism", Kapitalistate, 1, Banaji, lairus, 1977, "Modes of production in a materialist conception of history", Capital and Class, 3 . Barker, Colin, 1977, "On Altvater", mimeo, CSE Manchester . von Braunmiihl, Claudia, 1974, "Kapitalakkumulation im Weltzusammenhang . Zum methodischen Ansatz einer Analyse des Burgerlichen Nationalstaates'", Gesellschalt, 1, Frankfurt . 1976, "Die nationalstaatliche Organisierheit der Burgerlichen Gesellschalt : Ansatz zu einer historischen and systematischen Untersuchung", Gesellschalt, 8/9, Frankfurt . 1977, "The nation state and the world market : on the national organisation of bourgeois society" in John Holloway and Sol Picciotto, eds ., The State and Capital : a Marxist Debate, Edward Arnold, forthcoming . Cliff, Tony, 1970, State Capitalism in Russia, Pluto . Engels, Frederick, 1959, Anti-Duhring, Moscow . Harman, Chris, 1974, Bureaucracy and Revolution in Eastern Europe, Pluto . Holloway, John and Picciotto, Sol, 1977, "Capital, Crisis and the State", Capital and Class, 2 . Marx, Karl, 1973, Crundrisse, Penguin . 1976, Capital, Vol . 1, Penguin . Shaw, Martin, 1974, "The theory of the state and politics : a central paradox of Marxism", Economy and Society, 3 .4 .

ALTHUSSER, BALI BAR AND PRODUCTION E . Tomlinson

Simon Clarke's article "Marxism, Sociology and Poulantzas Theory of the State" (Capital and Class No . 2) is founded upon two arguments . First that " . the constitutive basis of all bourgeois ideology . . . is the conception of production as a technical process . . . " (p . 6) . Second that Althusser and Balibar (and derivatively Poulantzas) share this conception of production and therefore are ensnared in bourgeois ideology . To take briefly the first argument . Clearly one important aspect of bourgeois ideology is the "desocialisation" of production, and conversely part of the task of socialist ideology is to attack this conception and assert the importance of the relations of production in shaping the production process . But Clarke goes much further than this in arguing that all bourgeois ideology is based on this conception . Can all the ideological arguments that have functioned as supports for bourgeois positions really be reduced to one central principle? Is it meaningful to argue that, for example, everything from Cromwellian Republicanism in the 1650s to Menshevism in 1917 were based on a technicist conception of production? This kind of essentialist/reductionist argument functions as an obstacle rather than an aid to the analysis of ideologies . The second argument used by Clarke is truly astonishing to anyone who has the smallest acquaintance with the work of Althusser and Balibar . At its centre is the contention that for "Althusserians" " . . . relations of production (are) seen as the technical relations combining factors in material production" (Clarke, p . 8) . A striking (and perhaps symptomatic) feature of Clarke's article is the absence of any explicit page references to Althusser and Balibar (1970), surely the central text of their whole enterprise . To see the absurdity of the contention by Clarke quoted above one has only to consult Part 111, chapters one and two, of this text . Here Balibar attempts to reconstitute the concept of mode of production by arguing that this should be seen as consisting of two "connexions" ; the real appropriation connexion, determining the appropriation of nature through a specific labour process ; and a property connexion determining the model of appropriation of the product . Both connexions involve combinations of labourer/ means of production/non-labourers . The mode of production is structured out of these two connexions . (Althusser and Balibar, 1970, pp . 212-216) . Balibar repeatedly stresses that the process of production is made up of both



CAPITAL & CLASS

128

these connexions in their interdependence : nowhere is the attempt made to argue that one connexion is "technical", one "social" . On p . 246 Balibar spells this out in a footnote which reads : "Althusser has proposed the term 'technical relations of production' which clearly marks the distinction (between the two connexions) . But we should remember that 'relations' in itself implies their social character" . To assert that Althusserians see the property connexion as a relation or distribution (Clarke, footnote 15) mapped on to a technical process of production is wholly insupportable from Balibar's writings . The seemingly inescapable conclusion from reading Clarke's article is that he has not actually read Balibai s contribution to Reading Capital . Clarke does not even seem to recognise the existence of the problems in Marx's Capital which Althusser and Balibar try and engage . In the sections of Reading Capital quoted above Balibar is attempting to elucidate and develop Marx's concepts of "forces" and "relations" of production which remain ambiguous and underdeveloped . Such problems have to be faced and cannot be made to go away simply by invoking classical Marxist texts . To say that, for example "In Marx's developed thought production is seen as a process which is itself both social and material, as the contradictory unity of the production of value and the production of use values" (Clarke, p . 5-6) advances the development of historical materialism and the study of concrete social formations not one flea-hop . Equally simply asserting the primacy of production in a dogmatic way avoids posing the problem of how it is possible to conceptualise different forms of social relations of production without also discussing the different forms of distribution of the means of production . This latter can only be done by discussing different processes of circulation which cannot just be reduced to the effects of the process of production . Though posed here in a very abstract way, these are the kinds of problems Marxist economists should be working on rather than engaging in futile quotation swapping . There are many other questionable aspects of Clarke's article . For example it is difficult to understand how anyone who has read Hirst and Hindess (1975)(21 and Cutler (1973) can describe them as "Althusserian purists" (Clarke, footnote 42), given that both these texts contain sustained criticisms of Althusser and Balibar's arguments . But the central point at issue here Is not this and that detailed criticism of Clarke's article ; nor is it an attempt to defend all of Althusset s and Balibar's positions ; it is simply to show that the whole of Clarke's article is undermined because it rests on an enormous and fundamental misunderstanding of Althusser and Balibar's arguments .

NOTES 1 2

I am grateful to Stuart Birchell for very helpful comments . This text also suffers a grotesque misreading by Clarke . The argument



DEBATE

129

(footnote 6) that it is an attempt " . . . to give the various precapitalist forms of distribution a material foundation in the development of the forces of production", cannot survive a cursory glance at, for example, chapter five . Here it is extensively argued that many conceptions of feudalism are defective precisely because they reduce the economy to technique and differentiate feudalism purely by the mode of appropriation of the surplus product (see especially Hirst and Hindess, 1975, pp . 221-233).

BIBLIOGRAPHY Althusser, L . & Balibar, E ., 1970, Reading Capital, NLB, London . Cutler, A ., 1973, "Letter to Etienne Balibar . . . " Theoretical Practice 7/8 . Hirst, P ., & Hindess, B ., 1975, Pre-Capitalist Modes of Production, Routledge and Kegan Paul, London .

CO//SCC~

1a eol0gy &

~~

Investigations in theory pr. concrete anal) sis of current acuces, interviews, debates, polemic and correspondence

(~

translations, expraitions and reviews of key texts

NO . 3 . SPRING 1978 t'oucault : Politics Rossi-Landi : Sign Systems and Social Reproduction Women in Literature Critique of Piaget's Psychology . NO. 1 Psychology, Ideology and the llum :tn Subject t eos n(sm & The Language of Psychoanalysis (lass . Language and Education Voltrknov no Marxism and 1Jnguistia

NO . 2 Psychology . Prison, end tdcolopv The Theory of Fetishism in c .pit . The Unconscious of Psychoanalysis Pfcheux's Theory of nifcntme Critkai Introduction to G .U . Nr .J

NINGI.B COPIES bookshops - (1 .20 (12 .30) ; by pmt- Inland L1 .33, osrrxes suefaee £1 .30 (13 .00), dnneil (2 .60 (16 .00). ANNUAL SUBSCRIPTION O Issues) inland (3 .23, oveneet surface £4 .00 (09 .00) . airmail £7.73 (116.00) ; turdent and claimant rate (inland only) L2 .23 : Institutional rate £6, overseas surface (117.00) airmd (11 .73 (124 .00) .

Moo

Payable to Ideology & Cnnttrloutnesa, I Wobum Mansions, Torrington Place, London W .C.I .

ARCHIVE THE VALUE-FORM Karl Marx INTRODUCTION BY THE TRANSLATORS . M. Roth, W . Suchting The first edition of the first volume of Capital contains an appendix ("Anhang") entitled The Value-Form (Die Wertform) . This was dropped in the second edition, most of the material being worked into the rewritten version of Chapter 1 .111 The origins and nature of this appendix are elucidated in the Marx-Engels correspondence . During June 1867, Engels was reading the page-proofs of the first volume of Capital . On the 16th of that month he wrote to Marx saying, amongst other things : "The second sheet especially bears rather strong marks of your carbuncles, but that cannot be altered now and I do not think you should do anything more about it in an addendum, for, after all, the philistine is not accustomed to this sort of abstract thought and certainly will not cudgel his brains for the sake of the form of value ." He later goes on : "In these more abstract developments you have committed the great mistake of not making the sequence of thought clear by a larger number of small sections and separate headings . You ought to have dealt with this part in the manner of Hegel's Encyclopedia, with short paragraphs, every dialectical transition marked by a special heading and so far as possible all excurses and mere illustrations printed in a special type . The thing would have looked rather like a schoolbook, but it would have been made much more comprehensible to a very large class of readers . for the people, even the learned section, are no longer at all accustomed to this kind of thinking and one must facilitate it for them in every possible way ." (Marx-Engels Correspondence p .226) .



THE VALUE-FORM

131

On the 22nd June, Marx replied to Engels . He began by expressing the hope that "the bourgeoisie will remember my carbuncles all the rest of their lives", and continues later in the letter as follows : "As to the development of the value-form I have and have not followed your advice, in order to behave dialectically in this respect as well . I .e . I have 1 . written an appendix in which I present the same thing as simply and pedagogically as possible, and 2 . followed your advice and divided each step in the development into §§, etc with separate headings . In the preface I then tell the "non-dialectical" reader that he should skip pages x - y and read the appendix instead . Here not merely philistines are concerned but youth eager for knowledge, etc . Besides, the matter is too decisive for the whole book ." (Marx-Engels Correspondence, pp .227-8, Werke vol .31 p .303) . This appendix contains an extraordinarily clear and succinct exposition of Marx's concept of value . Irrdeed there is no better introduction to the much more involved exposition in the first chapter of volume I of Capital as we now have it . Marx says in the Preface to the first edition of Capital (1867) : "Beginnings are always difficult in all sciences The understanding of the first chapter . will therefore present the greatest difficulty" . (Penguin edition p .89) . Especially in the English literature there is still a strong tendency to skip these initial "subtleties" . As opposed to this, in the years after the student movement, young Marxists in West Germany have tried to acquire a new understanding of the whole of Marx's analyses, taking the value-form seriously . As there has been no language barrier, study of the additional versions of the fundamental part of the analysis as contained in such work as the Grundrisse, the Results of the Immediate Process of Production, the first edition of Capital, and the Notes on Adolph Wagner, all until recently closed to readers with no knowledge of German, was an important part of this work . This has been combined with reading secondary literature like I .I . Rubin s work, recently translated into English as Essays on Marx's Theory of Value, V .S . Vygodskii's book on the history of Marx's economic work, translated as The Story of a Great Discovery : How Karl Marx Wrote "Capital", and most important of all Roman Rosdolskys The Making of Marx's "Capital", which has only just now appeared in English translation . The result of this recent renaissance of Marxstudies in Germany, involving a greater number of people than ever before, is a rapidly increasing volume of literature on central topics of the analysis of capitalist society, much of which is not yet available in English . This includes work which emphasises the analysis of the value-form, listed in the bibliography below . The following translation of Marx's Value-Form appendix to volume I of Capital was made in 1976 . After its completion and submission for publication there appeared the first English published version of it in a volume entitled Value : Studies by Karl Marx edited by Albert Dragstedt . An examination of this published version however showed that it was neither a very readable nor an adequate rendering of Marx's text . (It may suffice to point out that twenty-six lines of Marx's text, most of them quite crucial, are omitted without notice [2J) . So we have considered it appropriate to present the following translation to the public .



132

CAPITAL & CLASS

NOTES

1 2

Mike Roth and Wal Suchting have worked together in Germany and Australia, and are both CSE members . They can be contacted at these addresses : M . Roth, Universitat Konstanz (Fachgruppe Philosophie), 775 Konstanz, West Germany ; W . Suchting, University of Sydney (Dept . of General Philosophy), Sydney 2006, N .S .W ., Australia . There is an English translation of the first edition version of chapter 1, by Axel Davidson (Marx 1972) . The appendix is pages 764-84 of the first edition of Das Kapital, Marx 1867 . This was reprinted in Marx and Engels 1955 pp . 262-88, which is the text we have used for this translation . The Dragstedt translation omits lines from pp. 262, 264, 274 and 279f of Marx's text . Cf . Albert Dragstedt's version, pp . 49, 51, 57, 63 .

BIBLIOGRAPHY Backhaus, Hans-Georg, 1969, "Zur Dialektik der Wertform", in A . Schmidt led .) Beitrage zur Marxistischen Erkenntnistheorie, Frankfurt, Suhrkamp. , 1974, 5, "Materialien zur Rekonstruktion der Marxschen Werttheorie", Cesellschaft . Beitrage zur Marxschen Theorie Nos . 1 & 3 . Holt, Dirk von, Pasero, Ursula and Roth, Volkbert, M ., 1974, Aspekte der Marxschen Fheorie : 2 Zur Wertformanalyse, Frankfurt, Suhrkamp . Eldred, Michael and Roth, Mike, 1978, forthcoming, A Guide for Reading 'Capital'. Marx, Karl, 1967, Das Kapital Erster Band, Erstausgabe, Hamburg, Verlag von Otto Meissner , 1972, Chapter One of Capital, first edition version, translated by Axel Davidson, Bulletin Marxist Classics Series, No . 1, New York, Labor Publications . 1973, Grundrisse . Foundations of the Critique of Political Economy (Rough Draft), translated by Martin Nicolaus, Harmondsworth, Penguin . 1976, Capital vol . 1, translated by Ben Fowkes, Harmondsworth, Penguin . 1976, Results of the Immediate Process of Production, printed as appendix to Penguin edition of Capital vol . 1 . 1976, Value : Studies by Karl Marx translated and edited by Albert Dragstedt, London, New Park . Marx, Karl and Engels, Friedrich, n .d ., Selected Correspondence, Moscow, Foreign Languages Publishing House . , 1955, Kleine Oekonomische Schriften : ein Sammelband, Berlin, Dietz Verlag . , 1965, Werke, Berlin, Dietz Verlag . Projektgruppe Lntwicklung des Marxschen Systems (Westberlin), 1973, Das Kapitel vom Geld. Interpretationen der verschiedenen Entwurfe, Interpretationen Zuni "Kapital", bd . 2, Westberlin Verlag fiir das Studium der Arbeiterbewegung . Rosdolsky, Roman, 1968, Zur Entstehungsgeschichte des Marxschen "Kapital" Frankfurt, [VA .



THE VALUE-FORM

133

Rosdolsky, Roman, 1977, The Making of Marx's "Capital", London, Pluto Rote Zellen/AK Munchen . 1974, 5, Der Aufbau des "Kapital " in Resultate der Arbeitskonferenz, MOnchen, Resultate Verlag . Rubin, I .I . . 1972, Essays on Marx's Theory of Value, Detroit . Black & Red . Vygodskii . V .S ., 1974, The Story of a Great Discovery : How Karl Marx Wrote "Capital". Tunbridge Wells, Abacus Press .

Jr dw,Fy,, w .1,

6r Il , e JJvr ,,1.,,

w

a tlnl

\Ir 1

.

• 'Iru

23 BMnke : Zru Innerlinken Auseinondenetxung / Mossorrat : Unksbiirgedidw Anolysen der . Enngielul ..' / Behiebspolibli bet Owm / Manidu-Gybrrgyost : Kultur and AIIMgdeben in der SU / AIMate, Zeunei : SonrheirnerKritBr / Sdwkt : Bouedid,e hrlerananvedre$ung (2) 24 Sd,eile :DerArbeihkompfderDnrdrorbethr1976/ HBkfebrondt, Olle, SdsoeIler : Krttik des •y,,clikoPrdndrsn hdernationalhmus/Deutsdwrroo : Des Elend retisdror Krisenwnolyse/ Krause : Die ollgemeine Strukttwodes Monopoh/Dudek : Engeh and dos Problem der Naturdialekttk

25 Seihtt :BundestagswoM76/Sdrnollinger,Stiiss: BundesRrgswahlen utd sotiale Busts der Podtelm (1) / Bergen : M iorisd» Sow and harige Arbeits-

emigrotion in tiellen Fall der Pro

teen / Stomoth : Gesso vom tenden/ Plank, Thiitmer: Reforrnismus u. Aueg

26 Sdrwarprmkt : Parteisn, BOndrspoMfil : / Zeuner : SPD and Gewerksdwften / Brorr t: Bnhaihfront and Volks(ront in Oeus,drlond / Ahvahn, Gecwb : Eurokommunismusand Wirhdm"rise in Italien / Sdmo6nger Sin: guides! gswohlen (2) /P ldebmndt : Kop. BPMbsolNk 74/76

froklo : etnzeln 9 Mock, im Abonnement 7 Mark, fiber Rotbudt, PohdamerBudrhondlungen oiler den ) : 28 Moth pkn Porto str.98,1 Berlin 30 . Johresobo (4

THE VALUE-FORM Karl Marx The analysis of the commodity has shown that it is something twofold, use-value and value . Hence in order for a thing to possess commodity-form, it must possess a twofold form, the form of a use-value and the form of value . The form of use-value is the form of the commodity's body itself, iron, linen, etc ., its tangible, sensible form of existence . This is the natural form (Naturalform) of the commodity . As opposed to this the value-form (Wertform) of the commodity is its social form . Now how is the value of a commodity expressed? Thus how does it acquire a form of appearance of its own? Through the relation of different commodities . In order correctly to analyse the form contained in such a relation we must proceed from its simplest, most undeveloped shape (Gestalt) . The simplest relation of a commodity is obviously its relation to a single other commodity, no matter which one . Hence the relation of two commodities furnishes the simplest valueexpression for a commodity .

I . SIMPLE VALUE-FORM 20 yards of linen = I coat or 20 yards of linen are worth 1 coat The secret of the entire value-form (alter Wertform) must be hidden in this simple value-form . Hence its analysis offers the real difficulty . §1 . The two poles of the expression of value (Wertausdruck) : relative value-form and equivalent form . In the simple expression of value the two types of commodities, linen and coat, obviously play two different roles . The linen is the commodity which expresses its value in the body of a commodity different from it, the coat . On the other hand, the commodity-type coat serves as the material in which value is expressed. The one commodity plays an active, the other a passive role . Now we say of the commodity which expresses its value in another commodity : its value is represented as relative value, or is in the relative value-form . As opposed to this, we say of the other commodity, here the coat, which serves as the material of the



THE VALUE-FORM

135

expression of value : it functions as equivalent to the first commodity or is in the equivalent form . Without analysing the matter still more deeply, the following points are clear from the start : a) The inseparability of the two forms . Relative value-form and equivalent form are moments of the same expression of value, which belong to one another and are reciprocally conditioning and inseparable . b) The polarity of the two forms . On the other hand, these two forms are mutually excluding or opposed extremes, i .e . poles, of the same expression of value . They are always distributed amongst different commodities, which the expression of value relates to one another. For example, I cannot express the value of linen in linen . 20 yards of linen = 20 yards of linen is not an expression of value but simply expresses a definite quantity of the object of use, linen . The value of linen can thus only be expressed in other commodities (in andrer Ware), i .e . only relatively . The relative value-form of linen thus presupposes that somb other commodity confronts it in the equivalent form . On the other hand, this other commodity, here the coat, which figures as the equivalent of the linen is thus in equivalent form, and cannot he at the same time in the relative value-form . This commodity does not express its value . It furnishes only the material for the expression of value of other commodities . Certainly the expression : 20 yards of linen = 1 coat or 20 yards of linen are worth one coat also includes the converse : 1 coat = 20 yards of linen or 1 coat is worth 20 yards of linen . But In doing this I must reverse the equation, in order to express the value of the coat relatively, and once I do this the linen becomes the equivalent instead of the coat . The same commodity therefore cannot make its appearance in the same expression of value at the same time in both forms . Rather, these exclude one another in a polar manner . Let us consider exchange between linen-producer A and coat-producer B . Before they come to terms, A says : 20 yards of linen are worth 2 coats (20 yards of linen = 2 coats), but B responds : 1 coat is worth 22 yards of linen (1 coat = 22 yards of linen) . Finally, after they have haggled for a long time they agree . A says : 20 yards of linen are worth 1 coat, and B says : I coat is worth 20 yards of linen . Here both, linen and coat, are at the same time in relative value-form and in equivalent form . But, notabene, for two different persons and in two different expressions of value, which simply occur (ins Leben treten) at the same time . For A his linen is in relative value-form - because for him the initiative proceeds from his commodity - and the commodity of the other person, the coat, is in equivalent form . Conversely from the standpoint of B . Thus one and the same commodity never possesses, even in this case, the two forms at the same time in the same expression of value . c) Relative value and equivalent are only forms of value . Relative value and equivalent are both only forms of commodity-value . Now whether a commodity Is in one form or in the polar opposite depends exclusively on its position in the expression of value . This comes out strikingly in the simple



136

CAPITAL & CLASS

value-corm which we are here considering to begin with . As regards the content the two expressions I '0 cards or linen = 1 coat or 20 yards of linen are worth I coat, 2 1 coat = 20 yards of linen or 1 coat is worth 20 yards of linen are not at all different . As regards the form they are not only different but opposed In expression 1 the value of the linen is expressed relatively . Hence it is

in the relative value-form whilst at the same time the value of the coat is expressed as equivalent . Hence it is in the equivalent form . Now if I turn expression 1 round I obtain expression 2 . The commodities change positions and right away the coat is in relative value-form, the linen in equivalent form . Because they have changed their respective positions in the same expression of value, they have changed value-form (die Wertform gewechselt) . §2 . The relative value-form . a) Relation of equality Since it is the linen which is to express its value, the initiative proceeds from it . It enters into a relation with the coat, i .e . with some other commodity different from itself . This relation is a relation of equalisation (Cleichsetzung) . The basis of the expression 20 yards of linen = 1 coat is in fact : linen = coat, which expressed in words simply means : the commodity-type coat is of the same nature list gleicher Natur), the same substance as the linen, a type of commodity different from it . We overlook that for the most part, because attention is absorbed by the quantitative relation, i .e . by the definite proportion, in which the one type of commodity is equated to the other . We forget that the magnitudes of different things are only quantitatively comparable after their reduction to the same unit . Only as expressions of the same unit are they magnitudes with the same denominator (gleichnamig) and hence commensurable . In the above expression the linen thus relates to the coat as something of its own kind, or the coat is related to the linen as a thing of the same substance, as the same in essence (wesensgleiches) . The one is therefore qualitatively equated to the other .

b) Value-relation The coat is only the same as the linen to the extent that both are values . Thus that the linen is related to the coat as to something of its own kind or that the coat as a thing of the same substance is equated to linen, expresses the fact that the coat counts in this relation as value . It is equated to the linen insofar as the latter is value as well . T he relation of equality is thus a value-relation, but the value-relation is above all the expression of the value or the existence as value of the commodity which expresses its value . As use-value, or body of the commodity (Warenkorper), the linen is distinguished from the coat . But its existence as value comes to light, is expressed in a relation, in which another commodity-type, the coat, is equated to it or counts as the same in essence . c) Qualitative content ( Cehalt) of the relative value-form contained in the value-relation . The coat is value only to the extent that it is the expression, in the form of a thing, of the human labour-power expended in its production and thus in so far as it is a jelly of abstract human labour -abstract labour, because abstraction is made



Tiff VALUE-FORM

137

from the definite useful concrete character of the labour contained in it, human labour, because the labour counts here only as expenditure of human labour-power as such . Thus the linen cannot relate (sich verhalten) to the coat as a thing having value, or cannot be related (hezogen werden) to the coat as value, without relating (hezogen werden) to it as a body whose sole substance consists in human labour . But as value this linen is a jelly of this same human labour . Within this relation the coat as a thing (Korper) thus represents the substance of value which it has in common with linen, i .e . human labour . Within this relation the coat thus counts only as shape of value (Gestalt von Wert), hence also as the form of the value (Wertgestalt) of the linen, as the sensible form of appearance of the value of the linen . Thus by means of the value-relation the value of the commodity is expressed in the use-value of another commodity, i .e . in the body of another commodity different from itself .

d) Quantitative definiteness (Bestimmtheit) of the relative value-form contained in the value-relation . The 20 yards of linen are, however, not only value as such, i .e . a jelly of human labour, but value of a definite magnitude, i .e . a definite quantity of human labour is objectified in them .In the value relation of the linen to the coat the commodity-type coat is hence not only qualitatively equated to the linen as bodily form of value (Wertkbrper) as such, i .e . as embodiment of human labour, but a definite quantity of this bodily form of value, 1 coat, not 1 dozen, etc . . insofar as in 1 coat there is hidden precisely as much value-substance of human labour as in 20 yards of linen . e) The relative value-form as a whole (Das Ganze der relativen Wertform) . Thus through the relative value-expression the value of the commodity acquires firstly a form different from its own use-value . The use-form of this commodity is, e .g . linen . But it possesses its value-form in its relation of equality with the coat . Through this relation of equality the body of another commodity, sensibly different from it, becomes the mirror of its own existence as value (Wertsein), of its own character as value (Wertgestalt) . In this way it gains an independent and separate value-form, different from its natural form . But secondly, as a value of definite magnitude, as a definite magnitude of value, it is quantitatively measured by the quantitatively definite relation or the proportion in which it is equated to the body of the other commodity .

§3 . The equivalent form . a) The form of immediate exchangeability . As values all commodities are expressions of the same unit, of human labour, which count equally and are replaceable or substitutable for one another . Hence a commodity is only exchangeable with another commodity insofar as it possesses a form in which it appears as value . A body of a commodity is immediately exchangeable with other commodities insofar as its immediate form, i .e . its own bodily or natural form, represents (vorstelit) value with regard to another commodity or counts as value-form (Wertgestalt) . This property is possessed by the coat in the value-relation of the linen to the coat . The value of the linen would



138

CAPITAL & CLASS

otherwise not be expressible in the thing which is the coat . Therefore that a commodity has equivalent form at all, means just this . Through its place in the value-expression its own natural form counts as the value-form for other commodities or it possesses the form of immediate exchangeability with other commodities . Therefore it does not need to take on (annehmen) a form different from its immediate natural form, in order to appear as value for other c ommodities . t o count as value and to act on it as value (auf sie als Wert zu wirken) . b) Quantitative definiteness is not contained in the equivalent form . That a thing which has the form of a coat is immediately exchangeable with linen, or a thing which has the form of gold is immediately exchangeable with all other commodities - this equivalent form of a thing contains absolutely no quantitative definiteness . The opposing erroneous view springs from the following causes : Firstly the commodity coat, e .g ., which serves as material for the expression of value of linen is, within such an expression, also always quantitatively definite, like 1 coat and not 12 coats etc . But why? Because the 20 yards of linen are expressed in their relative value expression of value not only as value as such, but at the same time are measured as a definite quantity of value . But that 1 coat and riot 12 coats contains as much labour as 20 yards of linen and hence is equated with 20 yards of linen has absolutely nothing to do with this characteristic property of the commodity-type coat of being immediately exchangeable with the commodity-type linen . Secondly if 20 yards of linen as value of a definite magnitude are expressed in 1 coat, then conversely the magnitude of value of 1 coat is also expressed in 20 yards of linen, and thus similarly quantitatively measured, but only indirectly, through reversal of the expression, not insofar as the coat plays the role of the equivalent but rather insofar as it represents its own value relatively in the linen . Thirdly we can also express the formula 20 yards of linen = 1 coat or 20 yards of linen are worth 1 coat in the following way : 20 yards of linen and 1 coat are equivalents, or both are values of equal magnitude . Here we do not express the value of either of the two commodities in the use-value of the other . Neither of the two commodities is hence set up in equivalent-form . Equivalent means here only something equal in magnitude, both things having been silently reduced in our heads to the abstraction value . c) The peculiarities (Ligentumlichkeiten) of the equivalent-form .

a) First peculiarity of the equivalent-form : use-value becomes the form of appearance of its opposite, of value . The natural form of the commodity becomes the value-form . But, nota bene, this quidproquo occurs for a commodity B (coat or wheat or iron, etc .) only within the value-relation to it, into which any other commodity A (linen, etc .) enters, and only within this relation . In itself, considered in isolation, the coat, e .g ., is only a useful thing, a use-value, just like the linen, and hence its coat-form is only the form of use-value list nur form von Gebrauchswert) or natural form of a definite type of commodity . But since no commodity can relate to itself as equivalent and therefore also cannot make its own natural hide an expression of its own value, it must relate itself to other commodities as equivalent or make the natural hide of



THE VALUE-FORM

139

the body of another commodity its own value-form . This may be illustrated by the example of a measure, whi< Ii is predicable of the bodies of commodities as bodies (den Warenkorpern its Warenkorpern zukommt), i .e . as use-values . A sugar-loaf, qua body (weil Khrper), is heavy and hence has weight, but one cannot tell the weight of a sugar-loaf by looking or feeling (man kann keinem Zuckerhut seine Schwere ansehn oder anfiihlen) Now we take different pieces of iron whose weight has been previously determined The bodily form of the iron considered in itself is just as little the form of appearance of weight as that of the sugar-loaf . However in order to express the sugar-loaf as heaviness or weight, we put it into a weight-relation with iron . In this relation the iron counts as a body, which represents nothing except heaviness or weight . Hence quantities of iron serve as the measure of the weight of sugar and represent, with regard to the body of the sugar, merely the form of heaviness (blosse Schweregestalt), form of appearance of heaviness . Iron plays this role only within the relation in which the sugar, or some other body whose weight is to be found, enters . Were both things not heavy they could not enter into this relation and hence the one could not serve as the expression of the weight of the other . If we throw both on to the scale pan, we see in fact that they are, as weight, the same and hence in a definite proportion also of the same weight . Just as here the body of the iron represents, with regard to the sugar-loaf, simply heaviness, so in our expression of value the body of the coat represents, with regard to the linen, simply value .

P) Second peculiarity of the equivalent form : concrete labour becomes the form of appearance of its opposite, abstract human labour . The coat counts in the expression of the value of the linen as the value-body, hence its bodily or natural form as value-form, i .e . therefore as embodiment of undifferentiated human labour, human labour as such (schlechthin) . But the labour by which the useful thing which is the coat is made and by which it acquires its definite form, is not abstract human labour, human labour as such, but a definite useful, concrete type of labour - the labour of tailoring . The simple relative value-form requires (erheischt) that the value of a commodity, linen, for example, is expressed only in one single other type of commodity . Which the other type of commodity is, is however, for the simple value-form, completely irrelevant . Instead of the commodity-type coat the value of the linen could have been expressed in wheat, or instead of what in iron, etc . But whether in coat, wheat or iron, in every case the equivalent of linen counts as the body of value with regard to the linen, hence as embodiment of human labour as such . And in every case the definite bodily form of the equivalent, whether coat or wheat or iron, remains embodiment not of abstract human labour, but of a definite concrete useful type of labour, be it the labour of tailoring or of farming or of mining . The definite concrete useful labour : which produces the body of the commodity which is the equivalent must therefore, in the expression of value, always necessarily count as a definite form of realisation or form of appearance, i . e . of abstract human labour . The coat, for example, can only count as the body of value, hence as embodiment of human labour as such, insofar as the labour of tailoring counts as a definite form, in which human labour-power is expended or in which abstract human labour is realised . Within the value-relation and the value expression included in

1 40

CAPITAL & CLASS

it, the abstractly general counts not as a property of the concrete, sensibly real ; but on the contrary the sensibly-concrete counts as the mere form of appearance or definite form of realisation of the abstractly general . The labour of tailoring, which e .g . hides in the equivalent coat does not possess, within the value-expression of the linen, the general property of also being human labour . On the contrary . Being human labour counts as its essence ( Wesen), being the labour of tailoring counts only as the form of appearance (Erscheinungsform) or definite form of realisation of this its essence . This quidproquo is unavoidable because the labour represented in the product of labour only goes to create value insofar as it is undifferentiated human labour, so that the labour objectified in the value of a product is in no way distinguished from the labour objectified in the value of a different product . This inversion ( Verkehrung) by which the sensibly-concrete counts only as the form of appearance of the abstractly general and not, on the contrary, the abstractly general as property of the concrete, characterises the expression of value . At the same time, it makes understanding it difficult . If I say : Roman Law and German Law are both laws, that is obvious . But if I say : Law (DasRecht), this abstraction (Abstraktum) realises itself in Roman Law and in German Law, in these concrete laws, the interconnection becomes mystical . -y) Third peculiarity of the equivalent-form : private labour becomes the form of its opposite, labour in immediately social form . Products of labour would not become commodities, were they not products of separate private labours carried on independently of one another . The social interconnection of these private labours exists materially, insofar as they are members of a naturally evolved social division of labour and hence, through their products, satisfy wants of different kinds, in the totality (Cesamtheit) of which the similarly naturally evolved system of social wants (naturwiichsiges System der gesellschaftli( lien Bediirfmsse) consists . This material social interconnection of private labours carried on independently of one another is however only mediated and hence is realised only through the exchange of their products . The product of private labour hence only has social form insofar as it has value-form and hence the form of exchangeability with other products of labour . It has immediately social form insofar as its own bodily or natural form is at the same time the form of its exchangeability with other commodities or counts as value-form for other commodities (anderer Ware) . However, as we have seen, this only takes place for a product of labour when, through the value relation of other commodities to it . it is in equivalent-form or, with respect to other commodities, plays the role of equivalent . The equivalent has immediately social form insofar as it has the form of immediate exchangeability with other commodities, and it has this form of immediate exchangeability insofar as it counts for other commodities as the body of value, hence as equal (als Gleiches) . Therefore the definite useful labour i e . as labour contained in it also counts as labour in immediately social form, . which possesses the form of equality with the labour contained in other commodities A definite, concrete labour like the labour of tailoring can only possess the form of equality with the labour of a different type contained in a commodity of a different kind, e .g . the linen, insofar as its definite form counts as



THE VALUE-FORM

141

the expression of something which really constitutes the equality of labours of different sorts or what is equal in those labours . But they are only equal insofar as they are human labour as such, abstract human labour, i e . expenditure of human labour-power . Thus, as has already been shown, because the definite concrete labour contained in the equivalent counts as the definite form of realisation or form of appearance of abstract human labour, it possesses the form of equality with other labour, and hence, although it is private labour, like all other labour which produces commodities, it is nevertheless labour in immediately social form . Precisely because of this it is represented in a product that is immediately exchangeable with other commodities . The last two peculiarities of the equivalent-form set out above become still more comprehensible when we recur to the great theorist (Forscher) who for the first time analysed the value-form, like so many forms of thought, forms of society and forms of nature, and for the most part more happily than his modern successors . I mean Aristotle . Aristotle clearly formulates first of all the fact that the money-form of the commodity is only the further developed shape (Gestalt) of the simple value-form, i .e . of the expression of value of a commodity in any other commodity, for he says : "5 beds = 1 house" ("KX&at nt:vre avri oixtac") does not differ from "5 beds = such and such an amount of money ("KXWat yr b,vr . . . bbou a nEVTe K Xwat") He sees further that the value-relation, in which this expression of value hides, determines, for its part, the fact that the house is qualitatively equated with the bed and that these sensibly different things would not be able to be related to one another as commensurable magnitudes without such essential equality . "Exchange", he says, "cannot take place without equality, but equality cannot occur without commensurability" .

it

( " OUT ' 10671tc pti oihn)c ovpperp(ac") But at this he pulls up short and ceases the further analysis of the value-form . "But 'it is in truth impossible ("r>2 pev oW hXs t9eia (MtivaroV") that things of such different sorts should be commensurable", i .e . qualitatively equal This equalisation can only be something which is alien to the true nature of things, and therefore only a "makeshift for practical purposes" . Aristotle thus tells us himself just where his further analysis suffers shipwreck, namely, on the lack of the concept of value . What is that which is equal, i .e . the common substance, which the house represents for the bed in the expression of the value of the bed? Such a thing "cannot in truth exist", says Aristotle . Why? With respect to the bed the house represents something which is equal (stellt . ein Gleiches vor) insofar as it represents what in both, the bed and the house, is really equal . And that is - human labour . But the fact that in the form of commodity-values all labours are expressed as equal human labour and hence as counting equally (als gleichgeltend) could not be read out of the value-form of commodities by Aristotle, because Greek society rested on slave labour and hence had the inequality of people and their labours as a natural basis . The -secret of the expression of value, the equality of all labours and the fact that all labours count equally because and insofar as they are human labour as such can only be deciphered when the concept of human equality



142

CAPITAL & CLASS

already possesses the fixity of a popular prejudice . But that it only possible in a society in which the commodity-form is the general form of the product of labour and thus also the relation of people to one another as possessors of commodities is the ruling social relation . The genius of Aristotle shines precisely in the fact that he discovers in the expression of value of commodities a relation of equality . Only the historical limit of the society in which he lived prevents him from finding out what, "in truth", this relation of equality consists in .

s) fourth peculiarity of the equivalent form : the fetishism of the commodity-form is more striking in the equivalent-form than in the relative value-form . The fact that products of labour, such useful things as coat, linen, wheat, iron, etc . are values, definite magnitudes of value and in general commodities, are properties which naturally pertain to them only in our practical interrelations (in unsrem Verkehr) and not by nature like, for example, the property of being heavy or being warming or nourishing . But within our practical interrelations, these things relate to one another as commodities . The are values, they are measurable as magnitudes of value, and their common property of being values puts them into a value-relation to one another . Now the fact that, e .g ., 20 yards of linen = 1 coat or 20 yards of linen are worth I coat only expresses the fact that 1 . the different . types of labour necessary for the production of these things count equally (gleichgelten) as human labour ; 2 . the fact that the quantity of labour expended in their production is measured according to definite social laws; and 3 . that tailors and weavers enter into a definite social relation of production . It is a definite social relation of the producers in which they equate (gleichsetzen) their different types of labour as human labour . It is not less a definite social relation of producers, in which they measure the magnitude of their labours by the duration of expenditure of human labour-power . But within our practical interrelations these social characters of their own labours appear to them as social properties pertaining to them by nature, as objective determinations (gegenstAndliche Bestimmungen) of the products of labour themselves, the equality of human labours as a value-property of the products of labour, the measure of the labour by the socially necessary labour-time as the magnitude of value of the products of labour, and finally the social relations of the producers through their labours appear as a value-relation or social relation of these things, the products of labour . Precisely because of this the products of labour appear to them as commodities, sensible-supersensible (sinnlich iibersinnliche) or social things . Thus the impression on the optic nerve brought about by the light (Lichteindruck auf den Sehnerv) from something is represented, not as a subjective stimulation of the optic nerve itself, but as the objective form of a thing outside the eye . But in the case of seeing, light from a thing, from the external object, is in fact thrown upon another thing, the eye . It is a physical relation between physical things . As opposed to that the commodity-form and the value-relation of products of labour have absolutely nothing to do with their physical nature and the relations between things which spring from this . It is only the definite social relation of people (der Menschen) itself which here takes on for them the phantasmagoric form of a relation of things . Hence in order to find an analogy for this we must take flight into the cloudy region of the religious world . Here the products of the human head appear as independent figures (Gestalten) endowed with a life of their own and standing



THE VALUE-FORM

143

in a relation to one another and to people . So it is in the world of commodities with the products of the human hand . This I call the fetishism which clings to the products of labour as soon as they are produced as commodities and which is therefore inseparable from commodity-production . Now this fetish-character emerges more strikingly in the equivalent-form than in the relative value-form . The relative value-form of a commodity is mediated, namely by its relation to other commodities . Through this value-form the value of the commodity is expressed as something completely distinct from its own sensible existence . At the same time it is inherent in this that existence as value (Wertsein) is a relation which is alien to the thing itself and hence that its value-relation to another thing can only be the form of appearance of a social relation hidden behind it . Conversely with the equivalent-form . It consists precisely in the fact c that the bodily or natural form of a commodity counts immediately as the social form, as the value-form for other commodities . Therefore, within our practical interrelations, to possess the equivalent-form appears as the social natural property (gesellschaftliche Natureigenschaft) of a thing, as a property pertaining to it by nature, so that hence it appears to be immediately exchangeable with other things just as it exists for the senses (so wie es sinnlich da ist) . But because within the value-expression of commodity A the equivalent-form pertains by nature to the commodity B it seems also to belong to the latter by nature outside of this relation . Hence, for example, the riddle Was Ratselhafte) of gold, that seems to possess, by nature, apart from its other natural properties, its colour, its specific weight, its non-oxydizibility in air, etc ., also the equivalent-form, or the social quality of being immediately exchangeable with all other commodities . §4 . As soon as value appears independently it has the form of exchange-value . The expression of value has two poles, relative value-form and equivalentform . To start with, what concerns the commodity functioning as equivalent is that it counts for other commodities as the shape of value (Wertgestalt), body in immediately exchangeable form - exchange-value . But the commodity whose value is expressed relatively, possesses the form of exchange-value in that 1 . its existence as value is revealed by the exchangeability of the body of another commodity with it, 2 . its magnitude of value is expressed through the proportion in which the other commodity is exchangeable with it . - The exchange-value is hence the independent form of appearance of commodity-value . §5. The simple value-form of the commodity is the simple form of appearance of the opposites, use-value and exchange-value contained within it . In the relation of value of the linen to the coat the natural form (Naturalform) of the linen counts only as the shape (als Gestalt) of use-value, the natural form of the coat only as value-form (Wertform) or shape (Gestalt) of exchange-value, The inner opposition between use-value and value (Gebrauchswert and Wert) contained in a commodity is thus represented by an external opposition, i .e . the relation of two commodities, of which the one counts immediately only as use-value, the other immediately only as exchange-value, or in which the two opposing determinations, use-value and exchange-value, are distributed in a polar manner among the commodities. - If I say: As a commodity the linen is use-value



144

CAPITAL & CLASS

and exchange-value, this is my judgement about the nature of the commodity gained by analysis . As opposed to this, in the expression 20 yards of linen = 1 coat or 20 yards of linen are worth 1 coat the linen itself says that it 1 . is a use-value (linen), 2 is an exchange-value distinct from that (something equal to the coat) and 3 . is the unity of these two differences, and thus is a commodity . §6 . The simple value-form of the commodity is the simple commodity-form of the product of labour . The product of labour in its natural form brings with it intp the world the form of a use-value . Therefore it requires further only the value-form in order for it to possess the commodity-form, i .e . for it to appear as a unity of the opposites use-value and exchange-value . The development of the value-form is hence identical with the development of the commodity-form . §7 . Relation of the commodity-form and the money-form . If we replace 20 yards of linen = I coat or 20 yards of linen are worth 1 coat by the form 20 yards of linen = 2 Pounds Sterling or 20 yards of linen are worth 2 Pounds Sterling then it becomes obvious at first glance that the money-form is nothing but the further development of the simple value-form of the commodity, and therefore of the simple commodity-form of the labour-product . Because the money-form is only the developed commodity-form it obviously springs from the simple comrnodit y-form Hence as soon as the latter is undcsrstood it only remains to consider the series of metamorphoses which the simple commodity form 20 yards of linen = I coat must run through in order to take on the shape . (Gestalt annehmen) 20 yards of linen = 2 Pounds Sterling . Simple relative value-form and singular equivalent-form . The expression of value in the coat gives the linen a value-form by virtue of which it is distinguished simply as value from itself as use-value . This form also puts it only in relation to the coat, i .e . to some single type of commodity different from itself . But as value it is the same as all other commodities . Its value-form must hence also be a form which puts it into a relation of qualitative equality and quantitative proportionality to all other commodities . To the simple relative value-form of a commodity corresponds the singular equivalent-form of another commodity Or the commodity, in which value is expressed, functions here only as singular equivalent Thus the coat in the relative expression of value of linen possesses only the equivalent-form or the form of immediate exchangeability with relation to this single type of commodity, linen .

ga .

§9 Transition from the simple value-form to the expanded value-form . The simple value-form requires (bedingt) the value of one commodity to be expressed in onlyone commodity of another sort, though it does not matter which . It is therefore just as much a simple relative expression of value of the linen whether its value is expressed in iron or in wheat, etc ., or when it is expressed in the commodity-type coat . Thus according to whether it enters into a value-relation with this or that other type of commodity there arise different simple relative expressions of value of the linen . There exists the possibility that it has (Der Maglichkeit na( 11 hat) just as many different simple expressions of value as there



THE VALUE-FORM

145

are different sorts of commodities . In fact, therefore, its complete relative expression of value consists not in an isolated simple relative expression of value but in the sum of its simple relative expressions of value . Thus we obtain :

It . TOTAL OR EXPANDED VALUE-FORM 20 yards of linen = 1 coat or = 10 pounds of tea or = 40 pounds of coffee or I quarter of wheat or = 2 ounces of gold or = 'h ton of iron or = etc . §1 . Endlessness of the series . This series of simple relative expressions of value is in its nature constantly extendible or never concludes . For there constantly occur new types of commodities and each new type of commodity forms the material of a new expression of value . S2. The expanded relative value-form . The value of a commodity . e . g . linen, is now represented in all other elements of the world of commodities . The body of each other commodity becomes the mirror of the value of the linen . Thus only now does this value itself appear truly as a jelly of undifferentiated human labour . For the labour which constitutes the value of the linen is now expressly represented as labour which counts equally with any other human labour whatever natural form at all it possesses and hence whether it is objectified in coat or wheat or iron or gold, etc . Hence by virtue of its value-form the linen now stands also in a social relation no longer to only a single other type of commodity, but to the world of commodities . As a commodity it is a citizen of this world . At the same time there is inherent in the endless series of its expressions the fact that the value of commodities is irrelevant with regard to each particular form of use-value in which it appears . §3 . The particular equivalent-form . Each commodity, coat, tea, wheat, iron, etc ., counts in the expression of value of linen as equivalent and hence as a body of value . The definite natural form of each of these commodities is now a particular equivalent form beside many others . Similarly the manifold definite, concrete, useful types of labour contained in the different bodies of commodities now count as similarly many particular forms of realisation or appearance of human labour as such . §4. Deficiencies of the expanded or total value-form . Firstly, the relative expression of value of linen is incomplete (unfertig) because the series which represents it never concludes . Secondly, it consists of a motley mosaic of different (verschiedenartige) expressions of value . Finally, if as must happen, the relative value of each commodity is expressed in this expanded form, the relative value-form of each commodity is an endless series of expressions of value, different from the relative value-form of each other commodity . - The deficiencies of the expanded relative value-form are reflected in the equivalentform corresponding to it . Since the natural form of each single type of commodity is here a particular equivalent-form beside innumerable other particular equivalent-

4



146

CAPITAL & CLASS

forms there exist only limited equivalent-forms of which each excludes the other . Similarly the definite, concrete, useful type of labour contained in each particular commodity-equivalent is only a particular and thus not exhaustive form of appearance of human labour . The latter certainly possesses its complete or total form of appearance in the complete range (Cesamtumkreis) of those particular forms of appearance . But thus it possesses no unified form of appearance.

§5 . Transition from the total value-form to the general value-form . The total or expanded relative value-form consists however only in a sum of simple relative expressions of value or equations of the first form, like 20 yards of linen = 1 coat 20 yards of linen = 10 pounds of tea, etc . But each of these equations contains, conversely, also the identical equation 1 coat = 20 yards of linen 10 pounds of tea = 20 yards of linen, etc . In fact : If the possessor of the linen exchanges his commodity with many other commodities and hence expresses the value of his commodity in a series of other commodities, then necessarily the many other possessors of commodities must also exchange their commodities with linen and hence express the values of their different commodities in the same third commodity, the linen . - Therefore, if we reverse the series 20 yards of linen = I coat or = 10 pounds of tea or = etc ., i .e . if we express the converse relation which is already contained "in itself" (an sich), implicitly in the series, we obtain : III . GENERAL VALUE-FORM 1 coat 10pounds of tea 40 pounds of coffee I quarter of wheat 2 ounces of gold '/2 ton of iron x commodity A etc ., commodity

= 1

20 yards of linen

§1 . The changed shape (Gestalt) of the relative value-form . The relative value-form now possesses a completely changed shape . All commodities express their value 1 . simply, namely in the body of one other single commodity, 2 . in a unified manner, i .e . in the same other body of a commodity . Iheir value-form is simple and common, i .e . general . The linen now counts for the bodies of all the different sorts of commodities as their common and general shape of value . The value-form of a commodity, i .e . the expression of its value in linen, now distinguishes the commodity not only as value from its own existence (Dasein) as a useful object, i .e . from its own natural form, but at the same time relates it as value to all other commodities, to all commodities as equal to it (als ihresgleichen) . Hence in this value-form it possesses general social form . Only through this general character does the value-form correspond to the concept of value (entspricht . dem Wertbegriff) . The Value-form had to be a



THE VALUE-FORM

147

form in which commodities appear for one another as a mere jelly of undifferentiated, homogeneous human labour, i .e . as expressions in the form of things of the same labour-substance . This is now attained . For they are all material expressions (Materiatur) of the same labour, of the labour contained in the linen or as the same material expression of labour, namely as linen . Thus they are qualitatively equated. At the same tine they are quantitatively compared or represented as definite magnitudes of value for one another (fOr ein ander dargestellt) . I .e 10 pounds of tea = 20 yards of linen and 40 pounds of coffee = 20 yards of linen . Therefore 10 pounds of tea = 40 pounds of coffee . Or in 1 pound of coffee there hides only a quarter as much of the substance of value, labour, as in 1 pound of tea . §2 . The changed shape of the equivalent-form . The particular equivalent-form is now developed further to the general equivalent-form . Or the commodity in equivalent-form is now - general equivalent . - By counting as the form of value of all other commodities the natural form of the body of the commodity linen is the form of its property of counting equally (Gleichg(iltigkeit) or immediate exchangeability with all elements of the world of commodities . Its natural form is therefore at the same time its general social form . For all other commodities, although they are the products of the most different sorts of labour, the linen counts as the form of appearance of the labours contained in them, hence as the embodiment of homogeneous undifferentiated human labour . Weaving, this particular concrete type of labour counts now by virtue of the value-relation of the world of commodities to linen as the general and immediately exhaustive form of realisation of abstract human labour, i .e . of the expenditure of human labour-power as such . For precisely this reason the private labour contained in linen also counts as labour which is immediately in general social form or in the form of equality with all other labours . If a commodity thus possesses the general equivalent-form or functions as general equivalent, its natural or bodily form counts as the visible incarnation, the general social chrysalis of all human labour . §3. Corresponding development (Gleichmassiges Entwick lungs verhiiltnis) between relative value-form and equivalent-form . To the degree of development of the relative value-form there corresponds the degree of development of the equivalent-form . But, and this is to be noted carefully, the development of the equivalent-form is only the expression and result of the development of the relative value-form . The initiative proceeds from the latter . The simple relative value-form expresses the value of a commodity only in a single other type of commodity, no matter in which . The commodity thus only acquires value-form inrlistinction from its own use-value form or natural form . Its equivalent also acquires only the singular equivalent-form . The expanded relative value-form expresses the value of a commodity in all other commodities . Hence the latter acquire the form of many particular equivalents or particular equivalentform . Finally, the world of commodities gives itself a unified, general, relative value-form, by excluding from itself one single type of commodity in which all other commodities express their value in common . Thereby the excluded



148

CAPITAL & CLASS

commodity becomes general equivalent or the equivalent-form becomes the general equivalent-form . §4 . Development of the polarity of relative value-form and equivalent-form . The polar opposition or the inseparable interconnection (Zusammengehorigkeit) and at the same time constant exclusion of relative value-form and equivalent-form implies 1 . that a commodity cannot be in one form without other commodities being in the opposed form, and 2 . that as soon as a commodity is in the one form it cannot at the same time, within the same expression of value, be in the other form . Now this polar opposition of the two moments (Momente) of the expression of value develops and hardens (entwickelt and verhiirtet sich) in the same measure as the value-form as such is developed or built up (ausgebildet) . In form I the two forms already exclude one another, but only formally (formell) . According to whether the same equation is read forwards or backwards, each of the two commodities in the extreme positions (Warenextreme), like linen and coat, are similarly now in the relative value-form, now in the equivalentform . At this point it still takes some effort to hold fast to the polar opposition . I n form II only one type of commodity at a time can totally expand its relative value, i .e . it itself possesses expanded relative value-form only because and insofar as all other commodities are in the equivalent-form with regard to it . Finally, in form Ill the world of commodities possesses general social relative value-form only because and insofar as all the commodities belonging to it are excluded from the equivalent-form or the form of immediate exchangeability . Conversely, the commodity which is in the general equivalent form or figures as general equivalent is excluded from the unified and hence general relative value-form of the world of commodities . If the linen, i .e . any commodity in general equivalent-form, were also to participate at the same time in the general relative value-form, then it would hsve had to have been related to itself as equivalent . We then obtain : 20 yards of linen = 20 yards of linen, a tautology in which neither value nor magnitude of value is expressed . In order to express the relative value of the general equivalent, we must reverse form Ill . It does not possess any relative value-form in common with other commodities ; rather, its value expresses itself relatively in the endless series of the bodies of all other commodities . Thus the expanded relative value-form or form 11 now appears as the specific relative value-form of the commodity which plays the role of the general equivalent . §5 . Transition from the general value-form to the money-form . The general equivalent-form is a form of value as such . It can therefore pertain to any commodity, but always only by exclusion from all other commodities . However the mere distinction in form between form II and form Ill already points to something peculiar, which does not distinguish forms 1 and II . This is that in the expanded value-lorm (form II) one commodity excludes all the others in order to express its own value in them . This exclusion can be a purely subjective process, e .g a process traced out by the possessor of linen (z .fi ein Prozess des Leinwandbesitzers) who assesses the value of his own commodity in many other commodities As opposed to this a commodity is in general equivalent-form (form III) only because and insofar as it itself is excluded as equivalent by all other



THE VALUE-FORM

149

commodities . The exclusion is here an objective (objektiver) process independent of the excluded commodity . Hence in the historical development of the valueform the general equivalent-form may pertain now to this now to that commodity in turn . But a commodity never functions in fact (wirklich) as general equivalent except insofar as its exclusion and hence its equivalent-form is a result of an objective social process . The general value-form is the developed value-form and hence the developed commodity-form . The materially quite different products of labour cannot possess the finished commodity-form, and hence also cannot function in the process of exchange as a commodity, without being represented as expressions in the form of things (dingliche AusdrOcke) of the same equal human labour . That means that in order to acquire the finished commodity-form they must acquire the unified general relative value-form . But they can only acquire this unified relative value-form by excluding from its own series a definite type of commodity as general equivalent . And it is only from the moment when this exclusion is definitely limited to a specific type of commodity that the unified relative value-form has won objective stability and general social validity . Now the specific type of commodity with whose natural form the equivalent form coalesces (verwachst) socially becomes the money-commodity or functions as money . Its specific social function and hence its social monopoly becomes the playing of the role of general equivalent within the world of commodities . A definite commodity, gold, has historically conquered this privileged place amongst the commodities which figure in form ll as particular equivalents of linen and in form Ill express commonly (gemeinsam ausdriicken) their relative value in linen . Hence, if we put in form III the commodity gold in the place of the commodity linen, we obtain :

IV : THE MONEY-FORM 20 yards of linen I coat 10 pounds of tea 40 pounds of coffee 1 quarter of wheat 'I, ton of iron x commodity A etc . commodity

2 ounces of gold =1

§1 . Difference between the transition from the general value-form to the moneyform and the earlier developmental transitions . Essential changes . occur at the transition from form I to form II and from form II to form III . As opposed to this, form IV is distinguished from form III by nothing except the fact that now gold instead of linen possesses the general equivalentform . Gold remains in form IV what linen was in form III - general equivalent . The progress consists only in the fact that the form of immediate general exchangeability or the general equivalent-form has now, by virtue of social custom, definitively coalesced with the specific natural form of the body of the



CAPITAL & CLASS

150

commodity gold . Cold confronts the other commodities as money only because it already confronted them before as a commodity . Like all other commodities it also functions as equivalent, either as singular equivalent in isolated acts of exchange, or as particular equivalent beside other commodity-equivalents . Little by little it functioned in narrower or wider circles as general equivalent . Once it has conquered the monopoly of this position in the expression of value of the world of commodities it becomes the money-commodity (wird es Celdware), and from the moment when it has already become the money-commodity, form IV distinguishes itself from form Ill, or the general form of value is transformed into the money-form . §2 . Transformation (Verwandlung) of the general relative value-form into the price-form . The simple relative expression of value of a commodity, e .g . linen, in the commodity which is already functioning as the money-commodity, e .g . gold, is the price-form . The price-form of linen is hence : 20 yards of linen = 2 ounces of gold

or, when 2 Pounds Sterling is the currency name for 2 ounces of gold, 20 yards of linen = 2 Pounds Sterling . §3 . The simple commodity-form is the secret of the money-form . We see that the money-form proper offers in itself no difficulty at all . Once we have seen through the general equivalent-form it does not require the least brain-fag to understand that this equivalent-form fastens on to (festhaftet) a specific type of commodity like gold, and still less insofar as the general

equivalent-form in its very nature requires the social exclusion of a definite commodity by all other commodities . It is now only a matter of this exclusion winning an objectively (objektiv) social consistency and general validity, and hence does not concern different commodities in turn nor possess a merely local reach (Tragweite) in only particular areas of the world of commodities . The difficulty in the concept of the money-form is limited to comprehending the general equivalent-form as such, form Ill . However form Ill in turn (riickbeziiglich) resolves itself into form II, and the constitutive element of form II is form 1 : 20

yards of linen -

I

coat or x commodity A = y commodity B . Now if we know

what use-value and exchange-value are, then we find that this form I is the simplest, most undeveloped manner of representing any product of labour, like

linen for example, as a commodity, i .e . as a unity of the opposites use-value

and

exchange-value . At the same time we easily find the series of metamorphoses which the simple commodity-form 20 yards of linen = 1 coat must run through in

Order to win its finished shape 20 yards of money-form .

linen

= 2 Pounds Sterling . i .e . the

REVIEW ARTICLE MODE OF PRODUCTION-OUT?

PRE-CAPITALIST MODES OF PRODUCTION By Barry Mindness and Paul Hirst Routledge (London, 1975) pp . 354, E7 .50 (hardback),

E3 .75 (paperback) .

MODE OF PRODUCTION AND SOCIAL FORMATION By Barry Hindess and Paul Hirst Macmillan (London, 1977) pp . 82, E5 .95 (hardback) Reviewed by Tim Putnam The complex of concepts surrounding the notion of 'mode of production' was one of the basic elements of classical Marxism . When Marx and Engels developed a materialist theory of history as a succession of distinct forms of society whose hidden mainspring was to be found in the contradictory unity of the (technical) forces and (social) relations of each, they were not engaged in a speculative or antiquarian exercise . They were searching for a materialist theory of politics which would provide a better critique of liberal and conservative nostrums than either dialectical method or humanist idealism could, and guide them in developing an effective political practice . To achieve this they had to go beyond any sort of philosophy and "appropriate the concrete in thought :" they had to attempt to create a science of revolution . To know what was in such a way as to understand what it could, and could not, become was the elusive but essential basis to any successful political strategy . The "capitalist mode of production" became the chief theoretical object of this investigation . Re-thought in terms of this object, Classical Political Economy yielded up its concealed distinction between labour and labour power and a new anatomy of society became possible . Although this anatomy was never fully developed in classical Marxism, it was capable of being extended to provide the Instrument of political analysis that Marx and Engels had sought . Lenin, to name but one, did more than use the notion of mode of production in a polemic against the populists In The Development of Capitalism in Russia . It also informed his theses on the appropriate form of Social Democratic party organisation for the Russian Empire, the understanding of class alliances which was so crucial to



152

CAPITAL & CLASS

Bolshevik strategy, the conception of Imperialism which revealed Russia's position in the World War . and his exceptional insight into the order of contradictions in a political crisis which made the development of the revolytion possible . And it remains true today that, for all this, a critique of Lenin can be mounted on the weakness of his grasp of the concept of the capitalist mode of production : by underestimating the unity of the labour process with capitalist relations of production, he too readily concluded that existing technology, extracted from its 'anarchic" conditions of production, could be a building block of socialism . (Panzieri, 1976) In this way the notion of mode of production has proven one of the most vigorous and fruitful of all those developed by Marx and Engels . Barry Hindess and Paul Hirst however, in their recent essay Mode of Production and Social Formation, claim that the concept of mode of production has hampered theoretical development and is at best irrelevant to politics . They make this claim largely on the basis of their own attempts to work with the concept in an earlier book, Pre-capitalist Modes of Production, in which they examined whether the various concepts of pre-capitalist modes were well formed in terms of a general definition of "mode of production" . This definition of a mode as an "articulated combination of forces and relations of production under the domination of the relations of production," they borrowed from the work of Althusser and Balibar . Significantly, they saw themselves as following Althusser in an attempt to develop Marxist theory _in a non-empiricist way, denying that general concepts were an abstraction of essential features from a pre-given reality" Drawing a distinction between the "object of knowledge" and the "real object", they emphasised that "facts" in knowledge did not have some specially privileged connection with the "real world" . They emphasised the way in which facts were produced and used within definite theoretical problematics, and saw their own work on the theory of modes of production as a means of developing knowledge by more rigorously defined general concepts . Gradually, however, Hindess and Hirst became dissatisfied with their attempt to elaborate theory from definitions . First, they changed the definition of mode of production, denying that the relations of production need be articulated with particular labour processes, or that it was essential to a mode of production that it produce the conditions of its own reproduction . By these changes they hoped to remove from the concept what they regared as arbitrary and misleading assumptions : the necessary unity of the totality of social relationships and the idea of necessary self-reproduction . Eventually, they have concluded that both these assumptions are intrinsic to the general concept of mode of production, and that therefore the whole notion must be rejected as a form of "rationalism" . Instead they argue that "it is necessary to develop concepts of relations of production and their conditions of existence, further specifying these concepts by developing the forms in which these conditions are provided in definite social formations ." (Hindess and I first . 1977, p . b) Every general notion of form or of causality is to be rejected : "We have no doubt that we shall be told by the unreconstructed defenders of 'orthodoxy' that to abandon the determination of the economic (in But either the first or the last instance) is to abandon Marxism . That may be Marx and Engels, with varying success, and virtually every other Marxist thinker have been in retreat from the consequences of economism . Where these consequences have not been abandoned in political practice . the results have 11



REVIEW ARTICLE

153

generally been disastrous ." (Hindess and Hirst, 1977, p . 5) "Marxist orthodoxy" and "economism" here may be polemically convenient straw men, but the authors are serious about their attack on the concept of mode of production . How is this "sweeping revision" justified? Hindess and Hirst do not claim that the assumptions implied in the concept of mode of production are wrong in fact . To make that claim would commit them to the idea that there is a privileged sort of knowledge which directly represents the world and against which theory may be tested . Hindess and Hirst follow Althusser and the Reading Capital school in rejecting this conception of knowledge : it is either naive in not recognising that "facts" are produced within definite theoretical problematics, or perverse in its attempt to restrict social theory to a rationalisation of appearances as they are given in experience . In their critique of "Althusserian rationalism", the authors do not want to retreat into "empiricism ." Neither may they state general formal criticisms of the inadequacy of the concept of mode of production as knowledge, for this would be to perpetrate their own "rationalism", substituting one set of ultimately unjustifiable and therefore arbitrary criteria of validity for another . Instead, Hindess and Hirst repudiate the notion of knowledge as the appropriation of the concrete in thought . Both empiricist and rationalist epistemologies are seen as closing the development of theory by setting up a privileged level of facts or concepts held to directly reflect or give the essence of the real . No guarantee of this privilege can be given within knowledge, and it can only be the source of a spurious and misplaced certainty . Instead of a general problem of knowledge, Hindess and Hirst see concepts formed and deployed in the definition and solution of problems posed by political practice . Theoretical discourses have definite orders of concepts which are reconstructed without limit in relation to the problems posed, without recourse to any general basis for appropriating the real . Though the language in which this position is expressed may seem awkward and unfamiliar, the basic idea is the same as that employed in the argument against the "reification" of any concept . The convolutions result from the attempt to consistently apply this critique so that the critic is not exposed as resting his case on another "reified" concept or unargued presumption of a privileged ground in reality . Ultimately, Hindess and Hirst's ground is the constantly shifting one of political practice . To drive home their attack on the concept of mode of production they need to show that it has been accorded a status in Marxist theory which has hindered the posing and/or resolution of crucial political problems . When it comes down to cases, though, the authors are not very convincing about the political "impertinence" of the concept of mode of production . Evidently they believe that it is an epistemological concept and that such concepts have serious political liabilities . But the only general argument for this position is a rather formal one, as we have seen, about the "closure" of discourse, The reader may suspect that an avowedly "materialist" discourse ought to come up against limits at some point as a sign of its difference from fantasy . He might also wonder whether the notion of an independently existing material reality, infinite but tractable to knowledge, has really been such an embarrassment to the followers of Marx . In any case, Mode of Production and Social Formation does not give an account of the political problems to which the notion of mode of production was originally thought pertinent, or assess its contribution to their resolution . This



154

CAPITAL &CLASS

might be thought an unkind criticism of an essay which self-consciously restricts itself to a critique of a definition formulated only ten years ago . But it is assumed by the authors that the Althusserian formula represents the nub of the concept of mode of production within Marxism, and that their own avowedly rationalistic attempt to elaborate knowledge from definitions is the only serious way that general concepts can be employed . (In this way they show just that excess of philosophical confidence and lack of historical and political sensitivity that one would expect from an "epistemologist .") While we are told, in a formal way, of the conceptual possibilities which the authors denied themselves by their own use of the general concept of mode of production, we are not shown that others' use of the concept has proved an obstacle to the posing or solving of problems thrown up by politics . Thus, although we have escaped from epistemology, we are still in the grip of a rampant meta-theory capable of laying low whole histories of concepts and their problems in order to clear space for its "unclosed discourse ." That this style of reflection on the concept of mode of production has, on balance, been theoretically destructive and politically disorienting, can be seen if we review the progress of their work from its Althusserian starting point . STARTING WITH ALTHUSSER It seems at first surprising that Hindess and Hirst's radical nihilism could be in any way descended from the Reading Capital school of Althussar, Balibar, Ranciere, et . al . In the first place it was a central concern of the school, and of Althusser in particular, to re-establish and redefine the claim of classical Marxism to be a science of social revolution . Though resolutely anti-empiricist in rejecting any conception of science as a mere reconciliation of given facts, Althusser took the "appropriation of the real in thought" as a basic task . More important for our purpose, the school's investigations into the development of theoretical problematics in Marxism highlighted the complex of concepts surrounding the notion of mode of production and did much to stimulate their critical use . In "Contradiction and Overdetermination" and "On the Materialist Dialectic", which appeared in La Pensee in 1962-3, Althusser (rightly, to my mind) recovered, for theoretical appraisal, the sense in which the materialist dialectic, as politically employed by Lenin and Mao, was actually the practical grasp of the theorisation of the mode of production . the problem of the "hierarchy" of contradictions and their aspects in a political conjuncture was also the problem of the relation between the contradictory unity of forces and relations of production and the complex of social practices For Althusser, "the complex whole has the unity of a structure articulated in dominance ." That is, the "hierarchy" of contradictions was not a question of accident but depended upon, and revealed, the hidden relation of apparently autonomous political, ideological and economic forms of activity . Althusser insisted on the importance of Marxism not slipping back "into a type of thought for which only one model of unity exists : the unity of a substance, of an essence or of an act ." The possibility of grasping a complexly-structurallydetermined form of unity was opened through the development of the theorisation of modes of production . Consequently, the rectification of the concept of mode of production came to have great theoretical importance for the school, and over a hundred pages of



REVIEW ARTICLE

1 55

Reading Capital are devoted exclusively to it . In this section Etienne Italibar argues

that Marx . in an attempt to reformulate the basis of the interrelation of different social activities in the periodisation of history, developed the concept of a mode of production as an "articulated combination of forces and relations of production under the dominance of the relations of production ." (Balibar, 1970, p 225) In this combination the "technical" forces and "social" relations are not simple elements that are combined, like "electrification plus soviets" They are themselves relations of simple abstract elements : the labourers, the means of labour and the object of labour (together called the means of production), anti the non-labourers (if any) Every process of production is both an appropriation of nature in which these elements combine in a labour process, and a social control and distribution of the product (and of the means of production) among them This conception of a mode of production as a double relation of the same elements emphasises two points : first, that the "forces" of production are not a thing (technology) but a relation, a labour process, and secondly, that the social relations of production are a relation of effective control and possession of the productive process and not reducible to the legal institution of property . The phrase "articulated combination" emphasises that, as the two relations combine the same elements in the same productive process, there must he a strong sense in which the two relations correspond . In contradiction with Soviet Marxism . Balibar claimed that Marx contended that the social relations of production were dominant in this correspondence . Setting aside the famous passace in the 1857 Preface, Balibar pointed to Chapters 6-16 of Capital, I, where the duration and internal organisation of the labour process are shown being shaped by the requirements of capitalist social relations . Any purely technical determinism in which the forces of production act as an economic "base" and the relations of production as a kind of "superstructure" is also precluded by the distinction of the economic relation of possession from the legal relation of property The object, and result, of this analysis was to attack naive and dogmatic conceptions of the mode of production, and yield new lines of enquiry about the articulation of the forces and relations of production . Although this conception of a mode of production as a combination of elements generated politically pertinent insights, it was in itself clearly inadequate to the task of grasping in theory the political problem of the priority of contradictions . The impressive sounding phrase "articulated combination" only indicated the problem of the interrelation of the different ways in which the same elements are united in the process of social production . The sense in which these relations are articulated can never be brought out by a static comparison of forms or a taxonomy of "levels ." Recognising this deficiency, Balibar introduced the notion of reproduction . If the activities to be related cannot be reduced to one common basis, then the test of the autonomy of the different practices, the domination of certain ones over others, and the determination of the process of production in the last instance must be how adequately each practice can reproduce the conditions of its own existence . In a concrete investigation, examining the reproduction of the conditions of existence of spheres of activity is an extremely powerful instrument of analysis . Informing the work of Marxist anthropologists engaged in the analysis of noncapitalist social formations and their penetration by circuits of capital, reproduction



156

CAPITAL & CLASS

has been the means of producing concepts of modes of production in which the "economy' is not dominant as in capitalism, and strictly speaking does not exist as a distinct sphere of social activity . (Meillassoux, 1966, 1975 ; Rey, 1971 ; CoqueryViderovitch, 1975) . These concepts have been useful in the political analysis of the sorts of crises precipitated by the irruption of capitalist relations in such social formations, and in indicating blockages to the expanded reproduction of capital . They have also helped to clarify the distinction between the sense in which the "economic" (as the process of social production) was held by Marx to be determinant, in the "last instance", of the order and effectiveness of all social activities, and the sense in which the "economy" (as value production) was considered to be the dominant sphere in the capitalist mode of production . (Meillassoux 1972, Rey 1973) As the failure to grasp this distinction can lead directly to a form of "economism", the use of the notion of reproduction in the study of non-capitalist social formations has produced results of general political significance HOW TO BREAK WITH ALTHUSSER? How should we assess the contribution of Althusser and Balibar to the development of mode of production theory? As Andre Glucksmann pointed out in a review of the first edition of Reading Capital (Glucksmann, 1972) there is a tension between the comparative analysis of modes of production as recombinations of the same simple elements and the formation of the concept of a mode of production by investigating the conditions of reproduction of its constituent relations . How can the "economic relations" of different modes of production be thought of as a simple recombination of the same basic elements if each mode of production is discovered to have a differently defined economic sphere which occupies a different position in relation to the reproduction of the whole? Similarly, the problem of transition from one mode of production to another, in a concrete historical process, is compatible with the notion of . recombination but not with the notion of reproduction . Balibar, sensitive to this point, proposed "transitional" modes of production in which the forces and relations of production do not correspond . Because of this lack of correspondence, reproduction can only take place on a transformed basis . Balibar pointed to Chapters 14-15 of Capital, I as the example of such a transitional mode in the progress from the formal to the real subsumption of labour . On this reading"manufacture" is a transitional mode of production, as is petty commodity production, for it is only when capital can become embodied as systems of machinery in the stage of machinofacture that we can speak of capitalist production proper . This reading has the merit of drawing our attention to the sense in which the working class must become abstract labour. for capital in the labour process as well as in the "labour market," and it also serves to remind us that systems of machinery (along with money) were considered by Marx to he the two "adequate forms of capital ." But it evades the problem . How does one give an account of transition without either reducing all activities to one basis (as in evolutionary accounts), or simply interposing historical accident (as in history-book narrative)? Clearly Balibar s attempt to reconstruct the notion of mode of production is ultimately incoherent . More theoretical work needed to be done here . But the nature of that work



REVIEW ARTICLE

1 57

depended on your view of the role that general concepts played in theoretical development . If you held that general concepts had to give the form of the real in such a way that more specific concepts could logically he deduced from them . then the tension between recombination and reproduction was an unacceptable contradiction . As the notion of reproduction could riot he elaborated to include transition, it had to go . On the other hand, if you valued general concepts for their ability to generate new insights in concrete theoretical investigation, recombination and reproduction yielded something of value In the analysis of transition . investigating the conditions of reproduction was actually very useful, while only trivial insights were suggested by the notion of recombination In taking their departure from Althusser and Ralibar . Hindess and [first took the first road, in which the elaboration of systematic "knowledge" from rigorous definitions is all important . Had they taken the second, in which general concepts function as heuristics, they would have reached very different conclusions about the political pertinence of the concept of mode of production . Pre-capitalist Modes of Production is not seriously concerned with producing knowledge about non-capitalist social formations . Insofar as their inspection of the concepts of pre-capitalist modes of production has any political point, it is to produce a clarification of the general concept of mode of production and its use that will aid in forming a concept of capitalism dominated by finance capital and a more rigorous concept of socialism, two tasks considered too difficult to face head on . The procedure adopted throughout the book is to attempt the construction of concepts of various pre-capitalist modes following the criteria laid down in their general concept of a mode of production, as "an articulated combination of relations and forces of production structured by the dominance of the relations of production" . (Hindess and Hirst, 1975, p .9) The mode of appropriating surplus labour and the distribution of means of production corresponding to it must determine a definite set of labour processes, otherwise a concept of a mode of production cannot be formed . This approach is radically opposed to what they call "empirical generalisation," or the abstraction of salient characteristics from a study of a particular historically existing society . Thus they do not reject the concept of the Asiatic Mode of Production because it is a bad generalisation about Asia (as do Daniel Thorner, Eric Hobsbawm and Perry Anderson), but because the exaction of tribute, or "tax/rent", which they take as the social relations of production, do not determine definite forms of labour process . Tribute may be exacted from units of production which are organised quite independently of the tribute exacting class, or it may play a decisive part in the re-organisation of production, as in the large-scale irrigation works considered by some to characterise "Oriental Despotism ." A similar method is applied to the concepts of other modes of production . For example, the authors attack the widespread notion that social relations of production in feudalism are based upon extra-economic coercion because the producer is not separated from the means of production . They argue that while the right of the feudal lord to exclude the peasant from the land may have its origin in military power, it reproduces its effectiveness through the partition and repartition of the land by the lord . The system of feudal landed property controls the "size, character and reproduction of the units of production . (making) the reproduction of the means of production simultaneously a reproduction of the exploitative t



158

CAPITAL & CLASS

production relations (ensuring) the subsumption of the direct producer ." (Hindess and Hirst, 1975 p . 236) This conclusion, which sharply differentiates their definition of the feudal mode of production from those based on politico-legal compulsion, or on the manor as a unit of production, is clearly produced by the need to show that feudal rent determines specific labour processes and thus satisfies the conditions of a well-formed mode of production . Although these conclusions seem interesting, they are fairly arbitrary in character . Instead of "destroying" the concepts of the Asiatic Mode of Production, they might have developed out of it the concepts of two (or possibly more) distinct modes of production to comprehend the diversity of labour processes the original concept comprised . Their conception of the feudal mode of production would have been radically different had it included towns as an integral part of social reproduction (as does Perry Anderson, for example) . This arbitrariness arises because Hindess and Hirst must have some specific contents to work over with their general concept, but they have no means for selecting and appropriating this "raw material " Sometimes the authors select texts which commit them to generalisations from the basis of a particular social formation, as in the discussion of the Slave Mode of Production, where we are simply told : "We will consider two analyses of the system of slave production in the U .S .A ., both of which attempt to analyse the South's economy as a whole ." (Hindess and Hirst, 1975, p. 148) In the discussion of the feudal mode concrete studies which support their position on feudal landed property are used as supports, while others are criticised for inconsistency with the general concept, or (most regrettably) simply ignored . As omissions in an account are often harder to detect than spurious reasoning, the reader is bound to wish that the authors had not been so scornful of the "empiricist" obligation to cover thoroughly the ground they define as problematic . But as they are not really interested in the relevant material, or the problems which generated it, Marx's notes are worked over by the general formula and the content is surreptitiously elaborated with convenient concrete illustrations . Even Marx does not escape this cavalier treatment . Hindess and Hirst show no interest in the Lthnological Notebooks (Krader, 1972) in which he evaluates in detail the work of such nineteenth century students of "primitive societies" as Morgan and Maine . Yet Marx's concept of "primitive Communism" is given a privileged status in relation to the extensive literature by Marxist anthropologists on the "lineage mode of production ." Armed only with their general concept of a mode of production, Hindess and Hirst blithely intervene to assert that there are no classes and no exploitation in "lineage social formations," which are really a form of primitive Communism . Rey and others have argued in detail that there is an exploitative relationship in the sense that a collectivity of elders "controls a surplus product, the partial or total use of which is for the reproduction of the relations of dependence between the direct producers and this group ." (Rey, 1975, p .b0) tfindess and Hirst dismiss this as "making no distinction between the technical and social divisions of labour," and confusing exploiters with nonlabourers who "perform functions necessary to the reproduction of the conditions of production " These are not judgements which can be made without participating in the actual process of investigation concerned ; as they stand they amount to a forced reading of Rey in order to subsume his work under an only partially examined category of Marx's This sort of process does not produce politically



REVIEW ARTICLE

159

pertinent conclusions about the concepts of particular modes of production . However, because Pre-Capitalist Modes of Production is an exercise in meta-theory, its authors would not be particularly concerned about such shortcomings as these . In their eyes the significance of the book lies in its rejection of both aspects of Balibar's attempt to formalise the notion of mode of production : combination and reproduction . It is these points which they develop in Mode of Production and Social Formation into a critique of the rationalist use of general concepts and the rejection of "mode of production" as a theoretical category . It does not seem particularly important to them that the notions of combination and reproduction attempted to specify politically important theoretical problems and actually produced some interesting results . The notion of combination was rejected because it was part of a scheme to construct a General Theory of Modes of Production which was considered to be "historicist" and "evolutionist ." Taking History as an object of knowledge rather than the "current situation" led away from posing theoretical problems in relation to political practice towards vain attempts to recover an inaccessible past . This could only result in a rationalisation of representations of the past in terms of some common underlying basis or essential principle of development . As we have seen, there are dangers and limits in thinking of History as a succession of modes of production understood as the recombination of the same simple elements : the concept of "reproduction" was introduced to compensate for them . But modes of production were conceived by Marx in relation to each other not in order to build a History of the World, but to analyse important political problems . The concel5t of the Asiatic Mode, for example, was produced as a foil for Feudalism in the investigation of the conditions of existence for the emergence of Capitalism . This problem is dispersed by Hirst and Hindess with the General Theory of Modes of Production, and the concepts of the Asiatic Mode and the Feudal Mode lose their ground and take on an arbitrary character as a result . Instead of using the concept of mode of production to analyse the conditions of existence for the emergence of capitalism, or performing the theoretical labour of extracting it from the contexts in which it was developed to apply it elsewhere, Hindess and Hirst turn a metaphysical problem of "transition" against the concept of mode of production . The form of the problem is the classic philosophical paradox : how can Being explain Becoming? The practical effect of posing this problem is, initially, to cripple the concept of mode of production as a complexly structured unity by restricting it to the conditions of existence of the relations of production . The theoretical and political importance of these relations of production becomes unclear . Having done its work, the problem of "transition" is itself subjected to the same sort of analysis and is replaced by a sequence of "transitional conjunctures" in which "class struggle" intervenes with a powerful but indeterminate effectiveness . Finally, any alternation of forms of determination is condemned as arbitrary . The faults of a definition of a mode of production as an articulated combination of forces and relations of production which produces its own conditions of existence are used to reject the whole notion of mode of production and the problems which motivated it . In its place we are offered the possibility of elaborating non-epistemological forms of discourse, forming politically pertinent theoretical problems, and investigating the conditions of existence of relations of production . The first possibility may be impossible, and the second redundant ; the t



160

CAPITAL & CLASS

third possibility may be withdrawn . Until we have specified the "politically pertinent problems", what basis do we have for an interest in the social relations of production? Hindess and Hirst believe that they have achieved a critique of Althusserian rationalism without falling back into empiricism . What their "auto- critique" does not reveal, however, is that they chose to make a, particular rationalistic use of Althusserian concepts which they then problematised . Attempting to resolve this problem in a characteristically rationalist way, they withdrew to more and more general levels of meta-theory, cutting away more and more from under their feet, until they have to begin again to confront the world as pragmatists .

BIBLIOGRAPHY Althusser, L ., 1969, for Marx, Penguin, London . and Balibar, E ., 1970 Reading Capital, NLB, London' Anderson, P ., 1975a, Passages from Antiquity to Feudalism, NLB, London. 1975b, "Note B, The Asiatic Mode of Production," in Lineages of the Absolutist State, NLB, London . Clucksmann, A ., 1972, "A ventriloquist structuralism", New Left Review, 72 . Coquery-Viderovitch, C ., 1975, "An African Mode of Production," Critique of Anthropology 4-5 . Godelier, M . et . al ., 1969, Sur le mode de production asiatique, C .E .R .M . Paris . Hilton, R . Et . Al, 1975, The Transition from Feudalism to Capitalism, NLB, London . Hobsbawm, E ., 1976, "Feudalism, Capitalism and the Absolutist State," Our History, London . Krader, L ., ed ., 1972, The Ethnological Notebooks of Karl Marx, Van Gorcum, Assen . Marx, K ., 1961, CAPITAL, VOL . 1, Lawrence & Wishart, London . Meillassoux, C ., 1966, Anthropologie economique des Couro de Cole d7voire, Mouton, The Hague . 1972, "From Reproduction to Production", Economy and Society, 1 . London . 1975, Femmes, Greniers et Capitaux, Maspero, Paris . Panzieri, R ., 1976, "Surplus Value and Planning," in CSE Pamphlet 1 : The Labour Process and Class Strategies, Stage 1, London . Rey, P .-p ., 1971, Colonialisme, neocolonialisme et transition au capitalisme, Maspero, Paris . and Dupre, G ., 1973, "Reflections on the pertinence of a theory of the history of exchange," Economy and Society 2,2, London . 1975, "The Lineage Mode of Production", Critique of Anthropology, 3, London . Taylor, 1 ., 1975, "Review of Pre-Capitalist Modes of Production," Critique of Anthropology 4/5,6, London . Terray, E ., 1972, Marxism and Primitive Societies, Monthly Review, New York .

REVIEWS

Two Reviews of : ECONOMICS : AN ANTI-TEXT Edited by Francis Green and Petter Nore Macmillan (London, 1977) pp . 215 xii, E7 .95 hardback, E2 .95 paperback (1) By Tony Millwood Twelve comrades in the CSE have collaborated to put together for the student embarking on a degree-level course in economics this critique from a marxist perspective of current orthodox economics . The book is arranged in twelve chapters, the first three dealing with questions of method and the remainder taking up topics that would appear as chapter-headings in the average mainstream textbook . The method of each author is to present the main features of the orthodox argument and analysis, to probe this for internal weaknesses (and thus examine some current debates among bourgeois theorists) and then to expound an alternative analysis grounded in the marxist tradition . A theme of the book is the identification of the essentially ideological content of much of orthodox economics and that much of the significance of orthodox theory is to be found in its ideological role . Leaving for the moment consideration of the opening chapters on method, the next section on microeconomics contains chapters on Consumer Sovreignty by Simon Mohun, The Firm and Concentration by Sam Aaronovitch and Wages and labour by Bettina Berch . The major part of Mohun s piece consists of a careful exposition of the doctrine of consumer sovreignty as it developed from propositions about the 'invisible hand' to its incorporation in Paretian theory of optimum resource allocation, dealing also with the well-known exceptions to the rule that a decentralised market-exchange system will ensure Pareto-optimality The critique is developed by distinguishing such a hypothetical exchange economy from capitalism, a system under which a 'free' labour force confronts the owners of the means of production who control production for the purpose of expanding capital and not for the optimal provision of use-values . Exploitation derives from the exchange of labour power not for what it produces but for what it costs to produce . While such a line of attack Is basic to the critique of the orthodox depiction of the capitalist economy as a well-run kibbutz Mohun makes only



1 62

CAPITAL & CLASS

passing references to the processes by which consumer preferences are actually formed in monopoly capitalist society (mentioning Galbraith) . Given the strength as ideology of the 'freedom of choice' myth this question might have received more attention Although Mohun notes the orthodox qualification that knowledge is' scarce" and costly' and this stands in the way of achieving a'pareto optimum' Mohun does not show that knowledge is a resource unequally distributed among classes in capitalism and the struggle for the possession of such knowledge is becoming more intense (e g . in relation to pharmaceuticals and nuclear energy) . It is perhaps in its discussion of the firm that the inadequacies of orthodox theory are most transparent and these are deftly dealt with by Aaronovitch . The reader is is not interested in then introduced to an alternative model where "capital (but) is presented from the beginning as a system of capital production as such capitalist firms are entities by means of which surplus value is accumulation produced'" Centralisation of capitals may occur as a result of merger or accumulation, and in connection with the former the role of banking and the institutional investor - finance capital - may be identified . The relationship between large firms - the dominant form - is not the 'competition' of orthodox theory impersonally mediated via the price system but is rather one of rivalry, with individual capitals seeking forever "to encroach upon the economic space already occupied or sought by others" . Aaronovitch successfully introduces an alternative (and more sustaining) approach to the analysis of the firm but which needs supplementing by historical analysis of the capitalist firm and of the role of the firm as controller of the labour process and as a socialising force . Berch on Wages and Labour is disappointing . Orthodoxy is depicted rather simplistically as a blend of Malthusian subsistence-wage theory and marginal productivity theory . This is criticised because "there are no elements of greed . or power relations" depicted in the employer-employee relation, and the "essential process of the valuation of the marginal product of labour is never actually undertaken" while labour-supply theory implies "that the length of the workingday or week is completely flexible" . These criticisms can be (and have been) successfully answered within the orthodox framework . There is no discussion of the role of trade unions of labour legislation and the state, incomes policies, the question of control of the labour process, the use of wages structure to divide and control the workforce, etc . The macroeconomics section opens with a clear and useful exposition of orthodox accounts of the nature and origin of 'profit' . Ben fine takes the reader through the attempts by bourgeois theory to salvage a concept of profit that is analytically useful and consistent with the depiction of capitalist society as an assembly of individuals pursuing their self-interest through equal exchanges in the market . tine surprisingly omits discussion of loan Robinson's destruction of marginal productivity theory, preferring to counterpose to the fisher-Marshall perspective the inarxist distinction between those who monopolise the means of production and the historically-produced 'free' labour force as the origin of the profit that accrues to capital . Laurence Harris' chapter on the Balance of Payments criticises the conceptual reliance of orthodox analysis on the primacy of the nation-state and argues that such an approach both obscures the conflict between labour and capital within nations and the transnational nature of a significant part of capital . Ihere follow chapters on Inflation (Andrew Glyn) and Keynesianism



REVIEWS

163

(13ob Sutcliffe) and a final chapter on The State . Petter Nore provides an account of the empiricist ("Wagner's Law") and ideological ("public goods") approaches of orthodox public finance theory and then introduces the concepts of "relative autonomy" and "legitimisation" as a prelude to a discussion of different categories of state economic intervention . The need to provide conditions in which capital accumulation can proceed while managing the social conflicts that inevitably arise through the careful granting of concessions, is stressed . An instrumentalist approach is identified and contrasted with the structuralist approaches of Yaffe and Poulantzas but it is the former approach that Nore naturally adopts in the brief survey of different arenas of economic intervention . The opening chapters deal with the Myth of Objectivity, the Individual as a Basic Unit of Analysis and Class in Contemporary Britain . The reader will not find in this collection either a definitive critique of bourgeois economics or more than an indication of direction that a marxist approach will lead but will undoubtedly be of use in introducing to the disillusioned that more sustaining fare is available .

(2) By John Urry According to the Introduction this Anti-Text is intended to function as a subversive companion to the normal textbooks used in mainstream Economics courses . It is meant to constitute an intervention at the centre of undergraduate teaching . Although one should welcome any such intervention, this contribution, largely written by CSE members, should have been rather better in a number of ways . Even though it will be widely used by students clasping Samuelson to their right breast and Anti-Text to their left, the intellectual/political impact is rather questionable . There are a number of related criticisms . First, it gives the impression of having been written hurriedly and somewhat carelessly . Thus, given that it was compiled by a number of contributors, a much more systematic and precise system of cross-referencing should have been employed . As it is, it is neither a text nor an anti-text, more a loosely related collection of papers, which treat some aspects of modern economics in a broadly critical fashion . Further, in many cases the crudest of bourgeois formulations are taken as Aunt Sallies, easily demolished by the somewhat mechanical application of the same set of criticisms . In the paper on "The Firm and Concentration", the only bourgeois explanation considered is Henderson and Quandt's account in Micro-Economic Theory . There is no consideration of the bourgeois critique of this and the attempt to develop a theory of the firm based on growth rather than profit-maximising . It is as though Marx dealt only with vulgar Economics and never considered Smith and Ricardo . Furthermore, there is very little detailed exposition and critique of substantial formulations by bourgeois economists, even from the textbooks themselves . A few selected quotations are all we are generally offered . There is a further difficulty . Because the writers do not generally try to provide a systematised alternative, that is, a genuine Anti- Text, it is often difficult to see exactly what Marxist political economy has to offer that makes it preferable



1 64

CAPITAL & CLASS

to bourgeois formulations . Indeed often we gather merely that Marxists used certain words which sound better since they more effectively resonate with our political consciences . However, generally, it is not shown how these actually function or could function as concepts in a systematic and rigorous theory . Many times the level of criticism is in effect merely empirical: silly bourgeois textbooks have omitted all sorts of considerations that clever Marxist economists could/ would solve, as evidenced by their use of certain words which show what a better grasp they have of the "real world" . This can be seen further in a number of ways . First of all, all the authors in this text, perhaps with the exception of Laurence Harris on "The Balance of Payments and the International Economic System", employ a very crude notion of ideology . Ideology seems to be anything which is untrue, not consistent with or explicative of the real world . So bourgeois economics is ideological because it leads economists to misperceive/misunderstand the true nature of bourgeois society . Yet once we are all Marxist economists then we will be able to grasp its true nature unproblematically, undistorted by bourgeois delusions . This view of ideology is difficult to sustain, however . Partly this is because it takes it to be inherently false, contaminated, and erroneous, rather than seeing it as at one level true, as providing a plausible and systematic framework structured by capitalist social relations which agents are able to sustain and reproduce their day-to-day activities . If bourgeois ideology was simply false then the revolution would have been accomplished long ago . Marx clearly showed the significance of this in his discussion of the wage-form . Furthermore, this view of ideology rests on an epistemological model in which the subject may or may not correctly appropriate the object . Once bourgeois notions are swept away then reality can be correctly grasped . But this suggests that science consists in individual scientists appropriating the real through theories and models which in some sense represent or capture the real . This raises a host of philosophical difficulties . Rather than discussing them directly let me consider the first paper in this book, by Francis Green, where "positive economics" is criticised and an alternative conception is advocated . This attempts to use Kuhn's discussion of normal/revolutionary science to criticise the paradigm of "positive economics" is flawed in a number of crucial ways . First, if we consider the recommended reading, Popper is taken as a representative conventional positivist philosopher of science, conterposed to the Kuhnian . However, Popper is no orthodox positivist at all, and he would reject many of the features of conventional science described on pp . 5-6 . But these features are themselves highly misleading, and the author on p . 6 . seems unaware of different models of explanation, with the deductive-nomological applicable to say physics, and the inductive-statistical to say economics . Second, there is a major omission from the discussion and that is the positivist belief in a theory-free observation language, or more simply of facts, which are theoretically neutral . However, this may have been omitted because it appears that Green is himself committed to the view that there are facts, "simple statements about the real world" (p . 12) which are logically independent of theories . Theories are then used to order such facts, to bring out their significance - a view with which few positivists would disagree . What Green has failed to realise is that Kuhn and others have more generally called into question the very existence of theoretically neutral facts per se . Incidentally Harris clearly and interestingly brings out how the



REVIEWS

1 65

so-called facts about the balance of payments are constituted on the basis of a set of categories which are not simply there in reality but are themselves theoretical (e .g . the nation) . Third, the account of Kuhn is not at all convincing On p . 14 we are told that objectivity "is taken care of at times of extra-normal science Kuhn most definitely does not believe this : indeed in The Structure of Scientific Revolutions it is questionable whether he sees any progress in science through paradigmatic shifts . Also it is unclear whether Kuhn's analysis is applicable to economics or to any other social science . Even if it was, the significance of this to Marxist political economy is unclear - one implication might be that we should all work away puzzle-solving within the "neoclassical/ neo-kevnesian synthesis" until a scientific revolution occurs and through an act of faith we gradually become adherents of the new paradigm (Marxist, of Monetarist, or what?) . Fourth, although we are not told much what non-positive economics would be like, the concept of dialectic would be central to it . The dialectic, we are told : "consists of analysing the world in terms of relations between factors, and relations between a factor at one time and at other times before and after" (p . 16) . But if this is all that the dialectic amounts to, and all that we have to counterpose to "positive economics", one wonders what all the fuss is about . I doubt whether the bourgeoisie is shaking in its bones at such a terrifying theoretical and political conception . Finally, Green's inability to identify different broadly positivistic conceptions of science leads him to ignore the strength of an instrumentalist philosophy of science amongst economists . Along with some of the other contributors to this book, Green believes that economic theories are intended to be true, to provide descriptions of the world which are correct . However, this is not necessarily the case . Many economic theories are premised upon an instrumentalist conception of science, theories being taken as useful fictions to generate successful predictions about the world but are not intended to be isomorphic with that world . (There are of course parallels here with the criterion of "practice" employed by Marxists) . However, where this is the case it is not sufficient for Marxists to try to refute a theory simply by showing that certain crucial assumptions or theoretical propositions are incorrect . Having indicated that this work does not contain an adequate and precise characterisation of the different methodologies of bourgeois and Marxist economics, the remaining papers can in some ways be read individually . Those I most enjoyed, besides Harris on the balance of payments, were Sue Himmelweit on the individual, Simon Mohun on consumer sovereignty, and Ben Fine on profit . However, the last of these, as well as that by Bob Sutcliffe, says little more than that profit is determined 1y an inherent class struggle between capitalists and wage-labour . We should have at least been told a little about the falling rate of profit and what might constitute a Marxist approach to crisis . Indeed there is at times a tendency to softsell Marxism, to make it sound more concrete, more in touch with the "real world" by appealing to the visible class struggle between flesh-and-blood capitalist and workers . But this is intellectually and politically dishonest, as well as providing apparent support for the simplest of neo-Ricardian approaches where there seem to be no laws of motion of the capitalist economy simply the real life struggle between workers and capitalists . As such this is as abstract an analysis as you could wish for, The paper by Monika Beutel, I found particularly curious . It is entitled "Class



CAPITAL &CLASS

166

in Contemporary Britain" and consists of showing how one group of bourgeois sociologists are wrong by referring to studies produced by another group . There is a lot of rhetoric about "underlying structures", and how bourgeois sociologists have not identified a pattern of structured inequality related to the conditions of production . Yet one important pattern seems to be the division between manual and non-manual tasks (see p . 50) ; which in fact has been discussed, elaborated and thoroughly masticated by bourgeois sociology . Nowhere does Beutel show how such market-based conceptions of class can be understood in terms of the social relations of capitalist production (the lack of reference to Carchedi's articles in Economy and Society is perhaps of interest) . The final paper by Petter Note convincingly demonstrates the inadequacy of bourgeois approaches to the state . It is however unfortunate that his attempt to outline the Marxist alternative is both contradictory and reductionist . He argues, first, that there are three levels of state intervention, the ideological, the political, and the economic, second, that because the success of one intervention depends on the success of another, it is incorrect to make any distinction between the economic and the political ; and third, that we can analyse the economic functions of the state which he relates pretty directly to the socialisation of production, the tendency towards uneven development, and the internationalisation of capital . This only demonstrates that to try to provide an Anti-text in Economics, even within the extended limits of this work, cannot succeed . The political struggle between classes, both at the point of production and at the level of the state, is not something that can either be simply part of our rhetoric or something which is added later once the economic analysis has been completed . Political economy and economics do not have the same theoretical object .

TELOS A quanaly Journal of Radical Thought NUMBER 33

FALL 1977 To&k of contents

SAREL LEE : Subterranean Indiudualum : Contradittsons of PolUititatson LEONARDO PAGG1 : Gramsaa General Theory of Marxism JAMES SCILMIDT ; Praxis and Temporality : Karl Kouha Political Theory KAREL KOSIK : The Dialectic of Morality and the Morality of the Dialectic MICHEL RYBALKA ; Introduction to "La Nottvsis Ph.losoplui" ANDRE GLUCKSMANN : An Interteete CORNELIUS CASTORIADIS : The DtuernonuU ANDRE GOKZ : Sonre and the Deaf CORNELIUS CASTORIADIS : Reply to Andr1 Gan EDGAR MORIN : The None and the Message REGIS DEBRAY : Spongurne Weepers BERNARD IIENRI LEVY : Response go the Master Censors JACQUES KANCIERE : Reply to Levy HOP JON : Sat-teen Lassn Proverbs : Not,, on Socialist Planning and as Discontents RUSSELL . BERMAN : From Street Theatre to Mediation JUERGEN HABERMAS : A Speculative Matenalut Plus letters and ream au of books and joarnats . Sub-11--n cost 110 .00 per year to individuals ; 115 .00 to institutions . Wnte for a fist of available back iseuca . Address au corrnpondence to Telos . Socioio Department . Washiugson University . St . Louis . Miuoun 61150 USA .

x

x

5

NOTES FOR CONTRIBUTORS

Capital & Class welcomes all contributions within the general scope of the CSE . not only long articles of a theoretical nature but also short notes and polemics, correspondence, and pieces long or short which have a topical political relevance . The Editorial Committee is responsible for producing Capital & Class . The members of the EC are elected at the annual conference, half being replaced each year so that no-one serves for more than two years . The Editorial Board has now been replaced by an open delegate body which will discuss all general policy questions, which should include the relation of the journal to other CSE activities . The Editorial Committee hopes to develop a closer liaison with general CSE activities through working groups and local groups, who are invited to nominate members to act as points of contact and to attend periodical editorial meetings . Material submitted to Capital & Class is assigned by the reviewing editor to at least 4 people for comment, usually two members of the EC and two others . Frequently, papers submitted will have been discussed at a CSE group or dayschool, and might have been revised after discussion there . However . the Editorial Committee of Capital & Class likes to be involved at an early stage rather than simply being presented with a final version to accept or reject . Papers submitted to the EC may be referred for comment to a CSE group if they have not already been presented at such a group meeting . All submissions should go directly to a member of the EC or to John Harrison, Oxford Institute of Economics & Statistics, St Cross Building, Manor Rd ., Oxford . Material submitted in draft form should be typed single-spaced and wherever possible 5 copies should be provided . The final copy which goes for typesetting must be typed very clearly, double-spaced with very wide margins . Writers should try to avoid unnecessary jargon or other complexities of style ; for our basic format in using references and footnotes please refer to a current issue .



CSE bookclub JUST OUT INTELLECTUAL AND MANUAL LABOUR : A CRITIQUE OF EPISTEMOLOGY Alfred Sohn-Rethel, was Professor of Epistemology and Social Theory at Bremen University, West Germany until his recent retirement . If socialism is to present an alternative to t echnocracy . i t society is to gain control over technology rattier than the reverse . then one must e stablish . a s at heoretical preconditiond that scant r depends ties social history for its very origin and its logic . 1 hits hook demun.sirates that the conceptual form of thinking of philosophy and science can be traced outside the immanency of the mind and, in fact, to what Marx calls the 'commodity ahstracuon' which is the key to the formation of societies in which production is carried on for exchange I his is the novel clement in this book : the view that exchange is the vehicle of a historical process in rime and space, by the agency of human action . not human thought . T he theory argued in this book sees development forced in the direction of production operated on a social scale substituting the capitalist system of private appropriation by the resources of reunified intellectual and manual labour .

publisher's price £4 .95 CSE bookclub price £2.95 JUST OUT INDUSTRY AND LABOUR CLASS STRUGGLE OF WORK AND MONOPOLY CAPITALISM Andrew L . Friedman, Lecturer in Economics, University of Bristol Throughout the history of capitalism radicals have been occupied with the struggle against exploitation at work . Although Marx recognised the importance of worker resistance, he did not systematically study the possibility that changes might occur under capitalism in response to the contradictory or sell-destructive lorces created by capitalist accumulation . I n this hook Andrew Fried man analyses the capitalist mode of production in general, staving atom Marx's Irunewoik as set out in Capital . lie examines the day-to-day operation of worker resistance and managerial counterpressure . and also helps to explain why areas of deprivation continue to exist beside areas of prosperity in all advanced capitalist countries, despite concerted attempts by governments to remove the 'pocket ; of deprivation .

publisher's price £4 .95 CSE bookclub price £2 .95

offer open in UK and Republic of Ireland only

Prices include postage and packing . Cheques/ postal orders to be made out to CSE and sent to : CSE, 55 Mount Pleasant, London WCI Please indicate amount of cash enclosed and address to which the order is to be despatched .

State and Capital A Marxist Debate Edited by John Holloway and Sol Picciotto This volume of essays translated from the German is concerned with the theory of the Capitalist state, in particular the relationship between its institutions and the nature of capitalism itself. The book includes the major contributions to the debate on the derivation of the state . The editors introduce the methodological issues involved and provide a theoretical context for the terminology of contemporary German Marxist analysis . Cloth £9.95 Paper £3.50

The Urban Question A Marxist Approach Manuel Castells Social Structure and Social Change i

'La Question Urbaine is the most finished product yet to emerge from the new (Marxist) school of French urban sociology . . . The aim of the book is nothing less than to reconceptualise the field of urban sociology . It is carried out in two stages : a critique of the literature of urban sociology (and urbanization) and an attempt to lay the Marxist bases for a reconstructed urban sociology .' C. V. Pickvance, American Journal of Sociology Cloth £12 Paper £5 .95

Human Geography A Welfare Approach David M . Smith 'I expect that Human Geography : A Welfare Approach will become the recognised starting point for this whole rapidly growing segment of geography, invaluable alike to students and teachers' . Geographical Magazine Cloth £9 .95 Paper £4 .50

Edward Arnold 25 Mill Street, London WtX 8LL



spare

35p at your newsagent's

I i:b

It's the only monthly nationwide women's liberation magazine!

TAKE A LOOK

WS W&

l59ae 62

AFRAID OF SCHOOL : A TWELVE YEAR OLD TALKS . . . PAM GEMS "UNCHARTED TERRITORY" . . . "THE WHOLE WOMAN" AND THE HIGH PRIESTESS . . . FEMINIST SPIRITUALITY IN THE USA . . . HOW TO MEND A TOILET . . . N EWS : I N THE PULPIT . . . AGAINST SWISS DOCTORS . . . ACTION AT BRITISH STEEL . . . AGAINST MALE VIOLENCE . . . MORE WOMEN'S CLINICS . . . DISRUPTING DIRTY LINEN . . .

CUT OUT THE FORM - SUBSCRIBE TODAY! r - .-w un == FILL IN THE FORM BELOW AND POST TODAY FOR A YEAR'S SUBSCRIPTION . TO : SPARE RIB SUBSCRIPTIONS c/o LINDA PHILLIPS, 114 GEORGE STREET . BERKHAMSTEO, HERTS HP4 2EJ, ENGLAND . PLEASE SEND ME SPARE RIB FOR ONE YEAR . I ENCLOSE CHEQUE/PO FOR E5 .00. NAME ADDRESS

'IGNATURE Rates outside UK : Europe E6 .50; Elsewhere wimail $15 .00 ; Airmail Zone A 416 .50; 7,one,B $18 .00 ; Zone C $20 .00.

$