Capital & Class. - 1983. - Issue 21 issue 21

BRICKS IN THE WALL : THE YOUTH TRAINING m&m SCHEME

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CliffAllum and 7o Quigley

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From a base of active trade union involvement, the authors in this piece take an historical look at Job Creation, YOP, the rise of the MSC and the culmination of these in YTS (the new Youth Training Scheme launched in September) . They describe and critically appraise YTS and look at the difficulties and contradictions of trade union involvement . They try to meet head-on the controversial issue of whether or not YTS should be rejected outright by the unions or if there is a case for its acceptance in the hope of changing it from within . Their conclusions provide food for thought for many people currently working on the left .

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Capital E5 Class 6 "Theyoung should be a source ofcheap labour because they can be trained on the job ". David Young, Chairman - Manpower Services Division) SEPTEMBER 1st saw the formal launching of the Youth Training Scheme (YTS) . Eight years of ad hoc improvisation in the face of the ever-growing problem of youth unemployment has finally culminated here . Intended as a permanent twelve month induction into industry, its long term intention is to scrap all apprenticeships in their present form and to substitute (as the first year), YTS . It's part of a more comprehensive plan to completely reshape the lives of young working class people . The agent of change is the ever ambitious MSC (with every increase in unemployment, its fortunes flourish) . Its tentacles now reach forward into factory and office, restructuring training, and at the same time they reach back to reorganise the lives of working class fourteen year olds still at school . Behind the guise of `training' and 'retraining' the range of targets the Msc aim to hit is sweeping . The reintroduction of selective education for the middle classes on the one hand, is coupled with even narrower vocational training for the working classes on the other. It has lowered wages for young workers as a preliminary to lowering wages for every one, abolished apprenticeships, and closed even minimally progressive bodies - the schools council, the wages councils and most of the industrial training boards . Despite such an impressive array of losses, there has been no vigourous opposition from the trade union movement . Quite the reverse . "If the employer with whom you deal has not previously mentioned YTS, ask how he/she intends to respond to the scheme . If it is not intended to run a scheme press for one to run". (TUC

Youth Training: A

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Guide and

Checklist for TU Negotiators) The trade union commitment to active promotion of YTS is something which needs explanation . The argument, that improved training or work experience leads to improved job opportunities, is profoundly misconceived . It is, though, a view which has proved remarkably resilient in the trade union movement . During a time of increasingly large scale unemployment it might be thought that a view which places the blame for unemployment on young people themselves would be increasingly untenable . It shows little sign of weakening . The bad experience of YoP clearly hasn't exploded many myths, for example, that such schemes provide real training or that they do more than supply industry with cheap labour. Acceptance of YTS is partly due to the way trade unions have come to participate in YTS (which will be discussed later). But it has also happened because of the way the new scheme has been billed . YTS has been recast as the new improved YoP, designed to do away with the greater excesses of the old scheme . The unions then have given their support to a scheme which has been sold and accepted as an improvement on what has gone before . The question, of 'improvements' for whom? (for the Tories, for the trade union movement?) has been lost in a remarkable convergence of interests . In the face of world recession, real unemployment levels of five million and the threatened de-industrialisation of Britain, both Len Murray and Norman Tebbit see the solution in the re-establishment of British capital and can come to agree with and support the new Youth Training Scheme . Preludes to YTS Staading at a mere 5,000 in the summer of 1974, the number of unemployed

Behind t,ie news school leavers steadily rose as the Labour Government advanced a series of ad hoc measures to deal with the problem . Devoid of any radical intent, these measures amounted to little more than a series of unsuccessful attempts to use public money to bribe employers to take on school leavers and subsidies for firms who increased their training intake . This was followed by the job Creation Programme which placed unemployed school leavers with voluntary organisations, community programmes and local authorities . The job creation scheme grew up in the climate of the `Great Debate' on Education whose ideas and attack on comprehensive schooling eventually found expression in a series of Black Papers . James Callaghan and Shirley Williams endorsed these criticisms . They merely replaced an older elitism with the more modern charge that education was failing to meet the needs of industry . The problem was no longer seen as economic but rather as one of education and young people were still to be blamed for their own unemployment . "The unqualified school leaver is frequently so defective in the must rudimentary skills required in adult life that his chances of securing employment in today's circumstances are severely limited" . (House of Commons Select Committee 1977) And the emergence of the MSC was intended to ensure that education was subordinated to the needs of industry .

The experience of the Youth Opportunities Programme Showering employers with cash handouts had failed to arrest the upward trend of youth unemployment . In 1978 the Labour Government unified its various initiatives under the broad umbrella of the

youth opportunities programme (YOP) . The idea was that a six month period of industrial experience and training would mould young workers and impart to them the right skills, right attitudes and most importantly of all "a realistic perception of their market value ." In the first year of the scheme well over half YOP trainees secured a full time job but by the end of the scheme, as unemployment continued to rise, this fell to below a third. The first year saw 162,000 unemployed school leavers placed on a YOP's course . At the end of the five years that YOP had been in operation one million eight hundred had been through the programme . As the scheme progressed, protests about the many abuses of young workers grew louder. While some places on Community Projects provided a genuine training element, the overwhelming number of YOP places was "Work Experience on Employers Premises" (WEEP) . In the first year of YOP, WEEP accounted for 128,200 of the 162,200. In 1981/82 it stood at 80.4% . A Youth Aid survey undertaken in 1981 concluded that "the majority of WEEP is concentrated in small, low paying non unionised workplaces". (Quality or Collapse. Youth Aid Review of Yop 1981) A vast store of cheap labour had been put at the disposal of employers . It was used to depress the wages of young workers, drive part time and older women out of jobs and disguise the consequences of public sector cuts . A whole new kind of worker had been introduced into work places and denied all employee protections rights . Criticism mounted . Yet the MSC insisted that its monitoring was guarding against abuse . An internal memo in mid 1981 confirmed what it was denying in public; that no less than 36,400 places were operating without having been approved . To deal

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Capital & Class 8 with this problem the MSC devised a criterion system for future visits and then simply wrote off its back log. By December CPSA members working for the MSC were claiming that only 30% of the newly prioritised visits were being made, and telephone calls to the employer were being classified as visits . In April 1981 the MSC defended itself against the charge that Yop was encouraging job substitution. It claimed that it was occuring in only 30% of WEEP places! High as this figure is, it greatly understates the real position . The MSC based its 30% claim on a British Market Research Bureau survey (January 1980). 302 WEEP sponsors admitted that they were breaking MSC guidelines and using YOPS as cheap labour (quoted in New Statesman May 15th 1981) . Trade union monitoring of Yop also appears to be dismal . Area Boards (upon which trade unionists sat) would seem a good vantage point for trade unionists to challenge non-existent training and cheap labour schemes . In fact, MSC guidelines recommended that only proposals for forty or more places should be scrutinised (though some boards looked at schemes that offered twenty places) . Dave Carter, in a TGWU study, notes that when the area Board in Manchester insisted on seeing

all schemes the MSC eventually produced a list with no details at all . Given that almost 90% of WEEP proposals offered less than 10 places it follows that the Area Boards were largely ineffectual .

Accidental injuries and YOP Inaugurated by Labour and continued by the Tories, it's the accident statistics for Yop trainees that testifies most eloquently to the contempt both political parties displayed for the young . In the two and a half years to September 1982, eleven school leavers have been killed on YoP schemes, fifty-five suffered amputations and there were nearly 7,000 accidents . And the longer the programme continued, the more hazardous it became . Growing grass roots hostility to this outrage was voiced at Union Conferences in 1981 . A Conference that year called by Tower Hamlets Trades Council concluded that, "Every major promise that was given by the MSC to the trade union movement when the scheme was first introduced has been broken, ignored or manipulated" . By September NUPE had begun unionising YOPS in the North of England . This led to two strikes and a local rally . YOP contingents appeared on a Right to

Accident statistics over 2 years of the Youth Opportunities Progamme April 80-March 81 April 81-March 82 360,000 553,000 No . of Yop entrants No . of notifiable accidents 1,719 3,251 4 6 Deaths 0 Loss of Limb 0 Loss of hand or foot 1 1 Loss of finger(s) or toe(s) 22 42 Accident rate per 1,000 trainees 4 .8 5 .8 Minor injuries cuts bruises etc 1,539 2,974 (Source Hansard 7th March, 1983)

change +54 +89 +50 +91 +21 +93

Behind the news Work march, a Peoples March for jobs, the jobs Express and in November, a YOPS Trainees Union Rights Campaign was launched . That year's annual TUC Conference heard motions calling for the complete withdrawal of trade union cooperation from WEEP and the MSC . The drive of this opposition was however, merely transformed into the watered down call for genuine quality training . But it was clear (to the MSC as it was to the trade union leaders) that the programme in its present form had had its day .

Overpaid youth? "Because the wages of young people are often too high in relation to experienced adults, employers cannot afford to take them on - even though it is clear that many employers want to help" Prime Minister, House of Commons . July 1981 Yet this belief that the high wages of young workers blunted their altruistic appetites is a prejudice demolished by Tebbit's own Department. Published as Research Paper No. 10, the Dept . of Employment compared the pay of young and adult workers for the period 1959 to 1976 and concluded that "The average levels of relative pay had little to do with the totals of youth unemployment. This included a period-the 60's - which saw male teenage unemployment consistently below that for adults, when the post war baby boom generation entered the labour market and when hourly earnings of males aged under 21 rose rapidly in relation to those of adult men" Incomes Data Services Study No. 291 June 1983 Young Workers Pay The Department subsquently updated its research to bring it up to 1979 . In April last year Michael Alison, Minister of State at the Dept. of Employment, was

forced to admit that "the conclusions reached in the updated analysis of Research Paper no . 10 are not significantly different from those in the original paper and it is not proposed to republish the report" Source as above. Relative Pay of Young Manual Workers 1960-1979 Hourly earnings as percentage ofAdult Earnings Boys Youths Girls Under 18 Under 21 1960 48% 64% 1965 50 66 1970 53 67 1975 60 66 1979 61 67 Source Dept. of Employment Earnings Survey The seemingly high ratio of young female to adult female rates is explained by the low pay of women workers . In looking at 91 recent wage settlements (including 38 national agreements), the IDS concluded that the "overwhelming majority (revealed) no changes over the last couple of years in the ratio of young workers pay as compared to adult wages" . The exceptions, apart from a one percent improvement in the rate for 17 1/2 year olds in coal mining, were all in the direction of worsening the ratio . Even more threatening to wage levels as a whole are those such as the Electrical Contracting and General Printing agreements . They scrap rates related to age and replace them by point of entry to training schemes . This could enormously cheapen the re-training costs of experienced adult workers and, by offering employers the prospect of adult workers to retrain at trainee rates, the already diminishing labour market for the young will be squeezed even further . There is thus no empirical data to sustain the Government's claim that growing

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Capital E5 Class 10 wage rates for young workers deter kindly capitalists from taking on school leavers . Despite that, Margaret Thatcher announced her plans in January 1982 for a Young Workers Scheme . The scheme bluntly tells employers that the less they are willing to pay a young worker the bigger the subsidy the State will award them . Here we can capture the essence of Thatcher's radical critique of bureaucratic, molly codling, state socialism . For, while Labour doled out subsidies to employers without asking or expecting anything from the employer in return, the Conservative Party breaks decisively with this pampering tradition and insists that every employer has to earn their right to guzzle at the State trough . For every employer who takes on a young worker and pays him or her less than £40 a week an appreciative state will award such an employer with a prize of £15 . For those employers who fail to keep the wage below £40 but manage to keep it below £45 there is a second, consolation prize of £7 .50. The Department of Employment commissioned the University of Sussex's Institute of Manpower Studies to investigate the impact of the first year of the scheme . See table for their findings . While the `deadweight' effect was very high, the number of real jobs created was very low. In fact, for a government expenditure of £60 million only 7,000 new jobs were created . For each job that the Size of establishment by no . of Employees 110 26- 50 101- 200 501- 1000 Over 5,000 Total

scheme created at the miserable weekly wage of less than £45 the government spent no less than £8,571 ! Resurrecting the ancient and primitive practice of punishing the bearers of bad news it has been rumoured that the Institute of Manpower Studies is to be denied future lucrative work from the MSC . Doubtless intended (pour encourager les autres) to concentrate the minds of other academic institutions on the old maxim that `there are lies, damned lies and statistics' .

The Youth Training Scheme (YTS) The MSC published two papers in 1981, (in May and December), which reflected their response to criticisms of YoP and, more significantly reflected the government's changing assessment of future labour market needs . The papers were entitled "a new training initiative", first a `consultative document' followed seven months later by "an agenda for action" . Both broke with the emphasis of the late 1970's which called for more quality apprentice-type training . Now what is being urged (and what YTS offers) is a twelve month training period in generalised basic skills backed up with `life and social skills' exercises . YTS commenced at the beginning of September . The MSC had hoped to be able to offer 460,000 places, (mainly to 16

Deadweight

Displacement

22% 88% 71% 91 97% 90%

22% 4% 10% 2% 3% 4%

Net Incremental Effect 56% 8% 19% 7% 0% 6%

Deadweight Subsidising jobs that would have existed anyway Displacement Substitution of young workers for adults Net Incremental Effect Young workers' jobs actually created by the Scheme .

Behind the news year old school leavers and some unemployed 17 year olds by September) . The Scheme is divided into two categories . The MSC hopes that Mode A schemes will account for some 300,000 places . In this category, organisations volunteer to take a number of trainees for a period f 12 months, combining on-thejob experience with 13 weeks off-the-job training . For the remaining 160,000 Mode B places, the MSG makes its own arrangements with local authorities, colleges, voluntary and community projects. Unlike Yop, a far higher percentage of trainees will work for larger firms with a more serious approach to training . But as with YOp the rate remains the same at £25 per week . This is despite union and MSC urgings that it be increased. The TUC in their near unqualified enthusiasm for the scheme blithely claim that it will be an easy matter to negotiate improvements on this miserable rate ; `managing agents will, however, often be able to afford to pay young people more than £25' . (TUC handbook on the Youth Training Scheme p .20). As a general proposition this claim is hard to refute . It does beg the question though, of why the trade unions at national level, (whose approval was so necessary and who consequently wielded much greater influence than a local negotiator) failed to secure an increase in the rate . Nor is it very honest to omit the inconvenient fact that the TUC's partner in the scheme, the CBI, have instructed their members to resist all attempts to improve the rate . The denial of employee status which characterised YOp is continued with YTS . It means trainees are excluded from various pieces of legislation designed for employee protection . Because many companies will now be using YTS as the first year of their training scheme, there will now be full time new employees as

well as young trainees undergoing the same course but enjoying very different and unequal rights . The MSC Guide to Managing Agents for the Scheme states that, `unemployed trainees should not, as far as possible, be put to any disadvantage by virtue of taking part in YTS .' Experience of YOp has already demonstrated that the MSG have little capacity and little inclination for the monitoring role necessary to sustain this claim . In fact, the September issue of the Independent and Trade Journal Health and Safety at Work contains a severe attack on the MSG for its : `lack of a positive commitment to the health and safety at work of the youth trainees - because nowhere in its eight pages (MSC leaflet promoting YTS) is the employers' responsibility for health and safety mentioned' . Alex Crawford, MSC passes the buck on youth safety As Section Two of the Health and Safety at Work Act applies only to employees, responsibility upon employers for instruction, supervision, training and welfare does not apply to trainees . Although a clause in the Managing Agency's contract with the MSC states a co-equal responsibility, its effective enforcement is exceedingly vague .

Financing the scheme The Government is spending just under £ one billion in the Scheme's first year. Those who take responsibility for schemes are known as managing agents . Under Mode B the MSC is its own managing agent responsible for providing complete programmes . Under Mode A external managing agents will take responsibility for a trainee's programme . They could provide everything (including the off-the-job training if they are a large organisation) . Or the Agency might be a group of

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Picture Raissa Page : Format

Behind the news smaller companies with a college of education or a private educational establishment all acting as sponsors for the Agency . For example, Birmingham Area Manpower Board, (one of 54 local boards with trade union, management and professional representation, set up to vet applications), reported to Labour Research just before September on the increasing tendency for off-the-job training to be provided by private establishments . For every trainee placed on an approved scheme the managing agency will receive £1,850 for the year, plus a £100 fee per place to cover administrative costs . From this will come the trainees annual allowance of £1,300 as well as college, off-the-job training fees . The concept of additionality has been developed by the MSC as bait to employers . For whilst each employer will get £1,850 for each trainee taken onto an approved YTS course (that is, above his/ her normal intake), the employer, once he starts taking on three or more additional youths, will be able to apply for the £1,850 grant to cover some of the normal intake as well . The additionality ratio is 3 :2 . Thus if a firm with a normal rate of new recurits of 20 took on 38, not only would that firm get a grant of £1,850 for each of its extra 18 recruits, it would also get £1,850 for each of 12 of its normal intake of 20 . Contradiction within the MSC While everything else is being cut, the Manpower Services Commission grows and grows . It is tempting to see the Msc as an uncontrollable Behemoth, swallowing up the state education system and spewing it out in privatised parts . The MSC, however, is far from homogeneous and the interests it does express are not always in line with the Employment Secretary's intentions . (Its Chairman is, of course, a political appointment . A property financier and committed `free market'

man, David Young has given both time 13 and money to the right wing `think tank', the Centre for Policy Studies .) It was MSC employees (as members of the CPSA) who drew public attention to the totally inadequate monitoring of YoP . The MSc also opposed the continuation of the Young Workers Scheme because it merely gave employers subsidies to encourage the payment of low wages but without any obligation to provide training at all. The government ignored their recommendations, however, and seems set to throw away another £60 million . Involvement of the Armed Forces was also unsuccessfully opposed by the MSC, both for its divergence from its basic skills criterion as well as its funding of a scheme over which it will have no control . (The gender role reinforcement is neatly expressed in the Armed Forces scheme . The Army is taking 1,250, Royal Navy 350 and the Air Force 350 ; of these 1,900 places only 133 are being offered to young women ; there are no places for women in the Army's scheme .) And smaller firms have complained about the ability of larger firms to flout MSC guidelines while finding themselves rigorously policed by local MSC officers . Yet another example of contradictions within the MSC was the piece which appeared in the Sunday Times (28th Aug . 1983) which reported the national intervention by the MSC against its own Area Manpower board for Fife and Central Scotland . The Scottish board was trying to defend local college provision of commercial and office training against the competition of a private firm called Pitman Training Services . A study by the Income Data Services on the scheme voiced complaints by companies that suggest national/local MSC conflict is not uncommon. Such a degree and variety of difference throws into doubt the wisdom of the boycottist tactic much advanced by the left against a supposedly monolithic state instrument of Thatcherite politics .

Capital E5 Class 14 The Labour Movement : for and against The labour movement is divided on the question of YTS . The dominant view, (certainly at leadership level), appears to vary from uncritical to cautious support, backed up with declarations to negotiate improvements and guard against abuse . An alternative view, (and one which expresses many of the arguments explicitly made in this article) is contained in the pamphlet of the Independent Labour Party, The Tories'PoisonedApple . It adopts the stance of implacable hostility and urges trade union withdrawal of all support for the schemes . The authors of the ILP publication see YTs as not only inadequate but positively harmful . It is the cutting edge to the Tory policy of reducing all wages . It is seen as harmful because it props up the Tories' attempt to dismantle the Welfare State and destroy the industrial base of Britain . While it is possible to agree with much of the above, complete withdrawal from YTS need not automatically follow . Indeed, some unions have produced guides for their negotiators which start from the premise of accepting the scheme and then trying to improve on it. First a bad example. The National Union of Teachers guide, Schools, the NBC and YTS, has a section on the MSC that appears to be cribbed from MSC sources and adds nothing more to our understanding . Of its twenty nine pages only one is given over to questioning what can be done and that does little more than discuss, inform, investigate, run work shops and share ideas . The main concern appears to be getting teachers on to as many Area Manpower Boards as possible, or, failing that, setting up teachers' sub committees to advise AMB's . The pamphlet shows no awarness at all that the entire drift of government policy is to take education for the working class out of the hands of professional

educators . Perhaps this explains the remarkable fact that the government's New Technical and Vocational Initiative for baptising 14 year olds in the fires of factory life, is not even mentioned . A good example, on the other hand, has been produced by the General Municipal and Boilermakers Union . The real value of such a guide lies in how it is used rather than in what it says . But at least negotiators of this Union are armed with good standards to fight for and cogent arguments with which to realise them . The document contains model agreements outlining trainees' rights. There is a Health and Safety Charter for trainees, designed to protect them against the horrors of Yop . It contains a model agreement for the joint regulation and monitoring of the Scheme and a checklist of 27 key questions to ask of any proposed scheme including, "will the union's policy on equal opportunities for women and ethnic minorities be catered for?" - ICI took on 191 trainees instead of their normal 50 apprentices last year and not a single woman was taken on. The guide also alerts negotiators to the dangers of diluting existing training opportunities and conditions by insisting on the strictest demarcation of YTS employees and YTS trainees . And, for jobs undertaken requiring no training, the recognised rate for the job must be insisted on. It asserts trainees' rights to join a union and elect representatives and proposes that in each work place the trade union organisation elect a shop steward/ staff representative to liaise with the trainees and their representatives . Problems of union control The institutional involvement of the unions in the operation of the MSc occurs at both the national and area level . Nationally, the TUC nominates representatives to sit on the Youth Training

Behind the news Board (YTB) which takes an overall advisory role on the scheme . More locally, trade union representatives sit on the Area Manpower Boards (AMB) . The Boards are based on the tripartite system . The Tuc, CBI, and `independent' organisations such as local authorities all having representation . This provides some system of union control over YTS . At national level, TUC nominees can supposedly influence both the guidelines of the scheme and monitor how it operates, while the five union representatives on an Area Manpower Boards can object to schemes and argue for improvements or outright rejection if they feel it necessary . But does it work? at the workplace: The case of GEC telecoms is one of the largest and most profitable firms in Coventry . It has had its share of redundancies and job loss. The trend will continue with the proposed introduction of the new telephone system, `System X .' The company in Coventry has a tradition of providing YoP places and earlier this year they proposed the introduction of 144 YTS placements in staff areas . Although it was clear that `job substitution' would operate, the union did not reject the scheme outright . Rather, they identified a number of conditions they wanted GEC to meet . Most significantly they wanted assurances about job security. The company refused to give such guarantees and the issue was taken through the disputes procedure without resolution . But local GEC management were not inactive . Letters were sent to GEC staff implying that if the unions accepted the same, the children of existing GEC workers would be given priority . At this point the scheme came before the AMB . This raised some problems . When the AMB considered the scheme, the Chairman declared an interest (he was, after all, the Personnel Director at YT's

GEC

telecoms) . However, despite the fact 15 that the Chair was then taken by one of the trade union representatives and that the unions at GEC had sent written and detailed explanations of their position, the scheme was not rejected, merely set aside . One reason seems to be that negotiations were allegedly still continuing . In contradiction to normal practices, the GEC management had invited the national union officials of the unions concerned to discuss the YTS scheme, thus attempting to put pressure on the local representatives . From these discussions an improved document emerged, but still without any guarantees on job security . Meanwhile, sons and daughters of GEC staff had been sent letters from the company promising interviews for the new YTS scheme . The issue then went to a ballot of the members who voted a massive 75 to 85% rejection of the schemes . (The extent of the workforce's opposition surprised even the unions .) Two factors go some way to explain it. GEC was one of the few large factories that has had experience of the reality of YOP while the attempt of the company to manipulate the employees' children probably backfired . GEC

The failure of tripartism The GEC example is not typical . Will most workplace unions oppose YTS with solid membership support? Will they lobby AMB members and put their views in writing? How many have any traditions of battling against the unpalatable effects of IOP and job sharing? What the GEC example does show is the limits of tripartism . If the AMB structure is going to allow trade unionists to block schemes which are unacceptable to the workers at a particular workplace, then GEC is the example . If union approval at the workplace means anything, then the GEC workers should get the support from the AMB for their demands . That the workers are uncertain

Capital & Class 16 that support from the AIMB will be forthcoming indicates just how weak the system is . At first sight, the impact of trade union involvement is patchy . Some AMBs have delegated responsibility for scheme approval to MSC officials where only a `small' number of places are involved . Trade union representatives never even see the schemes . But, in others, the trade union representatives have been instrumental in establishing definite criteria for the AMB to judge all schemes, improving on the ponderous TUC guidelines, and have insisted on seeing every scheme requiring approval . Nevertheless, to sit on AMBS is to accept that some schemes will be approved . The discussion is simply about standards, not about principles . And the weak position of the unions in the current recession indicates just how ineffective unions might be in the face of a determined employer . And the failure of the YTS to secure any increase in trainee payments beyond ,£25 indicates how uninfluential tripartism is . Accountability and control Even within the tripartite structure of the YTS's and AMB's there are problems. Links between workplaces and the AMB trade union representatives don't exist or else are purely accidental, (representatives are nominated through the regional TUC and there are few links between the regional TUC and workplace trades unionists) . To all intents and purposes, the AMB's are not accountable to workplace trades unionists . They are supposed to be implementing national guidelines as determined, with TUC input, by the YTB . Workplace unions' only real role in this framework is to feed information to AMB members and hope they are sympathetic . The system does not install workplace confidence that the AMB's will be effective . Given that links between workplace

and AMB are weak means that only the most committed AMB member will have the necessary information and inclination to challenge the conditions of specific YTS schemes . Secondly, the system creates real division within the unions . The GEC example, where national officials were brought in, is not the only one of its kind and it nicely illustrates the problem . Who approves or rejects a YTS scheme? In what ways can national offices, perhaps closely identified with TUC activities and policies, give effective support and local union opposition to YTS? Internal union conflicts and interests A further dimension to YTS is simply its scale . Consequently many workers come to depend on the success of YTS for their job security . The encroachment of the MSG within the Further Education sector, combined with education cuts, has placed members of unions such as NATFHE and NUT in difficult positions . YTS, whatever its educational and training shortcomings, is a very real alternative to redundancies in the education sector. To try and make YTS a `good' scheme is a very tempting way out of this dilemma . And neither is the civil service immune from job loss, nor unions such as the CPSA and SOPS . They have thousands of members administering YTS and similar MSC schemes . Workers in the MSG may well take training seriously and genuinely feel that YTS is better than nothing . Pressure on members' jobs has a further and more disturbing twist . YTS cannot be seen as a state training scheme . It is a scheme where privatisation of both training and administration is built in and will pose severe problems for teaching and civil service unions . Tebbit's much quoted remark about the need for the Further Education sector to be competitive in providing training, signifies the potential and intent that private training

Behind the news agencies should be providing training under YTS . Organisations have been set up to do just that . And for those on the left who see the MSC as the dark totalitarian sword in Tebbit's right hand, it is worth reflecting on the growth of Management Agents . They are effectively paid an 'ontop' payment to administer cheap labour schemes, and undertake administrative work previously carried out within the MSC itself. Consequently, union positions on YTS may be contradictory for some and simply impossible for others . If the teaching and civil service unions oppose it, members' jobs may go ; but if they don't, they may go anyway . Non-unionised workplaces YOP traditionally occurred in small, nonunion workplaces . The argument runs that YTS can only be financially viable in larger workplaces where the 'additionality' rule can be brought into play . But if the growth of `Management Agents' takes off, (and the evidence of the adult equivalent of YTS, the Community Programme, suggests that this is quite probable), it will be possible for traditionally nonunionised industries, for example retail trades, to take YTS labour on a large scale . The trade union representatives on the AIMBs have no right to insist on trade union approval of schemes in nonunionised areas ; and the union movement has little notion or time to monitor schemes in organised industries, let alone the non-unionised ones . Nevertheless, this is where the most serious abuses are likely to occur. Should unions therefore recruit YTS trainees to give them some protection? Some tried under Yop with some success. But are the unions really geared to handle the problems of YTS trainees, any more than young workers, women or blacks? What protections and assistance can unions really offer? Few unions appear to C & C-21-B

have thought this through and it indicates 17 the weaknesses of representation within bureaucracies dominated by white, male and middle-aged workers . In consequence, workplace trade unionists find themselves in a contradictory position . Is it better to resist the scheme than throw it out altogether? Or should those workplaces where unions can control and influence the scheme (which may not be many), agree to YTS schemes and thus prevent a far greater exploitation of young people in non-unionised sectors? Conclusions YTS poses a number of problems for trade unionists, and in some sense they are of our own making . The historical failure to provide effective representation of youth within trade union structures has meant a bankruptcy in policy and the issues of training and youth unemployment have been confused by collapsing them into one perspective - YTS rather than youth unemployment has become the central focus for discussion . Some eighty years ago the Polish Marxist Rosa Luxemburg enraged German trade union leaders with her description of trade unionism as a `labour of Sisyphus'. The reformist boulder of steady advances and improvements was in her view forever rolling back, pushed down the hill by every change in the market, by aggressive and confident governments and employers taking back what in a period of weakness they were forced to concede . Indignant trade union leaders have instead insisted that through their presence in the corridors of power and their positions within the institutions of the State they could make such reforms permanent and irreversible and keep the boulder ever steadily rolling upwards . Looking backwards over more than three quarters of a century it would be a very optimistic or very blind trade unionist who could with confidence say that Rosa Luxemburg was wrong .

Jane Wheelock There is a strong theme in contemporary Marxism which argues that the monopoly stage of capitalism requires a different analysis from that provided by Marx, who is seen as essentially examining a competitive stage . Such a view leads to a questioning of the law of value as a law of regulation of capitalism, operating through the formation of an average profit rate . It is important to ask how far modern Marxists have been able to return to, develop and make use of Marx's analytical ideas . This is something that has to date not been comprehensively done (although Semmler in his article in Capital and Class 18 raised many pertinent issues, so providing the inspiration for this article) . Using a history of economic thought approach, this piece will examine the concepts of competition and monopoly in the Marxist tradition .

Competition in the Marxist tradition • TAKING A HISTORY of thought approach to a problem is of course strongly rooted in Marxist methodology . A critique of existing theories is part of Marx's dialectical method, and he took a detailed critique of his predecessors as a basis for developing his own conceptions . One of my major aims in this article will be to identify the strands of thought within the Marxist tradition on competition and monopoly, attempting to identify where there is continuity . My prime concern will be to spell out the changing forms that competition takes with the historical development of capitalism from the competitive to the monopoly stage . Structural changes brought about by the accumulation process (the growth of large scale enterprise and of finance capital) are paralleled by changing competitive strategies, which can in turn be linked with developments in the law of surplus value . Given the importance of the implications which flow from a Marxist analysis of competition and monopoly, I want to contribute to the history of Marxist thought in this respect . I will therefore start (in the second section) by asking what the Marxist paradigm has to offer to a study of competition and monopoly. Section 3 will then look at what Marx had to say about competition, emphasising in particular the ambivalent nature of competition for Marx and also identifying those transitional elements in his works which examine the interface between competition and monopoly . Section 4 is concerned with the theorists of imperialism and sees Hilferding

Competition

19

as a major contributor to the debate on competition and monopoly using concepts developed by Marx . Section 5 attempts an outline of the current state of the debate over competition and monopoly within Marxism, identifying the new forms that competition takes within the changing institutional framework. The final section provides a brief conclusion on the strength of the Marxist contribution, as well as its policy implications .

By contrasting it with the Neoclassical paradigm, we can find out what a Marxist approach has to offer to a study of competition and monopoly. For the Marxist, a class structure is inherent in economic relations, whilst for the Neoclassical economist there is a basic assumption of equality in the relations between economic agents (the factors of production) . Another way of expressing this difference is that the orthodox approach tends to ignore power relations. Monopoly, however, provides an exception . How is it dealt with? For the orthodox economist, only monopoly profits are based on exploitation, whilst for Marxists all profits have this basis . In the Neoclassical schema, monopoly rent is introduced as a kind of theoretical afterthought, necessitated by the lack of correspondence between the abstract model of perfect competition and the real world of large-scale business enterprise . For Marxists, the associated contrast between the paradigms arises from differing treatments of the institutional framework . This framework is largely ignored by the Neo-classicist . General equilibrium theory has a very simple classificatory system which consists of individuals (whether they be households or firms) on the one hand and the economy on the other .' Economic agents are seen as more or less homogenous units, which are then assumed to pursue a maximising goal : maximising utility in the case of households and profits in the case of firms . In the Marxist paradigm, maximising behaviour by business is rather the result of the exigencies of a capitalist system, and the institutional framework is of fundamental importance . The Market

It is not suprising, given their predilection for homogenous economic agents, that Neoclassical economists should give pride of place to the market and to market price . This emphasis is not present for the Marxist, whose criticism of the market would start by pointing out that at the level of exchange individuals are free and equal, and it is only when the institutional power and class framework lying behind the market are examined that inequality becomes apparent .

THE MARXIST PARADIGM AND THE STUDY OF MONOPOLY.

Capital & Class 20

Orthodox economics has concentrated on market phenomena, especially price and income components, despite the fact that the price system is but a fragment of the whole economic system . This preference is understandable given the possibilities of model building that derive from price theory. Yet a distinction can be drawn between the logic of price formation and the sociology of price formation. Within their predominant concern with the market and the logic of price formation, neoclassical economists pay more attention to demand and consumer variables than to supply or production variables. This derives from their view of the paramount importance of the exchange system as an allocative mechanism for scarce resources . Marxists, on the other hand, see capitalist exchange as a means for achieving social reproduction and exploitation at the same time, so that the market place becomes an arena for the exercise of economic power between classes and sub-classes . Non-Marxist models thus relate almost entirely to market demand conditions, and this emphasis on the state of demand means that competition, oligopoly and monopoly are conceived of as opposing forms . The Marxist approaches the problem of monopoly and oligopoly structures from the viewpoint of the production process. In Neoclassical theory the problems of monopoly and oligopoly are largely considered within that branch of economics known as the theory of the firm, whose methodology is predominantly micro-static equilibrium theory, and only a limited number of attempts have been made to incorporate this essentially micro-economic tradition into a macro-economic context . Such a split within the subject matter of economics is not conducive to a full understanding of the growth of monopoly structures . Taking a dynamic and historical approach is inherent in the Marxist tradition, and I shall argue that this indeed provides the basis for a most important Marxist contribution to the theory of competition and monopoly. This historical dimension provides a link between the behaviour of monopolies and how and why they grow .

Competition is a process Finally, as I shall argue in more detail in relation to Marx, competition is primarily a process for the Marxist, whilst it is usually taken as a situation in the Neoclassical approach. This is exemplified in the assumption of perfect competition . Perfect competition is, however, more than a set of abstract assumptions in orthodox economics ; it is also seen as politically desirable since free competition is not merely a scientific explanation, but also ensures,

Competition 21

it is felt, the greatest possible satisfaction of needs in society as a whole, with optimum allocation of society's resources . Perfect competition thus serves the purpose of reconciling the interests of the individual with those of society : the invisible hand is the competitive market . Perfect competition ensures harmony in the interests of society, and provides an ideal solution to the problems of social control in the economic realm . The growth of monopoly structures is thus really rather embarrassing for the Neoclassical school. Monopoly is not without its difficulties for the Marxist paradigm either. In a famous purple passage at the end of Volume I, Marx argues that the monopoly of capital will become a `fetter on production' and `sound the knell of capitalist private property' .' Although in considerable crisis in the 1980s, capitalism continues to survive despite extensive monopoly elements .

The formation of the average profit rate is an expression of the competitive process . It is interesting to notice that it is not simply Marxists examining the monopoly stage of capitalism who argue that the process of price formation contradicts the law of value . At the start of Volume III Marx himself points out that competition seems to contradict the determination of value by labour time . Competition shows `average profits, independent of the organic composition of capital in the different spheres of production and therefore of the mass of living labour appropriated by any given capital in any particular sphere of exploitation' .' Under competitive capitalism, the average rate of profit figures as an already existing magnitude for the calculations of the individual capitalist, determining the transfer of capital from one place to another . Under these circumstances, the average rate of profit `does not present itself as a result of a division of value, but rather as a magnitude independent of the value of the produced commodities, as existing from the start and determining the average price of commodities, that is as a creator of value' .' This contradiction is, of course, resolved by Marx in the transformation process, the source of the most extended debate between Marxists and non-Marxists . At the root of Marx's solution to the `transformation problem' is his insistence that competition is opaque : the competitive process is one in which the appearance belies the reality. `Everything appears upside down in competition . The existing conformation of economic conditions, as seen in reality on the surface of things . . . . are not only different from the internal and disguised essence of these conditions, and from the conceptions corresponding to their es-

MARX'S VIEWS OF THE CHANGING NATURE OF COMPETITION

Capital f5 Class

22

sence, but actually opposed to them or their reverse' .' The law of surplus value actually takes a modified form under capitalism (Volume III) as opposed to simple commodity production (Volume I) operating through the formation of an average profit rate, by regulating prices of production . The way out of the apparently self-contradictory nature of competition lies in becoming aware of the fact that competition is not simply at issue in discussing the relation between `many capitals' (i.e . in Volume III) but that it is also part of the nature of `capital in general' (to use Rosdolsky's terms) as discussed in Volume I of Capital. Competition is no `deus ex machina' for Marx as it is for Neoclassical economists, but rather something that is inherent in the nature of capital as a social relationship . 'Conceptually' says Marx in the Grundrisse `competition is nothing other than the inner nature of capital, its essential character appearing and realised as the reciprocal interaction of many capitals with one another, the inner tendency as external necessity' . 6 The essential character of capital is that it is self-expanding value . Competition thus reinforces something which is in any case inherent in the nature of capital . What it becomes important to study is therefore the changing forms of competition, just as I earlier mentioned that the law of value changes its form . Levels of competition

Marx is primarily concerned to analyse the form that competition takes in the capitalism of his day, which has generally been labelled as the competitive stage . He does nevertheless also provide some pointers towards the form competition takes under the monopoly stage, of which more in a moment . Competition determines the distribution of surplus value via the tendency to form an average profit rate . This tendency is best regarded as a dynamic or perhaps dialectical process in which competition takes place at two levels . (What is useful about the terminology of levels of competition is that at the monopoly stage, competition becomes active on a further third, level, indicating a change in the form of competition) . Firstly, competition establishes an average rate of profit within a sector or industry by averaging the different individual values of a given commodity into one social value (what Marx calls market value) . Market value is determined by average conditions of social production within a particular sphere, and thus exerts a social sanction on the individual enterprise . The second level is that of competition between spheres or industries ; and results in the formation of prices of production, depending on the

Competition relative weight of the various spheres of production within which an average rate of profit has already been established, and depending on the transfer of capital from one sector to another . Neoclassical economists concentrate their attention on the formation of market prices, and Marx does indeed acknowledge that fluctuations in the conditions of supply and demand may lead to deviations between market prices and market values, but he, along with the classical economists, would argue that market values are the centre of gravity around which prices fluctuate . (Prices are ignored in this paper) . Formation of the average rate of profit In his paper Semmler argues that competition has two tasks for Marx, one to equalize prices, leading to differential profit rates, and the other to form an average profit rate, but I would argue that these two mechanisms are in actual fact part of a single tendency to form an average rate of profit . So far I have restricted myself to showing competition as a movement towards an average, whether within or between sectors . Yet competition requires the existence of differences in profit levels before it can act to eliminate those differences. For the individual capitalist, the average rate of profit is present as a regulating element in the form of a wish to place herself in an exceptional situation. The average rate of profit is an actual given for the individual capitalist, and her aim is to overreach it and make what Marx called an `extra' or `surplus' profit . Such an exceptional situation can be achieved by introducing new techniques of production within a firm, so that the individual value of the commodity produced by the innovating entrepreneur is below the market value determined by the average conditions of production in that industry sphere . This gives rise to what Marx calls `normal surplus profits' . What is the overall result of the individual capitalist's effort to place herself in an exceptional situation? It appears as though deviation from the average profit rate is the rule : `The abnormal exploitation, or even the average exploitation under exceptionally favourable conditions, seems to determine only the deviations from the average profit rate, not this profit itself .' Yet in fact this is a further example of reality being contradicted by appearance, and of the upside-down nature of competition, The exceptional situation cannot last, since other capitalists will be driven to adopt the same methods and in the very process of seeking to transcend the average profit rate, that average is actually effected and becomes a reality . The formation of the average profit rate is the result of two contradictory tendencies subsisting together : the tendency towards

23

Capital & Class 24

equalization of profit rates and the tendency towards their differentiation ." The average rate of profit represents a `practical brotherhood of the capitalist class' (as Marx puts it) in that each individual capitalist thereby shares in the common pool of surplus value in proportion to their share of the investment. Competition thus enforces common action on the capitalist class, and in so doing regulates the process of interaction within the class . It may seem that I have been making a purely semantic distinction in the unitary but differentiated process of competition . But the ambivalent or two-sided nature of competition is important to grasp, since a further manifestation of it becomes apparent when looking at what the imperialists had to say about competition . Through an examination of the contradictory nature of barriers to entry to a firm or industry, it will be seen both that competition produces monopoly, and that monopoly produces competition . Having considered the role of competition thus far in Marx's theory of value, one can draw a preliminary conclusion that the labour theory of value is unlikely to become invalid through a change in the nature of competition (with the development of a monopoly stage), since competition is not a driving force external to the system, but rather one which is inherent in it .

Concentration and centralisation of capital Before leaving Marx, it is important to acknowledge that there are some transitional elements in Marx's own thoughts : elements which examine the interface between competition and monopoly . On the one hand there is his descriptive treatment of the growth of large scale enterprise through concentration and centralisation of capital, and on the other his analytical treatment of extra surplus profits at the intersectoral level as a result of a series of special cases of `exclusion' from the average profit rate . Marx's references to the possibilities for the growth of large scale enterprise are brief but graphic . He saw the concentration and centralisation processes as inevitably taking place alongside capitalist accumulation. The growth of social capital is effected through the growth of individual capitals, and this Marx calls concentration . Centralisation, on the other hand, `is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals' .' It can only be concluded that in the very battle of competition, competition is destroying itself ('One capitalist always kills many" 0). This contradictory manifestation of competition is something that Marx does not develop, but it is a problem that Marxist writers on the monopoly stage must perforce confront.

Competition 25

Extra surplus profits No writers that I am aware of make reference to Marx's analysis of extra surplus profits arising at the level of competition between spheres of production . Here Marx argues that some capitals do not submit to the process of profit equalisation so that `a surplus-profit . . . . may arise, when certain spheres of production are in a position to evade the conversion of the values of their commodities into prices of production, and thus a reduction of their profits to the average profit' ." Unfortunately, Marx is concerned in the six `exclusions' from the average profit rate (which he discusses in Part 6 of Volume III) almost exclusively with monopoly ownership of land as a barrier to competition between sectors . Perhaps Marx can be excused his lack of concern with monopoly within the capitalist class, since when he died the growth of large scale enterprise was at an embryonic stage . Yet his description of concentration and centralisation of capital implies the growth of monopoly. Why did Marx devote so much attention to the issue of rent in his analysis of extra surplus profits between sectors, something that was substantially of historical and marginal interest even in his day, at the expense of a phenomenon that he himself recognised as being of contemporary significance? There is a considerable dichotomy in Marx's analysis here . Table 1 attempts to summarize Marx's views of the changing nature of competition between `many capitals', with competition acting at two levels : within a sphere of production and between spheres . In both cases the tendency to form an average profit rate is the outcome of both a movement towards that average and a movement away from it as capitals try to put themselves in a special position . Fractions of capital Up till now, the capitalist class has been presented as consisting of an undifferentiated group of `many capitals' . Marx actually distinguishes three fractions of capital, industrial, banking and commercial, between which surplus value must also be distributed . It is important to be aware of Marx's analysis here because of the changes in the relations between the fractions of capital introduced under the monopoly stage through finance capital . The circuit of industrial capital is represented as ~LP . . .P . . .C'-M',

M-C tMP

where the accretion of value derives from profit of enterprise . The



N

Table 1 MARX'S VIEWS OF THE CHANGING NATURE OF COMPETITION Labour theory of value

,

`Capital in general' Competition inherent in nature of capital .

,

Banking capital as 'capital in general' in the real world.

- Nearer to real world Law of surplus value

,

'Many capitals' and their interaction .

I Competition establishes an average rate of profit as a regulative principle distributing surplus value . Tendency to equalise

(1) Within a sphere of production Competition averages different individual values into one social value (market value) .

Tendency to differentiate via normal surplus profit .

Nearer to real world Transformation Procedure

Tendency to *~ equalise

I

Market Price Formed through fluctuations of supply and demand.

(4) Concentration and Centralisation of Capital Marx doesn't relate this phenomenon to the issue of distribution of surplus value .

Further distributions of surplus value required

\ (2) Be .rZeen spheres of production Depends on relative weight of different spheres . Formation of prices of production .

(3) The fractions of capital Banking capital (interest) Industrial capital (profit of enterprise) Merchant capital (enters formation of average profit rate)

Tendency to differentiate Landed property as barrier Rent

Competition 27

profit earned in the production process will, however, also be shared with banking capital whose circuit can be represented as M A M 5C-M' B_ M' A where money capital changes hands from A (the owner) to B (the industrial borrower), the latter transforming it into productive capital and returning a share of the profit as interest . Merchant capital may also take on the specialised function of converting commodity capital into money capital, and shouldering the costs of circulation . The circuit of merchant capital is represented by M-C-M' and merchant capital thus plays a determining role in the formation of the average profit rate . In contrast, there is no general law by which to determine the limits of the mean rate of interest `because it is merely a question of dividing the gross profit between two possessors of capital under different titles)' For Marx the credit system, as the institutional framework which facilitates competition between sectors, has an important role . In addition, however, the money market has a very special character for Marx, since capital exists here in the form of independent money value . This means that the social character of capital is here fully expressed, the competition between individual sectors ceasing . `The character worn by industrial capital only in its movement and competition between individual spheres, the character of a common capital of a class comes into evidence here in full force by the demand and supply of capital' ." Capital in general has appeared up to now only as an abstraction, but capital in general as distinct from particular real capitals, has itself a real existence, the capital accumulating in banks ." We are now able to move full circle from capital in general (theorised by the labour theory of value) to particular capitals (whose relationship is expressed in the law of surplus value) and back again . The social character of capital as expressed in the average rate of profit can in fact only be promoted and fully realised by the complete development of the credit and banking system, for the credit system allows for the free movement of capital between spheres of production .

In general the theorists of imperialism do not relate their consideration of competition to Marx's analysis, but there is an implicit development of the latter's description of the growth of large-scale enterprise in Lenin . For Lenin, the concentration of production into large units and the formation of monopolies, is of course a major characteristic of the new (monopoly or imperialist) stage of capitalism. `This transformation of competition into monopoly', he

THEORIES OF COMPETITION AFTER MARX .

Capital & Class 28

says, `is one of the most important . . . phenomena of modern capitalist economy' ." In addition to concentration and centralisation within a particular branch of industry, there is also combination, where different branches of industry are grouped into a single enterprise . Whilst Lenin does not acknowledge any basis to his analysis in Marx, the distinction between concentration and centralisation on the one hand and combination on the other is paralleled by the two levels of competition that I showed Marx as describing in Das Kapital . Centralisation within the branch affects the form that competition takes between industries producing the same product . Combination between branches (a contemporary example would have been the combinations between the anthracite coal industry and the railroads in the USA at the turn of the century) alters the competitive process between branches . The theorists of imperialism also point to combinations between banking and industrial capital : this of course involves a merging between the fractions of capital as Marx described them . Finance capital forms the institutional link between these fractions .

Hilferding's dynamic Does this growth of monopoly elements imply a suppression of competition? Hilferding is one of the few Marxists of the period who directly faces the possible implications for Marx's theory of value . `If combinations with a monopolistic character suppress competition, they thereby suppress the very means by which an objective law of price can appear . . . . The verification of the Marxist teaching on concentration, in other words, combination with a monopolistic character, thus seems to oppose the Marxian theory of value' .' 6 Whilst Hilferding's emphasis here is on the problem of an objective pricing rule (I would argue that this is not of crucial concern for Marxists), Hilferding does tackle the issue of whether competition and monopoly are mutually exclusive in his lengthy and scholarly book . I see Hilferding's major contribution as providing a framework for integrating the process of the formation of an average profit rate with the process of combination and the formation of monopolies, thus overcoming the dichotomy which I identified in Marx's analysis . Hilferding is able to provide a dynamic for the system . His dynamic of the combination process starts from one of the aspects of the formation of the average profit rate emphasised by Marx : the capitalist only succeeds when his profit is above that of the average rate of profit, yet the objective result of seeking higher profits is establishment of a common rate of profit ." Hilferding, however, goes further than Marx and argues that this fight to obtain

Competition

extra profits means that the organic composition of capital becomes higher and higher . Marx looked at the implications of this process for the economy as whole in terms of the falling tendency of the rate of profit, but Hilferding analyses its effects on many individual capitals . The growth in the importance of fixed capital makes it harder to withdraw capital once it has been invested and economic barriers to the movement of capital appear . Hilferding sees this as the start of a process tending to lead to inequality in the general rate of profit, with two sectors likely to have below average profit rates . Overproduction in the highly capitalised sectors already mentioned is likely to reduce the profit rate there below the average, more especially with barriers to the exit of capital . The highly competitive sector is also likely to have below average profit rates . The second aspect of the formation of the average profit rate posited by Marx then comes into play : the existence of differences in profit rates provokes competition which then eliminates those differences. Marx postulated the free movement of capital between branches as the means to this end ; Hilferding argues that in the new circumstances when spheres of production may have lower profit rates due to being particularly highly capitalised or particularly competitive, combination between spheres is a vehicle for achieving equality ." Thus at the level of combination between spheres of production, Hilferding sees a tendency to form an average profit rate in operation once again . Whilst Marx considered barriers between capitals as the result of land ownership, Hilferding deals with barriers within the capitalist class . So far I have considered Hilferding's concept of barriers to the exit of capital due to the growth of large scale enterprise . He also discusses monopolies, trusts and cartels which tend to have profit rates above the average, due to barriers to entry . In this latter case too, Hilferding sees a dynamic process at work, with cartellisation in one area of the economy provoking cartellisation in other areas . The suppression of competition at one level (within the sector) promotes the equalisation of profits at intersectoral level. 19 Thus, although Hilferding himself sees monopoly profits and a hierarchy of profit rates as potentially in conflict with the Marxian labour theory of value, he in fact provides a picture of a dynamic mechanism in which competition and monopoly are not mutually exclusive terms, but where each becomes the other in the process of capital accumulation . What requires attention is the nature of that competition, of which more in a moment . Finance Capital

What, finally, of the effect of finance capital as a combination between banking and industrial capital, on competition? In dealing

29

Capital & Class 30

with the three fractions of capital (merchant, industrial and banking), Marx argued that there was no general law to determine the distribution of surplus value between profit of enterprise and interest . Finance capital provides an institutional connexion between these three fractions, which is well expressed in Hilferding's analogy to the trinity for the relationship which results . `For industrial capital is God the Father, who has freed commercial and banking capital as God the Son, and money capital is the Holy Spirit. They are three, but nevertheless a unified one in finance capital' . 10 Hilferding is, of course, notorious for his conclusion that finance capital leads to the possibility of a single general cartel being formed, which Lenin branded as 'ultra-imperialism' . Such a proposition would involve the complete suppression of competition between capitalists . Further examination of the competitive process indicates that Hilferdings's conclusions were incorrect, even though his intermediate analysis contained much that was useful . Bukharin, in his `Economics of the Transformation Period' of 1920 provides, it seems to me, a useful framework for analysing the nature of competition, when he distinguishes three forms of competition based on the changes from concentration and centralisation to combination across branches and then extending through the role of finance capital between whole sectors of the economy . His first level of competition he names as horizontal competition between analogous enterprises which produce similar products and where competition does not rest on the social division of labour . Secondly, there is vertical competition between heterogenous enterprises whose separate existence expresses the fact of social division of labour. Bukharin's example is of the owner of a tailor shop who is related to the clothier because he buys cloth from him, and the simultaneous existence of a tailoring and a cloth maufacturing enterprise constitutes the expression of social division of labour. Lastly, there is combined (or compounded) competition between those capitalist units encompassing different branches of production and which transform the social division of labour into a technological division . Marx saw that within each industry, competition destroys itself, but that monopoly does too. Under the monopoly stage of capitalism, combination now takes place both between industries and between the fractions of capital . What are the dynamics of this process? The dynamic cannot be one of a consistent development of a single monopoly power, for the very factors that make for growth of one centre of economic power, also make for the dispersion of this power and for the building up of alternative centres of power ." Monopoly does not take over from competition at the later stage of capitalism ; rather competition takes an additional

Competition form. Arising from the imperialist analysis, competition occurs at three levels, the two spelt out by Marx, and additionally combined competition between the units of finance capital . At any of these three levels, barriers to competition will provoke competition at the higher level . Groups of finance capital may declare truces and reach agreements, but essentially such truces are temporary .

Continuity What I have attempted to bring out from the writings of the imperialists is that there is continuity between the competitive and the monopoly stages of capitalism, and that despite the lack of concern with Marx's categories, it is possible to form a synthesis between Marx and the imperialists . Marx was not simply analysing one stage of capitalism, the competitive stage ; and the laws he put forward, in particular the law of surplus value, apply to the new stage also, albeit in a modified form, The first aspect of this continuity is that competition remains a feature of the monopoly stage, although in a changed form . Competition now takes place at three levels, horizontal, vertical and combined competition, rather than simply within and between sectors as under competitive capitalism . Whilst barriers to entry and exit of capital can temporarily, or even for longer periods, prevent competition between sectors, combined competition, and the possibility of shifting financial groups correspondingly tend to overcome those barriers in their search for extra surplus profits . This is indeed what the empirical studies analysed by Semmler seem to indicate . The second aspect of the continuity is the parallel development which the law of surplus value itself undergoes under the monopoly stage . In the last section, I portrayed the law of surplus value as a general law governing the distribution of surplus value between capitals through a tendency to form an average profit rate, The `elasticity' of the operation of the law was emphasised, where normal surplus profits within a sector, and the tendency for those surplus profits to be overcome, are part of the process forming the tendency to form an average profit rate . On the other hand I showed Marx presenting competition between the fractions of capital (banking and industrial) as not subject to this general law : there is an `indeterminacy' (in the sense of no governing general law) in the distribution of surplus value between these two fractions . The development of the credit system and the possibility of combinations between sectors and between fractions of capital provides a mechanism for the tendency to form an average profit rate to re-establish itself at the level of the fractions of capital under the monopoly stage of capitalism . There is thus a link between the changing forms of com-

31

Capital C Class

32

petition and the development of the law of value, which deserves spelling out in some detail . It was shown in section 3 that under the competitive stage of capitalism competition operated at two levels to enforce the law of value . It operated within a sector ensuring that the commodity had the same market value for all producers regardless of the method of production used, which meant surplus profits for those who produced the commodity with an above average production method . Within the sector there is horizontal competition between enterprises producing the same commodity, and seeking to gain surplus profits . Competition also operated between sectors, equalising profit levels through the difference between prices of production and values . At this level there is vertical competition between enterprises producing different commodities and expressing the social division of labour. It appears that under competitive capitalism the law of value gives a determinate, if elastic, method for calculation of the division of the social labour of society . This is, however, to forget that running parallel to the operation of competition within and between sectors of production is the division of the capitalist class into three fractions, industrial, merchant and banking capital, together with the existence of the landowning class . In his theory of rent, Marx provides an analysis of the mechanism whereby the landlord is able to extract surplus value from the capitalist, enforcing the law ofvalue on the latter, if he is in a position to enjoy surplus profit . It is also known that merchant capital partakes of the average rate of profit, according to the mass of capital invested by the merchant . But Marx points out that there is no general law to determine the division of gross profit between financial and industrial capital, since the competition between these is an intra-class competition and thus the determinants of the limits of the mean rate of interest are purely empirical, in contrast with the competition which takes place between labour and capital . It would thus seem that under competitive capitalism there is in fact a level of indeterminacy (which has not generally been observed) in the law of value at the level of the division of the capitalist class into industrial and banking fractions . However, insofar as the credit system develops hand in hand with the development of capitalism, this indeterminacy is overcome . In the money market, the character worn by industrial capital only in its movement between spheres, the character of a common capital of a class comes into full evidence . Capital in general has real existence in finance capital .

THE CONTEMPORARY DEBATE

The contemporary debate within the marxist paradigm on the nature and significance of competition and monopoly is a complex and wide-ranging one . Semmler makes a valuable distinction between those who emphasise the abolition of competition and those

Competition

who stress its continued existence, but I feel that he oversimplifies current discussion, in the emphasis he places on the distribution of surplus and the distinction he makes between those who see a persistent hierarchy of profit rates and those who do not. My main concern in this paper is to introduce the institutional dimension, however, and to discuss the role of finance capital. I have therefore omitted consideration of other contemporary marxist views on the changing nature of competition. The institutional dimension provides an additional historical framework to the growth of monopoly capital and finance capital . (It also, incidentally, provides a basis for a marxist analysis of the internal functioning of large units of capital but shortage of space means that I will not develop this aspect) . De Vroey wrote the seminal piece that reclaims the separation of ownership and control as a specifically Marxian inheritance" . This argues that the joint stock company results in `socialised' capitalist ownership, giving rise to impersonal possession. To clarify what this means it is useful to distinguish between possession, ownership as a relation of production, and legal ownership . Possession of capital indicates management of capital : actually putting capital to work in the factory . Ownership as a relation of production means the power of assignment and disposition of capital . Finally, legal ownership of capital in the form of shares doesn't necessarily entail ownership as a relation of production. When viewed in the light of these distinctions, two features of the separation of ownership and control become apparent . Firstly, it signifies a separation between capital as property (ownership as a relation of production) and possession (or management) of functioning capital . This separation indicates that the capitalist class is delegating the task of making capital work to specialised managers, a functional differentiation, which finds a reflection in the multidivisional corporation . The second feature is the split between large and small owners which rests upon the distinction between ownership as a relation of production and legal ownership . The dispersal of (legal) stock ownership actually allows control by large-scale capital through purchase of shares . Neoclassical economists (in the tradition of Berle and Means) simply look at the separation of ownership and control in the individual company, but what is important to observe is how the dispersal of shares allows the centralisation of control over several (or even many) companies in the hands of a few . In particular, Marxists argue that alongside the development from personal to impersonal possession goes an integration and interdependence between the banking and industrial sectors of the economy, whose ultimate expression is finance capital . In an interesting study of the 200 largest us firms, Chevalier concludes that the marxist perspective provides a superior framework : C &

C-21-C

33



Capital & Class 34

`The works of Berle and Means and Lamer's study had isolated the problems of control from their economic context and from the behaviour of American industry, running the risk of giving the notion of control a purely abstract worth . Our study is a first step towards a better knowledge of the relations which exist between the financial structure and the behaviour of firms'." It is in fact the separation of ownership and control that provides the chief mechanism for the growth of large scale enterprise through merger activity . Whilst Marx discusses concentration and centralisation of capital as of equal importance for the growth in the scale of capital, it is widely agreed that today centralisation (via mergers and takeovers) is of considerably greater significance . Centralisation is the chief process which leads to the formation of monopoly capital (ownership as a relation of production) and its separation from non-monopoly capital . Whilst concentration is the expansion of ownership over a process of valorisation, centralisation refashions the autonomy of capitals, so establishing new relations of competition . Centralisation involves the creation of new structural forms, in particular the giant corporation, though ultimately also the financial group.

The distribution of surplus value What forms does competition take under these new circumstances? I want to attempt a classification of the changes in the nature of competition with the monopoly stage of capitalism, by examining the distribution of surplus value between both monopoly and non-monopoly capital, firstly at the level of the industry and then at the inter-industry level . Finally, how does finance capital affect this distribution both between fractions of capital and between financial groups? To clarify this, it is helpful first of all to consider the circuit of industrial capital . XI and X2 are two firms within the same industry (or sector) whilst Y is another sector . Using Marx's diagram for the circuit of industrial capital, we have : LP M-C X2

P X2

__

. . . C' - M'

X2

MP

X2

Barriers/agreements

V

X2

LP M - C s1

Barriers/agreements

ki



. . .P MP 0 xi

LP M - C Y

Y' ~"~ MP

P N

. . . C' - M' y y

. . .C' -M' Xi xi

Competition Each capital valorizes itself during the circuit of capital, making a profit (M') at the end of each circuit . If it is to continue performing the role of capital, the money realized at the end of each circuit can either be reinvested in that firm (X2), or another firm within the same industry (XI) or a different industry (Y) . Competition involves the mobility of capital from less profitable to more profitable firms and sectors . However, there may be barriers to such mobility (such as economies of scale and agreements between firms, of which more in a moment) . I have represented the forces for mobility of capital by arrows between the money capital of firms (M and M ) and of industries (M and M ) .The barriers are represented by horizontal lines, preventing such mobility . Under the competitive phase of capitalism, banking capital facilitated competition between firms and industries by assisting mobility of capital. There was, however, (as we saw in Section 3) also competition between the fractions of capital (industrial, banking and commercial) for the division of profit between profit of enterprise and interest . Under what circumstances will the barriers between firms and industries be overcome? This can be further clarified by distinguishing monopoly and non-monopoly capital as in Table 2 . The two industries X and Y have each been represented as containing both monopoly and non-monopoly capital . The former is characterised by five main features : it is large scale ; it may be formed through a variety of collusive agreements between firms ; there are barriers to entry, whether they be product differentiation through advertising, economies of scale or absolute cost advantages ; and finally it is frequently diversified into a variety of products and even industries . Non-monopoly capital is on the contrary small scale, often with a large number of firms in the same line of business, and having barriers to exit in the sense that capital is not very mobile out of the industry .

Types of competition This means that three kinds of competition can be identified within the industry . Firstly, there is what I think is best called free competition between non-monopoly capitals. This is competition between units of capital which don't have barriers between them . (Marx saw this type of competition operating through temporary surplus profits as was shown in section 3) . Secondly, there is competition between monopoly and non-monopoly capital. This is a process in which monopoly capital dominates non-monopoly capital due to the relative disadvantages of the latter . This inequality is represented by the non-reversibility of the competitive process : whilst monopoly capital can take over non-monopoly

35



Capital & Class

36

capital, or drive it to insolvency, non-monopoly capital must grow or accumulate to become monopoly capital . In most industries, however, it is convenient for monopoly capital that there should be a competitive fringe . Finally, there may be competition between different monopoly capitals within an industry or sector, provided it is sufficiently large . This last type of competition is similar to the competition between monopolies in different sectors or industries . I have called this type of competition `monopoly as a form of ." It is different from competition between monopoly competition' and non-monopoly capital in that it is reversible, in the sense that the same type of competitive processes operate in each direction . Table 2 HORIZONTAL COMPETITION WITHIN AN INDUSTRY

x Y II

Monopoly Capital X (i) Barriers to entry (a) Advertising (b) Economies of Scale (c) Absolute cost advantages (ii) Agreements between firms/Personal liaison, indirect liaison . (iii) Potential entry deterred by excess capacity. (iv) Large scale (v) Diversified

Na 0

Bankruptcy takeover

accumulation

Non-Monopoly Capital X

I

Free Competition

I

(i) Small scale (ii) Large number of firms in same line of business (iii) Barriers to exit Non-Monopoly Capital X

rn W Monopoly as a form of competition (collusion, takeover, diversification, accumulation, liaison) .

(Limited) competition provided by banking capital ensuring (some) capital mobility .

I

I I

Y II F H O z

a

I

HN

aOz zW

Competition

Thus competition between monopolies incorporates the characteristics that monopolies anyway possess . Agreements between firms in the same industry can be replaced or supplemented by agreements between firms in different industries . It is particularly significant that monopoly capital X can diversify and so compete with monopoly capital Y and vice versa . In other words, the barriers between monopoly capitals in different industries or sectors are porous, moveable and variable, as represented by the overlapping dotted lines in the diagram . `Monopoly as a form of competition' is very different from the competition between industries that Marx envisaged . Thus competition between non-monopoly capitals in different sectors remains in existence under the monopoly phase, albeit considerably overshadowed by the competition between monopolies . Banking capital today still ensures some capital mobility between non-monopoly capitals in different sectors, but its contribution is relatively limited . Linking this analysis of competition more closely to the tendency to form an average profit rate, it is possible to classify competition into levels on the one hand and types on the other . It is the structural changes brought about by the accumulation process (due to centralisation and to some extent concentration of capitals) that leads to the establishment of new types and levels of competition with the historical development of capitalism, and each type of competition involves a range of competitive strategies . Table 3 sets out such a typology of competition. Horizontal competition within an industry can take three forms, the first of which is free competition between non-monopoly capitals . In this case the tendency to form an average profit rate involves the dual process of establishing normal surplus profits (by, for instance, the introduction of new techniques) and then overcoming them, as all firms adopt the new techniques . Surplus profits are here very transient . However, as Marx pointed out, in the accumulation process, there is a tendency for concentration and centralisation of capital to take place . This gives rise to the growth of monopolies, so that one finds two further types of horizontal competition . The competition between monopoly and non-monopoly capital is one in which monopoly capital dominates, and it involves the possibility of extra surplus profits being made by monopoly capital thanks to barriers to entry . Such barriers will, however, encourage either non-monopoly capital to overcome them through growth and accumulation, or it will encourage the third type of competition : that between monopoly capitals . Monopoly as a form of competition means that the tendency to form an average profit rate takes the form of establishing and overcoming barriers which in particular may involve vertical integration within the industry . It may be that a `monopoly transformation' ensures the transfer of

37

Capital E5 Class

38

extra surplus profits for a period of time from within or between sectors of the economy, but this will tend to be overcome by vertical competition between monopoly capitals . Let us now look at the second level of competition ; vertical competition between industries . This can be of two types . There is free competition between non-monopoly capitals where as Marx pointed out, banking capital ensures capital mobility . There is some possibility for surplus profits here, when capital is less than perfectly mobile, as has already been pointed out . The other type is competition between monopoly capitals . The process of accumulation and centralisation of capital has in this case led to combinations of the units of capital across sectors or industries . Again the tendency to form an average rate of profit is achieved by establishing and overcoming barriers . In the case of vertical competition between monopoly capitals this typically takes the form of combinations between sectors by means of diversification . Centralisation involving diversification then creates the third level of competition, that of combined competition between financial groups . The formation of finance capital can be seen as Table 3 LEVELS AND TYPES OF COMPETITION AND THE ROLE OF CENTRALISATION

Accumulation leads to monopolies .

(a) Horizontal competition (within an industry) . - (i) Free competition between non-monopoly capitals. (Normal surplus profits due to individual value below market value) . (ii) Competition between monopoly and non-monopoly capital, in which monopoly capital dominates (Extra surplus profits due to barriers etc .) . (iii) Competition between monopoly capitals . Monopoly as a form of competition involving vertical integration . (Monopoly transformation)

Accumulation leads to combinations between sectors .

(b) Vertical competition (between industries) . (i) Free competition between non-monopoly capitals . (Banking capital ensures capital mobility) . (ii)

Accumlation leads to finance capital .

L

Competition between monopoly capitals . Monopoly as a form of competition involving combinations between sectors .

(c) Combined competition (between financial groups) Competition as a search for the most favoured conditions of growth by finance capital, as an articulated combination of banking and industrial capital . Monopoly as a form of competition involving combinations/diversification/ restructuring .

Comm,etition

the process of diversification writ large . Finance capital is the ultimate result of a continuing process of centralisation from which an articulated combination between banking and industrial capital grows up . Combined competition across sectors of the economy becomes the rule with finance capital . We have seen that under the competitive phase of capitalism, banking capital performs an important role in the tendency to form an average profit rate by facilitating capital mobility between firms and industries . The interrelations between industrial and banking capital are institutionalised under the monopoly phase through finance capital . Financial groups are able to move in and out of sectors of the economy, so that competition becomes an economy wide phenomenon : combined competition between cohesive sums of self-expanding capital . What is interesting about combined competition between financial groups is that competition has at this level decisively linked the spheres of exchange and of production . The competitive process becomes one for securing the most favourable conditions of growth, and not simply of exchange . The implications of this change will be discussed in a moment. What this classification of levels and types of competition has endeavoured to show, is that the competitive process is, if anything, far more vigorous under the monopoly phase of capitalism . Competition not merely takes place at three different levels, but also involves a range of types in the interactions between and within monopoly and non-monopoly capital . Whilst there will undoubtedly be temporary movements away from the average profit rate (whether above or below it), there will always be a tendency towards its re-establishment . The tendency to form an average profit rate is the very root of competition . As Aglietta puts it `The constraint of competition requires a social law proceeding from the nature of capital as a social relation, which operates as the law of the formation of a general rate of profit by which the valorisation of individual capitals is forcibly governed' ." The tendency to form an average profit rate is a process of conflict and under the monopoly phase of capitalism, there is a very wide range of competitive strategies.

Conclusions The contribution of the marxist paradigm

I would like to argue that the strength of the marxist paradigm in a study of competition and monopoly lies in the institutional and developmental elements that it can contribute to a study of the tendency to form an average profit rate . Marxist theory has, then,

39



Capital f5 Class 40 Table 4 MARXIST THEORY OF THE ADJUSTMENT MECHANISM Changing Competition Strategies

Changes in

Distribution of

Structural Conditions

Surplus Value

Merchant capital

Profit on alienation

(1) Transition to capitalism Competition in sphere of exchange

Free capital mobility (2) Competitive stage of capitalism

Industrial capital

Competition in sphere of circulation

Limited capital mobility

0

Price competition Primarily market behaviour .

Competition Competition within between industries . industries (Horizontal) (Vertical) 'Many capitals'

m C

a

X a C 0

a Seeking most favourable terms of trade.

m a

a0 0 00

CL

0

E in

0

E C

d

Banking capital ensures capital mobility .

m ~' ~i a

Tendency to form general industrial profit rate through (1) Horizontal (2) Vertical competition Division of surplus value between fractions : banking and industrial capital .

0 z

(3) Monopoly stage of capitalism Competition in economy as a whole (production and circulation) .

Finance capital

Wider range of competitive strategies* . Primarily investment behaviour and market context.

Financial groups provide free capital mobility between commodities, industries, and create market environment via new products . Capital in general has real existence .

Seeking most favourable terms of growth .

Monopoly capital is typical form taken by 'many capitals'

N c0 C E 0 2

m .a m

0

0-

Tendency to form average profit rate through (1) Horizontal (2) Vertical (3) Combined competition Division of surplus value within

0 articulated 00 combination of T

C 00 0

0 c E

finance capital .

E

o za

*Including product competition, sales promotion, diversification, consumer manipulation etc .

Competition

an important contribution to make in its ability to link the changing nature of the adjustment mechanism with the dynamic aspects of capitalism. The changing forms taken by the law of surplus value in other words link in with what Marx called the `laws of motion' of capitalism, the way in which accumulation has influenced the development of capitalism . Table 4 provides a summary of the way in which changing structural conditions are paralleled by changing competitive strategies . Changes in the nature of competition indicate the changing forms taken by the law of surplus value, which in turn is expressed through the distribution of surplus value within the capitalist class . During the transition to capitalism,' merchant capital is the predominant type of capital. At this stage it appears that profits are made simply in the sphere of exchange, with merchant capital able to buy cheap and sell dear, (M - C - M') what Marx called profit upon alienation . Competition is thus restricted to the sphere of exchange, since the production process is outside the control of merchant capital . Capital is, however, freely mobile between the units of merchant capital, since capital is not immobilised in the production process . This free capital mobility eventually destroys the possibility of earning a'profit upon alienation', and this is one of the factors which forces money capital into productive activity where surplus value can be obtained . In the ensuing competitive phase of capitalism, the circuit of capital expands to include the productive process /

MP

(M - C

P . . . C' - M') LP

and profit is derived from surplus value . Competition, however, primarily takes the form of price competition in the sphere of circulation via the realisation of surplus value . It can, as we have seen, take place at two levels, horizontal and vertical competition, but involves mainly market behaviour . Non-monopoly (or competitive) capital is here the typical form taken by `many capitals' with banking capital ensuring a (somewhat limited) mobility of capital within and between sectors . The tendency to form an average profit rate derives from both levels of competition . At both levels there is what I have called a process of `free competition', in other words, a competition external to the enterprise, given that typically there are not institutional connections between capitals . There are also no institutional connections between banking and industrial capital, and this means that the division of surplus value between the fractions of capital is again determined through a process of free competition .

41

Capital & Class 42

It has been continually emphasised that competition creates its opposite, monopoly. In the process of capitalist development, the typical form taken by `many capitals' becomes monopoly capital. Non-monopoly capital continues to exist, albeit in a formation dominated by monopoly capital . Section 5 spelled out the complexity of competitive relationships which thus arise . Crucial new phenomena are that competition actually takes the form of monopoly and that a new level of competition, combined competition between the units of finance capital comes into existence . The tendency to form an average profit rate now takes place at three levels . What is more, the institutional links formed by finance capital allow free capital mobility across the whole economy (and indeed between economies) . Capital in general has a real existence in financial groups . Competition now takes place across the economy as a whole, including not only the realisation of surplus value, but also its production . This is achieved through pursuing a far wider range of competitive strategies which include product competition, sales promotion, diversification and consumer manipulation. Competition under finance capital involves the systematic organisation of production across spheres and industries so that competition is no way limited to the exchange process . Combined competition is competition between cohesive sums of self expanding capital with diversification (or combination) as a crucial structural condition. Not only does this involve the investment strategy of the financial group, it also involves creating a market context where consumer habits are continually broken down and re-created through product innovation . This amounts to the units of finance capital seeking the most favourable terms of growth for themselves . The concept of finance capital is thus an important contribution by marxists to the theory of competition which arises from the emphasis placed within the paradigm on historical change as a developmental process . Financial groups express a growing cohesion within the capitalist system, and the unity of the capitalist class is forcibly expressed in that the theoretical category of `capital in general' used by Marx now takes on a real existence . The institutional phenomenon of finance capital, however, does require considerably more empirical research than has been expended on it to date by marxists . The form taken by finance capital and its articulated combination of the fractions of capital will differ from one social formation to another, as Thompson and Overbeek have pointed out" . Yet despite the growing cohesion created by finance capital, capital, as a social relation also creates competition . Differentiation between capitals continues to exist under the monopoly phase of capitalism, but competition takes different forms . As Panzieri expresses it `According to Marx, historically speaking,

Competition there is a growing cohesion in the system, passing through various stages, from the predominance of the individual capitalist to that of the capitalist as a simple shareholder of capital, passing through production prices up until the appearance of social capital in the financial form and division of profit into interest and entrepreneurial gain . Clearly, in each of these various stages of development, the specific forms assumed by surplus value (i .e . the laws of movement of capital as a whole) are distinct"' . The last section has been concerned to spell out these specific forms . I have not had the space to argue that the Marxist paradigm does not have a great deal to contribute to the study of price formation under the monopoly phase 2 ' . Nevertheless, it is able to take on board the fact that prices are indeterminate under oligopoly . For the marxist it is not surprising that the market mechanism should prove inadequate to the task of allocating resources rationally under the monopoly phase of capitalism. The marxist paradigm is indeed well equipped to analyse the institutional framework that has tended to replace price competition and the market . I have not touched on two further important areas where marxists have a considerable contribution to make to the theory of competition and monopoly : the role of the state and of internationalisation . Since these are both huge areas of debate in their own right, I restrict myself to pointing out their obvious importance . Policy conclusions

Can a concern with Marxist theories of competition and monopoly be dismissed as a purely intellectual (even academic) exercise? I hope not . The changing nature of competition outlined here indicates an increasing coherence and cohesion within the capitalist class . It is too simple to argue for the contradictions of monopoly leading to the demise of capitalism through an anti-monopoly alliance . With the development of finance capital, capitalism has achieved a considerable element of socialisation . Regrettably, co-operative forms of organisation inevitably operate on the competitive fringe, alongside non-monopoly capital . True, the forms that competition takes under the monopoly stage of capitalism simply serve to underline the absurdity of right wing appeals to the sanctity of the market mechanism. Competition policy is directed only at market power, and does nothing to regulate financial resources . The temptation on the left is to propose just to alter the structure of ownership, and have the state step in instead of large scale enterprise, with nationalisation as the socialist version of anti-trust policy . Unfortunately there are two major difficulties here . Firstly, even if one

43



Capital & Class

44

extends state ownership to the banking sector, ownership alone does not ensure that the socialisation involved in the institution of finance capital becomes socialist . Secondly, and perhaps even more importantly, the majority of people in Britain are simply not prepared to see any extension of state bureaucracy. The left in this country has been unable to put across a positive image for its policies in this respect (as in so many others), nor has it worked out in any detail what control as opposed to state ownership, might be trying to achieve .

NOTES

1. `In a fundamental sense, the general equilibrium theorist is not concerned with the organisation of the economic system, but only with the working of a system that has been designed by someone else' . Loasby .(1976) p .132 . 2. See Marx (1912) p .789. 3. Marx (1909) p . 244 . 4. Ibid, p . 1015 . 5. Ibid, p . 244 . 6. Marx (1973) p . 414 . 7. Marx (1909) p . 965 . 8. As Salama (1975) puts it: 'Surprofits dans certaines branches, sous-profits dans d'autres . . . constituent la base a partir de laquelle la concurrence pourra jouer . Cette concurrence tout en deplacant les capitaux des branches les moms rentables vers celles qui le sont plus, suscitera paralellement des modifications des combinaisons productives' . P . 246 . `Surplus profits in some branches, below-average profits in others . . . provide the basis from which competition can come into play . This competition, whilst displacing capitals from the least profitable branches towards those that are more profitable, also gives rise to modifications in the productive combinations' . 9. Marx (1912) p . 640 . 10 . Ibid. p .788 . 11 . Marx (1909) p .234 . 12 . Ibid. p . 428 . 13 . Ibid. p . 433 . 14 . Marx (1973) p .449 . 15 . Lenin (1970) p.680 . 16 . Hilferding (1970) p . 321 . `Si les unions a charactere de monopole suppriment la concurrence, elles supriment par la meme le seul moyen grace anquet peut se manifester une loi objective des prix . . . . La verification de l'enseignment marxien de la concentration, a savoir l'union a charactere de monopole, parait ainsi aller a l'encontre de la theorie marxienne de la valeur' . 17 . 'Mais cet effort subjective en vue du profit le plus eleve possible a pour resultat objective la tendence a l'establissement du meme taux de profit moyen pour tous les capitaux" . ibid, p . 261 . `But this subjective effort towards the highest possible profit has for objective result a tendency to establish the same rate of profit for all capitals . 18 . "Ainsi nous voyons comment se forme, aux deux poles du developpement capitaliste et pour des raisons tout a fait differentes, une tendance a la baisse du taux de profit au-dessous de la moyenne . Cette

Competition

tendance provoque a son tour, la ou le capital est suffisamment fort, une tendance contraire . Celle-ci aboutit finalement a la suppression de la concurrence et, par la, au maintien de l'inegalite du taux de prfit, jusqu'a ce que, en fin de compte, cette inegalite elle-meme soi abolie par la suppression de la separation des spheres de production" . Ibid . p . 270. "Thus we see how, at the two poles of capitalist development and for completely different reasons, a tendency to the lowering of the profit rate below the average takes place . This tendency leads in turn, where capital is strong enough, to an opposite tendency . This finally results in the suppression of competition and, thereby, to maintaining inequality in the profit rate, until, in the final analysis, this inequality itself is abolished by the suppression of the separation of spheres of production' . 19 . 'Les limitations imposees a la liberte de movement du capital pour des raisons economiques et des rapports de propriete . . . sont la condition de la suppression de la concurrence sur Ie marche entre les acheteurs . Legalisation des faux de profit ne peut done se faire que par une participation aux taux de profit eleve par suite de la cartellisation ou la combinaison" . ibid . p . 323 . `The limitations imposed on the freedom of movement of capital for economic reasons and because of property relations . . . are the condition for the suppression of competition on the market between buyers . The equalization of the levels of profit can thus only be done through participation in an increased profit level as a result of cartellisation or combination' . 20 . Ibid . p . 312 . `Car le capital industriel est Dieu le Pere, qui a libere le capital commercial et bancaire comme Dieu Ie Fils, et le-capital-argent est le Saint Esprit . Its sont trois, mais pourtant un seul dans Ie capital financier' . 21 . 'Mais le concurrence-processus et non simple situation - est le fondement de la dynamique generale du capitalisme barrieres a ('entree et moyens de les surmonter font tout deux partie integrante du jeux des forces qui s'affrontent . La constation des possibilites de franchir les barrieres, 1'etude des modalites concretes, de ces depassements ne sauraient suffit a comprendre la logique du movement d'ensemble . C'est ce movement d'ensemble que nous devons chercher a saisir. Dans cette perspective nous pouvons montrer d'une part que le progres technique qui constitue on moyen de depasser des barrieres est aussie le moyen de les reconstruire ou de les renforcer d'autre part que, integres dans cc double movement de renforcement et de depassement des barrieres, l'accroissement du volume du capital initial necessaire et sa contrepartie, la concentration, ne signifie pas reduction de la concurrence' . Borrelly (1975) p . 100 . `But competition - process and not just situation - is the foundation of the general dynamic of capitalism . . . barriers to entry and means of overcoming them both make an integral part of the game of forces confronting each other . The establishment of the possibilities of overcoming the barriers, the study of the concrete modalities of these means of overcoming, cannot allow of understanding the logic of the movement as a whole that we must find a means of grasping . From this perspective we can show on the one hand that technical progress which constitutes a means of overcoming the barriers is also the means of reconstructing them or reinforcing them and on the other hand that integrated in this double movement of reinforcement and overcoming of barriers, the growth in the volume of initial capital necessary and its counterpart, concentration, does not mean reduction of competition' .

45



Capital & Class 46

22 . See De Vroey (1975) . 23 . Chevalier (1970) p . 213 . 'Les Travaux de Berle et Means et 1'etude de Lamer avaient isole les problemes du controle de leur contexte economique et des performances de l'industrie americaine, au risque de dormer a la notion de controle une valeur purement abstraite . Notre etude est une premiere etape vers une meilleure connaissance des relations qui existent entre la structure financiere et la comportement des firmes' . 24 . This is also a term used by Wirth (1977) . 25 . Aglietta (1979) p. 280 . 26 . See Thompson (1977) and Overbeek (1980) . 27 . Panzieri (1976) p . 18 . 28 . Amongst those who deal with pricing issues are Meek (1973), Sweezy (1968) and Baran and Sweezey (1966) .

REFERENCES

M. Aglietta (1979) . A Theory of Capitalist Regulation . New Left Books . P . Baron and P . Sweezey (1966) . Monopoly Capital . England. Penguin. A .A . Berle and G .C . Means (1933) The Modem Corporation and Private Property . New York, Macmillan . R . Borrelly (1975) . Les Disparites Sectorielles des Taux de Profit . Presses Universitaires de Grenoble . N . Bukharin (1971) . Economics of the Transformation Period . New York. Bergman . J-M . Chevalier (1970) . La Structure Financiere de l'Industrie Americaine . Paris . Editions Cujas . J .A. Clifton (1977) . Competition and the Evolution of Capitalist Modes of Production . Cambridge Journal of Economics . M. De Vroey (1975) . The Separation of Ownership and Control in Large Corporations . Review of Radical Political Economy . Vol . 7 part 2 . R. Hilferding (1970) . Le Capital Financier . Paris . Editions de Minuit. M. Hollis and E . Nell (1975) . Rational Economic Man. Cambridge . Cambridge University Press . V.I. Lenin (1970) . Imperialism, the Highest Stage of Capitalism in Lenin, Selected Works Volume I Progress Publishers . Moscow . B .J . Loasby (1976) . Choice, Complexity and Ignorance . Cambridge University Press . K . Marx (1912). Capital Volume I . London Glaisher . K . Marx (1909). Capital Volume III . Chicago. Charles H . Kerr. K . Marx (1973). Grundrisse . England . Penguin . R . Meek (1973) . Studies in the Labour Theory of Value . London . Lawrence and Wishart . H . Overbeck (1980) Finance Capital and the Crisis in Britain . Capital and Class 11 .

Competition

R . Panzieri (1976) . Surplus Value and Planning: notes on the reading of capital in The Labour Process and Class Strategies . CSE Pamphlet No . 1 . London CSE . R . Rosdolsky (1977) . The Making of Marx's Capital. London. Pluto Press. K .W . Rothschild (1971) . Power in Economics . England . Penguin . P. Salama (1975) . Sur la Valeur. Paris . Maspero . J . Scott (1979) . Corporations, Classes and Capitalism . Hutchinson University Library. W. Semmler (1982) . Theories of Competition and Monopoly . Capital and Class 18 . P . Sweezy (1968) . The Theory of Capitalist Development . New York . Monthly Review Press . G. Thompson (1977) . The Relationship between the Financial and Industrial Sector in the U .K. Economy and Society. M . Wirth (1977) . Towards a Critique of the Theory of State Monopoly Capitalism . Economy and Society Vol . 6 No . 3 .

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Makoto Itoh

The great world crisis and Japanese capitalism THE GREAT WORLD DEPRESSION IN PERSPECTIVE

• Just as Marxian crisis theory analyses the causes of crisis in the preceding prosperous phase of capital accumulation, the causes and the specific features of the great depression after 1973 can be understood only through clarifying how and why the preceding postwar long boom could have continued for a certain period, and had to end thereafter . Four major factors were indispensable for the sustained economic growth in the postwar capitalist world preceding the 1970s . First, the us's hegemonic position in world trade which enabled the us government and giant corporations continuously to spend huge amounts of dollars abroad and yet maintain the convertibility of the dollar into gold as the basis of the Bretton Woods international monetary system . Second, a series of wide ranging technological innovations which spread from the us to the other advanced capitalist countries, leading to heavily oil-consuming industrial structures and life styles . Third, the cheap and elastic supply of primary products which was available from the third world . A representative example was the price of crude oil, hovering around 1 .8 dollars per barrel . Fourth, the supply of relatively docile and inexpensive labour power which was available from agricultural countrysides, immigrants and housewives . So long as these factors were effective, capital accumulation in the advanced countries could go on without serious depression . C & C-21-D

The first half of this article summarises and applies Itoh's overaccumulation thesis to the current world depression. The second half gives a detailed account of instabilities within the Japanese economy since the early 1970s, and argues thatJapan should not be seen as immune to the world crisis nor responsible for it due to disruptive trade policies . It is a salutory reminder to 49 socialists to resist the drift towards nationalistic arguments .

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The seeming success of Keynesian fiscal policies was not the cause but rather a reflection of such a process of capital accumulation . However, capital accumulation dialectically had used up and eroded its own basic factors by the end of the 1960s . On the one hand, as the upswing of the innovative long wave matured, us trade hegemony broke down and the Bretton Woods system based on the convertability of dollars into gold had to collapse . Then, the unstable explosive expansion of credit and debt at various levels accelerated inflation under the floating exchange-rate system. On the other hand, the overaccumulation of capital in relation to the supply elasticity of both primary products and labour power occured sooner or later through most capitalist countries . The power of trade unions to raise wages and the international combinations among the lesser developed countries for higher prices of primary products became very much strengthened . The difficulties of overaccumulation of capital under these circumstances were manifested in a profit squeeze,' speculative overtrading, and particularly this time, also in explosive inflation . The beginning of the current great depression from the end of 1973 thus took the form of an inflational crisis as I have described elsewhere .' In the following ten years, at least three specific features are historically conspicuous in comparison with the great depressions in the 1930s and from 1873-1896 . First, the character of depression deepened obstinately, as is shown in the continuous increase of OECD total unemployment from 8 .3 millions in 1973 to 31 .75 millions in 1982 .' Second, persistent inflation was accompanied by an explosive expansion of credit . Third, we witnessed a big change in the tide of economic policies from Keynesianism to Thatcherism or Reaganomics . These are the mutually related results of the collapse of the framework of postwar sustained growth through the overaccumulation of capital . For one thing, the unprecendented expansion of money and credit in various forms was facilitated and became necessary when the breakdown of the Bretton Woods system coincided with the difficulties of overaccumulated capital in particular under the influence of Keynesianism initially. Compared with the 1930s, it mitigated up to a point the acuteness of the economic crisis but generated at the same time a strong inflationary tendency . Under such circumstances, excess capital in the form of idle capacity is easily maintained and tends to restrict new investment . New technologies are being explored but are not yet strong enough to break through such restrictions to cause a new investment boom. The economic structure based on oil consumption remained fundamentally unchanged . Hence even the weak recovery after 1975, when it combined with the shock of the Iranian revolution in 1978, led to the second oil crisis .

Japanese capitalism In view of the difficulties of coping with excess fixed capital on a large scale, P Sweezy is probably correct in suggesting that a long wave business cycle cannot ensure an endogenous upturn .° Viewed from the angle of the raw material or producer-good industries, the proportions among industrial sectors which were more or less appropriate in the prosperous period have grown out of balance and are hard to correct . And the excess idle capacity forms a vicious circle with increasing unemployment and a stagnant or declining real income of workers . Monopolistic behaviour by giant corporations amplifies and prolongs such difficulties . The ratio of living labour (as the source of surplus value) to the total amount of dead labour embodied in constant capital may have been much reduced through capitalist `rationalisation' and lay-offs, and may also have pressed down a possible rate of profit . Thus, the factors which prolong and worsen the depression should clearly be distinguished from the logic of why and how it began. Various views of Marx's crisis theory should synthetically be mobilised for the analysis of both of these aspects on the basis of the excess capital theory . 5 Although Keynesian policy eased the impact of the initial phase of the crisis, it could not remove the difficulties of overaccumulated capital . It rather prolonged the difficulties and added an unstable inflationary character to them . As the depression continues and deepens, Keynesian expansionist devices have become deadlocked by an increasing budgetary deficit along with the more and more adverse economic effects of accelerating inflation . Austerity policies like Thatcherism and Reagonomics had necessarily to take the place of Keynesianism . They managed to calm down vicious inflation to a certain extent, but were unable to achieve economic recovery, and, in fact, sharply reinforced the depression . It is also remarkable that the danger of large scale financial collapse through explosive credit expansion has been strengthened with the lowering of inflation . Thus, a wide fluctuation of economic policies clearly amplified the world depression . The monopolistic behaviour of giant firms also had a similar effect . However, the root of the current depression cannot be due merely to Keynesian or to austerity policies or to the monopolistic behaviour of firms . Though these factors certainly aggravated the depression and gave rise to specific instabilities, the more basic root of the world crisis is the global overaccumulation of capital itself and the very difficulties of withdrawing excess capital . As long as this basic difficulty of coping universally with excessive capital remains, the recovery of the us economy from Spring 1983 will not lead to a way out of the great depression just as the previous recoveries in the late 1970s failed to do so . The

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successive failures of different policies to cope with the current great depression tend to show more and more that `the real barrier to capitalist production is capital itself' s Marx correctly pointed out .'

JAPANESE CAPITALISM IN THE WORLD DEPRESSION

As the world depression continues and deepens, nationalism in various forms is gaining in strength all over the world . It typically asserts that all the difficulties are basically due to foreign pressures . Nationalism is very harmful to the socialist movement since it consciously obscures the real deeper problems related to class conflicts . Distortions in the international market order in particular those caused by Japanese trade competition and its impermeable domestic market have become one of the most favoured explanations of the current crisis among western political leaders and business circles . Even some Marxian theorists, not to mention workers, in the west are not immune from such views .' It may be true that the relative stability and strengthened competitive power of Japanese capitalism in the world depression has to that extent aggravated the difficulties of other capitalist countries . However, it is a serious mistake to take Japanese capitalism as the cause of the world crisis or to take Japan to be an exceptionally stable economy exempted from the difficulties common to other capitalist countries . Japanese capitalism formed an important part of the global overaccumulation of capital and experienced a wide range of unstable distortions and fluctuations . At least three distinct periods are clearly discernable for Japanese economic activity in these ten years of world economic crisis . The specific focus of the economic crisis in Japan has changed from one period to the next. However, the difficulty of coping with overaccumulated capital within the key basic industries remains constant throughout the different periods . I shall briefly review each of these periods, and discuss thereby the dynamics of Japan's economic difficulties in relation to the current global crisis . An acute inflational crisis 1973-75 The four factors, which were described at the beginning of this paper, were especially effective in realising the high level of Japanese capital accumulation until the 1960s . Japanese national income grew from 39 billion dollars (421 dollars per capita) in 1960 to 176 billion dollars (1,702 dollars per capita) in 1970 . The fixed exchange rate of 360 yen a dollar, under the Bretton Woods system, which had acted as a barrier until the 1950s, had begun to favour Japanese exports by the middle of the 1960s, as Japan developed and then further refined her industrial technologies . Japan's

Japanese capitalism balance of trade changed from a deficit of 480 million dollars in 1964 to a surplus of 5,797 million dollars in 1971, and this clearly contributed to the collapse of the Bretton Woods agreement . During the process of its collapse, until summer 1971, and during the transformation of the international currency system the Japanese government consciously attempted to support the parity of the dollar (rather than a system of floating exchange rates) by means of the so-called adjustment inflationary policy and accelerated domestic inflation in order to curb, as far as possible, the degree of revaluation of the yen . As a result, Japanese consumer prices went up by 11 .7% in 1973, despite the revaluation of the yen from 360 yen in 1970 to 280 yen a dollar, which reduced the yen prices of raw materials from abroad . At the same time, Japanese capital accumulation became excessive in relation to the elastic supply of labour power . The major source of additional workers required by the continuous and rapid accumulation of capital in Japan was the agricultural sector . As the ratio of the agriculture and forestry sector in the total labour force declined from 48 .7% in 1950 to 16 .3% in 1970 and then to 11 .6% in 1975, the labour market began to tighten sharply . The number of job vacancies surpassed the number of job seekers by 83% and average nominal wages in the private sectors went up by 18 .5% in 1970, 20 .1% in 1973, and 32 .9% in 1974. Between 1965 and 1973, real wages in manufacturing industry more than doubled and, between 1970 and 1973 they exceeded growth in productivity . Furthermore, Japanese capitalism also suffered from the global overaccumulation of capital in relation to the elasticity of supply of primary products, which originated principally from the third world countries standing outside of the central capitalist production processes. The prices of grains, wood, textile raw materials, non-ferrous ores, and finally, crude oil rose sharply at the beginning of the 1970s . Japan's terms of trade (for all commodities) declined by 32% between 1970 and 1974 . Thus, the increase in real wages and prices of raw materials pulled down the rate of profit of Japanese industrial and commercial firms from 22 .7% in 1970 to 14 .7% in 1973 . 8 The acceleration of inflation did not mitigate this fall in the rate of profit . The increased price of crude oil on its own is estimated to have reduced Japanese GNP by 3 .8% in 1973-74, the equivalent of increased tax paid to OPEC . 9 The overaccumulation of capital in relation to both labour power and primary products, combined with a very loose monetary policy, induced an acute inflational crisis in Japan . The average annual rate of inflation of wholesale prices reached 16 .2% in the years between 1973 and 1975 and in 1974 alone, wholesale prices

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went up by 31 .6% . Speculative inventory stockpiling of various commodities increased enormously and disturbed the Japanese economy by making it difficult for firms to obtain necessary raw materials at profitable prices . Japanese manufacturing and mining production fell rapidly by 20 .4% from the end of 1973 to the beginning of 1975 . Investment in equipment also declined sharply by 28 .0% in the two years before the end of 1975 . One in three Japanese firms is estimated to have been running in deficit at that time . Thus the Japanese economy was far from stable . Instead, it experienced one of the worst inflationary crises among the advanced capitalist countries . However, there was one exception to the intensity of the Japanese crisis, and this concerned the rate of unemployment . Even though unemployment grew from 1 .2% in 1970 to 2 .2% (1 .20 million) in 1975, the rate of growth was still low in comparision to other advanced capitalist countries . There are various reasons for this . First, Japanese firms generally have a sort of life-long employment policy (up to the age of 55 or 60) for regular full-time employees and during this period they tended to avoid the serious frictions which would have arisen with workers had they abandoned this custom . Second, the official definition of unemployment in Japanese statistics is very narrow, and the real rate of unemployment is commonly believed to be comparable with other advanced capitalist countries if official figures are doubled . For instance, according to one estimate, about 1 .18 million people dropped out of the labour market (0 .83 million among them were female) between 1973 and 1975, reducing the official rate of unemployment by one half compared with previously . 10 Third, the tertiary sector which was still expanding, increased its employment by 0 .9 million in 1973-75 . Fourth, through the government's employment adjustment aid scheme, which provides firms with one-third or one-half of the wages for those workers who would otherwise be made redundant, 60 thousand firms received 55 .2 billion yen . But the scheme was not all that extensive, and managed to save only about 100,000 jobs in one year . A recovery dependent on exports : 1976-79

The increase in oil prices and energy costs was seen at the time to have struck a decisive blow to the Japanese economy, since Japan depended, more than any other advanced capitalist country, on oil imports. It imported 90 .1 % of total energy consumed in 1980 . However, Japanese capitalism recovered its annual growth rate of GNP from -1 .2% in 1974 to 5 .3% in 1976, and maintained a level of growth in excess of 5% until 1979 . The two major factors behind this unexpected recovery were first, the expansion of

Japanese capitalism exports and second, massive government spending which led to a large budget deficit. Keeping pace with the economic recovery in the us, Japanese exports increased from 56 billion dollars in 1975 to 98 billion in 1978 . Its trade balance changed from a deficit of 2 .1 billion dollars to a surplus of 18 .2 billion dollars . Also in the same period, Japan's share in `free world' exports increased from 7 .1 % to 8 .3 % . The trade surplus itself pushed up Japan's GNP by 2% in each of these years . Therefore Japanese economic recovery this time was heavily dependent upon the expansion of exports . It is worth noting that capitalist countries continued quantitatively to expand international trade during this depression, quite unlike their response in the 1930's, which was to push for bloc economies. In this sense, joint political action on an international scale does work among capitalist countries in fear of both economic disintegration (such as in the 1930's) and the danger of social upheaval . In the 70's, an imperialist bloc economy was impossible given the political independence of the third world countries . The international trade of the newly industrialised countries (NiCS) and OPEC countries expanded remarkably in this period . Together with the recovery of the us market, these circumstances clearly favoured Japanese capitalism which had already come to be the most competitive in various key industries in the world. Furthermore, the devaluation of the yen from 271 yen a dollar in 1973 to 297 yen in 1975, as a result of the trade deficit caused mainly by the increase in the price of oil, ironically strengthened Japanese competitive power . The extensive `rationalisation' of labour processes in the depression period was also conspicuous and effective in expanding Japanese exports . In particular, during the five years 1975-1980, labour productivity in Japanese manufacturing industry increased by 56 .0% in comparison to an increase of 33 .2% in the previous five years, while real wages rose only by 9.3% in the same period in contrast to the 33 .6% increase in the previous five years ." This big increase in labour productivity was achieved not so much by investing on a large scale in new equipment as by enormously intensifying the exploitation of labour and reallocating workers within the firms through the closure of inefficient production lines and workplaces . The cooperative attitude of workers and trade unions (which is often mistakenly regarded as native to the Japanese economy by ignoring the frequent, massive and militant workers struggles of the early post-war period until about 1960) was widely used by the firms to increase labour productivity (taking various forms such as quality circle (QC) movements and zero defect (zD) movements on the shopfloor) . By the same token the increase in real wages was easily restricted . At the same time, the Japanese government began to expand

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its budget deficit, by positively and consciously pursuing a sort of Keynesian strategy, especially since 1975 . The total government debt which was 13 .2 trillion (million times million) yen, constituting 11 .3% ofGNP in 1973, increased to 22 .8 trillion in 1975 and to 95 .0 trillion yen in 1980 (39 .7% of GNP) . In spite of this explosion of state debt, the rate of inflation was rapidly reduced . The annual rate of increase of wholesale prices decreased from 31 .6% in 1974 to 3 .0% in 1975, and it stayed at about 3 % between 1975-79 . The rate of increase of consumer prices went down more slowly, but it too dropped below 4% in 1978-79. How was it possible for government debt to be increased so enormously without accelerating, rather slowing down the rate of inflation? An important reason, in addition to a highly depressed domestic demand, was the high rate of individual savings which amounted to about 20% of disposable income . This traditionally high rate of saving which was channelled through the banks, etc to finance the investments made by firms during the prosperous period up to the 1960s, was able to sustain a massive government budget deficit when investment demand fell . However, it should be emphasised that even such massive Keynesian government expenditure and the huge export surplus could not easily revive private investment . Overaccumulated capital in the production process in the form of idle capacity prevented the recovery of private investments until the very end of 1978, and even then, the recovery was weak and short-lived . The rate of unemployment persisted at above 2% and domestic consumption demand remained consistently low. Hence the 1975-79 recovery was really far from total .

The second downswing : 1979-83 The second oil shock pushed the OPEC oil price up to 31 dollars a barrel in May 1980, from 12 .87 dollars at the beginning of 1979 . This 140% increase in the price of oil is estimated to have reduced Japanese GNP by 3 .3 %, nearly as much as in the case of the first oil shock . Once again, Japan's trade balance moved into a huge deficit amounting to 18.4 billion dollars in the two years 1979-80 . The austerity policies of the advanced capitalist countries, beginning explicitly with Thatcherism, reciprocally reinforced the deflationary pressure of the oil shock. A revaluation of the yen from 292 .8 yen a dollar at the end of 1976 to 194 .6 yen at the end of 1978 had already begun to curb Japanese exports . Then, from the end of 1981 the depressed market abroad in particular forced Japanese exports to be reduced . Japan's exports fell by 8 .7% from 152 .0 billion dollars in 1981 to 138 .3 dollars in 1982 . Japanese economic policy also had to shift away from positive

Japanese capitalism

Keynesianism towards austerity under the Suzuki cabinet, following the path of Thatcherism and Reaganomics . In 1981, the second year of the Suzuki cabinet, the blue-ribbon commission which was appointed to reform public finance strongly recommended a reduction in the issue of government bonds by severely cutting state expenditures . Japan is the only advanced capitalist country that depends on treasury bonds for more than 30% of its state revenue (government bonds account for 12% of revenue in US, and under 9% in Britain) . `2 This makes it difficult for the Japanese government to service its debts, let alone pay them off. The Keynesian expansion of state debt was felt not only to have been ineffective but also more and more burdensome even for business circles . The economic crisis had proved to be much more deep-rooted and longer lasting than the successive conservative Liberal Democratic Party (LDP) cabinets presumed. Last autumn, Suzuki was forced to step down from government when he failed to achieve his public promise to tackle the budgetary crisis by reducing bond issues . Nakasone, who succeeded Suzuki as prime minister has had to increase government debt again in the 1983 budget, while he pursues both more severe cuts (except in military expenditures) and nationalistic realignments . For instance, it is well known that he is willing to implement even constitutional changes which will facilitate more open rearmament . Anyhow, the two major factors behind the previous recovery, namely the expansion of exports and increased Keynesian state expenditure faded away and could no longer support the Japanese economy. It was therefore only natural that the Japanese aggregate business indicator consistently drifted downwards for three years after March 1980 . The official rate of unemployment touched 2 .72% (1 .62 millions in real numbers) inJanuary 1983, the highest in the history of official statistics beginning in 1953, and produced a political shock . Real wages declined by 1 .5% in 1980 and have hardly risen since . The National Personnel Authority's recommendation for the 1982 fiscal year to raise the wages of workers in the public sectors in line with wage increases in the private sectors was rejected for the first time. The opportunity and chances of getting a job for housewives and part-timers have also become very slim . Under these circumstances Japanese domestic investment could not but stagnate . These depressed conditions explain why and how the Japanese economy `absorbed' the second oil shock without causing vicious inflation . Some elements of the business indicator are beginning to suggest a minor recovery in the Japanese economy, similar to the US, since spring 1983 . However, these are mainly related to the recovery in exports and inventory investment . Domestic consumption and investment demand are far from active . The recovery may

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at the most lead to a short Kitchin cycle or a weak Juglar cycle upswing, but is unlikely to overcome the deep-rooted depression and the increasing pressure on the labour market in the Japanese economy. Under these continually difficult conditions of the last 10 years the Japanese trade union movement has not been able to fight back in a militant way, but has drifted to the right . The rate of unionisation for the about 40 million employed workers in 1981 was 30 .5%, 4 .5% lower than in 1970. Japanese trade unions are organised at the level of the enterprise or the company. However, there are two important national federations under which the unions come together. The smaller (2 .2 million members) of the two, called Domei (The Japanese Confederation of Labour) is predominantly private sector based and is traditionally more conservative than the other . In 1980, Domei began to try and bring together various separate unions under one national confederation, resembling the European metal workers union . A new confederation, Zenmin-Rokyo (The All Japan Council of Private Industry Labour Unions) was launched in December 1982 with some 4 .4 million member workers . Zenmin-Rokyo absorbed not only the Domei unions but also private sector trade unions in the traditionally more militant and bigger (4 .6 million members) national trade union council, Sohyo (The General Council of Japanese Trade Unions) which is dominated by the public sectors . In response to the shift to the right in the Japanese labour movement, the Roken-Center (The Labour Research Center) was formed in the spring of 1983 by a group of militant and class conscious activists under the leadership of three major advisers of Sohyo, a section of the Socialist Association associated with the Japanese Socialist Party, and the Rodo Soho (news for militant workers) group . Tatakau-Rosokaigi (The Conference of Militant Workers Unions) also started corresponding with the Roken-Center. Toitsu-Rosokon (The United Conference of Trade Unions), led by the Japanese Communist Party and which adheres more or less to the line of Eurocommunism, is also opposed to Zenmin-Rokyo . Thus the Japanese labour movement has entered into a new era of restructuring and struggle not just against the ruling class but also within itself. The remarkable thing is that this cooperative and rightward shift in the Japanese labour movement has actually become ineffective, especially in the beginning of the 1980's, in expanding Japanese exports and the domestic economy. On the whole, the tempo of increase of Japan's share in the world export market in these ten years or even in the period of recovery from 1975 to 1978 has been much slower than in the 1960s . The average annual increase of exports in dollar terms between 1973 and 1982 was

Japanese capitalism

17 .1%, which is not extraordinarily high in comparison to the 15 .6% increase in the case of the us, 14.6% in the case of the UK or 14 .2% in the case of West Germany . The Japanese ratio of exports to GNP in 1982 was only 13 .0%, much lower than the UK (20 .5%) and less than half of what it was for West Germany (26 .7%) . As for the much accused impermeability of the Japanese domestic market, this has not been anew phenomenon in the 1970s and 1980s as far as most of the manufactured products from the advanced capitalist countries are concerned, or for that matter in the case of primary products . A large proportion ofJapan's imports of primary products and foods [77 .7% ofJapanese imports in 1981 was fuels (51 .6%), raw materials (14.8%) and foods (11 .3%)] constitute an important market for the Third World, us etc . Japan's import of these goods can also be seen as contributing indirectly to the demand for manufacturing industries in other capitalist countries . It should also be clear by now that Japanese capitalism has been far from stable, crisis-free and rapidly expanding in the last ten years . On the contrary, Japanese capitalism has been shaken by the instabilities related to the great world depression, and has consistently failed fully to activate domestic investments and consumption under the universal difficulty of mobilising overaccumulated capital . Thus, the view that an exceptionally strong Japanese economy with an invading export base and an impenetrable domestic market is the cause of the current world depression turns out to be a nationalistic exaggeration and is simply incorrect, just as the view that the deepening crisis is the result of wrong policies is too superficial . Against these views, Marxians have the opportunity to argue persuasively that the historically specific capitalist systems which give rise to the problems of excess capital and transfer the burden more and more on the shoulders of working people, are what really need to be challenged .

This article is an extended version of a paper read at the 1983 CSE annual conference and also at the Summer Workshop at the University of Warwick . I owe special thanks to Ash Amin for his careful reading and editing of my manuscript .

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60 REFERENCES

1.

A Glyn and J Harrison (1980) The British Economic Disaster, esp .

p .12 . 2.

M Itoh (1980) Value and Capital, chap. 6 . 3. OECD, Economic Outlook, 32, 1982, p .35 . This forecasts 34 .25 millions unemployment by the end of 1983 . 4. P Sweezy (1982) `Why Stagnation?', Monthly Review, June. 5. cf. M Itoh, ibid, chap . 5 . 6. K Marx (1972) Capital, Vol . III, Lawrence & Wishart, p .250 . 7. eg M Aglietta (1982) `Capitalism in the Eighties', New Left Review, November/December . 8. A Glyn and J Harrison, op cit, p .60 . 9. M Yoshitomi (1981) Nikon Keizai (Japanese Economy), p .248 . 10. M Yoshitomi, op cit, p .60 11 . Y Tokita (1982) Gendai Shihonshugi to Rodoska Kaikyu (Contemporary Capitalism and Working Class), Table 2-32 . The other statistics from the central bank of Japan (Kokusai Hikaku Tokei, June 1983) shows that labour productivity in Japanese manufacturing industry increased by 33 .4% while real wages increased only marginally by 2 .2% between 1975 and 1979 . 12 . N Valery (1983) 'Japan : There can be clouds too . A Survey .' The Economist, 9-15 July, p .4 .

eo A Quarterly Journal of Critical Thought Issue No . 56

Special Section on the Summer 1983 German Peace Movement : MEUSCHEL: Neo-Nationalism and The Peace Movement Notes and Commentary: SUSS-LUCAS : The "Double Decision Makes Sense" ? KOMAROV : The Gas Pipeline Deal HONNETH-KALLSCHEUER : A Familiar Ghost BERMAN : Adorno's Radicalism FRANKEL : The View From Australia ADORNO : Two Interviews HERF : The Double Decision Still Makes Sense GRADY : Child Abuse HIRSCH : Fundamental Opposition and Realpolitik Reviews : POHRT : One Nation, One Reich, One Peace FEHER : Yathav, 1.'Utopie Meurtriere EHRING: She East German Peace Movement POSTER : Lemert and Gillan, Michel Foucault Articles : ARATO : Goldfarb, On Cultural Freedom SHAPIRO-KANE : Stagnation and the New Right BOKINA : Two Books on Marcuse HEARN : Corporatism in the U.S. KELLNER : Katz, Herbert Marcuse LUKE : Informationalism and Ecology PICCONE : Adorno, Against Epistemology HABERMAS : Neo-Conservatism in U.S. and W. Germany Subscriptions cost $20 per year for individuals ; $40 for institutions . Foreign orders add 10 percent . Checks must be in U .S . funds . No Canadian checks can be accepted . Back issues prior to No. 50 cost $5 .00 each ; No . 50 and subsequent issues are $5 .50 each . Institutions pay $10 .00 each for all back issues. For a full list of available back issues and to subscribe, write :

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Gilles Margirier Translated by Phil Powrie .

The Eighties : A second phase of the crisis? An analysis of recent trends in wage relations .

• GIVEN THE length of the crisis, we can periodise it . It no

longer needs to be studied in the context of the previous period, but can be analysed in its own right . For a while, the novelty of the phenomenon led economists to analyse the origins of the crisis by comparing it with the period of growth, seeking in the latter the contradictions which gave rise to the former . The question of the origins of the crisis has been at the centre of their preoccupations . Now the approach can be modified . The crisis, although it is by no means over, has been with us for long enough for us to explore its different phases, its shifts and changes . It is indeed conceivable that the length of this crisis will allow us to add to the theory of the transition from growth to crisis, a theory of the crisis itself as a self-contained unit . The unusual length of the crisis can be explained by the constancy of procedures of regulation . Recessions, the convulsions of capitalism, enable the latter to put its books in order. The stronger the regulatory procedures, the more likely it is that signs of growth will appear. Chain-reactions are kept under control and cycles leading to deep depressions are avoided . The degree of freedom acquired through recession gives the capitalist machine the boost it requires to carry on working . A crisis therefore occurs in stages during which a new mode of accumulation struggles to assert itself together with new forms of regulation compatible with it . But until this has happened, a new recession is inevitable (thus it

Capitalist economies have been going through a crisis for almost ten years . There have already been two serious recessions during this period . The first recession marked the beginning of the crisis, the second made it worse .

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is difficult to see how a crisis could be resolved without monetary stabilisation) . The only way of avoiding these cycles and shortening the crisis would be to shut the machine off so as to adjust it and to promote new forms . But such a solution is quite utopian at an international level, by the token that history is shaped by unbridled power struggles and open crises . The aim of this paper is limited . It will only seek to identify signs of a qualitative change in relations between capitalists and wageearners, new changes which were not in evidence during the first phase of the crisis . Using theoretical tools elaborated by certain writers, the first section will propose a way of reading the crisis, and will insist on the pertinence of the marxist approach and its concept. The second section will show the convergence of a number of recent social and political events, observable in industrial economics, which allow us to identify a second phase of the crisis . The radicalisation of political programmes, the new employment and incomes policies, the weakening of the workers' resolve in the struggle, the calling into question of social policies - these are all signs of a significant reorientation in wage-relations.

THE WAGERELATION AND CRISIS

The crisis and the economy : That a well-known economist like Salin should still seriously be considering whether we are in the throes of a major crisis (Salin, 1983) could well astonish us . And yet, the way economists see the crisis does help in identifying the social forces at play : the present struggles have as their stakes the destruction of past economic and social forms and the establishment of new kinds of wage-relations in such a way that the perpetuation of class domination can be stablized . In contrast with euphoric and soothing visions, this way of looking at the crisis relies very much on long-term historical considerations . There are two good reasons for such an approach : • on the one hand there is an awareness that the present crisis is the fulcrum of an essential change in society, and hence the need to stand back, so as to view it in its historical perspective . History becomes the privileged field of research for theories in which instability plays a large part (see Prigogine 1979 : 15) . • on the other hand, it would seem that the more economics became a hegemonic discipline in the period of expansion, through its ability to analyse and extrapolate the economic growth for a social order which was never questioned, the more fragile it becomes when the chaos of the social order becomes more and more obvious (See MINC, 1982 : chap . 1) . The reliance on the work of historians, who use their whole field of the social sciences as the raw material for their work therefore seems only natural .

The 'Eighties The wage-relation and the social dymamics of the capitalist economy

Economists who place the evolution of the wage-relation at the centre of their preoccupations show to what extent they have taken these two points to heart . But what is meant by the wagerelation? The wage-relation, which Marx calls "the capital-labourrelation" means the process of subordination of one group of individuals to another, characteristic of all class societies . In capitalist society, this process takes on particular forms, which Marx described and characterised . It is the invariable of the system, in the sense that we could not conceive of society as we know it without the wage relation . The separation on which it rests means that it is impossible for one category of individuals to assert themselves as producers and exchangers, as market producers, because they do not own the objects and means of production . This separation is concretized by the exchange of money, the wage, in exchange for work and the forced expropriation of the goods produced . This subordination which is no more than "formal", is changed historicaly into "real" subordination by the organisation of this separation on the basis of a specific mode of production : "from this basis there emerges a specific mode ofproduction not only where technology is concerned, but also the nature and real conditions of the work process . This is the capitalist mode of production . It is only then that the real subordination of work to capital is confirmed" (Marx: 217) . A fully constituted wage-relation thus means that separation which occurs in the capitalist mode of production. Although it may be the invariable of the system, this social relation nonetheless undergoes deep transformations, by the direct impact of the class struggle . Marx himself insists most strongly on this point : "the bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society . . . Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones" (The Communist Manifesto) . There could not be a clearer affirmation of a dynamic vision of history . This lesson has been well learnt, for the presentation of the transformations undergone by the wage-relation during the periodisation of capitalism shows how Marx's distinction between "formal subordination" and "real subordination" has been developed . From this point of view, crises can be considered to be the

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privileged moment of the "disruption of production", "the weakening of social institutions", the affirmation of "instability and movement", necessary to "revolutionise social conditions taken as a whole" (to use Marx's terms) . That is the kind of crisis we are going through . The rise of capitalism in the previous period had been based upon increased division of labour and Taylorisation . The enormous increase in productivity and work-rate, a longer working-day, the massive mobilisation of a work-force previously confined to the agricultural sector or non-capitalist societies, all of these brought about a commodity production whose growth rate was without historical precedent . Moreover, it has been the function of "social institutions" to contain and partially resolve the contradiction inherent to this system of accumulation. Thus the State has loomed large, developing secondary education for the needs of production, socialising part of the workers' wages (thus partially separating wage-earning from labour activity), planning the economy so as to adjust production to meet demand in middle course, overseeing currency and credit, securing the results of social struggles with normalising procedures (as in the case of linking wage-increases with productivity so as to ensure production outlets), etc . . .

Crisis and 'fracture" That period came to an end because of the sharpening of the social contradictions to which it had given rise and which it was becoming difficult to contain . The crisis which has come out of it frees accumulated tensions and allows the balance of power between social groups to be expressed more "freely" . The institutions, which precipitate and mediate demands, are no longer capable of channelling this balance

of power and of focussing it in the search for a social compromise . (Contrary to what was happening during the 50s and 60s . It is clear that during that period, wage-increases were not generously handed o'Ter by employers but obtained by protest and struggle . Nevertheless, these struggles are beneficial for the system as a whole thanks to institutional mediations which managed to establish a compromise based on guaranteed purchasing power) . The state of crisis is coupled with a process of crisis . Society changes through struggle . "Instability and movement" have as their function the "disruption of production" and "the weakening of social institutions" . Three phases can, in my opinion, be distinguished in this process, three main points of "fracture" . These do not follow one upon the other chronologically, rather their effects are culmulative . In the first phase (the first "fracture"), attacks against a



The 'Eighties monopolistic wage-relation are indirect, from several points of view : • social groups affected by the crisis are those on the periphary of the system, i.e . women (confined to the domestic sector), young people (confined to the education sector), immigrants (who are sent back to their countries of origin), old people (for whom a social group has been invented, "senior citizens") . As many people are kept in a position of non-employment as can be without the contradictions created being untenable for society as a whole . • compensation for workers allows demand for market products to be maintained and a fundamental factor in this type of wage-relation goes unquestioned, i .e . the consumption by the workers of the goods they themselves produce . • structures of production are created which allow escape from a monopolistic wage-relation: subcontracting, moonlighting, working at home . The second "fracture" is the present one, which started approximately at the end of the 70s . Struggles are much more direct

and aim to question the existence of the wage relation in its monopolisitic form. • attacks against the unions, against their very existence, become more and more frequent . They rely on social contradictions which the workers themselves experience : inability of the unions to take the aspirations of the workers completely into account, separation from the unemployed, etc . . . • the mechanisms which allow wages to be adjusted on productivity are questioned . The undermining of the purchasing power of all categories of wage earners is what is aimed for and increasingly used as a bargaining point for continued employment . • redundancies affect hitherto well-protected workers in heavy industry. • more and more businesses collapse as a result of these struggles, amongst them large firms . • the socialisation of risks, a characteristic of the monopolistic wage-relation, is called into question . The role of the state, as it has been developed in the last 30 years, is contested. It is upon this "moment" of the crisis that we shall pause in what follows, in the attempt to define it with more precision . Before we explore it in more detail, however, it is important to specify that the third "fracture", still to come, functions at an international level . The internal contradiction experienced by each national social formation cannot fail to affect others . The preservation of internal order leads each nation to rethink its relations with the others . Schematically, two points of weakness can be isolated : C & o-21-E

65

Capital f5 Class

66

∎ international trade contracts (see David, 1982) . Trade relations beween national social formations tail off. The table below clearly illustrates this, especially as far as manufactured products are concerned .

Table 1 : Annual variation of world exports (%)

Total Agricultural products Mineral products Manufactured products

1963 -73

1974

1975

1976

1977

1978

1979

1980

8 .5

3 .5

-3 .5

11

4 .0 7 .0

-3 .5 -2 .5

5 -7 .5

11 .0

5 .0

8 .5

1981

4 .5

5 .5

5 .5

1 .5

9.5 4.5

2 .0 2 .0

9 .0 1 .5

7 .0 5 .0

3 .0 -8 .0

3 .0 -12 .0

4.5

13 .0

5 .0

5 .0

4 .5

4 .5

0

(Source : GATT)

The means adopted to this end are more and more "effective" : from negotiations on self-imposed export restrictions (e .g. the USA Japan agreements on Japanese exports), to negotiated agreements (e .g. the Multifibres agreements), to the development of bilateral agreements, then to bans on certain products ; the gradation is obvious . But protectionism, if it is useful to consolidate internal cohesion, can only increase political and military tension between nations . It is easy to see what "solution to the crisis" could be envisaged in this perspective . ∎ if too many countries get into debt, it can lead to the total collapse of the monetary system on which international trade is based (see Sweezy, 1982) . The figures are telling . Between 1975 and 1982, the debts of developing countries rose from 180 to 626 billion dollars ; between 1981 and 1982 they rose by almost 100 billion . Servicing the debts has amounted to 131 billion dollars, of which 60 billion was interest, for these same countries . The impossibility of repayment is coupled with further loans which lead to increasingly unnegotiated solutions (e .g. Rumania declared unilaterally in January 1983 that she would not repay interest) . The inability of these countries to get rid of their debts (i .e . to hold their promise of expending social labour to match the creation of currency by the large financial centres of the developd capitalist countries) is by no means new ; what is new, however, is that the lending countries now run major risks . From the beginning of the crisis right up to the end of the 70s, international credit was used to feed demand from developing countries for industrial goods provided by firms in

The 'Eighties 67

capitalist countries, who saw in this a substitute for declining markets in their own countries due to stagnating investment . But the persistence of this stagnation, the lack of growth in the foreseeable future, makes it impossible for the lenders (they realised this in September 1982 at the General Assembly of the IMF) to rely on industrial capital . If a financial crisis were to occur, apart from its international repercussions, it would not fail to precipitate internal social changes ; international phenomena would thus rebound on the original constraint . For the moment, this is still only a threat, a third phase in the future, perhaps . With the 80s, on the other hand, we went straight into the second phase . The examination of its characteristics is the aim of what follows .

The radicalisation ofpolitical programmes characterising the beginning of the second phase of the crisis: In the second phase of the crisis, there is political radicalisation in almost all countries . This shows to what extent the crisis has got worse, in so far as the deterioration of the economic situation leads to increasingly direct confrontations between social groups . This second phase begins with the 80s : in May 1979, Mrs Thatcher replaces Labour, and at the beginning of 1981, Reagan replaces Carter . These two heads of state symbolise the return of the narrowest kind of conservatism, firmly set upon undermining the social gains made by the workers . In contrast, the coming of a left-wing government in France (and also in Greece and in Spain) can be seen as a swing of the pendulum compensating for rightwing policies during the first phase of the crisis . In each case, the economic policies are more radical than before, and are aimed at accelerating social change . The way in which economic policy has developed in the USA, the UK, and perhaps soon in West Germany with the arrival of H . Khol (it is significant that the later change of government in this country corresponds to the slightly healthier economic situation of West Germany, protected a little longer from the depression), is in answer to the need for social change which the more timid economic policies of 1974-1980 were not able to bring about . The seriousness of the crisis means that half-measures are no longer possible . In the logic of capitalism, it is clear that large-scale social change, capable of stimulating capitalism (i .e . high profits and a well-established class domination) can only occur if there is a massive increase in unemployment to allow a restructuring of the industrial system by the liquidation of unprofitable businesses, the

THE 1980s: A TURNING POINT IN THE CRISIS

Capital E5 Class

68

displacement of capital from one branch to another, a new spatial distribution of industry within the country itself . Also, workers' resistance to the labour process must be broken, profits restored by leaning on wages, etc . . . The first phase of the crisis did not allow these aims to be fulfilled . What happened? In 1974-75, because of (and on the pretext of) the oil crisis, there was an attempt to rationalise by eliminating the `harmful effects' (from the capitalist point of view) of decreasing productivity, struggles for working conditions, and wage increases between 1967 and 1973 . There was a strong increase in unemployment (particularly in the USA, Britain and W . Germany. But this was largely due to the failure to absorb new workers, whether these were young people, women wanting to work, or immigrants prevented from entering the country . Decreases in employment were largely obtained by making unprotected categories of workers redundant (immigrants in W . Germany and France; Blacks and Puerto Ricans in the USA; Indians and Pakistanis in the UK) . It is symptomatic that, during that recession, the speed with which employment was adjusted, insofar is it can be calculated, was all the higher the more wageearners in the countries concerned were divided into unequally protected categories - adjustment was faster in the USA and W . Germany, slower in France and Italy . (This is clearly not the sole explanation of differences : see Boyer and Mistral, 1978a) . From 1976 until 1979 the unemployment rate stabilized on average in the large countries as a whole (continuing to increase in France and Italy, decreasing in the USA, the UK and W. Germany) . At the same time, where employment increase did resume (in the

Graph 1 : Rate of Business Failures (per 10,000 companies) 160 140 120 100 80 60 40 20 0

The 'Eighties

industrial and service sectors in the USA ; the service sector in France and W . Germany and overall in Italy) this was on unhealthy foundations, both at the level of inter-capitalist competition and at the level of capital-labour relations (despite the development of qualitatively new relations, involving more precarious forms of employment, in the many small firms created) . An illustration is the development of the business failure rate . It can be seen that in the USA, from 1975-80, the failure rate was negligable, contrary to what is happening now, when increasing unemployment is threatening those who are best protected (some workers, but also management) . From 1972-80, therefore, there was little restructuring, compared with what is likely to happen in the 80s . Moreover, the lack of bankruptcies was due to the fact that to a certain extent restructuring was delayed by the socialisation of costs . This socialisation mediated by the State was a means of preserving a structure inadequate for capitalist requirements by dispersing its costs . For example, in the USA, state expenditure on pensions, social security, and health insurance went from 22% of the federal budget in 1970 to 33% in 1980 ; health and education expenditure from 11% to 16% ; social subsidies to local communities and to the Federal States went from 12% in 1970 to 17% in 1980 (see STOFFAES, 1982) . This policy of weathering the crisis through the socialisation of costs culminated in 1977 with the decision to extend unemployment benefit to another 9 million workers who had previously not been covered (farm-workers, home-helps, government employees) . With this measure, the Federal States's programme of unemployment insurance covers 97% of American wage-earners (see HICKEY, 1978) . There is an increase in both social costs linked to the crisis and their acceptance by the State in all countries at this time (see Table 2) . Table 2: Social Security Expenditure (as a % of Gross Domestic Product)

West Germany France UK

Italy Netherlands Denmark

1970

1975

1980

21 .4 19.2 18.4 15 .9 20.8 19.6

27 .8 22 .9 22 .6 19 .5 28 .1 25 .8

28 .3 25 .8 22 .8 21 .4 30 .7 28 .0

But keeping the economy under sedation has by no means cured it . Inflation has another, "latent", as it were, means of prolonging the crisis . High inflation in all countries from 1975-80

69

Capital & Class 70

is due both to unresolved blockages in the efficient running of capital and the refusal to deal with them (see Aglietta/Orlean, 1982 : 113) . In these conditions, it isn't surprising that American capitalism produces a government which proposes a radical economic policy to eliminate all obstacles to the more harmonious functioning of capitalism (i.e . high profits and a well-established class domination, rid of any notion of social justice) . As C . Stoffaes points out: "Reagan's victory is also the victory of the new areas over the old areas, the new industries of the Sun-Belt over the obsolete industries of the East Coast and the Great Lakes . It means that the wealthy businessmen of Texas, Georgia and California have had enough of paying taxes to help bankrupt industries, pockets of unemployment in Ohio, Michigan or Massachussets" (STOFFAES, 1982 : 45) . In the USA, as in the UK, the arrival of conservative government will precipitate the resolution of these contradictions . The strategy of these governments is not so much to counterbalance workers' resistance to the deepening of the crisis as to attack them head-on, to break them . The arrival of the Left in France expresses on the contrary the hope of the workers that the crisis will be resolved from above .

Breaking the mechanisms of monopoly regulation : The procedures of regulation of present-day capitalism, most often called "monopolistic", coupled with the intensive accumulation of capital has ensured an unprecedented increase in commodity production . (By regulation is meant the set of social procedures which goes hand in hand with acculumulation in the forms required by the mode of accumulation) . This can be schematically characterised : • by measures ensuring an increase in the purchasing power of the workers in conjunction with productivity increases and the intensification of labour ; • by social compromises resting notably on the development of collective bargaining; • by the larger part played by the State in economic affairs, in particular the socialisation of the market characterised by the greater separation than before between work and income . The gradual seizing up of intensive accumulation has led to the crisis. Previously good for growth, employment and incomes, the cogs in the machine have gone into reverse and changed into the vicious circles of inflation and unemployment . To look for procedures of regulation in this context can only aggravate the crisis. And yet this is what has happened . The rigidification of behaviour and procedure when accumulation has been blocked has accentuated inflationary tendencies .

The 'Eighties Breaking the mechanism of monopoly regulation is therefore the first step in a programme to come out of the crisis . The desire to do so is proclaimed explicitly or implicitly by most governments of the industrialised countries, left or right . There is no need to be astonished at such unanimity in conservative or progressive programmes, because it is a question of coming out of the crisis, as long as one postulates, as I have done, that when the risks are taken into account, no social group can deliberately have a strategy of aggravation of the crisis . This is not at all the same as saying that social projects which form the second step of the same stakes - are the same for all social groups . The class struggle in the present period, revolves around these two aspects . When the balance of power is favourable to the workers - as is the case in France - economic policy should aim to increase productivity through a new mode of development . The accumulation of capital should be characterised by the active mobilisation of human resources allowing savings on time . This can only occur if new work relations are developed which bring about new attitudes to work : qualitative changes will free productive potential. At the same time, regulatory procedures should make this aim of productivity compatible with the struggle for better living conditions . They should therefore no longer only adjust production to meet commercial demand, as used to be the case, but ensure the correct management of time : more time made available in production on the one hand, time given back to the workers on the other. (In this restitution, arbitration is still necessary to decide between restitution in the form of a shortening of the working day or the form of commodity consumption .) When the balance of power is unfavourable to the workers, as is the case in the USA, the UK and W. Germany, economic policy tends to allow profits to be restored by increasing the intensity of work and the pressure on wages. Breaking the mechanisms of monopoly regulation is, in this case, getting rid of an institutional yoke which has little by little encumbered "free enterprise" . It is to promote a looser, less institutionalised form of regulation, which allows company managers as much latitude as possible to exploit the possibilities of increasing surplus value . In what follows I shall try to show how the second phase of the crisis, which we are going through now, is in fact characterised by the exacerbation of struggles centering on a monopolistic wage-relation. The calling into question of wage-indexation Capitalism got the most it could out of the possibilities of growth opened up in the post-war period, by the establishment of largely institutionalised procedures adjusting production to meet demand . At the end of the 60s, the productivist model based on

71

Capital & Class 72

Taylorisation, which until then had considerably reduced the number of breaks in the working day, began to lose its effect because of the organisational and socio-political limits it came up against (see BILLAIJDOT, 1980) . This can be measured statistically by the change in the apparent productivity curve (measured by value added per capita) at the beginning of the 70s due to the reduction of the working day in all countries and the slowing down of productivity per hour (except in France and W . Germany; see Graph 2) . At the same time the ability of workers to impose an increase in purchasing power became stronger. From that time on there is a "scissoring" effect between the productivity curve and the purchasing power curve, indicative of the substantial tensions connected with the division of incomes and the workers' strong position with regard to it . The period, which stretches from the beginning of the crisis to the end of the 70s, seems to be characterised mainly by thefailure to call monopoly regulation into question . Although deep depressive phases such as those of the 30s are avoided, it will be a factor contributing to the length of the crisis . This can be seen statistically Graph 2 : Productivity per hour in the manufacturing industries Semi-logarithmic scale (1950 = 100)

Source : US Bureau of Labour Statistics (9) .

The 'Eighties 73

by the widening gulf between purchasing power and apparent productivity in all countries (see Graph 4) . During the whole of this period, monopoly regulation is in operation . The necessary solutions in the face of the crisis, are not very different in principle to those previously established : • the principle of the separation of work and income is aggravated by the setting up of complex systems of redundancy pay, early retirement, etc . . . • collective bargaining continues to play its part of adjusting wages to prices as well as sliding-scale mechanisms (In Italy, in 1975, there is even a reinforcement of the mechanisms of adjustment and tightening of wage-scales by a revision of the slidingscale in exchange for the lengthening of the working year) . • unemployment, although on the increase, hardly affects negotiations for wage-increases . The increase in the resulting distortions are resolved provisionally by high inflation rates . The second phase, which we are going through now, is characterised by a worsening of the crisis, accompanied by the political changes detailed earlier, and, as far as

Graph 3 : Ouarterly trend of purchasing power of wage rates. Semi-logarithmic scale (1st quarter 1967 = 100)

68

69

Source: OECD (2)

70

71

72

73

74

75 76

77

78

79

80



Capital & Class 74

wages are concerned, additional pressure in all countries to lower purchasing power and a change in wage-fiadng : ∎ in the USF,, the reduction of real wages is henceforth the result of negotiated agreements, signed by the workers themselves . According to an enquiry by the Employment Ministry, the wages of 73% of wage-earners covered by collective agreements signed during the first months of 1982 are frozen. The average wageincrease for the first year of the agreement is 2 .2% with 7 .8% for

Graph 4 : Real Wages and "adjusted" productivity Real wages .'Adjusted' productivity Etats-Unis

60

65

1960-1975 = 100

France

70

75

60

65

70

75

The 'Eighties the previous negotiations . • the same applies to W. Germany, where I .G . Metall ., the strongest German federation signed an agreement in March 1982 limiting wage increases to 4 .2% at a time when prices were increasing by 5 .8% . • in the UK, 250,000 workers, according to the CBI, accepted deferral or abandonment of any demands for wage increases . • in France, the Prime Minister attacked the inflexibility resulting from automatic wage increases (Press conference, 5 Sept ., 1982) . • Italy, in the last few years, has been an exemplary case of the rigidification of institutional procedures for fixing wages . The sliding scale used as the basis for wage fixing has indexed wages on prices and reduced wage-scales considerably . The system is at present being called into question : in June 1982, the Italian employers, in a letter to the unions, attacked the agreement which has been in operation since 1945, and reinforced in 1975 . (Since 1975, only one point on the scale has been taken into account . Thus geographical, social, age and sexual differences were abolished) . More recently, the attack on this agreement has led to a social pact which suggests that in 1983 wages will increase by a maximum percentage equal to the increase in prices ; this, when one takes the situation in the past into account, represents a significant development in wage policy. In all the large countries, therefore, the position of strength obtained by the workers during the years before the crisis and maintained overall during the 70s has been seriously undermined . We have just seen this in our study of wage trends, but other signs of this relative weakness of the workers and initiative of the employers in the class struggle are apparent. Increasing unemployment appears to have turned unemployment into a qualitative regulatory procedure . It has been shown that during the first half of the 70s, unemployment did not exert any moderating influences on wage increases (see Boyer and Mistral, 1978 b) . The analysis of historical changes in the regulatory procedures of capitalism has proved the historically contingent character of the famous Phillips curve and its failure to account for the link between unemployment and wages in a period of growth . And yet, the sudden increase in unemployment suggests that a closer link is being forged at present . In the USA, 12 million are currently unemployed, i .e . 10 .8% of the working population, the highest since 1949 . At the end of 1982, the EEC had 30 million unemployed, more than 3 million in the UK (11 .9% of the working population) ; in Belgium, 14 .9% of the working population is un-

75

Capital & Class 76

employed, and the number of unemployed has increased by 30% in one year in W . Germany. The number of discouraged workers is on the increase ; nearly 2 million in the USA when 6 million part-timers would like to work full-time, and the length of unemployment is increasing in all countries : 55% in the UK had been unemployed for more than six months in July 1982 against 42% a year earlier; in the USA, the average length of unemployment is almost 18 weeks . Deflationary policies brought into play in most countries are then, from this point of view, having the right effect . The consequence of such an increase in unemployment is a weakening of the bargaining position of the workers, since the hitherto best protected categories are now threatened . As a result there have been notable modifications in the procedures of collective bargaining, where for thefirst time clauses have appeared which tend to link a certain guarantee of employment with wage concessions and procedures for the reorganisation of production . In the

this affects - significantly enough - the three biggest firms in the car industry: Ford, General Motors, Chrysler, i .e . more than 500,000 workers . We can therefore see an important change in monopoly regulation . USA

Table 3 : Unemployment rate in the USA (Nov . 1982) Women, adult, white Men, adult, white Women, adult, black Men, adult, black Adolescents, white Adolescents, black

8 .0% 9 .2% 16 .7% 19 .0% 21 .3% 50 .1

Whereas until now, capitalism had tended to avoid collective bargaining, by developing unstable employment, having recourse to sub-contracting, and so on, all of which became increasingly prevalent during the 70s in the USA, but also in Europe (principally Italy), it is now workers covered by collective bargaining (unionized workers) who are affected. A new stage has been reached in the sense that when the existence of collective agreements cannot be attacked, their contents are modified and aim to re-establish wageflexibility in response to the unemployment rate . This is made easier by changes in the balance of power between capitalists and workers . Indeed, there was a considerable weakening of the workers and their organisations at the beginning of the 80s . Class struggles: division and weakening of the workers

Indeed, this is how the present state of social struggle could be characterised, in all countries . The turning point of the 80's

The 'Eighties 77 Graph 5 : Unemployment rate (Source OECD)

Per cent of Total labour force 13

11

9

7

3

1973

1974

1975

1976

1977

1978

1979

seems to be characterised by a reversal' of the balance of power between social classes . Certainly, one could object that it is rash to suppose that the workers were in a position of strength when they are still dominated by capital . Nevertheless, it seems true to say that through the expedient of monopoly regulation, a number of practices became fixed as a result of institutionalisation (one important example is the decentralisation of negotiation procedures in industrial relations) and the workers were able to hide behind them during the inception of the crisis ; moreover, these procedures allowed them to resist effectively changes desired by the employers . At present, there are several signs that this resistance is breaking under the employers' onslaught and because of internal division in the workers' movement . The two are combined to mark the beginning of a process of transformation in social configurations, by the establishment of new relations between the antagonists . The employer's offensive : the signs of a reversal in social relations compared with the preceding phase are legion . I have already underlined one aspect of this problem when discussing incomes policies . It is obvious that the concessions `asked' of wage-earners carry more weight when capital begins a massive restructuring programme and eliminates unprofitable firms . The example of International Harvester demonstrates this : the management obtained important concessions from previously strong unions by threatening bankruptcy . Even if this does not happen (which is far from being proven given the company's $4 .2 million

1980

1981

Capital & Class 78

debts), the relations between union and employers will be forever marked by this struggle . Other more or less brutal forms of pressure applied to unions are being developed: • unemployment affects union power by weakening union numbers . • political and legislative pressures are increasing. The conflict of the pointsmen in the USA is an example . In the UK the successive votes for the Employment Act (in 1980) and the Employment Bill (1982) are evidence of the wish to undermine the power of the union : the calling into question of the closed shop, security for non-unionised workers, prohibition of solidarity strikes, stiffer penalties, are the main points . It could certainly be objected that this is by no means the first time (the Industrial Relations Act of the Health government fell through in 1971), but the determination of the government and anti-union feeling in the populace are much stronger than they were before . • the anti-union fight is becoming more and more openly admitted as one of the employers' aims . This is especially true in the USA where `new techniques' have appeared on a massive scale . There is, for example, the proliferation of `Labour management consultants' . Their role is to advise company managers on how to prevent union activities in their firm and how to get rid of it when it exists . There is a vast panoply of strategies and methods ; e .g. the interpretation of legal texts, recommendations for the selection of personnel and the right dose of ethnic minorities, etc . (see Kilgour, 1981) . • the displacement of capital towards less industrialised areas of the country is increasing . Thus in the USA, the large factories of the North-East are giving way more and more to the small businesses of the South where labour laws are more flexible, wages lower, and unions non-existent . These measures taken as a whole put workers' organisations in an increasingly weak position . This is true not only of the USA and the UK, as we have seen, but also of Italy (German unions have been less affected by this process, but this delay can only be due, as it was in the case of unemployment, to the health of the German economy until recently) . As a result there is a reduction in the number of strikes (and workers involved in strikes) to a very low level, as can be seen from the graph below . The division of workers : the radicalisation of the stakes in capital-labour relations which typifies the present phase is not the only element in the weakening of working-class defenses . The social change occurring during the crisis goes beyond the simplistic idea of polarised and antagonistic classes ; it affects all social classes. This is certainly an important reason for the widespread

The 'Eighties 79

division of the union movement (which can be seen both in divisions within the unions, and slackening union membership) . At this stage of the crisis, hopes and fears have focused on ideas of entrenchment which appear to be viable solutions for some social strata, and lesser evils for others . There is less sociability due to increased risks at the individual level, and when projects or aspirations make an appearance, they clash more violently than before with other projects, other aspirations . (The shortsightedness, or bad faith, of some privileged social strata with regard to their own situation when, paradoxically, their function is to study society, shows how widespread the problem is : in a recent publication, an intellectual, who shall remain nameless, when advocating solidarity, denouncing social-corporatism, enumerating the privileged social categories and actors, and setting out their privileges, `forgot' to include himself in the list!) . The social field is becoming fragmented into smaller and smaller groups, concerned with homogeneity, with their identity . Those who are most often excluded are obviously the weakest, especially those whose membership of the national community has not been recognised but only tolerated for the needs of economic growth . American society in particular is at present sinking into ever-deepening inegaliGraph 6 : Strikes involving more than 1,000 workers

500

400

300

200

1950

(Source : Bureau of Labor Statistics) .

1960

1970

1980

Capital & Class 80

tarianism . We saw this in the comparative table of unemployment rates for whites and blacks . It can also be seen where income is concerned (see table 4) ; Table 4 : Income distribution according to race in the In dollars 1980

From From From More

USA

in 1980

Family income of Blacks

Family income of Whites

40% 30% 22% 8%

16% 28% 35% 21%

0 to 10,000 10,000 to 20,000 20,000 to 35,000 than 35,000

To these inequalities we can add the attacks on acquired rights : on a couple of occasions recently, the Ministry of Justice attacked labour quotas for minorities . Institutions cannot remain immune to this groundswell in the social fabric . The unions grew and became stronger with structures adapted to a social configuration which is now disintegrating. Their difficulties in taking up new aspirations, in organising the new categories of workers (service industries), and the unemployed, has made them more vulnerable (see Maire, 1980 : 117-121) . Union division is obvious in France, even more so in Italy where the movement towards unity has been extremely strong during the 70s . And so Italian unions are extremely divided in the debate on eonomic policy, and the FLM, since 1972 the symbol of unity, now only retains the pretence of it .

Reorientations in social policies : In the crisis, it is less the state-form itself which is in crisis than its functionality, as it has slowly established itself since the Second World War; (the contradiction pointed out on several occasions by G . de Bemis between state power and the power of transnational firms is real enough, but it only affects the state-form very slowly, at least in the industrialised countries where it has been operating for several centuries) . The `decline' of the state forecast by new economists, Friedmanite monetarists and holders of the supply-side doctrine has never had any credibility . It is an economic vision which takes no account of the state's social functions which are far from being defunct. In fact, another sort of state interventionism is operating in the USA and the UK, just as strong as the other one, but serving the interests of the ruling classes more directly (and in the short term!) . From this point of view, the change is real enough, and the state is

The 'Eighties

precipitating the redistribution of wealth, brutally pigeon-holing the individuals' position in society; this was only happening very slowly in thefirst phase of the crisis. Inflation played that role then, albeit in a diffuse way. Although it has stopped inflation with a brutal recession, the economic policy itself has not stopped working. Inequality is the clearly stated means of restoring social dynamism . The list of measures taken in this direction and which organise social regression to re-establish profits is long . But, even this aim cannot be fulfilled beyond the very short term by Reaganism . The deficit it causes is so much of a threat for the interests of American capitalism and provokes so much opposition within the ruling class itself, that a decision to increase taxes recently had to be taken . Whether the state says it wants to free the economy from the obstacles of social policy, as in the USA, the UK and W. Germany, or whether it refused to renounce its role as social leveller as in France, we are nevertheless forced to admit that the ability of the state to socialise the consumption costs of individuals as it previously existed has been called into question, and this characterises the second phase of the crisis . From 1970-1980, the State's acceptance of the social costs of the crisis was general, and social security expenditure gradually increased as a proportion of the Gross National Product . (see Table 5) . Budgetary policies put into effect in 1975 consisted in boosting demand by increasing deficits . The slackening of production meant that these deficits were not reabsorbed and the new recession of 1979-80 increased them yet again when the situation was made even worse by the debts incurred (W . Germany esp Table 5 : Net Goverrunent borrowing (-), or lending (+), as a proportion of Gross Domestic Product (%) . EEC

USA

Japan

1973 1974 1975 1976

-0.8 -1 .9 -5 .5 -3 .7

+0 .5 -0 .2 -4 .2 -2 .1

+0 .5 +0 .4 -2 .6 -3 .5

1979 1980 1981

-3 .6 -3 .6 -5 .0

+0 .5 -1 .2 -0 .9

-4 .8 -4 .2 -4 .0

Sources : Comptes de la Nation, 1981 At the beginning of the 80s therefore, State social policies came up against monetary constraints which could not be got round . Unless the circle of increased productivity and purchasing power is rapidly re-entered - which is an academic hypothesis C &

C-21-F

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Capital & Class 82

national economies in the years to come will have to develop under the constant and ever closer threat of the explosion of monetary constraints . It is not by any means proven that the end of the credit crisis can be controlled . In this case, the political order and national sovereignties will suffer. There is therefore little room for manoeuvre where social policies are concerned . But in return, these state social policies are a means of resolving the monetary contradictions, to the extent that their solution depends upon a stable social order, and the effective regulation of conflict which does not have recourse to inflationary practices . The coming of conservative governments leads to a social order which relies upon inequality through social policies which aim to make the poor poorer and the rich richer (see Coriat, 1982) . This system does not go without contradictions : • reinforcing the exclusion of a fraction of the population, and multiplying the ghettoes, paves the way for violent conflicts which may tear society apart. These have so far been contained in the USA, partly by the hope which Reagan represented, even for those who could expect nothing from him . In the UK, the riots during the summer of 1981 were proof of this latent violence ; • the logic of the Reagan administration led, despite restrictive social policies, to a worse deficit (from $58 billion in 1981 to $111 billion in 1982) . That administration has clearly failed to achieve its aims, and the consequences are by no means favourable for the capitalist class . On the contrary, they increase in-fighting between the different fractions . • by promoting what seems to be a return to the sweat system, by going back on agreements on working conditions and guaranteed rights, by cutting back on education and research, the policies are hardly likely to ensure increased social productivity . This may affect the American lead in the development of productive forces . In France, another road is being trodden . The coming of a left-wing government characterises the re-orientation of the beginning of the 80s . In contrast with the government of the USA and the UK, its programme is one of social justice . But to carry this out is by no means easy . At first, social-democratic practices were adopted to re-orient the wage-relation : increased socialisation of the risks, increased basic wage, etc . There was a marked increase in the `monopolistic' characteristics of the previous wage-relation . This process came up against economic constraints which show how limited such measures are without intensive accumulation . Coming through the crisis supposes an aim which achieves a consensus and adquate means to obtain it : • when the immanence of social conflict is taken into account, the aim cannot easily be isolated, defined with any

The 'Eighties 83

precision, or generally accepted . This can be illustrated in reverse by the development of corporatism, i.e . the proliferation of partial aims in the short term, appropriate to each social group . An aim in the middle term ensuring the durability of the left-wing experiment on the basis of an ethic of social justice would be to increase social productivity and to use this increased productivity to improve living and working conditions . The potential productivity increase is huge, but it cannot be achieved on the basis of Taylorisation and Fordism . It must be brought about not only through technological innovation but especially and above all by social innovation . Only bold steps in the social sphere, working conditions, re-organisation of the division of labour, and the re-appropriation of knowledge would bring this about . ∎ the role of the state must therefore be to free social creativity by the promotion of new, more flexible, less centralised institutions . On the other hand, it must contribute actively to free those social groups from their past who cling to it so readily, by exposing the compromises of the past and provoking debate to change the way people think .

At the time of writing, French economic policy has gone through a major reorientation. Coming after council elections which were difficult for the government, this reorientation is nevertheless linked only with economic considerations, with the competitiveness of the French economy, the monetary situation, the foreign trade, and deficit. (Indeed, it is difficult to see how election results more favourable for the left would have changed the measures taken) . This stresses the weight of economic variables in the present situation and marks the limits of political will . One reason for this is the pursuit of international competitiveness . France is and remains an economy where trade relations are largely open to the world market . We could summarise the government's options thus : (a) push France up on the role of honour of commercial capitalist economies by changing and developing its structure of productivity on the basis of a strong industry ; (b) reduce social inequality, whether this involves income, wealth, or power, and increase individual freedom . The problem is to reconcile these two aims, to make them compatible . Can the socialist project for society be coupled with a market economy whose logic is made that much more implacable by the contraction of markets? In other words, can capitalism, be fought on its own ground, that of a market economy, in the construction of a new society? In the other large economies, the capitalist machine has been strengthened . Confrontations on the world market are con-

CONCLUSION



Capital E5 Class

84

ducted on the basis of regressive social policies which reduce production costs and brutally restructure the economy . The only limit to this kind of strategy in the short term is the social reactions it provokes and the political sanctions which are likely to come with them . As long as these reactions are contained (by restrictive legislative measures and/or policing measures), competitiveness is bound to be better than for an economy, like France's, which has social aims . The problem is that by increasing unemployment and reducing purchasing power, outlets become fewer and this leads to the sharpening of international competition and the need to climb onto another level of social regression to keep ones head above water. In that kind of sitatuion, nobody gets richer, but everybody hopes to become (or remain) on top (and therefore less poor) tomorrow; to become the richest the day after tomorrow! In the middle term, this leads : • to shrinking trade relations, sharper competition for remaining outlets and therefore to international economic and political tension ; • to restriction of individual freedom, a less democratic and more policed social organisation, tensions not only between antagonistic clsses but also between underprivileged strata . Such a situation is clearly full of risks for world peace, mortgaging the long term . What the long term brings will of course depend on many factors . All that can be said is that the deeper the recession, the greater the risks and the more the future will be threatened. On the other hand, if we come through the recession, the conditions favourable to economic growth will occur more quickly . Liberal policies are playing a game of all or nothing : the risks of losing everything increase at the same rate as potential gains . Can France avoid this situation? The third devaluation amongst other measures are reminders of the implacability of the international commercial order. Lower purchasing power, increased taxes are used to slow down consumption and thereby reduce the foreign deficit which has accured during the two previous years . The deficit in the balance of payments is due to : • the openness of the French economy whose home market is catered for mostly by foreign products . The boost to the economy has therefore benefited foreign producers, and the lack of a simultaneous boost in W . Germany meant that exports did not compensate imports . • American monetary policy which boosts the dollar . The international environment and the existing productive structures are therefore the factors which largely determine the results of policies taken . The present policy consecrates both the

The 'Eighties primacy of the international order over the national will and the strength of the international order in enforcing conformity between economic rules which it itself dictates . The measures taken to reduce the foreign deficit would have been imposed on France by the IMF anyway . It is difficult to see anyway how France could not be affected by the crisis . For through what miracle could two years of new economic policies both increase purchasing power, reduce unemployment, and prevent the increase of a foriegn deficit, (without mentioning social rights such as the 39 hour week, a fifth week of holidays, retirement at 60, etc . In the USA the government plans to change the legal retiring age from 65 to . . . 67!) In short succeed on all levels in a depressed international context where only the strongest have a hope of coming out of it honourably, when clearly much better equipped, structurally more competitive economies like those of the USA or W. Germany, if they are managing to maintain their currency and their foreign balance, are doing so at the price of stagnation or reduction in purchasing power (according to recent statistics 31 million Americans are below the official minimum wage of $9500 per annum for a family of four), and increased unemployment (this has risen between Jan . 82 and Jan . 83 by 28% in W. Germany, 29% in the USA, 15% in Italy, 11 % in the UK and 4 .9% in France) . Amongst the consequences of the French economy's present situation, we can, however, distinguish between those which are inherent in the crisis and those which are due to liberal economic policies followed by other countries . It is in effect fairly clear that it is not just American workers who are paying for a reduced inflation rate by unemployment, but also partly French workers . What we must do to ensure the continuity of the present socialist experiment is to find a solution which distances us fairly rapidly from the international commercial order . Although this can be achieved in the middle term by effective productivity structures (this is the wager of a new industrial policy and a new relationship between industry and other sectors of the economy (see AGLIETTA/NOYER 1982), it can only be achieved in the short term by refusing to play by the rules, by refusing the dictates of international capitalism . The other wager in the short term is to make the socialist experiment credible for a social base shaken by recent harsh measures . Speeding up changes in living and working conditions, reducing the working period, in short promoting new attitudes to work is in the short term the only guarantee for the validation of an economic policy which could otherwise kill all hopes, and in the middle term the only (Socialist) way of stimulating more than marginal increases in productivity. As R . Boyer has been stressing for several years, the wage-relation is the crucial issue in this crisis .

85



Capital & Class 86

If the present government wishes to reinforce its social base and gain acceptance for the harsh measures which cannot be escaped, it will have to take the plunge on social innovation . Because, if it is true that pause for thought will prevent the French from getting angry at being no better off in 1983 than they were in 1980, the project of a socialist society cannot be put off forever, or at any rate until better times, for philosophical and electoral reasons certainly, but also pragmatic reasons ; only work-sharing (in different forms, and most especially a shorter working week) will bring French society and its economy out of the doldrums .

REFERENCES

M . Aglietta, R . Boyer (1982) 'Une industrie competitive en France et dans le monde', 3ournees de travail sur la politique industrielle de la France (Paris 15-16 Nov. 1982) . M. Aglietta, A . Orlean, (1982) La violence de la monnaie, PUF . B . Billaudot, (1980) 'Accummulation, croissance et emploi dans l'industrie frangaise : retrospectives 1959-1974', Economie et Statistique, no . 127, Nov. 1980 . R . Boyer, J . Mistral, (1978a) Profit, Inflation, Crises, PUF. B. Coriat, (1982) `Relations industrielles, rapport salarial et regulation : l'inflexion neo-liberale', Consommation, no .3, 1982 . F . David, (1982) Le commerce international a la derive, Calmann-Levy . A . Hickey, (1978) `Unemployment insurance covers additional 9 million workers', Monthly Labor Review, May 1978 . J .G . Kilgour, (1981) Preventive Labor Relations, New York . E . Maire, (1980) Reconstruire 1'espoir, Seuil. K . Marx, Une chap itre inedit du capital, UGE A Minc, (1982), L apres-crise est commencee, Gallimard . I. Prigogine, I Stengers, (1979) La Nouvelle Alliance, Gallimard . P. Salin, `La crise et la SMI' radio programme on France-Culture, 18 January 1983 . C . Stoffaes, (1982) La Reaganomie, Fondements doctrinaux et dimension internationale, Docummentation Frangaise . P . Sweezy, (1982) `The Economic crisis in the USA', Monthly Review Dec. 1982 .

Martin Spence

Soviet power : Nuclear energy in the USSR

In this paper I set out to examine the Soviet nuclear power programme, in the context of energy policy, economic policy, and the class struggle in the USSR . My intention is not only to reach an understanding of the Soviet nuclear programme in its own right, but to measure it against Western nuclear programmes, and to compare their origins, dynamics, and the interests they serve .'

87

Capital & Class 88

lot of data, and for guidance in my overall theoretical approach, I have leaned a lot on the work of Hillel Ticktin and others around the journal Critique. In this view, the USSR has broken with capitalism but is demonstrably not socialist, nor indeed a `planned' economy . It is a bifurcation from the classical Marxist pattern of social development : it retains features of capitalism, borrows features of socialism, but rather than being a `transitional form' between the two it is a social formation in its own right.' I should stress that I do not accept all of Ticktin's positions .' This paper is also written, of course, in the context of recent debate within Capital & Class on the politics of nuclear power . My earlier paper in C&C 16 has provoked a response from Wolfgang Rudig in C&C 20 - but both of these contributions centred on Western nuclear power programmes. Perhaps as a result of this, the debate is in danger of degenerating into a sterile squabble over institutional forms, centring on the question `Is it multinational capital or is it the State which is mainly responsible for promoting nuclear power?' . We will never come to grips with this complex issue, if we frame our central questions in such simplistic terms . By studying the Soviet nuclear programme, we may prevent the debate from degenerating in this way . We can all agree that Western multinational companies are not dictating the Soviet programme : it is formulated by State planning bodies, and carried out by State-owned industries and utilities . We need not argue here about the identity of the responsible institutions - which means that we can look beyond institutional forms, to the real issues at stake in this debate . There are two essential points where Rudig and I take different positions . Firstly, there is the question of the class strugle, and the ways in which nuclear power both reflects and reacts upon the balance of class forces . Secondly, there is FOR A

the question of the world market, and the constraints and imperatives which it imposes upon economic agents, whether private capitals or State institutions . In C&C 16 I sought to argue that nuclear power programmes in the West (and specifically Britain), can only be understood within a class context, as local reflections of certain global capitalist trends, with multinational companies playing a crucial role in implementing these trends . In the present paper I hope to show that, despite many differences with the West, nuclear power in the USSR must also be analysed within the context of the class struggle, and must take into account the place of the Soviet economy in the world market. I feel that Rudig has not come to grips with the issue of class, or with the existence of a world market, in his paper. His account takes the nuclear programmes of a certain number of advanced capitalist countries, one by one, as if they could be considered in isolation from the world economy; and his overall analysis is essentially liberal and institutional rather than Marxist and class-based . However, on one important issue he makes a telling criticism of my argument in C&C 16, which I am forced to accept . He rightly attacks my characterisation of nuclear power as a `specifically capitalist technology' . 4 This phrase was indeed sloppy and ill-thought-out . I don't accept all of Rudig's arguments against it, but I take the main point. The present paper is, in a sense, a testimony to the fact that nuclear power cannot be `specifically capitalist'- otherwise how is it that the world's largest non-capitalist state is vigorously pursuing a nuclear power programme? Behind my careless phrase lies a crucial point, however. Nuclear power is a class technology, which is introduced to maintain and extend the power of the ruling class, and to undermine the position of the working class. This point I still

Soviet power maintain, and hope to demonstrate that it is no less true in the USSR than in the capitalist West.

The Soviet crisis The USSR faces its own economic crisis, distinct from that of the West but related to it. A pattern of low growth rates and economic slowdown has been setting in since the 1960s . Targets are repeatedly missed, and new targets increasingly modest . Industrial growth in 1982 was the lowest since the Second World War ; it achieved 2 .8%, when the target had been 4.7% . 5 The 1983 target is the lowest set since 1929 . 6 The root of the problem is identified by Soviet planners as low productivity . At the 26th Congress of the cPSU it was spelled out that `the principal factor in economic growth is increasing labour productivity' .' This failure is not a failure for 'socialism', or for a `planned economy', because neither exist in the USSR . Planning, to be worthy of the name, must involve sharing of information and democratic processes of decision-making . The centralised and bureaucratised `planning' institutions in the USSR are actually incapable of planning, of handling and processing the vast mass of information generated by an increasingly sophisticated and interdependent economy.' These institutions, their methods and habits, are of course the legacy of the era of Stalinist industrialisation . There are other legacies as well, which contribute to today's crisis . Geographically, Stalinist industrialisation built upon the infrastructure inherited from Czarism - emphasising development in the European USSR . Great projects were certainly launched in the East, such as the UralsKuznetsk combine, but Siberia never received more then 15% of total investment in any Five Year Plan (FYP) up to 1950 .°

Sectorally, Stalinist industrialisation 89 was based upon a classic coal-iron-steel complex - as indeed it had to be, initially . But the very nature of the `planning' processes, based on purely quantitative targets, discouraging innovation and rewarding mindless repetition, meant that this industrial complex tended to reproduce itself at the expense of agriculture, consumer goods, and new technologies . These structural tendencies were of course associated with quite deliberate political decisions to prioritise heavy industry. Overall, therefore, Stalinist systems prompted the extensive development of heavy industry, but proved incapable of intensive development and innovation . The end result is massive inefficiency and waste - which Ticktin identifies as the central, definitive feature of the Soviet economy . 10 These institutional, geographical, and sectoral problems are not the whole story, however. Underlying these, and limiting the options of the ruling class, is the question of the working class. The Soviet working class lacks independent organisations for collective action and selfdefence : it has been effectively fragmented and atomised, by the political system and by the organisation of work . But the other side of this coin is that each worker retains considerable individual control over the immediate work process. Resistance is thus expressed individually rather than collectively, via absenteeism, frequent changes of job, `laziness' and lack of commitment when at work. The right to work, and full employment, are constitutionally guaranteed, and would be difficult if not impossible for the ruling class to remove. But for many Soviet workers, the `right to work' is interpreted daily as the `right not to work hard"' This is the framework of the Soviet class struggle, and it obviously contributes to chronic low productivity, though it is hardly the only cause . The options for the

Capital & Class 90 ruling class are limited . Talk of economic reform has been in the air for years, and certain sections of the ruling class and intelligentsia might benefit from a step towards a more `open' market economy 12 - but this step would also imply the dissolution or reform of the very 'planning' institutions in which the ruling class bases its power . It would also encounter strong opposition from the working class, because a market economy would necessarily mean an end to the constitutionallyguaranteed right to work - a right which underlies such limited power as the working class retains . So, the Soviet ruling class must seek, as far as possible, to raise productivity within the framework of the bureaucratically-organised economy although this in itself militates against necessary technogical innovation; and within the framework of its broad 'understanding' with the working class, although this in itself implies continued low labour productivity. The current tactics of the Andropov leadership illustrate the constraints which exist . It has launched a campaign against labour indiscipline and absenteeism - but cannot carry it too far . And it has declared institutional reforms in the planning system - but only in two ministries . " Energy policy The Stalinist industrialisation drive of the 1930s, and reindustrialisation after the War, were overwhelmingly coal-based ." Even in the 1960s, 40% of the USSR's transport system was taken up with the movement of mineral fuels - predominantly coal." Since the mid 1960s, however, coal has been slipping behind its targets . Enormous reserves still exist, but they are concentrated in Eastern Siberia, far from the western urban-industrial centres . Hydro-electric power is still significant - and hydro schemes have been

prioritised, as prestige projects, ever since the Dnieper dam in the 1930s . But, as with coal, the emphasis is shifting East . Hydro potential in the Western USSR is now fully exploited, 16 , and current new projects are based on the enormous rivers of East Siberia, the Angara and Yenisei ." This has meant that a wide-ranging electricity transmission grid has had to be built, to bring hydro-electricity to the Western USSR ." Oil and gas are the great new energy resources, which have become increasingly important since the 1950s . In the late 1950s, Khruschev set out to transcend the Stalinist coal-iron-steel complex, and prioritise instead the more modern industrial complex of chemicalsoil-gas . He caused massive industrial disruption in the attempt - but oil and gas production did indeed take off. By 1970, oil was the USSR's major extracted fuel by volume, 1 I and in the late 1960s and early 1970s it was the only fuel regularly to achieve its targets ." Production is now falling, often due to short-sighted production techniques, 20 but the USSR is still the world's leading producer . Gas has proved to be even more significant . It is estimated that the USSR holds one-third of all world gas reserves, of which half is in the enormous North Tyumen fields in Western Siberia . 21 The result is that gas has now replaced oil as the basic energy source for many industrial processes .22 But this is only half the story . Oil and gas are not extracted purely for domestic consumption but also, crucially, for export, both to other CMEA countries and to the West . In 1981, sales of gas and oil accounted for 47% of total Soviet exports, and 75% of total exports to the West. 23 These energy exports are therefore crucial sources of hard-currency earnings . The rapid exploitation of Eastern oil and gas reserves is the central element in

Soviet power

the current, 11th, FYP . Investment has shifted geographically towards Siberia, and sectorally towards the fuel industries : investment in fuel and energy is set to rise by 50% in 1981-5, compared to 197680 . 24 Exploitation is proceeding at such a rate that some reserves are possibly being lost forever, in the interests of short-term extraction, 25 and the delicate ecology of Western Siberia is being upset and possibly shattered, with unpredictable consequences ."

Nuclear power One increasingly important energy source has not been mentioned so far - nuclear power . In the USSR, as in the West, nuclear power is a technological `spin-off from the military nuclear weapons programme . But in the West, the balance between private capitalist and public involvement has changed over the years : although the State continues to provide a crucial underwriting role, it is large scale private capital which increasingly provides the dynamic between Western and Third World nuclear programmes ." The situation in the USSR is quite different. The Soviet atom bomb project was launched in 1942, and accelerated in 1945, and it is not until 1953 that a separate nuclear power programme can be identified . In that year, the `Ministry of Medium Machine Building' was established to oversee the nuclear power programme, as part of a series of events surrounding the downfall of Beria, who had previously controlled the atom bomb project . 28 The Ministry was run by technocrats and police officials from the bomb project, bearing witness to a certain technological continuity. 29 The first nuclear power station to be commissioned, at Obninsk in 1954, was essentially a converted military plutonium-producing reactor . However, the young nuclear power

programme soon fell victim to political 91 intrigue . In the 6th FYP, a significant nuclear programme was envisaged, with 2000 to 3000 Megawatts ( .Mw) to be installed by 1960 . 3° But the embryonic nuclear establishment allowed itself to become embroiled with the antiKhruschev faction during the internecine battles in the Politbureau in 1956-7 . Khruschev's victory, in which he characterised his opponents as the `Anti Party Group', rebounded on the nuclear programme . The 6th FYP was scrapped, to be replaced by a new Seven Year Plan to run to 1965, in which chemicals, oil and gas were prioritised . Nuclear power didn't figure at all.'Nuclear power stations did continue to be built, but only slowly : 400 MW were installed by 1960, and 1600 Mw by 1970 . 32 The breakthrough came with the 9th FYP, to run from 1970 to 1975 . By this time Khruschev was long gone, and research and development work during the 1960s had identified two favourable reactor-types, both Light Water (LWR) designs. 33 The advantage of these designs is that they lend themselves to relativelyfabrication cheap production-line methods . LWRs, especially the Pressurised Water Reactor (PWR), have also been adopted in the West as the most commercially-viable reactor designs . The 9th FYP aimed at the installation of 6000 to 8000 Mw of new nuclear capacity by 1976, and the construction of a major reactor-building factory complex. The nuclear programme was thus to quadruple in five years 34 . The 10th FYP, from 1976 to 1980, continued the trend : nuclear power, which provided 3 .2% of electricity in 1976 35 , was targetted to provide 10% by 1980, with 13,000 to 15,000 Mw new capacity installed . And Atommash, the giant nuclear reactor factory near Volgograd, was the 10th FYP's prestige project 36 . Actual achievements didn't quite match the Plan, though they were

Capital E5 Class

92 impressive enough . In 1981 nuclear power provided 6 .5% of electricity, rather than the targetted 10%, and nuclear capacity installed during the 10th FYP totalled 12,000 Mw, rather than the targetted 1315,000 37 . Continued Expansion planned

The growth is planned to continue in the current, 11 th, FYP (1981-85) . Nuclear power is intended to expand by 24%, providing 14% of electricity by 1985 . Nuclear capacity is targetted to increase 2'/z times as fast as new coal-, oil- or gas-fired capacity'" . Once again, it is unlikely that these ambitious targets will be met - but the expansion of the programme has nevertheless been steady and impressive from 1979 onwards . This is quite unlike the situation in the West . There, nuclear power programmes advanced in fits and starts during the 1950s and 1960s ; received a tremendous boost following the 1973 Oil Crisis ; but have been faltering since the mid-1970s . The Soviet programme, effectively insulated from the market and political forces affecting Western developments, had expanded steadily at the very time when projects in the West were being reassessed, cut back or abandoned . This difference in timing should alert us to the fact that the Soviet programme is driven by a dynamic quite different from that operating in the West. We should also take note that the expansion of nuclear power coincides precisely with the major export drive for oil and gas . We must also take into account the location of new nuclear capacity. Nuclear power stations are not being scattered throughout the Soviet Union. They are being concentrated, very deliberately, in the industrialised and urban areas of the European USSR, where about 80% of the population lives and 80% of the electricity consumption takes place". We have already seen that, by 1985, it is planned

that 14% of all electricity generating capacity wil be nuclear ; but in the European USSR, the planned proportion is 24% . Nearly all new generating capacity in this region is nuclear . Fossil-fuel fired stations are simply not being built any more"'. Nuclear power in the USSR is not simply being developed as a new source of energy for the national grid . It is being developed as a specifically urban industrial source of electricity, to meet the needs of the Western, European part of the country, where the bulk of production - and the bulk of the working-class - is concentrated . The question we now need to tackle is ; how does this nuclear power programme relate to the Soviet ruling class's wider strategy for dealing with its economic crisis?

The class politics of nuclear power in the USSR We have already seen that the dilemma of the Soviet ruling class is that it must find a way of responding to the crisis, while leaving intact its own institutional powerbase, and while retaining its basic 'understanding' with the working-class . The discovery of enormous oil and gas reserves in the East, in the 1950s and 1960s, appeared by the late 1960s and early 1970s to open up a solution to this dilemma . By turning to the world market, the ruling class calculated it could avoid disruptive, self-generated change at home . The export of oil and gas could earn hard currency - especially after the OPEC oil price rises of 1973 and 1979- with which to buy two vital commodities . Firstly food : Soviet agriculture is notoriously inefficient, and was hit from the late 1970s by a series of bad harvests. Complaints about food are, furthermore, the single most common cause of strikes among Soviet workers" . Secondly, Western

Soviet power technology: we have already seen that the Soviet bureaucratised economy, with its inherited tendencies towards repetition and quantitative targets, has proved incapable of generating innovation and intensive development . So, if new technologies could not be developed domestically, they must be imported from the West . Oil and gas earnings would thus buy time and indulgence from the working class, while also financing industrial re-equipment and higher productivity . This strategy ties in with another regular theme of recent FYPs, the 'renovation' of existing industry, especially in the European USSR where industry is concentrated . The need to modernise, improve, cut out inefficiency and waste, is a constant both in `planning' documents and in leaders' speeches" . But the renovation strategy, to be successful, must be underpinned by the availability of new productive technologies, and by the existence of an adequate, high-grade energy infrastrucutre . It is clear that the expansion of nuclear power in the European USSR plays an important role within this overall strategy . Firstly, the construction of new nuclear capacity obviously reduces the pressure on fossil fuels to be burned for electricity generation, and frees them for other uses such as in the petro-chemicals industry, or for export . Secondly, nuclear power represents a relatively cheap option, in providing bulk high-grade energy for the increasingly energy-intensive urbanindustrial areas of the European USSR . If renovation and modernisation are to proceed, then a secure electricity supply system will clearly be needed - and if this system is not nuclear-based, it will have to be based on coal, oil or gas . All of these precious fuels are located far to the East, implying high costs of transport and distribution . Nuclear power stations are, by contrast, relatively non-site-specific, because fuel cost is a small element in the

overall budget . The nuclear programme 93 is thus a crucial part of the ruling class's strategy: it helps underpin both the oil/ gas export drive, and the effort to raise productivity through renovation and modernisation .

An attack on the working class But we should not view the programme merely as a `technical fix' . It also represents an attack on the Soviet working-class, at two levels . To understand this point, we must consider the nature of civil nuclear technology . A nuclear power station is essentially an atom bomb kept under control : by sustaining the process of fission rather than allowing it to spend itself in an explosion, energy can be drained off in the form of heat and used to generate electricity . The engineering must evidently be of the highest quality for the process to work at all, even if we put aside questions of safety and efficiency-and this is true not only for the power stations, but also for fuel fabrication, enrichment, reprocessing, and all the other necessary technologies of the nuclear fuel cycle . From this flows the imperative for a high degree of division of labour, dictated both by the sheer complexity of the technology, and by the horrific consequences of breakdown or miscalculation . This drastic division of labour must be accompanied by a tight work-discipline, affecting not only highlyqualified technicians but also manual workers. We have already seen that the residual rights of Soviet workers consist essentially in a fair degree of individual, atomised control on the job . A growing role for nuclear power within the energy sector must imply, at the very least, an erosion of these residual rights within that sector . Assuming that no operating authority can afford to put up with constant breakdowns, shut-downs or radioactive emissions, work-practices within the energy

Capital f5 Class 94 supply industry must be redefined, and traditional indulgences curbed . Secondly, the fast-expanding Soviet nuclear programme implies a shift in the balance of delivered energy towards electricity - that is to say, towards a highgrade energy form which clearly ties in with the drive to industrial modernisation and higher productivity . This drive in itself must, at some point, come up against the issue of workers' rights and traditional work practices. It has been calculated that 15 million workers - 25% of all productive workers - could actually be removed from the Soviet economy, and overall production would rise as a result, such is the level of overstaffing" . If productivity is to rise, this question must be tackled by the ruling class, either directly or obliquely . For the time being, the approach appears to be oblique. But the establishment of an extensive, nuclear-based energy infrastructure in the European USSR will provide the necessary framework for the renovation strategy, and thus for a serious challenge to the traditional rights and work-practices of the working class . Despite the very different dymamic behind the Soviet nuclear programme, as compared to Western programmes, they do share this fundamentally anti-working class character. And this is true in a further sense as well, in that wherever it is sited, nuclear technology poses unacceptable hazards to the workers in the industry, and to populations close to its facilities . The world's worst nuclear accident to date is believed to have occurred in the USSR, when there was an explosion in a nuclearwaste dump near Cheliabynsk, in late 1957 or early 1958 44. Casualty figures are not known. The available evidence suggests, however, that a cavalier attitude has been taken towards radioactive hazards throughout the Soviet programme . Conditions in the Saxony uranium mines run by the USSR in the

1940s are known to have been abominable ; and Malyshev, the first Minister of Medium Machine Building, is believed to have died in 1957 from radiation-induced leukaemia 45 . One recent Soviet writer cites industry after industry in which official pollution limits are flouted as a matter of course". There is no reason to believe the nuclear industry is any different which means that the population of the European USSR is now faced with a major problem of potential radioactive pollution, for the foreseeable future .

Strategic problems As presented here, the Soviet ruling class's strategy has a clear pattern and logic to it - but we must distinguish between intent and achievement. The ruling class may intend to raise productivity, and ultimately face the working class's residual power, by means of a strategy of this sort, but this is not in itself a guarantee that the ruling class will succeed . In fact, there are several indications that the strategy is in trouble . Firstly, the whole approach implies a considerable opening-up to the world market . The role of oil and gas as hard currency earners is crucial . But this also implies that the USSR will become increasingly vulnerable to global market forces - and this is now happening. Recession in the West has cut into energy consumption and pulled down the price of oil, so that Soviet revenues from this source are falling. Gas is a better longterm prospect, and the battle with the USA over the gas-pipeline to Western Europe has now been won. But prolonged Western recession may reduce projected income here as well . Secondly, the import of Western technology may be a necessary part of modernisation and improved productivity but it can also cause problems for the ruling class . The central feature of the organisation of work at present is its

Soviet power

atomisation . Some new technologies reinforce this tendency, but others imply a growing socialisation of the labour process, which clearly has drastic political implications . Improved productivity isn't as self-evidently desirable as it sounds . Thirdly, the policy of renovation in the European USSR has, in practice, proved difficult to implement . Inherited institutional structures, quantitative target criteria, bonus systems and managerial career structures all put great emphasis on prestigious new projects, and on sustained output . Both factories and construction enterprises have proved reluctant to undertake renovation projects" . And finally, the nuclear industry itself is not immune to the chronic problems of the Soviet economy . Delays in the nuclear programme have been frequent, attributed to shoddy engineering work, poor management, bad design, bad workmanship, and poor scientific backup" . As recently as July 1983, a serious accident occurred at the Atommash reactorfactory, which plays a key role in the future of the programme . It is not clear what happened, though lives were apparently lost. Senior managers at Atommash have been severely criticised by the Politbureau for `gross violations of State discipline', and it is understood that the programme as a whole has been significantly delayed" .

Conclusions There are tantalising similarities, and important differences, between Soviet and Western nuclear power programmes . In both cases, the pursuit of such programmes can only adequately be understood by locating local strategies within the wider world economy . In both cases, nuclear power plays a role in a wider process of economic restructuring, against the interests of the working class . And in both cases, ruling class strategies

run up against contradictions - but the 95 nature of those contradictions is very different in the two cases . Shifting market and political forces threaten nuclear corporations in the West ; while inherited inefficiency, conservatism, and the attempt to retain a certain `understanding' with the working class, may undermine the plans of the ruling class in the USSR .

References and Notes 1 . See Spence M., `Nuclear Capital', in Capital & Class 16, for discussion of the dynamic of Western nuclear programmes. 2 . Ticktin H ., `The contradictions of Soviet society and Professor Bettelheim', in Critique 6, Spring 1976. 3 . Specifically, I cannot see the point of Ticktin's insistence that the Soviet ruling group is an `elite' rather than a class (see Ticktin H ., `Towards a political economy of the USSR', in Critique 1, Spring 1973) ; nor can I accept his characterisation of the USSR as a society which is inherently unviable, lacks a mode of production, and is `going nowhere' (see Ticktin H. `The class structure of the USSR and the elite' in Critique 9, SpringSummer 1979, and `Is market socialism possible or necessary?' in Critique 14, 1981) . 4 . Riidig W., `Capitalism and nuclear power - a reassessment', in Capital & Class 20, Summer 1983, pp . 131 ff. 5 . Financial Times 24/11/82 . 6 . ibid.

7 . Tikhonov N .A .,

Guidelines for the economic

and social development of the USSR for 1981-85,

Novosti, Moscow, 1981 . 8 . Ticktin H ., `Towards a political economy of the USSR', in Critique 1 . 9 . Rumer B ., `Soviet investment policy: unresolved dilemmas', in Problems of Communism, Sep-Oct 1982 . 10 . Ticktin H ., `Towards a political economy of the USSR', in Critique 1 .

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11 . Holubenko M ., `The Soviet working class' in Critique 4, Spring 1975, p .22 . 12 . Ticktin H ., `Towards a political economy of the USSR', in Critique 1 . 13 . Financial Times 10/8/83 . 14. Nove A., The Soviet economic system, George Allen & Unwin, 1980, p .173 . 15 . Tanzer M., The energy crisis, Monthly Review, 1974, p . 94 16 . Khachaturov T., `The economy of the Soviet Union today, Progress, Moscow, 1977, p .157 17 . The Siberian Power Grid was completed in the 7th SYP (1959-65), and the United Power Grid in the 9th FYP (1971-75) . See Danilov L., Soviet Five Year Plans, Novosti, Moscow, 1980 . 18. Khachaturov, op.cit., p .87 19 . Nove A., An economic history of the USSR, Penguin, 1982, p . 376-8 . 20 . Hewett E.A ., `Soviet energy : supply vs . demand', in Problems of Communism, Jan-Feb 1980, p. 55 21 . ibid. 22 . Gas is now used to produce 93% of pig iron and steel, 44% of ferrous rolled stock, and 59% of cement, as well as being the basic feedstock for chemicals, ammonia, and fertilisers. See Soviet Weekly 24/4/83 . 23 . Financial Times 4/11/82 . 24 . Rumer B ., op.cit., p . 62 25 . Hewett E .A ., op.cit.

26 . Komarov B ., The destruction of nature in the Soviet Union, Pluto, 1978, p . 127 27 . Spence M ., op.cit. 28. Wolin S & Slusser R .M ., (eds), The Soviet secret police, Methuen, 1957, p .54, note 130. 29. ibid. 30 . Pringle P . & Spigelman J . The nuclear barons, Sphere, 1983, p .230. 31 . ibid., p . 236 32 . ibid., p . 230 33 . Semenov B .A ., `Nuclear power in the Soviet Union', in IAI:A Bulletin, vol. 25, no .2 . 34 . Pringle & Spigelman, op.cit., p .411 35 . ibid., pp . 400-401 . 36 . ibid. 37 . Semenov N .A ., op. cit. 38 . ibid. 39 . Danilov, op.cit. 40 . Semenov, op .cit. 41 . Holubenko M ., op.cit ., p . 16 42 . Tickhonov, op .cit., and Andropov quoted in Financial Times 21/3/83 . 43 . Ticktin H ., `Towards a political economy of the USSR', in Critiquel, p .31 . 44 . Medvedev Z.A ., Nuclear disaster in the Urals, Angus & Robertson, 1979 . 45 . Pringle & Spigelman, op. cit., p .231 . 46 . Komarov, op. cit., p .21 47 . Rumer B . op . cit., p .60 . 48 . Financial Times 26/2/82 . 49 . Times 21/7/83 .

David Gleicher

A historical approach to the question of abstract labour • THE PAPER IS divided into five sections and a brief concluding summary . In the first section, Marx's distinction between the form of value and its substance is addressed through an exposition of the "commodity as such" ; that is, the product as it appears in the sphere of circulation (market) without any identification with a particular set of relations of production . The interpretation offered draws heavily from the works of the Japanese Marxists, Kozo Uno (1977), Makoto Itoh (1980) and Thomas Sekine (1980) . On the basis of an understanding of the commodity as such, the second and third sections advance the argument that abstract labour is the substance of value of the commodity only in the specific context of capitalist relations of production . After a discussion of BohmBawerk's critique of a labour theory of value derived directly from the commodity as such, a linkage is forged between Uno's conception of value and the findings concerning the capitalist labour process which have been articulated by the us Marxist Braverman (1974), and Aglietta (1979) . I will assert that abstract labour has been the ongoing historical result of the development of capitalist relations of production, where the latter is understood to mean a structure of "generalized commodity production" - labour power itself being a commodity sold by wage labourers to industrial capitalists . This ongoing result is what I mean by the "historical abstraction of labour ." The theory that abstract labour is the substance of value, therefore, I contend is specific to capitalism . C &

C-21-G

Few topics in political economy have enjoyed as much attention, or have been the center of such controversy as the "labour theory of value" - a theory which gained prominence in the writings of the classical school of the late-eighteenth and nineteenth centuries, and which continues to be a major topic of Marxist political economy into the present period . The object of this paper is to outline a coherent approach to the labour theory of value by addressing one central problem that has long plagued Marxist theoreticians, and whose various solutions underlie the stances that have been adopted by different schools toward virtually all of the other important topics of Marxist thought. That problem is the sense in which what Marx termed the "abstract labour" representing the value of commodities, is an extant social phenomenon in capitalist economies; in short, the problem of the "ontology" of abstract labour.



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The fourth section if the paper then notes, in relation to a controversial passage from the first edition of Capital I, a fundamental difference between the ontology of abstract labour that I am presenting, and that which is advanced by a school of contemporary Marxist theoreticians whom I call the "Rubin school ."' These are writers who argue that money is the sole measure of abstract labour; that labour only becomes abstract in the act of exchange between the commodity and money. I suggest that this ontology is congenial to Bohm-Bawerk' critique in modern guise . The final section completes the ontology of abstract labour by pointing to Babbage's principle as that which governs the initial abstraction of labour, as well as the deepening abstraction of labour in the course of capitalist development . Before proceeding to the first section, it should be noted that the concern of this paper will be limited to the ontology of abstract labour . In particular, it is not the intention here to directly confront Marx's other well-known and equally controversial qualification to the labour said to be the substance of value - namely that it is the "socially-necessary labour" embodied in the commodity . A justification for such a procedure is that the problem of sociallynecessary labour involves the proper attribution of quantities of value to commodities, which itself presumes that labour is abstract, i .e, that the units in which labour is expressed must be quantitatively comparable across different use-values . Thus, the problem of abstract labour is logically prior to that of socially-necessary labour. At the same time, it should be stressed at the outset that the rendering of an ontology of abstract labour is by no means a complete solution to the general problem of value .

THE COMMODITY AS SUCH

A guiding principle of Marxist political ecomomy is that the investigation of production as a labour process is properly occupied with the social determination of the latter; this is a principle which serves as a critical guide to Marxist historiography. The worker must be specified as either a slave maintained by a master, a peasant paying feudal dues to a sovereign lord, a wage labourer selling his/her labour power to capital, or some other determinate social being - the particular laws governing production in each instance being the proper realm of political economy . "Man?" Marx asks rhetorically, criticising the orthodox economist Wagner in notes written toward the end of Marx's lifetime, 'if this means the category `Man', then in general he has 'no' needs ; if the man who confronts nature in isolation, then he has to be conceived as a non-gregarious animal ; if a man already present in some form of society . . . then the determinate character of his social man should have been set out

Abstract labour at the beginning, i .e ., the determinate character of the community in which he lives, for here production, that is, the process of making a living, already has a social character .' (Marx, 1972 : 45-6) . Marx's analysis of capitalism begins with the commodity defined as any useful object which appears in a market for exchange - because capitalism is that mode of production whose species differentia is generalized commodity production . In capitalist society the human capacity to produce useful objects, labour power, appears as a commodity, delineating the worker as a wage labourer free to sell his/her commodity to any would-be employer of it . The relation of production between wage labour and capital is grasped by Marx as tightly woven into the fabric of generalised commodity production, the reproduction of each class being dependent on the existence of markets for labour power, means of production and means of subsistence . Uno's Analysis One of the great contributions made by Uno to Marxist political economy has been to articulate the necessary connections between capitalism as a distinct object, generalized commodity production, and the commodity as such . The latter has existed within, and between a wide variety of modes of production . Commodity relations are therefore understood by Uno to exist as a pre-condition of capitalism, which in turn is thought of as a mode of production penetrated by the commodity (Uno, 1977 : xxiv) . Uno's project begins with the deduction of the category of value from an initial, `naive' conception of a given heterogeneous stock of goods, which are periodically offered for sale in markets . This conception is naive in the sense that the goods which appear in the sphere of circulation must also be products of some labour process, and hence are not in reality `given' at all . . The premise that human needs do not exist independently of the particular mode of production is not contradicted, however . To the contrary, the knowledge of the nature of capitalism in particular, requires that the nature of the commodity be first explored apart from that mode of production ; the commodity as such being not specific to capitalism . The deductive nature of this initial enterprise, whose only prerequisite is that many goods be regularly exchanged, follows from the nature of Uno's project as a whole . Within what he terms the `doctrine of circulation' the value forms common to all modes of production in which commodities appear, are deduced from the sphere of circulation so as to comprehend generalised commodity production - in which production is penetrated by those value forms .

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The conception of a stock of goods appearing in the sphere of circulation - the commodity as such - points to the analysis which occupies Marx at the outset of Capital. Each commodity is, on the one hand, a `use-value' - a distinct object (or human activity) capable of fulfilling some human need . Insofar as it is only considered as a use-value, however, the commodity is realized (consumed) outside the sphere of circulation . On the other hand, each commodity comes to be represented by an 'exchange-value' in the market, and hence evinces another existence other than that of a use-value . The exchange value of any commodity is measured by an ideal quantity of money per unit of use-value : the price which it commands in the market . (The price is ideal to the extent that the money listed is not necessarily capable of being realized by the seller . A `market equilibrium price' ultimately obtains, however, at which the list price and actual price coincide .) Money E5 the Commodity Money is seen to be the single good in whose units exchange value is expressed; conjointly, it commands any of the use-values that appear in the sphere of circulation . Two forms that money has taken historically are commodity money (e .g. gold) and credit money (e .g . commercial paper). The chief point to be made about money in the present context is that here its existence is deduced from the commodity as such - that is, prior to any specification of its historical form, and hence to the particular mode by which the commodities in the sphere of circulation are produced . This is the same as the viewpoint taken by de Brunhoff, who remarks in her work Marx on Money, `To determine the nature of money, the point of departure must . . . . be a deductive analysis, without regard to its concrete forms and its role in capitalism .' (de Brunhoff, 1976 : xiv) . Like the commodity as such, from which it is deduced, money is also not specific to capitalism . The characterisation of the commodity as a use-value and that which is represented by an exchange value underlies Marx's conception of value. Reviewing his procedure later in the `Notes on Wagner' Marx explains (referring to the first chapter of Capital), `What I start from is the simplest sociall form in which the labour product is represented in contemporary society, and this is the "commodity." I analyze this, and indeed, first in the form in which it appears . Here I find that on the one hand it is in its natural form a thing of use, alias a use-value, on the other hand a bearer of "exchange-value ." Further analysis of the latter shows me that exchange-value is only a `phenomenal form,' an independent mode of representation of the value contained in the commodity, and then I proceed

Abstract labour

to analyse the latter .' (Marx, 1972 :50) . Value, in the first instance, is deduced from the existence of exchange value attached to commodities in the sphere of circulation . The commodity's price indicates the comparability of heterogeneous use values . What is meant by value is this existence along a single dimension of use-values found in the market . To repeat the definition of value provided by Uno, The value of a commodity refers to its quality of homogeneity to other commodities and the use-value to its quality of heterogeneity from others . This quality of homogeneity stems from the fact that every commodity must be exchanged by its owner for a definite quantity of other commodities that he might choose . It is this requirement of exchange that endows the commodity with its value ." (Uno, 1977 :5) . In contrast to the subjective theory of value adopted by contemporary neoclassical economists, this conception stresses that the value of a commodity, while predicated upon the commodity being a use-value, is nonetheless that aspect of the commodity wherein its individual use-value disappears . Each commodity being capable of commanding other use-values in exchange means that the fact that a good appears in the market signifies that its particularity as a use-value is of interest only to the extent that it attracts exchange value (money) and consequently other use-values to its owner, and not to the extent of the subjective `utility' realized by its immediate consumption. Money is conceptually distinct from the initial stock of heterogeneous goods that appear in the sphere of circulation in that it is a form of value which does not possess exchange value ; exchange value being the particular use value of money . Since money is "essentially a value-reflecting object which releases all other commodities from the constraint of their specific use-values" (Uno, 1977 : 11), reference to the "exchange value of money" is as meaningless as reference to the "length of an inch," or the "weight of an ounce ." It is true that orthodox theory includes a conception of the exchange value of money as the series of use-values that a monetary unit commands in the market . However, being of infinite dimensions, such a series is not strictly speaking an exchange value in the sense of a price, comparable to the prices of all other commodities in the sphere of circulation ; hence, as Uno comments, "such a value expression is nowhere observed except in the particular case of a literal "ten-cent store' ." (Uno, 1977 : 8, n. 3) . The initial conception of value, as articulated by Uno, is seen to constitute solely a negation of the commodity as an individual use-value . Value is not, as yet, attributed a positive substance . As Levine remarks in this regard,

101

Capital & Class 102

"value emerges originally as the indifference to need which results from the multiplication of need in wealth society . Value, taken in this sense, remains a relation of need to need so that that relation which transcends the particularity of need and constitutes particular use-values as components of wealth is reducible to a relation of need . Value possesses, from this standpoint, a purely negative determination as that substance which goes beyond the particularity of need by relating different particular needs .' (Levine, 1977 : 13) . It follows that money - the unit in which exchange value is expressed - enters the sphere of circulation as that which has as its use the articulation of this negation ; it is that which commands any use-value in the market, and on that account is a more highly developed form of value than the commodity. However, this does not mean that money is value ; rather, money is a form that value takes . Thus, for instance, it is the use-value of a commodity which allows its owner to command other use-values in the market, and for this reason it is obvious that the stock of heterogeneous goods which appears in the sphere of circulation is no less `valuable' than the exchange value to which it ideally corresponds .' To quote Marx's celebrated assertion midway through the first chapter of Capital : `When at the beginning of this chapter we said in common parlance, that a commodity is both a use-value and an exchange-value, we were, accurately speaking, wrong . A commodity is a use-value, or obiect of utility, and a value. (my emphasis) It manifests itself as this two-fold thing, that it is, as soon as its value assumes an independent form - viz ., the form of exchange-value .' (Marx, 1967 : 60) . 3 Here, Marx makes explicit a central tenet of political economy that the existence of money, while evincing the homogeneity of commodities, is not itself the substance of that homogeneity . It is, as Marx writes, `an independent form' of value, not value in its own right. We are now in a position to pose the problem of value which the present ontology of abstract labour is intended to address . That problem concerns the substance of value which comes into being in conjunction with the capitalist mode of production. Such a substance is, on the face of it, necessary to a system of generalised commodity production, where the structure of prices regulates the proportion of means of production and labour power allocated between the production of various use-values, as well as the distribution of means of subsistence between the different economic classes . In order for such a system to be reproduced it is clear that price must become a determinate social form . By setting out the doctrine of circulation prior to investigating capitalism as a distinct

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historical object, we avoid confusing the substance of value as a positive element of capitalist reproduction, with the value forms, the commodity and money, which come to be governed by that substance .

As a purely logical deduction from the doctrine of circulation, whatever the substance of value is, it must have the property of being homogeneous with respect to use-values ; since exchange value enters the sphere of circulation as a general equivalent, indifferent to the individuality of commodities, its substance must be homogeneous if it is to regulate commodity prices, and through them, generalised commodity production . The neoclassical conception of utility, central to a subjective theory of value, has proved to be quite problematic precisely because value stubbornly remains identified with heterogeneous bundles of use-values within the circulation of the commodity - the result being an extremely truncated discussion of the problem of value in modern orthodox texts . By the same token, the doctrine of circulation is not sufficient to provide an understanding of capitalism as a distinct historical object, since it is not specific to the relations of production which generate the stock of goods that appear in the sphere of circulation (see Uno, 1977 : 32-4, n.2) . Thus, opposing a central thesis of the Rubin school, I also contend that the doctrine of circulation - i .e ., the commodity as such - is not sufficient to articulate the labour theory of value . In particular, an account of value which is not grounded in capitalism as a distinct set of production relations falls prey to one of the critiques of Marx's formulation for the theory in the first chapter of Capital : a critique initially advanced in the famous work of the neoclassical economist Bohm-Bawerk . The labour theory of value, Bohm-Bawerk claims, constitutes an arbitrary abstraction, which has no necessary validity with regard to historical phenomena (1949 : 34-6, 75-7) . On this basis, BohmBawerk asserts that abstract labour can be logically substituted for by any other entity capable of being deduced from the commodity as such (for instance, if properly defined, utility) . Extending BohmBawerk's critique further, countless critics of Marxist theory have contended that the true grounding of the labour theory of value is therefore moral rather than scientific necessity, although it is clear that Marx himself did not consider that to be the case . The Commodity as Such/Abstract labour response to Bawerk.

Bohm-

One response to Bohm-Bawerk's criticism has been to try to establish the historical necessity of the theory by positing a "law of

BOHMBAWERK'S CRITIQUE OF THE LABOUR THEORY OF VALUE

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value" governing all instances of commodity relations - identifying abstract labour, in other words, explicitly with the existence of the commodity as such, rather than with generalised commodity production . The regulation of exchange value is said to be non-specific to capitalist relations of production in a fashion parallel to the value forms : the commodity and money.4 The difficulty with this approach is that, when it is applied to the investigation of capitalism in particular, the analysis can be challenged on epistemological grounds as being an example of Hegelian idealism, or, to be more precise, as collapsing into what the Marxist philosopher della Volpe (1980) terms "hypostasis ." 5 In order to investigate capitalism as a distinct object the analysis must be qualified to state that the phenomenal unfolding of the general law occurs only when the commodity as such has, in fact, become generalised, i .e ., only when capitalist relations have been established . Della Volpe makes the point that Marx criticised Hegel's theory of the State for reasons of exactly this sort, writing in an essay on Marx's early works, `As Marx explains . . . "Hegel is not to be blamed for depicting the nature of the modem state (of his time) as it is, but for presenting that which is as the nature of the state.' Hegel makes the historical state generic, makes it the most universal essence, and yet puts himself in the position of being unable to see any longer what there was in its structure and (historical) origins that was particular or specific, and hence does not criticize it." (della Volpe, 1978 : 165-9) . So too, if the extant regulation of exchange value is a universal principle, a critical understanding of the specificity of abstract labour - the substance of value - to generalised commodity production is lost, and Bohm-Bawerk's critique is seen to reemerge .

The response that the law of value is a purely logical deduction A related response to Bohm-Bawerk's criticism has been to explicitly treat the law of value as a purely logical deduction, eschewing any discussion of its historical necessity altogether, and thus deeming Bohm-Bawerk's criticism not so much as incorrect, as epistemologically misplaced . Abstract labor, according to this view, is logically abstract. It has no substantive existence apart from the value form, money . Exchange value is equated wih value - that is, the homogeneity of use-values in the sphere of circulation while the act of exchange itself, wherein use-values are realized as exchange value is said to be simultaneously the abstraction of otherwise heterogeneous ('concrete') labour units embodied in the various use-values found in the market .' The grounding of abstract labour in exchange value is problematic, however, in that it does not

Abstract labour

actually answer the question of historical necessity, but merely displaces it, since, as we have seen, money itself is deduced from the commodity as such, and hence is not specific to capitalism . Along these lines, the notion that labour is logically abstract, in that it draws only a formal distinction between the commodity's exchange value and its value, raises a serious "dimensionality problem" - one that has had a long history within the value theory literature .' By conflating the units which express commodity prices with those that express values, the theory of value is reduced to a tautology. It has no power to explain the determination of prices by values, since the latter are measurable only in units of the former . Marx himself criticises just such an interpretation of his theory, as indicated by statements of his already cited, from Capital 1(1967 :60) and `Notes on Wagner' (1972 : 50) . A more extended discussion of this matter by Marx, however, is found in his critique of the anti-Ricardian, Bailey, in Theories of Surplus-Value III (1971 : 124-48). There, Marx comments, When commodities are exchanged in the proportion in which they represent equal amounts of labour-time, then it is their aspect as materialized labour time, as embodied labour-time, which manifests their substance, the identical element they contain . As such, they are qualitatively the same, and differ only quantitatively, according to whether they represent smaller or larger quantities of the same substance, i .e ., labour-time . They are values as expressions of the same element; and they are equal values, equivalents insofar as they represent an equal amount of labour-time . They can only be compared as magnitudes because they are already homogeneous magnitudes, qualitatively identical ." (1971 : 127-28) . Similarly, referring to Bailey's critique of Ricardo, Marx writes, `(Bailey) accuses Ricardo of having transformed value from a relative attribute of commodities in their relationship to one another, into something absolute. The only thing that Ricardo can be accused of in this context is that, in elaborating the concept ofvalue, he does not clearly distinguish (my emphasis) between the exchange-value of the commodity as it manifests itself appears in the process of commodity exchange, and the existence of the commodity as value as distinct from its existence as an object, product, use-value .' (1971 : 125) .

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Capital & Class 106 ABSTRACT LABOUR IS HISTORICALLY SPECIFIC TO CAPITALIST RELATIONS OF PRODUCTION

The responses cited to Bohm-Bawerk's critique reflect an approach taken by many contemporary Marxist thinkers, who endeavor to ground the labour theory of value in the commodity as such . Here, we will advance an ontology of abstract labour which, while fulfilling the logical requirement that the substance of value be homogeneous across various use-values, nonetheless identifies that substance with capitalism as a distinct historical object, i .e ., generalised commodity production . An implication of such an ontology is that within the specific context of capitalist reproduction, value is an entity other than merely the negation of usevalue deduced from the commodity as such . Value becomes, instead, a social substance capable of regulating the price structure, and hence reproduction as a whole . The process by which labour comes to possess this separate social existence as value is what I refer to as the historical abstraction of labour ; it is the central conception within the approach being offered herein . DefiningAbstract Labour

It is one of Marx's great contributions to have explicated the worker, amongst all the so-called `factors ofproduction,' as the sole subject of any labour process . The means of production, lacking any independent will, enter into no relation other than a technical, engineering relation involving the physical interactions by which a particular output is generated, and whose laws are those of physics . By contrast, the worker's labour, though it obeys the laws of physics, is also an aspect of a specific social relation of production, and hence is directed by forces which exist along an altogether different - i .e ., social - dimension." Labour from a social standpoint is the purely subjective activity of producing use-values mediated by a class structure that has been engaged in by slaves, peasants, wage labourers, and others over the course of human history . It is governed, in each of these cases, by laws of political economy, not physics . Delineating the sphere of inquiry in Capital, Marx writes along these lines, "The labour process resolved . . . . into its simple elementary factors, is human action with a view to the production of use-values, appropriation of natural substances to human requirements; it it the necessary condition for effecting exchange of matter between man and Nature ; it is the everlasting Nature-imposed condition of human existence, or rather, is common to every phase . (However) as the taste of the porridge does not tell you who grew the oats, no more does this simple process tell you of itself what are the social condition under which it is taking place, whether under the slave-owner's brutal lash, or the anxious eye of the capitalist,

Abstract labour

whether Cincinatus carries it on in tilling his modest farm or a savage in killing wild animals with stones .' (Marx,1967 : 183-4) . Abstract labour, then, is subjective activity of producing use-value that is not specific to the production of any single usevalue, but which, to the contrary, represents the possibility of producing a wide variety of use-values . It must be stressed that the abstractness of labour is not taken to be a logical abstraction, where "abstract" labour is opposed to "concrete" (meaning actual) labour. This point of view, which has its origins in Marx's famous deduction of labour as that which is common to all commodities appearing in the sphere of circulation (1967 : 41-6), is rejected here on the basis that it endeavours to deduce abstract labour from the commodity as such (see Itoh, 1980 :47-52) . Rather, the question of the abstractness of labour is taken here to be an historical one, having to do with the nature of the relation of production under consideration . In other words, abstract labour is taken to be actual (concrete) labour that has become independent of, and hence homogeneous across, various use-values, and which comes into existence, I argue, only with the advent of capitalism . From the standpoint of political economy, therefore, abstract labour is labour as such . It is, in Marx's words, `the general possibility of wealth as subject and activity .' (1973 : 295-6) . PrimitiveAccumulation andAbstract Labour

The initial problem posed by the above formulation concerns the historical processes by which the abstraction of labour occurs. The solution lies in what Marx called the `primitive accumulation of capital' ; that is, the emergence in England of the seventeenth and eighteenth centuries of a significant class of wage labourers, characterised by their sale of labour power to industrial capital in the sphere of circulation . The reproduction of a class of workers through the sale of labour power as commodity marks an historic separation of the worker's labour from the goods which it generates (see Marx, 1967 : 713-60) . It signals the identification of use-values with individual capitalist industries, which employ wage labour in the production of commodities on the basis of the rate of profit . (The use-value of labour power to its consumer, industrial capital, is the creation of 'surplus-value .') It signals the identification of use-values with individual capitalist industries, which employ wage labour in the production of commodities on the basis of the rate of profit. (The use-value of labour power to its consumer, industrial capital, is the creation of `surplus value' .) The primitive accumulation involves, on the one hand, the separation of the workers from the means of production . Histori-

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cally, this is the dispossession of the English peasantry from its land that occurred roughly between the fifteenth and eighteenth centuries (see Lazonick,1974) . Control of the product thereby came into the grasp of capital, the workers being rendered incapable of independently producing their means of subsistence . While a necessary condition, however, the separation of workers from the means of production is not sufficient to institute capitalist relations of production . The relations between workers and capital must be mediated within the sphere of circulation for such relations to be fully instituted; the commodity must penetrate the relations of production . Capital must be capable of selling means of subsistence in exchange for wages of workers (simultaneously the means of reproducing the commodity labour power), and also must be capable of realising labour power as a use-value in the production of commodities for profit, the latter being either distributed to capitalists for purchase of means of subsistence, or used to purchase additional means of production and/or labour power for the expansion of industrial capital . Maufacture and theAbstraction of Labour Equally necessary then for the institution of capitalist relations of production in addititon to the separation of the worker from the means of production is the separation of the worker's activity itself from its own product . Historically, this occurs with the development of the `manufacturing' division of labour from roughly the mid-seventeenth to mid-nineteenth centuries in England . Manufacturing involves the reduction of the individual worker's activity to "detail labour" - labour which confines its subjects to elemental tasks within the operations of a single `collective labourer,' the firm . Under these circumstances wage labour and capital appear as distinct commodity-owning classes for the first time . The worker's activity has no use (produces no use-value) save that of its employment by capital . The commodity is the product of capital. Of this second aspect of the primitive accumulation, Marx asserts, `If at first the workman sells his labour-power to capital, because the material means of producing a commodity fail him, now his very labour-power refuses its service unless it has been sold to capital . Its functions can be exercised only in an environment that exists in the workshop of the capitalist after the sale .' (Marx, 1967 : 360) . Concerning the historical significance of manufacturing, Braverman notes, `The earliest innovative principle of the capitalist mode of production was the manufacturing division of labour, and in

Abstract labour one form or another this division of labour has remained the fundamental principle of industrial organization . . . . While all known societies have divided their work into productive specialities, no society before capitalism systematically subdivided the work of each productive specialty into limited operations . This form of the division of labour becomes generalised only with capitalism . '(my emphasis) (Braverman, 1974 : 70) . It is important to draw a clear distinction between the manufacturing and the `social' division of labour (Marx, 1967 : 350-68) . The latter, being a feature of all societies, refers to the division of labour processes according to the use-values needed for the reproduction of the whole . The 'occupations' of individual workers vary according to the particular good he/she is engaged in producing ; or, to put the matter in the obverse, individual workers do not each engage in the production of every use-value needed for the reproduction of the whole . The historical foundation of every social division of labour (and hence all societies) is the division between `town and country', or, more generally, between the production of means of production and the production of means of subsistence . In the context of generalised commodity production, the social division is that between capitalist industries, each made up of one or more capitalist firms, and each, as has been said, associated with one particular use-value .' The relations between the different industries are, of course commodity relations . By contrast to the social division of labour, manufacturing is an aspect of a particular kind of labour process, which becomes generalised across the social division only in conjunction with the emergence of capitalism . The effect of the manufacturing division is that the subjective activity of the worker is appropriated by capital only after labour power has been purchased on the market . Prior to that point, the worker is free to sell his/her labour power to firms in any industry; beyond that point, capital is free to realise the commodity labour power at its will . 'What, . . . , characterizes division of labour in manufacture?' Marx rhetorically inquires, and answers, `The fact that the detail labourer produces no commodities . It is only the common product of all the detail labourers that becomes a commodity . Division of labour in society is brought about by the purchase and sale of the products of different branches of industry, while the connection between the detail operations in a workshop, is due to the sale of the labour-power of several workmen to one capitalist, who applies it as combined labour-power . The division of labour in the workshop implies concentration of the means of production in the hands of one capitalist ; the

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division of labour in (capitalist) society implies their dispersion among independent producers of commodities .' (Marx, 1967 :355) . It is important as well to draw a clear distinction between manufacturing and the so-called `technical' division of labour . This third division refers to the a priori separation of a single labour process into constituent elements or tasks . The technical division of labour certainly reduces the time necessary to produce a quantity of use-values in comparison to producing each unit of the good individually ." Like the social division of labour, the technical division is characteristic of virtually all historical periods . As Braverman remarks, `such methods of analysis of the labour process and its division into constituent elements have always been and are to this day common in all trades and crafts, . . ." (Braverman, 1974 : 76) . Considering, for example, a blacksmith engaged in the production of pins, it is clear that he/she will devote a certain block of time exclusively to drawing out of wire, another block of time exclusively to straightening the wire, another exclusively to pointing it, etc . etc . It is unlikely that he/she will produce each pin individually . It is to be observed, however, that while the labour process here is technically divided, the blacksmith is not a detail labourer. Manufacturing is a specific social form taken by the technical division of labour, in which the individual worker's activity is limited by capital to a few constituent elements of the collective labourer taken as a whole . In the famous example of the pin manufactory proffered by Adam Smith, one set of workers is employed exclusively in straightening the wire, another exclusively in pointing it, another in grinding it, etc . etc . No single worker can be identified as the producer of pins . To quote Braverman again, `Not only are the operations separated from each other, but they are assigned to different workers . . . . The worker may break the process down, but he never voluntarily converts himself into a lifelong detail worker . This is the contribution of the capitalist .' (Braverman, 1974 : 77) . Thus, while manufacturing presupposes a technical division of labour, it is characteristic only of capitalist relations of production . Unlike the blacksmith who technically divides his/her own subjective activity, but who nonetheless is the producer of a use-value (pins), the wage labourer employed in maufacturing expends abstract labour : labour which is not particular to a use-value . The worker's own labour power is the sole use-value which (so to speak) the wage labourer does produce, and which, as such, is not manufactured . Alternatively, all manufactured goods are products of capital . Through the reduction of the worker's activity to abstract labour, labour comes to be the substance of value determining

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111

commodity prices; simultaneously, value ceases to be merely the negation of use-value manifested in the sphere of circulation, but now acquires a positive social existence . Marx alludes to this historical abstraction of labour, in which a homogeneous substance of value comes into being, in the Grundrisse. There, he writes, `the relations of labour to capital, or to the objective conditions of labour as capital, pre-suppose a process of history which dissolves the various forms in which the worker is a proprietor, or in which the proprietor works .' The result of this dissolution is that `the worker can be found as a free worker, as objectless, purely subjective labour capacity confronting the objective conditions of production as his not-property as alien-property, as value for itself, as capital .' (Marx, 1973 :498) . The advent of the wage labourer, then, means a complete appropriation of the subjectivity of the worker by capital ; once having purchased labour power in the market, capital is free to realise it at its will . By the same token, however, with the reduction of the worker's activity to abstract labour, rather than the production of a particular use-value, labour power becomes capable of being employed across different capitalist industries in varying proportions . The effect of this is that labour can flow between commodities (as well as into and out of the sphere of production via a `reserve army') . The worker in capitalist society becomes uniquely free to sell labour power as a commodity to competing capitalist industries, even as his/her subjective activity within the labour processes has become completely appropriated by capital . The fluidity of labour, in this sense, many have argued, is what grounds generalised commodity production by enabling industries to expand or contract based on the rate of profit; the market equilibrium price being no longer arbitrarily given by conditions of supply and demand, but now having as its centre of gravity the `price of production .' (see Marx, 1970 : 31-4; Uno, 1977 : n .3 ; Levine, 1977 :49-52 Brenner, 1977 :32 ; and Sekine, 1980; 295-6) . The implication of this is that abstract labour is measurable along a different dimension than that along which the price structure is measured, so that it is not tautological to affirm that quantities of abstract labour regulate the price system, and via the price system, regulate generalised commodity production .

At this juncture it is useful to discuss an important passage from the first edition of Capital I; a passage which has been the subject of much controversy. The ontology of abstract labour being presented here yields a new interpretation of this passage, and in so doing sheds light on the different conception of value being advanced here from that of the Rubin school . In this passage, Marx makes an

A MODERN VERSION OF BOHMBAWERK'S CRITIQUE AND THE RUBIN SCHOOL'S REPLY

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analogy to the ontological status of abstract labour as follows : `It is as if,' he asserts, `alongside and external to lions, tigers, rabbits, and all other actual animals, which form when grouped together the various kinds, species, sub-species, families, etc . of the animal kingdom, there existed also in addition the animal, the individual incarnation of the entire kingdom.)' In the spirit of BohmBawerk's critique, one modern critic has observed that the logic of this analogy succumbs to idealism - a movement in thought being confused with the historical existence of a value substance (Moore, 1963 : 1971) . Marx himself is cited as having attacked the exact same logic in an earlier work ; there, Marx makes a similar analogy as a means of criticising speculative philosophy ; in particular, Hegel . He states, `If from real apples, pears, strawberries and almonds I form the general idea "Fruit," if I go further and imagine that my abstract idea "Fruit, " derived from real fruit, is an entity existing outside me, is indeed the true essence of the pear, the apple, etc ., then . . . I am declaring that "Fruit" is the "Substance" of the pear, the apple, the almond, etc . I am saying therefore, . . . that what is essential to these things is not their real existence, perceptible to the senses, but the essence that I have abstracted from them and then foisted on them, the essence of my idea -Fruit' (Marx, 1975 : 68). Marx avers in no uncertain terms that reasoning of this sort is a chief error of speculative philosophy . Thus, it would not seem to be the reasoning from which Marx derives his ontology of abstract labour, as the passage from the first edition would seem to suggest is the case . Members of the Rubin school have responded to such criticism by endeavouring to resolve the apparent inconsistency btween Marx's materialist ontology, and the conception of value expressed in the passage from the first edition of Capital I. The resolution is achieved through a characteristic conflation of the money form of value and the substance of value . Abstract labour, it is argued, is ontologically different from `animal' or `fruit' in that it does actually acquire an historical existence ; it appears historically as the social form, money, which within the sphere of circulation is the general equivalent with respect to use-values . Arthur writes in this vein, As values commodities are equatable with one another . So much so that a universal equivalent may be substituted for them all - the money commodity . In the reproduction of animals a bull cannot stand in for a goat just because some metaphysician declares that it contains the essence of `the animal' . But, in the reproduction and accumulation of values, it is immaterial what natural form the value-body (money) has . . . . In sum, as values the essence of com-

Abstract labour

modities `stands outside themselves' and acts as mediator in their circulation .' (1976 : 12). But this response depends upon a conception of value wherein the abstraction of labour occurs exclusively within the sphere of circulation ; in the act of exchange by which a use-value is realized is exchange value. This conception, as we have indicated, fails to adequately address the question of the historical necessity of value, and so raises a serious dimensionality problem that reduces the labour theory ofvalue to a tautology. For this reason then, it is of theoretical interest to present an alternative response from the one of the Rubin school with respect to this matter . The initial direction our response takes is similar to that of the Rubin school, in that according to our conception of the substance of value, it follows immediately that abstract labour must be ontologically different from `animal' or `fruit' - we explicitly state that the substance of value acquires an historical existence . It is therefore a very peculiar phenomenon indeed . We concur with Arthur that `the `animal' analogy is meant to show up the strangeness of the situation under discussion in the case of the universal value-body. It is as if `the animal' existed as well as dogs and cats . It is as if `fruit' existed over and above apples and pears . . . But whereas in the `fruit' example Marx was caricaturing a metaphysical theory, in `the animal' case he is illustrating . . . a real social relation .' (Arthur, 1976 : 12) . Where our response differs from that of the Rubin school is in our rejection of the claim that labour is abstracted within the sphere of circulation through the very act of exchange . The ontology of abstract labour being advanced herein asserts that, to the contrary, it is through the development of capitalist relations of production that labour - which is otherwise abstracted from the technical aspect of the labour process only in thought - becomes the substance of value ; i .e ., a real social phenomenon . With the manufacturing division of labour a homogeneous substance comes into being . Each commodity appearing in the sphere of circulation embodies a quantity of that substance, and it is that substance which comes to regulate the relative prices of the commodities . While money is the form of value manifest in the sphere of circulation, its substance is abstract labour, which, unlike `animal' or `fruit' does (in the context of capitalist relations) exist . Braverman, concluding a discussion of Taylorism (the first major development in the maufacturing division of labour) suggests just this when he observes `This mechanical exercise of human faculties according to motion types which are studied independently of the particular kind of work being done (i .e . Taylorism) brings to life C &

C-21-H

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114

the Marxist conception of `abstract labour .' We see that this abstraction from the concrete forms of labour - the simple `expenditure of human labour in general,' in Marx's phrase which Marx employed as ameans of clarifying the value of commodities (according to the share of such general human labour they embodied) is not something that exists only in the first chapter of Capital, but exists as well in the mind of the capitalist, the manager, the industrial engineer .' (Braverman, 1974 : 181) .

THE HISTORICAL NECESSITY OF VALUE

I hope to have indicated thus far why the conception of an historical abstraction of labour supports an ontology which neither involves the deduction of the substance of value from the commodity as such, nor the equation of abstract labour as an extant social phenomenon solely with the existence of money ; hence the labour theory of value is not, as Bohm-Bawerk would have it, an arbitrary abstraction, nor does it reduce to a tautology in the manner of the Rubin school's approach . The formulation is incomplete, however, unless it can be shown that the abstraction of labour is an ongoing result of capitalist relations of production manifest in the historical development of the capitalist labour process . Abstraction of Labour is not synonymous with Deskilling

One of Braverman's central insights is the identification of Babbage's principle as that which underlies the initial abstraction of labour apparent in the emergence of the manufacturing enterprises, as well as being a source of the deepening of that abstraction over the course of capitalist development . According to that principle, the specialisation of individual workers vis a vis tasks within a larger technical division of labour, depresses the wages advanced by the individual capital (independent of any other change in the technique of production in use) . This is because each worker, who would otherwise require skills to carry out each of the tasks dictated by the technique in use, now requires skills associated with a limited number of tasks . As Braverman explains, `Insofar as the labour process may be disassociated, it may be separated into elements some of which are simpler than others, and each of which simpler than the whole . Translated into market terms, this means that the labour power capable of performing the process may be purchased more cheaply as disassociated elements than as a capacity integrated in a single worker.' (Braverman, 1974: 81-83) . The operation of Babbage's principle is therefore equivalent to the simplification of the collective labourer . It is specific to capitalism,

Abstn,ct labour

where labour power is a commodity, and the labour process is organised by capital . Through Babbage's principle, the worker's activity becomes detail labour, no longer being the production of a use-value . It is to be noted that in conjunction with the abstraction of labour, the labour power sold by individual workers comes to be differentiated in the market not according to particular use-values produced by different workers - but instead, varies according to the scarcity (relative to want) of workers capable of performing a given task ; a hierarchy of skills is established to which a scale of wages comes to correspond (see Marx, 1967 : 349-50). Capitalism engenders a heterogeneity of labour power, in other words, even as labour - subjective human activity - is abstracted from particular use-values . It follows that the abstraction of labour should not be confused with a tendency for all workers' activity to be reduced to unskilled labour, and therefore for the value of labour power to be equalised between workers (cf. Bowles and Gintis, 1977 :173-6) . While Babbage's principle does imply that any re-organisation of the labour process by capital (including a change in technique) will have a strong tendency to increase the proportion of tasks requiring relatively unskilled labour, this does not mean that there will necessarily be any tendency for the hierarchy of skills itself to be eliminated . The simplification of collective labourers might very well be achieved historically through the creation of a relatively few tasks requiring great skill, but which are necessary to the creation of a relative expansion in the tasks requiring little or no skill . For example, as one researcher into the development of the capitalist labour process has written with regard to the engineering profession : `Modern electric engineering was invented by the sciencebased industries to provide specialists who could apply the advances of science to the production process . Its chief task was to standardise and routinise the organization of the production process as a whole, as well as the work of particular individuals. Electrical engineers, in short, were skilled workers whose job was to use science to render the skills of other workers unnecessary .' (Kraft, 1979:6) . The example of the engineering profession also illustrates the co-existence of an increasing disparity in the value of labour power on the other . While highly skilled in a particular set of tasks, and hence possessing a relatively high value, the engineer is nonetheless capable of being employed across a wide range of industries . An important inference that can be drawn from the above is that the hierarchy of skills is not a ranking of the relative productivity (units of use-value per hour) of individual workers engaged in

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the different tasks associated with a labour process . The individual worker, no matter what rank he/she occupies in the hierarchy of skills, is not the producer of a use-value . Each worker's labour is abstract. The engineer is no more the producer of automobiles than the assembly-line worker for instance . The labour time necessary to produce a particular use value is, from this standpoint then, the subjective activity of the collective labourer as a whole entity - including labour tranferred from constant capital - and is comprised of the (homogeneous) sum of hours of subjective activity per unit of use-value produced, as indicated by the technique of production being employed ." Thus there is no meaning to the attribution of productivity to individual workers on the basis of the task performed, nor to the expression of skilled ('complex') labour as a multiple of unskilled ('simple') labour . " On the contrary, although the composition of skills will differ from one industry to the next with differences in the technique of production, these affect the relative wages advanced across industries, and not the relative labour time necessary to produce the various commodities . Abstraction and the Simplification of Collective Labour The final consideration here will be the sense in which the deepening abstraction of labour over the course of capitalist development is the result of simplification of collective labourers by capital via Babbage's principle ; the latter operating in the context of capitalist relations of production . `Applied first to the handicrafts,' Braverman writes, 'Babbage's principle eventually becomes the underlying force governing all forms of work in capitalist society, no matter in what setting or at what hierarchical level .' (1974 : 81). We have observed that the manufacturing enterprises of seventeenth and eighteenth century England mark the initial abstraction of labour; formerly autonomous petty commodity producers being brought together by capital and reduced to detail labourers . In this process, a hierarchy of skills does become established, distinguishing the labour power of different workers along a dimension other than the use-value produced. The proportion of skilled workers required by the techniques available to the early manufactories, however, proved to be too great to yield a rate of profit across the entire social division of labour. The manufactory was for this reason a transitory form of the capitalist labour process - one which never governed capitalist reproduction as a whole (see Marx, 1967 : 368-9) . In the second half of the nineteenth century England (and other capitalist economies) witnessed the mechanisation of labour processes ; a general transformation which overturned both the manufacturing and petty commodity forms characteristic of the primitive accumulation . The unit of production becomes the

Abstract labour factory - the form of the capitalist labour process par excellence which is coupled with the application of `scientific management' (Taylorism) by capital (see Marx, 1967 : 371-86; Aglietta, 1979: 113-16). Mechanisation eliminates tasks requiring extraordinary (scarce) attributes of workers by incorporating complex activities into the independently powered movements of a system of machinery. Thus, obeying Babbage's principle, the proportion of unskilled workers employed by collective labourers is increased greatly . As expressed by Aglietta, `The machine system is a complex of productive forces in which a series of tools is set in motion by a mechanical source of energy, the motor, via an appropriate transmission system . . . . Instead of wielding tools, the workers become appendages of the machines . By transferring the qualitative characteristics of labour to the machine, mechanisation reduces labour to a cycle of repetitive movements that is characterised solely by its duration, . . .'(Aglietta, 1979 :113) . Since the activities of the vast majority of workers come to involve the simple tasks of operating and maintaining the machinery - the latter being that which acts directly upon the raw materials collective labourers are simplified considerably . By contrast to the manufacturing enterprises, therefore, factories enable capital to derive a rate of profit across the social division of labour, sufficient to ground a system of generalised commodity production ; that ground being the value substance, abstract labour . The statement that the abstraction of labour is `deepened' through mechanisation means that, not only is the subjective activity of the factory worker detail labour, but also the labour power of wage labourers throughout the hierarchy of skills becomes, for the first time historically, capable of being employed across industries in the proportion dictated by the rate of profit (see note 11) . Given the techniques available to the early manufacturing enterprises, the hierarchy of skills established within any one industry typically included many tasks involving skills specific to that, and only perhaps a few other industries . Thus, the activity of many workers remained linked to a particular use-value being produced . Although abstract, labour during this initial phase of capitalist development is not fluid with respect to use-values ; it cannot readily flow across the social division of labour . With the wholesale simplification of the collective labourers across the social division through mechanisation, since the number of tasks requiring little or no skill is expanded enormously-coming to include in it most workers - a large pool of labour power necessarily comes into existence which can be employed in any capitalist industry, regardless of the particular use-value it pro-

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duces . In addition to multiplying the tasks which require no skill, mechanisation tends to deepen the abstraction of highly skilled labour as well. The differentiation of human activities manifest in the hierarchy of skills is no longer determined by the nature of the direct subjective interaction of a worker and a use-value in the process of being produced . Rather-as is codified in the doctrine of Taylorism - the hierarchy of skills comes to correspond to the differences in activities operating, maintaining, and designing systems of machinery . The latter activities are then amenable to being analysed `objectively' i .e., in terms of general physical properties . As such, they come to be common to virtually all industries . Thus, as we have already had occasion to remark, the industrial engineer (unlike, let us say, a skilled detail labourer in a seventeenth century watchmaking manufactory) both occupies the upper-reaches of the hierarchy of skills, but is also capable of being employed across the social division of labour . From the available evidence, the mechanisation of labour processes has continued into the modem period, with the onset of assembly-line production in the 1920s, coupled with mass consumption (Fordism), and the institution of automated factories (neo-Fordism) in the post-War period (see Aglietta, 1979 : 11630) . A detailed treatment of these developments cannot be undertaken here . It suffices to say, however, that to the degree that mechanisation is extended to labour processes throughout capitalist society, the existence of abstract labour, and conjointly, the labour theory of value, are confirmed . Not only is the subjective activity of each worker divorced from the production of a use-value, but the labour power of each worker, no matter what its rank in the hierarchy of skills, is capable of being employed in any capitalist industry.

Conclusion The primary thesis of this paper has been that abstract labour is an historically necessary phenomenon which emerges in conjunction with capitalist relations of production . Abstract labour, according to this view, is not simply a logical abstraction from the commodity as such, and is therefore not an arbitrary abstraction, as is claimed by those in the tradition of BohmBawerk; nor is the abstraction of labour acquired in the act of exchange when the use-value is realized as money, as is claimed by the Rubin school . Value, which is solely the negation of use-value when deduced from the commodity as such, I have argued is a homogeneous social substance, abstract labour in the context of generalised commodity production . Implied by this ontology is that the substance of value, abstract labour, and exchange value, the

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money realized for commodities, exist along different dimensions . In principle, therefore, abstract labour is a measurable phenomenon in its own right, and it is not tautological to affirm - as the labour theory of value does - that it is quantums of abstract labour associated with commodities, which underlie the price structure through which capitalist society is reproduced . Acknowledgements I am especially grateful to Duncan Foley and Paul Swanson for their patience and guidance in numerous discussions of the issues treated herein . I would also like to thank John Alcorn, Suzanne de Brunhofl, John Ernst, David Levine, Thomas Sekine, Anwar Shaikh and the referees from Capital & Class for many helpful comments on earlier drafts of this piece .

1. While not self-defined as such, the school represents a tradition based on the works of the Russian Marxist, Isaak Illich Rubin (1972,1978) (see Bradby, 1982 ; Fischer, 1982) . Certain contemporary articles which follow Rubin's contention that labour becomes abstract only in the act of exchange between the commodity and money are : Pilling (1972), Rowthorn, (1974), Arthur (1976), Gerstein (1976), Kay (1976), Fine and Harris (1977), Himmelweit and Mohun (1978), Banaji (1979), Elson (1979), Eldred and Hanlon (1981), de Vroey (1981, 1982), Foley (1982) and Lipietz (1982) . 2. Indeed, use-value can exist as a form of value without there being any exchange value attached to the commodity . This is true in the case of isolated (barter) exchange, in which the value of one commodity is expressed by the use-value of another . A heterogeneous stock of more than two goods appearing in the sphere of circulation requires the more highly developed value form, money, measuring exchange value (see Krause, 1982 : 27-44) . 3. The history of Marx's distinction between a commodity's exchange value and its value is traced by Young (1976) . 4. The primary source of this position is Marx's `Letter to Kugelmann' of 1868 (Marx, 1977 : 33-5) . 5. Della Volpe writes, `The non-rigidity, or dialectical character, of thought either signifies the rigorous extirpation of every hypostasis, in which case the dialectical character of thought is its functionality, and the concept (or category) recovers its normal value as predicate of a subject distinct from this concept; or else we inevitably fall back into hypostasis, into the substantified predicate, in which case it is difficult to see any possible antimetaphysical and anti-dogmatic significance of the instance of the nonrigidity or dialectical character of thought .' (1980 : 176) . 6. This response is characteristic of the Rubin school . Its most unambiguous formulations are to be found in Himmelweit and Mohun (1978), Elson (1979), Eldred and Hanlon (1981) and Lipietz (1982) .

NOTES



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7. The question of dimensionality is addressed pointedly by Lowe (1938) and Dickinson (1956) . In more recent years it is discussed by Itoh (1980 : 68-74) and Sekine (1980 : 290-95). 8 . The means of production clearly do not `expend labour' -which implies subjective activity ; rather, they are directed by workers (albeit in a very passive manner in some instances) in the production of use value . It is absurd, for example, to say that in the production of food, the plough and oxen employ the peasant, while to say the opposite - the peasant employs the means of production to generate food - expresses the commonplace understanding of labour as subjective activity . Conversely, where food grows `in the wild' - meaning apart from any human intervention - this is not, properly speaking, a labour process, and has no social determination . (see Uno, 1977 : 23-5) . 9. This is not to suggest the impossibility of `joint production,' where one firm is associated with more than one industry . However, questions arising from joint production, which properly concern the determination of socially-necessary labour, are outside the purview of the present paper . 10 . The reasons for this were, of course proffered by Smith in 1776 : `First . . . the increase in dexterity in every particular workman : secondly . . .the saving of the time which is commonly lost in passing from one species of work to another ; and lastly, to the invention of a great number of machines which facilitate and enable one man to do the work of many .' (1976 : 11) . 11 . The essential aspects of such a price mechanism were first adduced by the classical economists, notably Smith and Ricardo, and have been formalised in the literature on the transformation problem' (see Medio, 1972 ; Itoh, 1980 : 66-79) . The dynamic of price determination in capitalist society is understood to be the expansion and contraction of industries based on inter-industry differentials in the rate of profit on capital . Adjustments in the relative scale of production between industries creates a tendency toward a uniform rate of profit via the formation of `prices of production' (or what Smith called "natural prices") in the sphere of circulation ; this is to say, prices which yield, per unit, the cost of production marked up by a general rate of profit on industrial capital . An adequate theory of value, then, must account for the determination of a structure of prices of production . In relation to the ontology offered herein it is seen that the movement of a market price toward a price of production is fundamentally the relative flow of (abstract) labour into or out of an industry on the basis of its rate of profit . This flow is comprised of the `living labour' expended by the workers employed directly by the industry, and the `constant capital' transferred to the product . Per unit of use-value this sum is then what constitutes the value of the commodity ; it is the quantum of abstract labour necessary to generate units of a given use-value for the purpose of transforming them into exchange value (money) in the sphere of circulation. 12 . This passage is quoted by Arthur (1976 : 12), Rubin (1978 : 120) and Fischer (1982 : 31) . 13 . The 'socially-necessary' labour time within the industry as a whole is then the measure of the commodity's value . The problem of determining socially-necessary labour lies outside the scope of this paper . 14. The view that the reduction of skilled labour (logically and/or historical) to unskilled labour is equivalent to the abstraction of labour, is widespread amongst Marxist theoreticians . Its classic expression is by

Abstract labour 121

Hilferding (1949 : 138-46), based on remakrs of Marx in Capital 1 (1967 : 197) . It has been the prevalent response to Bohm-Bawerk's criticism that a hierarchy of skills is equivalent to the heterogeneity of labour . A general critique of Hilferding's position, which includes a survey of much of the literature along these lines, is found in Harvey (1983) . The ontology presented here renders both Bohm-Bawerk's critique and Hilferding's response moot by drawing a sharp distinction between the heterogeneity of labour power brought to the market based on relative scarcity, and the homogeneity of labour with respect to the production of different usevalues .

Agliettta, M . (1979)A Theory of Capitalist Regulation : The us Experience (New Left Books) . Arthur, C .J. (1979) The concept of abstract labour Bulletin of the Conference of Socialist Economists 14.

Banaji, J . (1979) From the commodity to capital : Hegel's dialectic in Marx's Capital, in D . Elson (ed) Value: The Representation of Labour in Capitalism (CSE Books) . Bohm-Bawerk, E . von (1949) Karl Marx and the close of his system, P .Sweezy (ed) (Augustus M . Kelley) . Bowles, S . and Gintis, H . (1977) The Marxian theory of value and heterogeneous labour: a critique and reformulation Cambridge .Journal of Economics 2 .

Bradby, B . (1982) The remystification of value Capital and Class 17. Braverman, H . (1974) Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century (Monthly Review Press) . Brenner, R . (1977) The origins of capitalist development : a critique of neo-Smithian Marxism New Left Review 104 . Brunhoff, S . de (1976) Marx on Money (Urizen) . Dickinson, H .D . (1956) A comment on Meek's `Notes on the transformation problem' Economic3ournal264. Eldred, M . and Hanlon, M. (1981) Reconstructing value-form analysis Capital and Class 13 .

Elson, D .(1979) The value theory of labor, in D. Elson (ed) Value: The Representation of Labour in Capitalism (CSE Books) . Fine, B . and Harris, L. (1977) Surveying the foundations Socialist Register. Fischer, N . (1982) The ontology of abstract labour : a discussion of Value : The Representation of Labour in Capitalism, Review of Radical Political Economics 2 .

Foley, D . (1982) The value of money, the value of labor power and the Marxian transformation problem Review of Radical Political Economics 2.

Gerstein, I . (1976)Production , circulation and value : the significance of the `transformation problem' in Marx's critique of political economy Economy and Society 3 . Harvey, P . (1983) The value creating capacity of skilled labour in Marxian economics, forthcoming in Review of Radical Political Economics. Hilferding, R . (1949) Bohm-Bawerk's criticism of Marx, P. Sweezy (ed) (Augustus M . Kelly) . Himmelweit, S . and Mohun, S . (1978) The anomolies of capital Capital and Class 7.

Itoh, M . (1980) Value and Crisis: Essays on Marxian Economics in Japan (Monthly Review Press) . C &

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Day, G. (1976) A note on abstract labour Bulletin of the Conference of Socialist Economists 13.

Kraft, P . (1979) The industrialization of computer programming, in A . Zimbalist (ed) Case Studies on the Labor Process (Monthly Review Press) . Krause, U . (1982) Money andAbstract Labour (New Left Books) . Lazonick, W. (1974) Karl Marx and enclosures in England Review of Radical Political Economics 2 .

Levine, D . (1977) Economic Studies : Contributions to the Critique ofEconomic Theory (Routledge and Kegan Paul) . Lipietz, A . (1982) The so-called `transformation problem' revisited Journal ofEconomic Theory 26.

Lowe, A. (1938) Mr. Dobb and Marx's theory ofvalue Modem Quarterly 3 . Marx, K . (1967) Capital I (International Publishers) Marx, K. (1970) A Contribution to the Critique of Political Economy (International Publishers) . Marx, K . (1971) Theories of Surplus- Value III (Progress Publishers) . Marx, K . (1972) Marginal notes on Adolph Wagner's 'Lehrbuch der politischen Okonomie', reprinted in Theoretical Perspectives 5. Marx, K. (1973)Grundrisse : Introduction to the Critique of Political Economy (Vintage Books) . Marx, K . (1975) The Holy Family (Progress Publishers) . Marx, K . (1977) Selected Letters (Foreign Languages Press) . Medio, A. (1972) Profits and surplus-value : appearance and reality in capitalist production, in E .K. Hunt and J. Schwartz (eds)A Critique of Economic Theory (Penguin Books) . Moore, S . (1963) The metaphysical argument in Marx's labor theory of value Cahiers de l'institut de science economique aplique 140 . Moore, S . (1971) . Marx and the origin of dialectical materialism Inquiry 14. Pilling (1972) The law of value in Ricardo and Marx Economy and Society 3. Rowthorn (1974) Neo-classicism, neo-Ricardianism and Marxism New Left Review 86 .

Rubin, I . I. (1972) Essays on Marx's Theory of Value (Black and Red) . Rubin,1 .1. (1978) Abstract labour and value in Marx's system, reprinted in Capital and Class 5.

Sekine, T . (1980) The necessity of the law of value Science and Society 3 . Smith, A . (1976) The Wealth of Nations (University of Chicago Press) . Uno, K . (1977) Principles of Political Economy : Theory of a Purely Capitalist Society (Harvester Press) . Volpe, G . della (1978) Rousseau and Marx (Lawrence and Wishart Ltd .) Volpe, G . della (1980) Logic as a Positive Science (New Left Books) Vroey, M. de (1981) Value, production, and exchange, in The Value Controversy (New Left Books) . Vroey, M de (1982) On the obsolescence of the Marxian theory of value : a critical review Capital and Class 17. Young, G. (1976) A note on Marx's terminology Science and Society 1 .

John Willoughby

Review article Internationalism and the Development of An Alternative Economic Strategy in the United States : A Review Essay on TheDeindustrialization ofAmerica and Beyond the Waste Land

The Deindustrialization of America : Plant Closings, Community Abandonment and the Dismantling of Basic Industry by Barry Bluestone and Bennett Harrison ; and Beyond the Waste Land : A Democratic Alternative to Economic Decline by Samuel Bowles, David Gordon and Thomas Weisskopf are two recent contributions to the debate on alternative economic strategies in the United States . After critically discussing their proposals, this article moves on to outline the crucial ingredients of a more internationalist alternative .

Economic Strategies that have been developed in recent years by British socialists have clearly been a response to the failures of the last Labour Government and the harsh austerity imposed upon the British population by Thatcher's monetarism . These oppositional programmes, whatever the merits of the actual proposals, have at least had the effect of contributing to a sharper THE ALTERNATIVE

debate within Britain about the nature of socialist transition for the advanced capitalist nations . The Left is now more forthrightly facing up to dilemmas imposed upon it by the existence of an integrated capitalist world which is still organized politically by nation-states . The implementation of austerity policies by Carter in 1979 and 1980 and the Thatcher-like Reagan Administration in Washington have stimulated similar attempts to formulate a socialist or radical alternative in the United States .' In certain fundamental respects, these efforts differ from the British proposals . The United States has no major party which is committed rhetorically to building socialism ; nor is there even a major electoral formation which in an unproblematic way is based on trade union organisation . The hegemony of the two major capitalist parties has meant that it is not even clear how an oppositional, radical programme can be presented as an alternative which could be taken seriously . Because of these political conditions, the actual programmes that have emerged are at one and the same time more vaguely general

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Capital & Class 124 and more fragmentary. Despite these limitations, I accept the premise of those who have developed policy proposals in the United States . Given the very real ideological and political barriers to the development of Left politics, it is a useful exercise to communicate programmes which stop short of advocating a complete socialist transition . Nevertheless, as socialists, it is necessary to evaluate any alternative formulation sceptically: not only must we ask whether the programme is at all workable (and thus a plausible vehicle for political mobilization), but we must also attempt to determine whether or not the implementation of such a proposal would actually contribute to the further development of anti-capitalist politics . Radicals cannot accept a programme which consolidates capitalism by `buying off' one segment of the population at the expense of another, or which serves as a brake on popular movements . It is in this context that I evaluate two recent books by North American radical economists : The Deindustrialization of America by Barry Bluestone and Bennett Harrison and Beyond the Waste Land by Samuel Bowles, David Gordon and Thomas Weisskopf.z

The Deindustrialization of America A central theme in trade union responses to Reagonomics has been to point to the devastation that has been visited upon the industrial sector of the United States . Unemployment rates in the major industrial states of the Midwest are well above the national average of 9 .5% . Furthermore, any economic upswing will not restore the industrial Midwest to its former prosperous condition : the regional shift in production towards the `Sunbelt' seems permanent .' In response to this development, there has been considerable discussion within trade union circles to present policies that would regulate

capital mobility as well as limit the importation of industrial goods . For instance, many radical economists in the United States now support what is known as the Local Content bill of the United Auto Workers . This proposal, which is presently being considered by Congress, but has little hope of becoming law until a Democratic president is in the White House, would force the automobile producers who have large markets within the United States to manufacture most of their vehicles with goods made and assembled in the United States : the larger the sales, the greater the percentage of `local content' which would be required . Clearly, this policy is an attempt to regulate capital and trade movements for the auto industry, and enthusiastic radical supporters of this measure argue that such regulation would set a precedent for other efforts to direct capital movements in a way which would promote employment and enhance the possibility of workers' control. Barry Bluestone's and Bennett Harrison's book, ne Deindustrialization of America, can be seen as an attempt to provide a more general argument in favour of these types of capital regulation policies . It is the central theme of their work that the erosion of us industrial strength can largely be attributed to corporate disinvestment that has been stimulated by intensified capital mobility . The authors cite figures which suggest an annual loss of 3 .2 million jobs as a result of plant closings during the 1970s, and even though it is noted that overall employment expanded during this period, it is argued that the new low wage jobs cannot be compared to the high-wage, unionized job losses . Furthermore, the instability engendered by these shifts in the geographical location of employment has imposed huge costs on both the declining and expanding sectors of the country, which presumably outweigh any

Review article benefits that the Sunbelt area has experienced during its economic boom .' A Global Explanation The Deindustrialization's explanation for the increased rapidity of plant closings (and creations) rests on the not uncommon radical argument that us corporate behaviour must be viewed in a global context. The establishment of US hegemony through the Bretton Woods Agreement and the Marshall Plan led to the active promotion of us capital exports - first to Europe and then to the rest of the world capitalist economy. In addition, advances in communication and transportation technologies made it possible for Us corporations to exert much more centralized control over the production and circulation of capital . On the domestic front, this expansion of capital's might took place with trade union 'permission' as all could share in the benefits of rapid growth . This rather standard story of us advance proceeds with an analogous description of decline : it is the export of capital from the United States which lays the basis for the domestic economy's fall from an imperialist grace . Transnational corporate investment promotes international competition from Europe and Japan, squeezes national profits, and thus promotes further capital export . Given this underlying explanation of deindustrialization, Bluestone and Harrison dismiss the liberal Keynesian alternative to Reagan's incoherent brand of monetarism : The rise of international competition and the increase in the velocity of capital mobility make the entire panoply of liberal policies ineffective, unaffordable, and ultimately unproductive . . . . The expansion of international competition and the new technological breakthroughs that make rapid capital mobility possible have produced a set of conditions under which government can no longer coerce

the private sector to cooperate in the regulatory process or to provide the necessary revenue for the provision of public goods and social redistribution.' The key role which international competition plays in either exacerbating the cyclical effects of capitalist anarchy or of eroding the prospects for any effective Keynesian strategy, lead Bluestone and Harrison to consider corporatist policy alternatives . Corporatism has many possible meanings for radicals, but in the context of US policy proposals, the term largely signifies the direct involvement of the state in capitalist investment . Lester Thurow is the best known liberal advocate of such a strategy; he has supported the creation of a public finance board which would funnel funds to 'sunrise' industries with growth potential.' As Bluestone and Harrison note, the Japanese Ministry of International Trade and Industry, is often the model for these uninspiring proposals. Bluestone and Harrison reject these various 'neo-liberal' programmes because they would increase capital mobility, rather than restrict it, and possibly sponsor the creation of state capitalist hierarchies which would subordinate trade unions to the dictates of capital even further. Nevertheless, one could view their own policy proposals in the final chapter of The Deindustrialization as an attempt to develop a corporatist programme with a much larger degree of popular input . Policy proposals The authors begin their discussion of an alternative by committing themselves to certain familiar principles that are basic to any Left programme : increased regulation and welfare expenditures, decreased military spending and progressive tax reform . In addition, it is assumed that any Left programme must embrace the

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Capital & Class 126 goal of full employment - although the authors do not really explore the macroeconomic implications of reflationary policies . So far, there is little that is original in this mix of policies. Bluestone and Harrison's new contribution is their insistence on the necessity to devise policies that limit capital mobility . They call for the implementation of laws which would require notice before economic establishments are closed, grant high severence pay to workers and municipalities affected by any shut down and require corporations to engage in mandatory economic planning which is committed to the economic redevelopment of declining regions . These legislative reforms - explicitly based on German and Swedish legislation - are linked to a `radical industrial policy' which attempts to promote active popular participation in future investment projects . In return for government and labour support for new or reorganized enterprises . Bluestone and Harrison propose that corporations be forced to commit themselves to more worker participation in the management of the firm, extensive health and safety programmes and unionization . In addition to this support of `progressive' private capital, it is also hoped that new, community-controlled public industries could also be generated through a combination of popular initiatives and government assistance .' It would not be unfair to conclude that Bluestone and Harrison's proposals accept the general framework of Thurow's reindustrialization plan as long as the state is forced to provide stronger guarantees for worker and community security . These are not trivial extensions : many trade union officials would be sympathetic to this policy mix . On the other hand, with the neo-liberals, The Deindustrialization implicitly assumes that one key goal of any policy is to restore US competitiveness within the world economy .

The implication of this general approach is clear : Bluestone and Harrison suggest that a new democratic capital-labour concord is possible, and that this should aid in the reconstruction of the United States . Although the us-created structure of global accumulation is assumed to be the ultimate cause of deindustrialization in North America,' the structure of international economic relations is not addressed in any of the book's proposals . Some restrictions on capital mobility and greater state planning are seen as sufficient to restore the `competitive balance' .

Beyond the Waste Land The second recent work proposing a radical policy alternative to the Us economic crisis is much more ambitious than The Deindustrialization of America. Both its explanation of us economic decline and its proposed solutions are more extensive and certain to spark significant debate . Beyond the Waste Land's account of the seventies stagnation at first seems to be merely an elaboration of the thesis of the Bluestone-Harrison work : Bowles, Gordon and Weisskopf claim that after World War II, the new institutional framework of corporate dominance allowed for early rapid growth, but later became a barrier to further us accumulation : The post-war corporate system . . . was based upon relations of domination and subordination, forged into an inflexible and hierarchical structure of private privilege . Us corporations achieved their power in the world economy shortly after World War II - but only at the expense of European and Japanese companies, Third World countries, and many people in the United States . This particular structure of domination was likely to last only as long as corporations could sustain it against challenges from below . . . . Both at

Review article home and abroad, the tasks of preserving the post-war corporate system grew more and more arduous . The costs of maintaining private power and privilege ultimately overtaxed the resources and flexi.' bility of the us capitalist economy This general framework has become a rather standard part of the radical account of us decline ; at this level of generality, Beyond the Waste Land is not not original . There is, however, a difference in the authors' account of the process of decline, if not their theory of crisis . Bowles et. al, maintain that the attempt by us corporate interests to recreate the post-war framework of dominance through increased militarization to discipline the external world ; through rising unemployment and increased work-site supervision to discipline labour ; and through gutting environmental and anti-discrimination policies to stem popular protests against the logic of accumulation have paradoxically imposed additional burdens on the us economy . In fact, the authors claim that, with their proposed twenty-four key reforms, 'useful output' in the United States could increase by 50% .' 0 As a result of this focus on the waste burden (primarily generated by the production of useless output, unproductive supervisory labour and excess capacity), Beyond the Waste Land shifts away from its original emphasis on the global corporate economy . Instead, Bowles, Gordon and Weisskopf emphasize the need for the state to influence and create productive enterprises which eliminate low-wage work, ban employment discrimination and share technological infomation as well as profits with its workers ." Beyond the Waste Land places a sharper emphasis on workplace and community reorganization than The Deindustrialization of America; for this reason, the twenty-four point programme is not as readily cooptable by capitalist interests who are wil-

ling to compromise with the trade union 127 hierarchy.

The lack of a plausible international component Nevertheless, the lack of a plausible international component in Beyond the Waste Land is a serious gap which calls even the programme's domestic coherence into question . Bowles et. al. do advocate slashing military spending, placing controls on capital mobility (similar to Bluestone and Harrison's proposals) and implementing what they call a democratic trading regime, but there is a certain amount of inconsistency in these planks. On the one hand, the authors very clearly argue that high tariffs cannot be a solution to underlying competitive difficulties in trade ; on the other, they refer favourably to Keynes's 1933 argument for broad selfsufficiency in industrial production ." This latter position, in combination with their concern to avoid future foreign trade 'shocks' of the OPEC variety, seems to push the authors in the direction of arguing for a planned, bilateralist trading regime . And this is given further credence by their argument for preferential trade with those countries respecting workers' rights .' 3 What would be the vehicle for such an evolution? Here, Bowles, Gordon and Weisskopf are not very clear, but apparently they envisage the gradual introduction of long-term trading agreements that would, in some sense, circumvent and eventually limit the anarchy of the market . This emphasis on trade is not matched with an equal concern with the movements of productive and money capital . This is a weakness in the programme to which we shall return . Here, we merely note that while Beyond the Waste Land implies the need for a radical reform in the international economy, it specifies neither the nature of that reform nor the means for bringing it about .

Capital E5 Class 128 An Evaluation Clearly, The Deindustrialization of America and Beyond the Waste Land cannot be considered revolutionary socialist programmes . Indeed, the authors go to some pains to avoid the 'orthodox' language of Marxian economics in order to make their theoretical and political arguments more palatable . This is not just a question of theoretical language . The political vision of these works is forthrightly left Social Democratic . This does not constitute a reason for rejecting the proposals - even if one is convinced that Social Democracy cannot ultimately resolve capitalist contradictions. As I said in the introduction, our evaluation of these works depends on an assessment of the policies' short-term viability as well as a more speculative consideration of the political forces that might be set in motion by campaigning for these alternative strategies. This general critique requires some understanding of the theoretical context of these works . In both cases, these authors basically adopt a `New Left' analysis of capital accumulation . 14 Beginning with Boddy and Crotty's analysis of profit squeeze as a result of labour militancy; continuing with Bowles and Gintis's emphasis on profit squeeze as the result of the development of the social wage by the Keynesian state ; and finishing with Weisskopf's greater focus on the problems of raw material shortage and international competition, these theorists have argued that the success of Keynesianism has laid the basis for its irrelevance today. This is by no means an uncommon argument in Europe . Indeed, Glynn and Sutcliffe's work in the early seventies did have a large impact on radical economics in the United States, and the political point of this approach is clearly in the Kaleckian tradition. Because capitalism is based on social antagonism, the state cannot indefinitely maintain an economic policy which strengthens the

bargaining position of those groups or nations which must remain subordinated to capital . 15 State intervention This perspective would seem to imply that no actions by the state - beyond the crushing of oppositional formations - can succeed in providing a solution to capitalism's difficulties . This is obviously not the theoretical conclusion that the authors under review wish to draw . Instead, they imply that contemporary economic dynamics make problematic any attempts to turn back the clock through austere repression . 16 This is indeed a key theoretical argument for Bowles, Gordon and Weisskopf. The devalorization of fixed capital as well as labour power could lead to the collapse of the domestic industrial infrastructure altogether rather than promote the conditions necessary for renewed sustained accumulation . For these reasons, they predict that a monetarist solution must be short-lived, as both capital and labour express their opposition to profit-squeezing/wage-depressing policies . Given the bankruptcy of Keynesianism, they anticipate that we will eventually witness a movement towards more interventionist policies through the mechanisms of capitalist state planning . This belief that more active state planning is on the political horizon is the context within which both books have been written . The authors are clearly concerned to develop an alternative interventionist programme which would promote economic rejuvenation and provide a more favourable context for experiments in popular workplace and community democracy . Is it possible to develop such a programme without proposals for reform of the international economy? In my view, the answer is clearly No . With respect to TheDeindustrialization of America, it is certainly true that mild

Review article capital controls are not incompatible with the free enterprise global economy . On the other hand, it is also clear that these controls, particularly in the case of Germany, have not effectively shielded the domestic economy from the partial erosion of its industrial base . At best, the constraints that Bluestone and Harrison propose would provide a modest amount of protection to unionized workers . At worst, these programmes could fail to address the problem of expanding employment for all workers and thus divide the working class in general . The political priority of campaigning for full employment could get lost as separate groups of workers agitate for partial protection . This is happening. It is not that capital controls should never be supported by the Left, but rather that they should be supported in the context of a general programme that promotes employment for all workers or provides the basis for more popular action that shifts the balance of power away from capital's prerogatives . As soon as one admits the possibility of trading off some gains for others, without a changed macroeconomic environment, capital is in a position to exploit these 'pro-worker' reforms to its own advantage."

US imperial policy In fact, given the modest nature of the reforms that Bluestone and Harrison actually propose, parts of their work could easily be subsumed under a capitalist strategy to protect certain privileged unions in return for support of us imperial policy. Walter Mondale, the most likely Democratic Party candidate for president, has precisely made this connection between economic nationalism and the maintenance of a rationalized us imperial structure . It is certainly understood by most trade union officials (the majority of whom support Mondale) that such an imperialist commitment would

require the maintenance of contemporary 129 global political-economic structures . Without distinguishing carefully between a programme of economic nationalism which might be able to challenge capitalist hegemony over the world economy, and protectionist policies which regulate an aspect of competition in order to provide the government with some popular legitimacy, radicals may soon find themselves in the position of providing a Social Democratic justification for the continued us domination of the world economy . For this reason, the more extensive economic programme of Bowles, Gordon and Weisskopkf is welcome . Their more specific emphasis on the importance of reducing wage differentials, creating structures for worker and community democracy and exerting more public control over capital (including the nationalization of the financial sector) all make it clear that reform is being proposed not to rationalize capitalism, but rather to transform it. Nevertheless, it is important to probe further and ask whether the rejuvenation strategy is viable. Are there ways in which Beyond the Waste Land fails to anticipate barriers to the implementation of its programme?

Barriers to implementation It is important to remember that even Jimmy Carter's modest reflationary programme culminated in a $32 billion balance of trade deficit and a $18 billion outflow of short-term capital. 18 Even without the job and wage restructuring aspects of their programme, it is undoubtedly the case that Bowles, Gordon and Weisskopf's programme of more massive fiscal stimulation would place downward pressure on the dollar and add to significant inflationary pressures, calling into question the viability of any price control programme . To sustain full employment, we need more than domestic

Capital & Class 130 reforms that might lead to eventual productivity increases. Without some immediate international restructuring, it seems likely that the type of programme which Beyond the Waste Land calls for would culminate in the sort of international problems plaguing the Mitterand government . If so, a progressive American government would be faced with the uncomfortable choice of austerity policies before the longer-term workplace and community reforms had taken hold . The result, rather than preparing the way for long-term advance for the Left, would instead be demoralization and set-back . Despite the political attractiveness of much of the Bowles, Gordon, Weisskopf programme, we need to elaborate an alternative international programme that is more compatible with their domestic policy proposals . Indeed, it might also be necessary to modify aspects of their domestic strategy in order to avoid the potential problems just considered . A Sketch of an Internationalist Alternative Economic Programme Any attempt of American radicals to construct an alternative economic programme which aims to restructure the world economy must confront two key issues . I have stressed in my critique of Beyond the Waste Land the problem of short-run destabilization of any radical economic programme through capital flight ; even more important, however, is the general issue of the us's imperial role in the world economy . Reforms must be proposed which erode the power of us capital's mechanisms of global coercion in the short and long-run .

Military cut-back For this reason, general calls for slashes in military spending are not sufficient. It must be clear that a radical programme in the us has as a major goal the cutting-back of the US military profile in

the world . Thus, I would add to any alternative economic strategy a plank which advocates the us withdrawal from NATO, the dismantling of all major foreign military bases as well as other US concentrations of military forces and the banning of the arms trade . To my mind, this attack on the forces of coercion are a precondition for the successful implementation ofothermore `economic' proposals .

Transnational corporations and international trade One implication of this plank is that the US government would also cease to support US-owned transnational corporate activity overseas . This would mean in particular the dismantling of laws which force the us state to act vigorously to prevent nationalizations, the use of government resources to share technological information directly and the creation of state-sponsored marketing boards for major traded commodities . These structural proposals, of course, do not address directly the problem of capital flight and the resulting inflationary pressures . It is possible that a domestic attack on transnational corporate privilege within the United States would unleash political action in the rest of the world, making it increasingly difficult for capital to escape from political regulation . A sharp leftward shift in the political climate in the United States would clearly throw capital on the defensive throughout the globe . It would not be reasonable, however, to assume that there would be no need to reform the general structures of trade and relatively free capital mobility . As Bowles, Gordon and Weisskopf point out, there is a need to move towards a system of planned trade . What exactly would this require? In the first place, it should be possible for a powerful economy such as the US to enter into long-term bilateral and multilateral import-export agreements that would establish more benefi-

Review article cial 'North-South' trading arrangements . Various New International Economic Order demands which advocate the stabilization of commodity prices and the promotion of industrial exports from the Third World could be integrated into such a perspective . At the same time, the internal planning mechanisms that both Deindustrialization and Waste Land advocate could be implemented to revitalize declining regions on the basis of new economic activities . It is possible that such planned trading arrangements would reduce the scale of trade within the advanced capitalist world while promoting industrialization in the South . 1 ° This perspective is different from Waste Land's advocacy of trade among `democratic countries' which respect workers' rights. At the moment, many of the nations Bowles et. al. refer to are important global powers supporting the politics of coercion within the Third World . No country in the world can be considered a genuine supporter of democratic rights, and an appeal to this laudable principle obfuscates global reality . It is necessary to put our own `imperial' house in order, and then engage in trading arrangements within a transformed global economy - transformed as a result of our dismantling of the American global repressive apparatus . 20 Monetary reform As we begin to move to a planned trading system which also constrains the productive investment activity of transnational corporations, it is also necessary to address the issue of monetary reform . Indeed, the power of transnationals to perform rapid geographic shifts of their monetary assets is likely to be a key stumbling block to the implementation of any alternative economic strategy . Making the dollar inconvertible is an essential medium-term goal of international economic reform, and in the short-run, a partial foreign exchange control pro-

gramme could assist in the freezing of 131 more speculative assets. This last proposal, however, raises several problems . It would be very difficult to shift away immediately from the current use of dollars as a global currency . If the dollar suddenly ceased to function as a means of exchange, large numbers of countries would find it impossible to import essential supplies . Any radical government within the US must be prepared to advocate the replacement of the dollar with an international unit such as the SDR (special drawing right) . One could envisage that the use of such a `currency' to be limited only to international transactions and such a reform could be a key aspect of any programme to both eliminate the overhang of debt in the Third World and provide a regular transfer of resources to the South . Despite the speculative nature of this proposal, the dismantling of the dollar-based global economy would be a central step in protecting the domestic economy from capitalist subversion and freeing the world from the coercive logic of global accumulation. Transitional instabilities Given all the uncertainties involved in eroding the military, corporate, trading and financial structures of us imperialism as well as corporate power within the domestic economy, it is still quite likely that any alternative economic programme in the United States would face instabilities that cannot be readily anticipated . For this reason, it seems more prudent for any advocate of an Alternative Economic Strategy to back away from a productivist emphasis on increasing output as a result of planning and democratic rationality . Instead, it is more appropriate to emphasize the ways in which such a programme could allow for the creation of more leisure time as well as promote democratic control over the organization of social lives . Any transition period

Capital E5 Class 132 would be easier to cope with if a progressive government did not engage in massive reflation and instead concentrated on providing for the sharing of work and goods . The international uncertainties of any transition would require slack in the economy so that a progressive government could mobilize resources for unanticipated crises. This focus on redistribution and restructuring is also more compatible with any programme of environmental reconstruction as well as feminist demands that more resources be devoted to the construction of social life outside of commodity production ."

Conclusion This international economic reform proposal and the associated advocacy of a more `austere' domestic economic alternative, does have a close affinity with some of the New International Economic Order proposals that have been embraced by most Third World states - both those which depend on us support for their existence and those which find themselves in opposition to the dictates of us foreign policy. It should be clear that these planks have a progressive meaning insofar as the other general structures of US imperial domination - including the debt management practices of the IMF are dismantled . There is not a contradiction between opposition to certain political-economic programmes in one context while supporting them in another . Nevertheless, this last section is frankly speculative and is meant to provoke criticism and reformulations . One of the ironies of the last decade is that the discussion of international economic restructuring is much farther along in those sections of the world which would most suffer from any unilateral attempt to break out from the logic of global accumulation . It is crucial that us radical

economists begin to participate in an ongoing dialogue with those who are attempting to study and design alternative economic orders for both declining sectors of the advanced capitalist world and the still poverty-stricken nations of the Southern hemisphere . The United States economy, with its still significant continental resources and huge internal market, is probably best placed to break from the global economic structures it created without suffering enormous economic costs . But even in this case, international cooperation among anti-capitalist political movements would be essential for any progressive government in the us . Beyond this material interest in internationalism, the us also faces a moral responsibility to assist all popular attempts to exert democratic control over global economic life . The economic viability and political integrity of any alternative us economic programme depends on the inclusion of international planning . It is not a luxury, but a necessity . Acknowledgements I would like to thank Micaela di Leonardo for her particular assistance on this project . Samuel Bowles, Arthur MacEwan and Simon Mohun read and made valuable comments on an original draft, and the Capital and Class reviewers, Sonia Liff, Anne Phillips and Ken Jones, made important suggestions as well . I am, of course, solely responsible for the final draft .

Notes and References 1 . Unlike Europe, there is a lively nonMarxist leftist tradition in the United States . Thus, it is more appropriate to refer to the different oppositional perspectives as `radical' rather than `Marxist' or even `socialist' . 2 . Barry Bluestone and Bennett Harrison,

The Deindustrialization of America : Plant Closings, Community Abandonment and the Dis-

Review article mantling of Basic Industry (New York: Basic

Cambridge journal of Economics 5 (December

Books, 1982) . Samuel Bowles, David M . Gordon and Thomas E . Weisskopf, Beyond the Waste Land:

1979) . T . Weisskopf, "The Current Economic Crisis in Historical Perspective", Socialist Review 11 (May June 1981) . A. Glynn and B . Sutcliffe, British Capitalism, Workers and the Profit Squeeze (London : Penguin Books, 1972) . M . Kalecki, Selected Essays on the Dynamics of the CapitlaistEconomy (Cambridge : Cambridge University Press, 1971) . 16 . Arthur MacEwan, "International Economic Crisis and the Limits of Macropolicy", Socialist Review 11 (September-October 1981) . 17 . One example of `capital control policies' which the Left normally does support is movements by workers to place economic pressures on corporations so that they are prevented from shifting productive locations . Bluestone and Harrison do propose innovations that might assist efforts by workers to articulate grassroots opposition strategies . The danger exists in devising policies which invite the state to regulate such activities, or which invite individual industries to appeal for special assistance while shutting out other workers from similar options . 18 . Paul Samuelson, Economics, 11th edition (New York : McGraw-Hill, 1980) : 616 . 19 Trade among industrial OECD countries has declined from 71% of the total in 1966 to 65% in 1981, but an alternative programme would probably intensify this trend. OECD,

A Democratic Alternative to Economic Decline

(Garden City, New York : Anchor Press/ Doubleday, 1983) . 3 . Bluestone and Harrison present data which demonstrate that while jobs expanded by three million between 1969 and 1976, none of this net growth occurred in the 'Frostbelt' (the Northeast, Mid-Atlantic and Midwestern regions of the country) . Bluestone and Harrison : 270. 4 . Ibid. : 25-81 . 5 . Ibid. : 208-9 . 6 . Lester Thurow, The Zero-Sum Society (New York : Basic Books, 1980) : 191-2 . 7 . Bluestone and Harrison : 231-64 . 8 . One general weakness in both Deindustrialization and Waste Land is that neither book addresses the issue of Canadian industrial decline . Given the complete integration of the Canadian and US economies, any alternative programme must deal with the Canadian experience . 9 . Bowles, Gordon and Weisskopf: 6 . 10 . Ibid. : 177 .

11 . This is not the complete programme, which also includes macroeconomic reflation to reduce unemployment eventually to 2% . 12 . The authors refer to Keynes's 1933 Yale Review essay on industrial self-sufficiency favourably . Ibid. : 258 . 13 . Ibid. : 346-5 1 . 14 . The category New Left is not rigorous and has a certain ironic ring as many of us begin to grey and enter our forties . Nevertheless, it is possible to distinguish theoretically the theoretical emphasis of this school from Baran and Sweezy's underconsumptionist theory or other theorists' concentration on the law of the tendency of the rate of profit to fall . 15 . R. Boddy and J . Crotty, "Class Conflict, Macro Policy and the Political Business Cycle", Review of Radical Political Economics 7 (1975) . S . Bowles and H . Gintis, "The Crisis of Liberal Democratic Capitalism : The Case of the United States", Politics and Society 11 (1982) . T . Weisskopf, "Marxian Crisis Theory and the Rate of Profit in the Postwar US Economy,

World Economic Interdependence and the Evolving North-South Relationship (Paris : OECD, 1983) :

72-3 . 20. It should be clear that the disruption of the US's network of global control would not usher in an immediate period of peace and prosperity . Indeed, the transition is likely to be quite tumultuous as internal and external power relations throughout the globe change dramatically . 21 . Rudolf Bahro is an advocate for the former environmentalist position . Rudolf Bahro, Socialism and Survival (London : Heretic Books, 1982) . Recently feminists have begun to stress the importance of agitating for a shorter working week . Anne Phillips, "Fighting for Shorter Week", Politics and Profit (June 1983) .

133

Capital 'f Class

Strategy note Fighting Multinational Power: An Afternote on Trade Union Research in Scotland . Chris Baldry, Nigel Haworth, Simon Henderson, Harvie Ramsay.

Prior to being sent to Capital E5 Class our article had been heavily edited for an alternative purpose which in the event did not materialise . The article which appeared in C&C 20 was therefore a version which regrettably omitted two important areas of the original paper - how the research team (RT) came to be established, and the role of the enabling bodies in its efforts . The net result of this was to give the RT the possible appearance of centrestage poseurs, and to oversimplify the complex process of such research work within the union movement . Because of the danger this poses to other groups trying to work with the unions rather than seek self-aggrandisement, we have asked the editorial collective for the opportunity to set the record straight, and to expand momentarily on some of the related issues .

The research team in context The RT had its origins in the Trade Union Research Unit (Scotland), which was set up in autumn 1977, based in the Glasgow College of Technology but including individuals from other teaching institutions 134 in Strathclyde Region on its steering committee . More significantly, the Research Unit had the official support of This is a brief addendum to the Strategy Article in Capital and Class number 20.

the Scottish TUC, who also appointed members to the steering committee . The direct involvement of the STUC is a major innovation ; for the TUC in London has been far less supportive and adventurous where such ideas are involved, not to say downright hostile on occasion . Some suspicion of academics is well justified, but we feel that initiatives such as that of the STUC are greatly needed, and must have a positive impact if extended and built upon with due care . The request for help in the Massey Ferguson, Kilmarnock case came to TURU(S) from the Massey shop stewards via the AUEW and so to the STUC . Two members of the RT were also TURU(S) steering committee members . It should be stressed that no strings were attached to what was very much an exploratory venture. The RT was left to liaise with the Co-ordinating Committee of MF stewards, and thereby to work out a role for themselves . This confidence and freedom made it possible for the RT to act quickly when crisis blew up, with full information and other support. The other indispensable assets were the unfaltering encouragement and the fund of information provided by the stewards at MF itself. We acted chiefly as collators and re-presenters of material which they had in their midst, being able, as outsiders less entangled in the detail of the struggle, to give it some fresh coherence and application . No-one of those involved, whatever their assessment of the need to act or delay, to strike or keep talking, offered us anything but generous praise for our efforts .

An assessment of our role Actually we ourselves thought our reception was if anything over-generous and over-enthusiastic . In our article (CESC 20, p .160) the RT is listed as an asset in the struggle, but in our original draft we had a

Strategy note

large question mark against this . We felt that the provision of reasoned argument may have helped to encourage putting off action for discussion with an employer whose stated rationale for closure had little to do with the underlying decision to leave the workforce jobless . We also felt undeservingly cast in the role of `expert' advisers, when our contribution was far less grand . Moreover, the implication of such an image for progress in attacking the division of head and hand is evident . In addition, we experienced the overriding need to respond to a crisis as a major handicap, tying us to 'tail-ending' management moves along with the unions when a far more effective intervention would have been a long-term link with wider educational aims, and a chance to take the initiative by generating proposals from within the Kilmarnock workforce . Nor should it be imagined that we found our role unproblematical in other respects . Our actions were somewhat timid, perhaps, precisely because we were aware of our unusually privileged access, and because the novelty of our position meant that our accountability had not been clearly defined . Was it to the STUC or to TURU(S)? To the Massey workers, or their joint shop stewards' committee, or to the Co-ordinating Committee chosen from the stewards? Was it to the national negotiators, headed by the AUEW? Or was it to some brave definition of building socialism and spreading The Word? The crisis made it easy to retreat to providing weaponry specifically for negotiation, but we were aware that our resulting dealings with the Co-ordinating Committee did have numerous implications too complex to explore here . Given the subtle differences in the pull of the different entities listed above, we are still uncertain as to how a choice between them should be made. Again, this problem is from our own pondering ; we were never loaded with it by the STUC or by the stewards .

Our article was derived from our 135 report back to TURU(s) and the STUC . No obstacles were placed in the way of our writing it up . We originally authored it as the Massey Ferguson Trade Union Research Team to avoid the individualism and any appearance of seeking gain from having our names identified . We were persuaded to identify ourselves before the article reached Capital & Class ; in some ways we now regret accepting the change . Our thanks are overdue to TURU(S), to the STUC, and above all to those at Masseys for trusting and encouraging us,and for making our efforts possible.

Since then Since the time of our RT, TURU(S) has had to restrict itself to fire-fighting, dealing with a barrage of requests for help by setting small groups of people to provide information and argument on a basis usually still more limited than the RT for trades unionists facing crises . It has also now produced 20 issues of a quarterly journal of trade union discussion and relevant statistical information for Scotland, the Scottish Trade Union Review. The achievements have been real, if limited by circumstances . Indeed we recommend to Capital & Class the idea of running a series looking at TURU(S) and other research units seeking to work with the labour movement (such as the Coventry Workshop, or TUSIU in Newcastle and the Labour Research Department itself) to compare strategies, consider achievements and constraints, and to evaluate possibilities. It will probably be some time after the labour movement turns the corner from its present decline that the opportunity to build beyond a largely reactive base will arise . Perhaps then someone will be in a better position than previously to take that opportunity .

Capital E5 Class

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