Permanent Revolution

Sigmund Freud on Fri 03, July 2009 @ 21:48

Sigmund Freud — 2009-07-03 21:48:15

"The total closure of the financial system from September 2008 onwards proved that even while the body was relatively healthy if the blood of finance could not flow around it then it would quickly die."

Er, a healthy body doesn't suffer from paralysis of its circulatory system.

Everyone knows this 'strong economy' thesis has been proven monumentally wrong. Why don't the rest of the PR people shut this loony up?

bill j on Fri 03, July 2009 @ 22:12

bill j — 2009-07-03 22:12:44

Good stuff. Can a healthy body suffer from the paralysis of its circulation? Or in other words can it have a heart a attack? Actually it happens all the time. As part of my work I have to do health promotion/stop smoking. When the ban on smoking in pubs was introduced the statisticians noticed that there was a dramatic reduction in heart attacks in young men, mostly early 20s on Sunday afternoons.

What had been happening was that after playing footie in the morning and therefore working their hearts harder for an extended period men went for a post match drink. The carbon monoxide from passive smoke in pubs made their blood thicker leading to clots and heart attacks.

The post Lehmans heart attack for the world banking system is a similar combination of the consequential inconsequential. Lehmans were responsible for around $400-$600bn of derivatives. The failure to secure public funding for the bank to the tune of $1bn-$2bn meant they were allowed to collapse. As a result all of these derivatives were frozen. Lending stopped world wide. When however they were ultimately reconciled the funding gap and resultant losses were a mere $5bn. To use another medical analogy, its like they amputated a leg and upon completing the operation discovered that the problem was an itchy toe. The trouble is though after you've amputated a leg, even by mistake, its not so easy to fix.

Sigmund Freud on Sun 05, July 2009 @ 22:47

Sigmund Freud — 2009-07-05 22:47:32

so capitalism today is a healthy young man is his early 20s suddenly falling ill by breathing in an external poison? fascinating :)

bill j on Mon 06, July 2009 @ 08:52

bill j — 2009-07-06 08:52:18

Lol.

No capitalism today is in crisis, just as it has been for the last four decades.

stuart king on Wed 08, July 2009 @ 18:35

stuart king — 2009-07-08 18:35:28

Sigmund was never very good at economics, perhaps he should have stuck to psychology.

skidmarx on Mon 20, July 2009 @ 15:13

skidmarx — 2009-07-20 15:13:32

No account is made for the one off addition to world capitalism which resulted from the transformation of planning into capitalism and as a result the collapse of the Stalinist central plan is measured as the collapse of capitalism rather than the creation of it.

If you don't accept the assertion that Stalinism represented a different mode of production it makes sense. It seems odd to believe that the 'socialist' economies didn't exist as far as the capitalist world was concerned until 1989, then enter it in all their glory. Presumably an analogy is made with the expansion of capitalism into areas with pre-capitalist modes of production, but those were areas that had had little economic or other competition with capitalism.

In the centrally planned economies of the USSR etc. values were not related to prices, they were decided by central planners in advance and therefore did not change through time.

Highly questionable.

bill j on Tue 21, July 2009 @ 13:05

bill j — 2009-07-21 13:05:05

What's questionable? E H Carr's masterful history of the Bolshevik revolution explains how central planning was established out of NEP;

http://www.amazon.co.uk/History-Soviet-Russia-Foundations-Planned/dp/0333245717/ref=sr_1_3?ie=UTF8&s=books&qid=1248177580&sr=8-3

Are you saying that never happened? Harman does, Cliff never did. Cliff's theory of state capitalism insisted that the law of value does not operate inside the USSR. Harman on the other hand said it did.

The law of value - that the price of objects was determined by the socially necessary labour time they cost to produce determined through exchange on a market - did not operate as central planners allocated means of production, raw materials and labour to produce outputs in quantities and at prices they decided in advance. Commodities were not exchanged the law of value did not exist.

That's why the transformation of these centrally planned economies qualitatively transformed capitalism in the 1990s and indeed lead to the sub-prime bubble, as Chinese surplus profits were invested in the US, driving down interest rates, accelerating speculation etc. resulting in the mess of the credit crunch.

skidmarx on Thu 23, July 2009 @ 12:27

skidmarx — 2009-07-23 12:27:55

Your link only goes to amazon flogging the book, so I can't check the accuracy of your rendition right now.

On Cliff we've been over this before. He says that Russia appears to be a negation of capitalism until you look at it in the international context, when it can be seen the law of value does apply. Whether you agree with it or not, that's what he says.

Central planners couldn't just set prices and values willy-nilly, just as those in large firms cannot do so indefinitely.

I'm sorry I don't have time to set out my thoughts on this clearly and coherently right now, so I'll leave you with a couple of thoughts.Was there production of commodities in the Soviet Union, even if not universally exchanged through a market? Was labour-power a commodity, even if not freely sold, as with authoritarian capitalist regimes? Did the workers constitute a working-class? Were they in power in some sense? What happens to historical materialism if history can advance to a workers' state without any meaningful control of the state by workers?

On your last point, I'd say that in an era of globalised capitalism, to suggest that economies escape its influence if a certain amount of their production is nationalised or they have a certain distance from the world market mistakes the way capitalism influences international relations. All you appear to be saying is that the re-integration of China(and presumably the Eastern bloc) into the world market led to first boom and then bust. That doesn't necessarily lead to a conclusion that they were transforming from non-capitalist economies back into capitalist ones.

bill j on Fri 24, July 2009 @ 08:54

bill j — 2009-07-24 08:54:57

We have been over this with Cliff before, Cliff says abstracting the USSR from the world economy then the law of value does not exist. That's the correct thing to do. Abstracting the UK economy from the world economy then the law of value DOES exist. Abstracting an egg from a frying pan the egg does exist etc.

Central planners set prices according to the priorities of the bureaucracy. They put a high value on bombs, nuclear weapons, the heavy industrial infrastructure etc. A key priority in the 1920s was to have products to exchange with the peasantry for food, and the political decision over the price at which that exchange took place. But this was not decided by a market, hence all the discussion about the scissors crisis.

Once central planning was properly established from the early 1930s onwards there was virtually no exchange at all. There were no commodities. Labour power was not a commodity - as Cliff explains elsewhere - there was no market. There were definite quantities of raw materials, labour power and means of production which were allocated according to central bureaucracy priorities to produce given quantities of outputs, more or less successfully. The "prices" of these outputs were planning measures to assist the bureaucrats. But even they did not determine their deicisons at what was produced, where and how often.

That is what it means when you say that the law of value does not exist in an economy abstracted from the world economy.

Did the working class exist? Yes and it grew as the peasantry where stripped of their land, but it was atomised by a bureaucracy akin to the rulers of a fascist state.

Historical materialism survives just fine, the soviet union actually existed and historical materialism provides the tools to describe it, as Trotsky's analysis shows, and E H Carrs who was not a Marxist but was certainly a materialist.

Contrast the USSR/China/Eastern bloc etc. today with the economy of the 1980s. Today capital circulates, profits are produced, the law of value exists, the restoration of capitalism in these economies created a new period of capitalism, globalisation and explains the recent boom then bust. Crises in and of themselves occur whether or not capitalism was restored there, but the fact that capitalism was restored there explains this crisis, and indeed, it cannot be explained without it.

skidmarx on Fri 24, July 2009 @ 14:27

skidmarx — 2009-07-24 14:27:50

Where does Cliff say that labour power was not a commodity? You may be right, but your interpretation of what he says on the law of value doesn't inspire me with confidence. Stopping half way through his argument to say that he doesn't think the law of value applies is not good reportage.

How can a working-class exist if it is not selling its labour power? I only have a minute at the moment, but there are a couple of interesting passages in Chapter One of Capital where Marx looks at different forms of society and ridicules the idea that the Greeks and Romans lived simply by plunder that might be relevant.

bill j on Fri 24, July 2009 @ 18:36

bill j — 2009-07-24 18:36:31

I'm not stopping half way through the quote, the whole thing is here;

"Hence if one examines the relations within the Russian economy, abstracting them from their relations with the world economy, one it bound to conclude that the source of the law of value, as the motor and regulator of production, is not to be found in it. In essence, the laws prevailing in the relations between the enterprises and between the labourers and the employer-state would be no different if Russia were one big factory managed directly from one centre, and if all the labourers received the goods they consumed directly, in kind."

Its absolutely unequivocal - the law of value is not to be found in the USSR - when abstracting it from the world economy. That is absolutely the correct thing to do. The laws which govern the centrally planned economy of the USSR were the laws that operated within it. Just as the laws that govern the capitalist economy of the USA or UK are also the laws that operate within it. That's why the USSR was not a capitalist economy and the USA and UK are capitalist economies.

Sure enough Cliff then goes onto say, doing violence to his own argument, that to discover the nature of the USSR's economy we have to look not at what it is, but what it is not - the world within which it finds itself - but that's rather like saying we discover the essence of a fish not by looking at a fish but the water it swims in. The water is very important to the fish, decisive indeed in shaping its whole life and existence, but the water is not the fish.

On labour markets Cliff is even clearer, its from the same passage actually, here's an extract (you can look the rest up yourself if you want!);

"In order to see whether labour power in Russia is really a commodity, as it is under traditional capitalism, it is necessary to see what specific conditions are necessary for it to be so. Marx states two conditions for this: first, that the labourer must sell his labour power as he has no other means of subsistence, being “free” of the means of production; secondly, that the labourer can sell his labour power as he is the sole owner of it, that is, he is free to do so. The freedom of the worker on the one hand, his bondage on the other, are shown by the “periodic sale of himself, by his change of masters, and by the oscillations in the market price of labour power”. [30] Marx therefore says that in order for labour power to become a commodity it is necessary that the owner of the labour-power should sell it only for a definite period, for it he were to sell it rump and stump, once for all, he would be selling himself, converting himself from a free man into a slave, from an owner of a commodity into a commodity. He must constantly look upon his labour-power as his own property, his own commodity, and this he can only do by placing it at the disposal of the buyer temporarily, for a definite period of time. By this means alone that he can avoid renouncing his rights of ownership over it. [31]

If there is only one employer, a “change of masters” is impossible, and the “periodic sale of himself” becomes a mere formality. The contract also becomes only a formality when there are many sellers and only one buyer. (That even this formal side of the contract is not observed in Russia is clear from the system of fines and punishments, the “corrective labour”, and so on.)"

Again;

"There is no doubt that “oscillations in the market price of labour power” take place in Russia, perhaps more so than in other countries. But here, too, the essence contradicts the form....In the traditional capitalist economy, where there is competition between sellers of labour power, between buyers of labour power, and between sellers and buyers, the price of labour power is determined by the resulting anarchy...In contrast to this, in Russia the total amount of real wages and salaries is fixed in advance by the quantity of consumers’ goods planned."

http://www.marxists.org/archive/cliff/works/1955/statecap/ch07-s1.htm#s4

skidmarx on Sat 25, July 2009 @ 16:07

skidmarx — 2009-07-25 16:07:30

Thanks for the elucidation of Cliff on labour power. If he says that "There is no doubt that “oscillations in the market price of labour power” take place in Russia" then it would appear that he thinks that there is a working class that is having its labour power exploited by a capitalist class, but that it is not sold as a commodity because of the lack of choice of employers. In this it would seem to be a similar situation to workers in Nazi Germany or in the contemporary US prison system.

To the extent that I'm making any point here, it is to suggest that where you have an exploited class with a modern division of labour that is clearly not in power, Occam's Razor would suggest that the preesures of global capitalism still determine its nature, unless there are good reasons to think some fundamentally new mode of production is in operation, and I don't see that.

On you point about the law of value: if we abstract from the world economy, a large firm like General Motors is an autarkic entity that plans years in advance. Cliff thinks that what is good for the analysis of General Motors is good for the analysis of the Soviet Union.This is clear in the next section of his book "The Marxian law of value and the Russian economy viewed in its relation with world capitalism" which as I'm sure you are aware ends with the line "The law of value is thus seen to be the arbiter of the Russian economic structure as soon as it is seen in the concrete historical situation of today – the anarchic world market."

When you say "but the fact that capitalism was restored there explains this crisis, and indeed, it cannot be explained without it", I can't agree. The specific nature of the crisis and the boom that precedes it cannot be explained without looking at the way production has shifted to low-wage economies like China that have massively expanded their export markets, but the way Russia and its satellites shifted to oligarchic capitalism with a mere politcial revolution rather than a full-blown social counter-revolution, and China made the transition without even a political rwevoultion, seems to me one of the best pieces of evidence that they were stepping sideways from one form of capitalism to another, rather than dismantling some sort of workers' state. It seems to me that by focussing on nationalisation you mistake essence for appearance, but I would say that.

bill j on Sat 25, July 2009 @ 18:10

bill j — 2009-07-25 18:10:25

Well as you say Cliffs analysis is incoherent. He demonstrates that the law of value does not operate in the USSR - and then in the next chapter demonstrates it does. The advantage of that is you can have your cake and eat it.

If there is only one firm in the USSR - in your example if there was only General Motors running the entire economy - then there would be no competition, what Marx called the motor of the capitalist economy, no exchange of commodities, no commodities (as no one to exchange commodities with), so no profits, no law of value and of course no labour market, so no capitalism.

That the law of value does apply to General Motors today is more obvious than with most firms, it went bankrupt over the summer. After it emerges from bankruptcy its work force will have been reduced from 112,000 in 2006 to 38,000 in 2009.

The social nature of the transformation, i.e. counter revolution, in Russia and China was based on the transition from central planning to the market. This is where the empiricists of bourgeois academia and economy have a massive advantage over the "Marxists" who just make up any old stuff to justify whatever theory they're peddling.

The bourgeois economists simply register that China and the USSR were centrally planned non-capitalist economies before the 1990s - they have enough class consicousness to know what capitalism is after all - they then explain the steps that were taken to re-introduce capitalism there.

Of course the SWP/IS tradition can't accept that. The facts go against their theory. So no sweat, they deny the facts. The purpose of theory for them is not, after all, to explain the world in order to change it, but to explain away the world in order to justify the existence of their organisation. Empirical reality is a tiny obstacle measured against that over-riding priority.

The specific nature of the recent boom was a result of re-cycled super profits from notably China, Russia and the other oil producers. Those re-cycle super profits brought down US interest rates, so enabling the sub-prime bubble, the withdrawal of mortgage equity, the overblown US balance of payments, their increasing dependence on foreign super profits and so on, until the whole thing went pop.

Ask yourself why China and Russia didn't export anything (OK hardly anything) in the period before 1990 when they were not producing goods for export. Russia was after all the second most powerful economy in the world then, yet when it collapsed with capitalist restoration in the 1990s exports actually doubled during that period. Just what you would expect if you had seen the transition from an economy based on a central plan to one based on the sale of things on a market, i.e. commodity production.

The incoherence of the Cliffite tradition doesn't stop there of course. Harman's theory of state capitalism is the opposite of Cliff's, Harman states that the law of value does exist in the USSR - Cliff denies it but again no sweat internal coherence and consistency are a positive disadvantage when flummery and confusion are required.

Oh well, c'est la vie.

skidmarx on Mon 27, July 2009 @ 14:27

skidmarx — 2009-07-27 14:27:19

I'd have to see what Harman says before commenting fully on any alleged divergence from Cliff. Perhaps any divergence can be explained by Cliff's analysis beginning during what bourgeois historians call "high Stalinism",when the impotance of the Plan and the isolation of the economy was at its highest. I do recall Harman, I think in an old copy of Socialist Worker Review, going through many of the East European economies and showing how much private enterprise there was. Last night I watched BBC News explain that Cuba's economy had been hit by the global credit crunch, is it completely out of the orbit of international capitalism?

You say "The social nature of the transformation, i.e. counter revolution, in Russia and China was based on the transition from central planning to the market." I think that's what's known as begging the question. If the working class had been in power in China, I think Marxists would have expected to see some change in the leading force in society in a counter-revolution changing the mode of production. In other state capitalist countries many of the nomenklatura stepped sideways to become oligarchs, exactly what Cliff would expect.

"Ask yourself why China and Russia didn't export anything (OK hardly anything) in the period before 1990", Because their goods were not of sufficient quality to compete on the world market. State capitalism works as an industrialing strategy at certain historical periods, and not at others. It is the increasing inabilty to justify their existence that encouraged state capitalist ruling classes to jump over to the discipline of the market.

Perhaps there is some truth in your account of how the growth of China first fuelled the boom and then precipitated the crash. But I don't see that its re-integration into global capitalism pre-supposes that it was previously non-capitalist in nature. I don't generally see how historical materialism stands up when the choices in an era of potential plenty are extende from socialism or barbarism to the possibilty of some non-democratic supposedly planned state that we can't tell when it will pop in and out of historical existence.

Graham B on Mon 27, July 2009 @ 17:43

Graham B — 2009-07-27 17:43:02

skidmarx, you say:

"Perhaps there is some truth in your account of how the growth of China first fuelled the boom and then precipitated the crash. But I don't see that its re-integration into global capitalism pre-supposes that it was previously non-capitalist in nature."

I watched a youtube video the other day of Chris Harman speaking at Marxism 2009 (debate with David Harvey I think) and he mentions the recycling of profits from China to the US driving the debt bubble, sub-prime, financial crash etc. The problem for him is that this hardly rests comfortably with his continued insistence that the fundamental cause of this great recession is a low global rate of profit that dates back to the early 1970s. He then has a number of approaches to resolving his contradiction, one being that capitalists have indulged in gross financial speculation as returns on productive investment are too low. But this is certainly not true of China where investement was a staggering +40% of GDP, but savings (read profits) were even higher:

http://blogs.cfr.org/setser/2009/06/30/the-savings-glut-controversy-guaranteed/#more-4700

It would be a lot easier if he just accepted that profitability was high prior to the credit crunch, not low.

If, as you believe, the re-integration of China into global capitalism does not imply that it was previously 'non-capitalist', then it's economy was 'capitalist' when essentially autarkic? You can draw an analogy with General Motors, but that is surely just a consequence of the size of the units of capital, even in Marx's day the factory manager was often not the owner. The reason for internal planning, etc. is to better compete on the world market. The same is true of role of the state in capitalist economies, MIT in Japan in the post-war period directed their export drive.

In the absence of international trade (or very little), Cliff had to introduce some other form of competition - military competition - but this would only hold if it could be proven that such massive military spending somehow transformed the economy *within* the USSR to one where the law of value reigned. Call the USSR what you like, and I'm not sure what it should be, but centralised planning, however horribly distorted, is not capitalism. For Haraman to emphasise the increasing importance of foreign trade (not sure about private enterprises) for Eastern Europe is very much the 'tail wagging the dog' in any analysis of the Stalinist economies.

bill j on Mon 27, July 2009 @ 19:12

bill j — 2009-07-27 19:12:55

Its not unusual in a revolution or a counter revolution for plenty of the figures in the ruling elite to transfer from one set of rulers to another. Cromwell was an MP in Charles parliament, then chopped his head off.

Robespierre was a lawyer, then he did the same thing.

Stalin was a revolutionary who lead the counter revolution, indeed according to your account Stalin restored capitalism, many of his nomenklatura started work under Lenin, if you're right then by the same token, capitalism was never restored in the first place.

And so on.

The decisive moment of the restoration of capitalism in China, i.e. the overthrow of bureaucratic central planning, was in the in the late 1980s when price controls were destroyed and market prices established as the governing economic law. The show down was at Tiannanemen, where unemployed workers from the now privatised state owned enterprises, united with the student demands for democracy. Once they were crushed a full blown capitalist economy was established by the mid-1990s.

In the case of the USSR the price explosion took place after Yeltsin in the early 1990s.

BTW I'm not saying anything radical in claiming this, it is the well established in numerous reports by investment banks, the OECD, IMF and so on. Just about the only people who can't see it are Marxists.

Ask yourself this, if the USSR was state capitalist, how come no one, not a single academic or researcher has found any evidence of it, now the archives have been re-opened. Isn't it telling that there is no empirical evidence to support the SWPs theory whatsoever?

skidmarx on Tue 28, July 2009 @ 12:23

skidmarx — 2009-07-28 12:23:01

billj- Are these academics supposed to find a secret memo where Stalin says"Yes we are capitalists?" I think the quote Cliff uses about "We are fifty to a hundred years behind the advanced countries..." is as close as we're going to get.

It is Trotsy who suggested that there couldn't be state capitalism without a full-blooded change of regime because that would be running the film of reformism in reverse.

Graham B - I may try to address your point later.

bill j on Tue 28, July 2009 @ 12:35

bill j — 2009-07-28 12:35:10

No but what they are supposed to find is stuff like balance sheets, profit rates, returns on investments etc. None of which exist. Its not like they've been buried at the bottom of the cupboard and no one has stumbled across them yet.

In 1934 Trotsky said the film of reformism couldn't be run backwards, or in other words in the USSR then capitalism could only be restored with a violent counter revolution. Hitler tried it six years later. Trotsky was right it was very violent. It was called Operation Barbarossa.

60 years later, after six decades of Stalinist oppression and alienation, the working class did not have the same relationship to the state. It did not regard it as something worth defending and so did not defend it. So a violent counter revolution, barring the odd exception, did not occur and was not required. That just shows its a mistake to build a whole perspective off a few remarks of Trotsky made in the mid 1930s. They were not eternally correct but related to a real situation.

The facts are one third of the world were non-capitalist bureaucratically centrally planned economies until the early 1990s. Then a capitalist economy was restored. Instead of central planning the economies were now governed by the law of value, profit ruled. Like I said the before, the huge advantage capitalist theoreticians have over nominal Marxists is they're only in the money. Now they can make money in these countries, whereas before they couldn't. And money talks.

This is the truth. The point of theory is to explain the truth. If it can't then the theory needs to be ditched not the truth.

BTW you haven't explained how the USSR could be capitalist given that as Cliff explained there was no labour market in it.

skidmarx on Tue 28, July 2009 @ 12:37

skidmarx — 2009-07-28 12:37:10

"The reason for internal planning, etc. is to better compete on the world market."

And the reason for internal planning in a state capitalist economy is so that the conditions of existence of the ruling class can be maintained, by ensuring it develops enough not to be swallowed up by other state-capitals,produces enough and the quality of consumer goods to ensure that the working-class does not revolt, and produces enough for itself to keep in a privileged style. Otherwise what is the dynamic of such economies, and where is the working-class in all this if there is no exploitation?

billj - To clarify my point about capitalist counter-revloution, it is socialist revolution that must take place collectively and consciously because of its social nature, counter-revolution can be like the transition from feudalism to capitalism,bit by bit.

Just because capitalist ideologues thought the Soviet Union represented socialism didn't make that true.

bill j on Tue 28, July 2009 @ 12:59

bill j — 2009-07-28 12:59:07

But by the time Trotsky wrote his remark in 1934, about the film of reformism not running backwards, acccording to Cliff capitalism had already been restored for 6 years without him noticing!

Now if capitalism can be restored without anyone realising it, then that obviously poses no problems whatsoever for capitalist restoration in the 1990s when everyone (barring certain Marxists) recognised it.

Cliff said that the USSRs economy was non-capitalist, but because it existed in a capitalist world it was forced to militarily - not ecnomically - compete with capitalist states, and as a result the central plan was impacted by that competition.

That is certainly true. The central plan was very strongly impacted by the need to militarily compete with the capitalist states. But in order to show that the economy of the USSR was capitalist Cliff would have to show that central planning no longer existed. But of course, at the outset, he had said that it did exist, that the economy of the USSR was non-capitalist, a bureaucratically centrally planned one.

Ergo the conditions for a capitalist economy that Cliff would require to be fulfilled in order for his theory to be correct were excluded by him at the outset. Consequently, state capitalism, as a theory is a total non-starter.

And the distinction between military and economic competition is critical. Capitalism is after all built on economic competition. To concede that the economy of the USSR did not economically compete with capitalism is to concede that it is not a capitalist economy.

MatthewGraculus on Tue 28, July 2009 @ 13:36

MatthewGraculus — 2009-07-28 13:36:51

Just when I want to read it the actual article seems to have disappeared. Can you put it back please.

Meanwhile, can I ask Bill J what sort of evidence he would accept to show that the USSR was state capitalist? Isn't the Marxist method more to approach the data with Marxist categories - that's what the debate is usually about.

And I think Bill is exaggerating the role of unemployed workers around the Tiananmen crisis - what evidence please? I'm not denying the potential threat of the students getting much more active support from the working class as being a facotr, but Bill seems to be claiming somthing much more specific. The point remains about the ease with which a bureaucracy, despite some divisions, shifted from one social and political direction to another. How did that happen?

And the points about shifts in the ruling elite are very poor - Cromwell was never a part of the monarchical elite; Robespierre was a minor provincial lawyer in the Third Estate, not a member of the ruling elite of the ancien regime. Silly polemical points I'm afraid.

PR webby on Tue 28, July 2009 @ 17:04

PR webby — 2009-07-28 17:04:33

Apologies not sure what happened there, now restored.

bill j on Tue 28, July 2009 @ 17:09

bill j — 2009-07-28 17:09:27

OK you don't like my comparison with Cromwell or Robespierre. Doesn't get round the fact that according to Cliff, Stalin restored capitalism in the USSR. If this is ruled out in China and Russia then it is obviously ruled out in the USSR too.

What evidence is there that the USSR was centrally planned?

Strangely Cliff provides a reasonable account of central planning, as has already been described above. If you're not satisfied with that try E H Carr. Or Trotsky. Or Mandel. If you're not happy with that and want more contemporary descriptions, the OECD produced an excellent paper a few years ago. Burkett and Hart Landsberg describe the restoration process in their book China and Socialism.

Surely the onus is on the state capitalists - which is - notwithstanding the relative size of the SWP on the British left not by any stretch the consensus of serious accounts of the USSR's economy, to provide evidence that the USSR was not centrally planned?

Graham B on Tue 28, July 2009 @ 19:46

Graham B — 2009-07-28 19:46:30

ISJ 49 (Winter 1990) has Mandel and Harman slugging it out on State Capitalism but there is a more interesting article by Derek Howl, 'The law of Value and the USSR'. What struck me on re-reading it is how competition has been abstracted from economics, any external coercive force is sufficient to make an economy capitalist and there is no reason why this "fundamental pressure should not take a variety of forms."(p97)

It's as if competition in itself can define capitalism; enter military competition as the key for adherents of State Capitalism. Yes, the state bureaucracy in the USSR allocated resources to war production at the expense of the majority of the population and attempted to use the latest technology to improve productivity. So what, has this never happen before in pre-capitalist class societies?

The State Capitalist criteria for defining capitalism seems far, far too broad to me, notwithstanding the changes in capitalism over the last century that need to be taken into account - multinationals, role of the state, etc.

MatthewGraculus on Wed 29, July 2009 @ 12:42

MatthewGraculus — 2009-07-29 12:42:41

Thanks for putting the article back up again.

Actually I'd prefer to discuss the current crisis and Choonara's (very useful) account of different Marxist theories than row about state capitalism - isn't that a bit theological?

It seemed to me that Choonara's account excludes any understanding of the processes of globalization as a factor in all this, which I take to be typical of the IS tradtion since the early 1990s.

You are right about the centrality of falling profit rates in the SWP argument and the dodgy way they have of geting round the evidence.

But on state capitalism - not sure why BillJ is emphasising the question of central planning as a defining feature or critical point. It depends on what you mean by 'planning' - 'command economy' is a useful academic invention. And the traditional response is, 'look at a vast multinational, that's centrally planned, does that stop it being a capitalist enterprise engaged in capitalist accumulation and competition.'

skidmarx on Wed 29, July 2009 @ 13:57

skidmarx — 2009-07-29 13:57:16

MatthewGraculus - sorry if the debate has been sidetracked as far as you're concerned.On Tianenmen I'm also doubtful. It is normal in capitalist societies for the ruling class to use a massive defeat for workers the stepping off point for a new round of exploitation, I don't see why China here is any different.

I think that globalisation has been key to state capitalist analysis from the ouitset, it's why military competition is essential to determining the nature of the economy in a way that wasn't true under feudalism.

bill j on Wed 29, July 2009 @ 14:20

bill j — 2009-07-29 14:20:15

At one level yes I agree with you, the issue of the precise definition of these societies is not nearly so important now, given that they no longer exist. The relevance to this debate is the impact of capitalist restoration in China/USSR/Central Europe etc. on the extension of the world market and the development of globalisation. The problem with the IS position, although not only their position, is that if you already regard these societies as capitalist, then the impact of capitalist restoration is at best marginal to the world economy.

Hence, the instance of Harman and co that nothing decisive has changed vis this period and the last one, (I accept that state cap isn't the only issue here, given that various nominally Trotskyist groups have the identical position, notwithstanding an at the surface at last different view of the nature of these states).

What was that impact? By doubling the size of the world working class that could be exploited by capitalism, removing trade barriers, consolidating the defeats of the working class in the UK/US etc, inheriting a mass of means of production at no cost - which had been previously paid for by the plan - then the rate of profit world wide was restored up until 2007, to levels not seen since the 1960s. Andrew Kliman's graph shows that pretty well.

It was this growth of profits, particularly in the previously non-capitalist economies of Russia and China, which caused the disproportions which lay underneath the present crisis. In short surplus Chinese and Russian (and middle eastern oil exporters) brought US treasuries, lowering interest rates their, creating the sub prime bubble, enabling securitisation, and laying the basis for the present crisis. They also explain the present recovery, China which had been slowing its economy until the end of the summer went into very rapid reverse, its government overseeing a $2 trillion reflationary package, when combining new bank lending and direct subventions, this is lifting Asia out of recession, in fact it already has lifted Asia out of recession, while continued purchases of US treasuries enables the US financial authorities to ride out the banking storm.

What all this means for the future is that China will come out of the crisis immensely strengthened and notwithstanding the depth of the shock last December, the world economy is reviving much faster than even the most optimistic commentators anticipated.

skidmarx on Wed 29, July 2009 @ 16:31

skidmarx — 2009-07-29 16:31:34

So are workers not exploited in command economies?

I might agree that some means of production were bought up on the cheap, but again that's frequently the case when regimes cease to be able to justify their existence, and war or bankruptcy enables a new group, sometimes part of the old, to take control of the means of production. What seems clear is that at no point was the working class controlling the means of production (except for a brief period in Russia, after which the Communist Party substituted for it), so again state capitalism seems a logical description of their structures.

To show how the theory of state capitalism is more than just a description of 'socialist' economies, here's an excerpt from Georges Nzongola-Ntalaja's “The Congo from Leopold to Kabila:A People’s History”(p148):

“The basic goal of the Mobutu regime was simply to reinforce its bargaining power vis-a-vis foreign capital in order to provide the new ruling class with a relatively solid economic base. Made up of the petty bourgeois leaders of the independence struggle and newer recruits among university graduates military officers and rich merchants, this class was the main beneficiary of Mobutu’s dictatorship and the system of patronage built around him. Owing its existence to the place its members occupy in the upper echelons of the state apparatus and to increased state participation in the economy, this class was, by virtue of its relationship to the state, a state[italics] bourgeoisie.As the domestic branch of the international bourgeoisie, the state bourgeoisie constitutes its own capital collectively through the output of state enterprises,royalties,taxes,and so on, as well as individually, for instance, through savings from exorbitant salaries, corruption and the use of state resources for personal ends.”

bil j on Sat 01, August 2009 @ 01:58

bil j — 2009-08-01 01:58:19

Where workers exploited in command i.e. centrally planned economies? Certainly workers had surplus labour extracted which was disproportionately consumed by the ruling bureaucracy. If you want to call that exploitation you can. But they did not have surplus value extracted, as the economy was not run for profit, so in that sense they did not suffer from capitalist exploitation.

The means of production of the old centrally planned economies, which included whole cities, Shanghai, Moscow, Leningrad, and all the attendant infrastructure, were not just bought up for cheap. They were not bought at all. They were appropriated by the newly forming capitalist class from the ex-degenerated workers states for nothing. No payment whatsoever. Hence the organic composition of capital was very low, with very cheap fixed capital costs and very low wages. This was the source of surplus profits which lead to globalisation and the present crisis.

al h on Thu 20, August 2009 @ 05:57

al h — 2009-08-20 05:57:21

Well, which is it? If the rate of profit falling, stagnant or what??

al h on Thu 20, August 2009 @ 18:40

al h — 2009-08-20 18:40:38

Could someone please tell me how you know who wrote the article which is being commented on?

Also, looking at the ISJ article there is a quote from Marx:

"... The distinction between selling and loaning is quite immaterial in this case and merely formal, and…" That is, the worker is exploited not only when buying goods but also when 'buying' loans. It seems that an analysis of overproduction can be applied to finance as well as industrial capitalism. Once too many loans are made, inevitably there will be a crisis when workers can't repay the loans. Capitalism then makes up the difference by indirect appropriation of worker salaries from the government in the form of bailouts, etc.

Is there really anything new about finance capitalism? Marx predicted (among other things) that finance capital would dominate industrial capital. That Goldman Sachs is a winner of the capitalist competition over GM is hardly earth shattering.

Derek Dodds on Fri 04, September 2009 @ 14:28

Derek Dodds — 2009-09-04 14:28:34

As a non-Marxist I am appalled at your quasi-Marxism, after all you can respect someone’s ideas without being totally convinced. Much better than pretending to espouse those views and doing them a total injustice. And no MatthewGraculus, Bill’s comments about the French revolution are not “simply polemic points” but the very antithesis of your beloved Marxism.

Surely for Marxists, if I listened to those lectures properly, the political is determined by the social relations of society (namely class relations). The impression given by Bill, of Cromwell switching sides for fun is surely an insult to Marxist historians like Hill who documented how class forces played out in the English civil war.

No for Marx, capitalism brings forth the socialist revolution, not feudalism. Marxists like Lenin and Trotsky were clearly keen to revise this theory to show how a nascent bourgeoisie were too weak to undertake a role of developing capitalism and how it fell to the working class, itself a tiny proportion of the Russian population, to not only overthrow feudal relations but to take society forward to socialism. From my limited understanding, I believe Lenin was always conscious that the revolution was of workers and peasants and this contradiction could only be resolved by revolution in the heartland of capitalism. Indeed, Trotskyite notions of Russia as a workers’ state (rather than a peasant and workers’ state have only served to distract attention from the real task facing the leadership of the Russian economy). If the peasantry were super-exploited and liquidated in order to bring about the rapid and “impressive” industrialisation of Russia then this cannot be credited to a proletariat that was itself super-exploited. Self-sacrifice in the interests of socialism may have been Stalin’s ideology but it is clear that a class of exploiters, in the image of Stalinism, emerged to ensure that sacrifice and certainly not to endure it themselves.

If Bill had taken the time to read empirical studies on Russia, I recommend anything by Alec Nove (another non-Marxist with a rudimentary grasp of Marxism) he would see clearly that a whole heap of paperwork exists within “soviet societies” in general to show an obsession with allocation of targets and price setting. This allocation of targets and price setting is nothing other than the commodification of labour, be it in a distorted form or not. If the workers do not own the means of production, it is owned by a class centrally (the central state apparatus) and leased to independent enterprises (run by officials taken from the same apparatus) who are responsible for extracting surplus (and who took a large slice of incentives to add to their already high wages) then this is a class relation. The fact that Bill cannot see how accumulation to compete with other states is the external complement of this internal process is because he still subscribes to Stalinist-Marxist economics which says that a national economy can be isolated from the outside world for 60 years. Eventually liberalisation sends out increasing power to the individual enterprises until private ownership is the norm, the mediations from central planning both wasteful and a break on growth (something similar happened in the west). In Russia there is still a great deal of waste and inefficiency, no matter how much it is hidden by the income from oil. There has been no revolution, nor restoration, but the near-final completion of the task to modernise a backward country. A history Marx would consider “bathed in the blood of the peasants and proletariat” , the inevitable unfolding of social relations in a backward non-capitalist country; a history for Bill based on the personality and bad politics of Uncle Joe (a modern Cromwell- bloody turncoat).

Derek Dodds on Fri 04, September 2009 @ 16:41

Derek Dodds — 2009-09-04 16:41:40

Having had my non-Marxist comment on your quasi-Marxist theory of the soviet union it seems only appropriate we return to the main theme, “The cause of the crisis”. Thanks for all these new ideas Bill, I will read more about Robert Brennan and Stagnation theorists. As for the this being an ordinary crisis of an extremely healthy economic body, I beg to differ.

Firstly, you are careful to state that it is important to include financial profits not because money really can generate surplus all by itself (a wholly non-Marxist concept) but that:

“…….by directly lending to consumers, banks increase the rate of surplus value by effectively cutting wages, as workers pay an ever increasing proportion of their income in interest and mortgage payments.”

However, according to those articles I read by Marxists, surely the banks don’t increase the rate of surplus value but take a greater share of surplus value. If they take it from the capitalist directly they are not increasing surplus value but getting a share, so why are they increasing surplus value by getting it directly from a worker? Surely, there is a difference between the volume of surplus value and the rate it is amassed. As a consumer I can be “exploited”, but is this the Marxist concept of the source of profits? It’s certainly true that higher prices make me work harder. It seems Bill that you are becoming a non-Marxist like me.

Secondly, you claim:

“The striking conclusion is not that there were insufficient profits or that the rate of profit was too low, but that there was such a glut of profits that they system could not cope.”

This glut of profits you claim comes from former socialist societies. But the Marxist David Harvey, who also espouses your theory of Capitalism cannibalising former socialist societies, himself asserts:

Throughout the history of capitalism, the general rate of growth has been close to 2.5 per cent per annum, compound basis. That would mean that in 2030 you’d need to find profitable outlets for $3 trillion dollars. That’s a very tall order. I think there has been a serious problem, particularly since 1970, about how to absorb greater and greater amounts of surplus into real production (my emphasis). Less and less of it is going into real production, and more and more into speculation on asset values, which accounts for the increasing frequency and depth of the financial crises we’ve been having; they are all crises of asset value. See Red Pepper

http://www.redpepper.org.uk/Their-crisis-our-challenge

If the rate of profit is so high, then why can’t the productive industries absorb it; especially in the former socialist countries? Why has capital fled to speculation and not expansion of the productive base of society?

Finally, I suggest you read Kenneth Galbraith on the 1929 crash, you will discover that profits were not only “high” prior to the great crash but investment also peaked considerably, not too dissimilar to the current crises. People like you may have felt the underlying economy was strong and healthy by virtue of the “high profits” and “healthy investment rate” that preceded it, but they were wrong, weren’t they?

bill j on Sat 12, September 2009 @ 13:20

bill j — 2009-09-12 13:20:18

OK so you're haughty and insulting Derek. But is there anything when you get past the bile?

Not sure what you're on about with Cromwell. Cromwell was a landlord, but of that section of Southern landlords who's wealth was based on commodity production. In other words he was a capitalist even under feudalism, that's why he led the bourgeois revolution.

Not sure what you're on about regarding the Soviet Union. My point is simple. The USSR was a non-capitalist, bureaucratic centrally planned economy. Trotsky defined it as degenerate workers state. The CIA set up an entire bureau to try to discover common standards to compare it to a capitalist economy from the 1950s onwards, if you want empirical accounts, perhaps you'd want to include that one?. Angus Maddison the foremost bourgeois economic historian has written about it here;

http://www.ggdc.net/maddison/

USSR: Assessing the Performance of a Communist Economy

He points out that the basis for the bureaucratic centrally planned economy was entirely different to the capitalist one;

"In communist economies, private property in means of production was virtually eliminated, and all major decisions on resource allocation were made by government command rather than by market forces. The party elite gave highest priority to investment in heavy industry and to military spending. Consumption shares were characteristically lower than in Western countries.

Basic items were sold below cost and full employment was guaranteed. But consumers had only limited access to commercial services, private automobiles and housing. There was no competitive pressure to meet consumer demand for quality goods, and queuing made heavy demands on their time. Price and tax structures and incentives were different from those in the West. Enterprise profits were simply mark-ups on labour and material inputs and did not reflect

asset scarcity."

Vis Choonara the point is simple. How can you describe globalisation, when you deny the key change, the restoration of capitalism in the former non-capitalist Stalinist states that created it?

Where do I say money can't create profits? Which is indeed a wholly un-Marxist concept. If you're going to slag me off, at least get your facts straight. Again my point is straight forward, Marx asserts that surplus value is created in production, hence financial profits are simply a re-distribution of existing profits. However, by directly lending to consumers, banks "directly exploit" consumers in Costata Lavipitsas terms. Does this mean that banks directly create surplus value? Not really. In practice all they do is reduce a workers wage, as they pay an increasing proportion of their salary direct in interest payments, credit cards, mortgages etc. You could call this direct exploitation of the workers by the banks, or indirect exploitation of their employers - the capitalists who pay their wages - by the banks. It doesn't actually make any diffference. But it does increase the rate of surplus value by cutting wages and therefore increases profits.

David Harvey does refer to the geographical expansion of capitalism, but doesn't think it made any substantive difference to capitalist stagnation. His point about the limits of the capitalist market confirms that. By including a third of the world within the capitalist world market, and doubling the size of the working class, through the restoration of capitalism in the ex-Stalinist states, then capitalism qualitatively increased the size of the world market.

If you want you can read my review of David Harvey's book here

http://www.permanentrevolution.net/entry/1170

And of J K Galbraiths here

http://www.permanentrevolution.net/entry/2079

So why not do some reading yourself?

bill j on Sun 13, September 2009 @ 11:23

bill j — 2009-09-13 11:23:53

BTW $3 trillion is really not that much, certainly not that much by 2030. The World Economy is approximately $60 trillion today so its only a 5% increase, a ridiculously low increase in 20 years. With the restoration of capitalism the size of the world capitalist population increased by around 2 billion, so that's only $1500 each. Nothing to get sweated about I'm sure you'd agree.

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