There is no more important question for the organised working class movement than to deepen their understanding of the nature of capitalist exploitation. It is what will determine whether they confine themselves to a reformist agenda within the framework of capitalism or pursue a revolutionary socialist programme.

MARX spent the greater part of his life studying the political economy of capitalism.

Early capitalism was a progressive force in the development of human society. It broke with the economic and political constraints of feudalism and proclaimed on its revolutionary banners the democratic slogans of "Liberty, Equality, Fraternity".
The capitalist mode of production had brought on the scene vast new productive forces. A truly momentous development in society’s capacity to produce the goods and services on a scale that dwarfed all previous economic systems.
Much has been written about brutal early industrial capitalism, and it was. But it is equally true that over time it raised living standards, facilitated population growth and improved health and life expectancy.
Within living memory, the material conditions of working people have been transformed. Despite the poverty and deprivation that still exists for many people, it does not compare with the bleak material poverty of the interwar years
A dynamic system - periods of incredible growth and development.

Its advocates---none better!

But Marx exposed its basic flaws, and they are serious flaws.

Exploitation is hidden not obvious.
Slave society brutal/ obvious.
Feudalism, first obligation to work for their lord and master/ pay tithes. Direct and obvious.
Capitalism free men and women voluntarily sell their labour power. Paid on the basis of hours worked and their skills.
Employer invests/risks his capital, together with his entrepreneurial skills.
At the heart of the system is the drive for private profit.
For its advocates this is its virtue.
"The greatest good of the greatest number is best served by the pursuit of self- interest." A spin-off from which all society benefits.

Private profit = efficiency

Marx: It is the drive for private profit that is what is wrong with the system.

Workers are not free men and women, but wage slaves who are robbed at the point of production
Labour is the only factor in production that adds value. It is where the employer’s profit comes from: worker works e.g. 8 hours but only paid for 4.

Is therefore the basis of class conflict in capitalist society. Capitalist strives to continually increase profits at the expense of wages and conditions. Workers strive to increase wages and better conditions at the expense of profits. A conflict to which there can be no end under capitalism.

Crises are endemic to capitalism. Capitalism destroys its own markets. Capitalism is shot through with contradictions.

Production for profit requires two things (a) capitalists who own the means of production, (b) workers to work the means of production.

Workers produce things - commodities - not directly for their own use or for the personal use of the capitalist, but for the capitalist to sell for money in the market.

For their efforts workers receive wages, the capitalists receive profits.

The profit comes from the surplus value created by the worker from the hours of unpaid labour he gives to the employer.

However, not all the surplus value is taken in profit by the individual employer.

Profit is what is left after the customer has paid for the article, and the employer has paid wages, paid for raw materials, plant/machinery and for depreciation.

Surplus value is therefore a fund from which different capitalist groups take their pickings----

The Landlord, rent
The Banker, interest
Middleman (merchants) profits, etc

For capitalism to go on expanding the dynamism of the market is all important.

History has shown us however that expansion is periodically brought to a shuddering halt by crises of overproduction, a glut of goods that the market cannot absorb, with devastating consequences for whole generations of working people.

"In these crises there broke out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of overproduction." (Communist Manifesto, 1848).

The 1930s, "The Devil’s Decade"

These years were the classic example of a world gripped by capitalist economic madness. The crisis appeared to come out of nowhere and bewildered the classical economists of the time, who embarked on policies that only worsened the crisis, cutting wages and erecting protectionist trade barriers.

Factories and whole sectors of industry closed down, many never to reopen.
Millions were unemployed. And as one sector after another lost their jobs they lost their purchasing power in the market place, leading to yet more unemployment.
A negative economic multiplier was set in motion, leading to ever deepening crisis.
While millions starved, farmers in the wheat- growing prairie lands of America were paid not to grow wheat. In the fishing ports around Britain, fish catches were thrown back into the sea.
Mountains of commodities of all kinds piled up for which no markets could be found.

Thus we have the classic capitalist paradox of poverty in the midst of plenty.

What causes these crises?

They are dictated by the laws of capitalist production and its inherent contradictions.

The first contradiction is that workers are not only producers but also constitute the principal market to which the capitalist must sell his products. And since the workers are paid wages far below the value of the commodities they produce, they cannot buy back the sum total of their labour, potentially leading to a glut of goods that cannot be sold.

If this were the whole story capitalism would collapse as soon as the first attempt was made to turn commodities back into money.

The market however is made up of more than the purchasing power of workers directly involved in producing commodities. It is a law of capitalism that it is driven to expand and make more profits. Investment in more and new machinery, raw materials, etc plays a key role in creating new markets and expanding existing ones. And if it could go on doing so all would be well, but it can’t.

Tendency for the rate of profit to fall.

The drive to accumulate more and more capital is what fuels the capitalist system. Although the process is uneven, over time competition enforces incessant revolutions in the methods of production. The end result of this is that production becomes more capital intensive –i.e. uses more machines and less labour. This is the long term contradiction that threatens the survival of the system.

Discussion point:

How can this be so? How can investing in more advanced technology cause profits to fall? From the individual capitalist’s point of view, the whole point of investing is to increase their market share and increase their profits, and they do (at least in the short term).

Points to bring out:

The first point to note is that individual capitalists act blindly from self-interest and have no regard to the wider economy, but their actions have an impact on the wider economy.
In their own company, it is likely that they will shed labour as a result of the new technology. Those made unemployed will have less money to spend and will therefore help to cause job loss elsewhere.
Where new technology is introduced production will rise using less labour. But less labour- even if wages rise as a result of getting a small share in the increased productivity-will mean a smaller market.
"This disproportion between the expansion of capital and the relative stagnation of the workers’ demand is the ultimate cause of crises. (Emile Burns p27.)"

"One capitalist kills many". Insofar as such expansion may give the capitalist temporary short-term market advantage in his sector, he will also kill off his competitors, thus further shrinking the market.

Competition and the squeeze on wages.

Both in times of crises and as a general rule capitalists seek to squeeze wages in order to boost profits. And in so doing they threaten their own markets.

Discussion point.

Invite students to discuss the many forms such attacks take. In particular, it should be brought out that many are subtle and not obvious.

Examples:

Less obvious:

Productivity deals
Partnership agreements
Selling conditions in return for wage "increases"
Labour flexibility deals.

Less subtle:

Wage "increases" that don’t match the rate of inflation.

Blatant :

Gender and racial discrimination in wage structures
Exploitation of temporary, part-time and young workers.

What are the likely short-term and long-term consequences of this process?

Social production - private ownership.

The central problem raised by Marx is the contradiction between the social nature of production and the private ownership of what is produced.

There can be no democratic control in such a relationship. From this flows the struggle of social classes, the alienation of work from an integrated life, production for profit, not necessarily for use, the need for a coercive state as a weapon of those in power.

Alienation: Marx drew attention to the way in which workers lose control over their lives by losing control over their work.

Under modern factory and workplace conditions, workers lose control over the process of production, over the products they produce, and over the relationships they have with each other.
Work is soul-destroying, repetitive and monotonous.
Workers are divided against each other on the grounds of skills, gender and race.

The creativity of human labour- that which separates mankind from the rest of the animal world- ceases to have meaning, and the worker becomes a mere cog in an impersonal production process.

Capitalist commodity production is anarchic.

Capitalist production is without plan or order—only aim is to make profit.

Everything is dictated by the laws of the market, not the purposeful order of a conscious plan.

Obviously commodities must have a use value, but that is not the capitalist’s main concern. If guns make more profit than butter….

Consumerism—obsession with material things, “toys” of every kind.

Power of advertising to promote useless and unhealthy products.

Adulteration of our food.

Neglect of health, culture and education.

Destruction of the environment.

Useless, non-productive occupations, sales, advertising, etc.

Therefore whatever claim the champions of capitalism may make for the ability of the system to provide the material things of life, when it comes to the quality of life, capitalism fails the test.

Imperialism—Globalisation.

In its drive for profits capitalism has undergone a continuous process of change. Early capitalist competition led to more and smaller companies going to the wall as they were killed off by their larger, more successful competitors.

Out of competition came its opposite, monopoly.

From the late 1800s corporations and trusts came to monopolise entire sectors of national economies.

State power was used to help these monopolies win access to raw materials in other countries, frequently at the barrel the gun.

As pointed out by Lenin, one of the special features of imperialism is the export of capital- i.e. investment abroad-as distinct from the export of commodities.

The end result of this was the territorial division of the world among the major industrial powers—leading eventually to world wars for the redivision of the spoils.

History manifestly demonstrated that imperialism intensified the contradictions of capitalism.

Today we are living in a phase in the development of imperialism that has come to be known as globalisation, which is further intensifying the contradictions inherent in the system, widening the gap between rich and poor on a global scale.

Globalisation is not some mysterious development out with the control of national governments, as some would have us believe. It is an economic and political strategy driven by the world’s most powerful capitalist monopolies and their national states.

The clear economic and political goals are the unhindered penetration of every part of the world by monopoly capital, requiring the free investment of capital, deregulation of labour and the privatisation of public sector industries and services.

New Labour are not a helpless victim of uncontrollable, mysterious free market forces, but a principal player in using the full force of the British State machine to foster and promote the interests of British state monopoly capitalism.

World poverty and imperialist aggression.

Despite the dynamism and economic growth that have characterised capitalism, precisely because of its contradictions, which are being accentuated as the power of monopoly capitalism grows, poverty and imperialist aggression are becoming more marked:

Of the six billion people on our planet, one billion are severely undernourished.
Daily, our TV screens bear witness to the horrors of third world poverty.
More than two billion lack sanitation and safe water supplies.

In the USA, the citadel of free market economics, 37 million people live below the poverty line. 25% of African – Americans live in poverty. 45 million of its citizens don’t have health insurance.

Yet none of this need be so, and this is the real indictment of capitalism in the 21st century. Scientifically and technically, modern society’s productive forces are more than capable of meeting the basic food, shelter and health needs of the world’s entire population.

However, despite all the talk of making poverty history, the capitalist economic and political system is incapable of doing so. Indeed, quite the reverse. Far from eliminating poverty, capitalism’s science and technology is turned to making ever more destructive weapons with which to bomb all who stand in their way back into the dark ages.

The case for socialism has never been greater, and needs to be taken into our labour movement with a new vigour and urgency.

Discussion Questions

1.When we witness the super profits being made by the oil companies, the banks and financial institutions, and the supermarkets, how can it possibly be argued that there is a tendency for the rate of profit to fall?

2.Marx argued that the key contradiction within capitalism was its tendency towards its means of production to be more and more social in character while its ownership became more concentrated in private hands. (a) Would you say that this is borne out by what is happening in Britain today? (b) If so, what likely consequence has this for class structures and political alliances?

3.Does the export of capital at the expense of domestic investment, not contradict the assertion that capitalism in its search for ever increasing profits is driven to technical innovation?

4.Suggest ways in which capitalism holds back the full development of modern society’s productive forces.

5.Why is trade union militancy on wages, pensions and conditions (a) vital and (b) not enough?

6.Which economic measures today would be most practical and effective to begin making inroads into the economic and political power of the capitalist class?

MORNING STAR
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