Are socialists just better managers of capitalist exploitation?

by Jehu

It is generally assumed among socialists that society cannot go from capitalism to communism in one leap, but, like Rooksby, I am unclear exactly what socialists think can be accomplished on the day after they get elected or otherwise seize power. If I read him correctly, it appears as if Rooksby imagines self-styled socialists (or what passes for socialist these days) can and must be satisfied to simply manage capitalism for a longer or shorter period of time.

For instance, in this passage, Rooksby seems to suggest even a minimum program of ending wage labor cannot be accomplished from day one:

“The ‘reformist’ way of attempting to resolve the dilemma [posed by the two-stage socialist strategy] … is essentially to kick the end goal [socialism?] into the long grass. For ‘reformism’ the socialist goal is always already not just yet, just over the horizon, relegated to a perpetually postponed future. This is, of course, a kind of bad faith on the part of those apparently committed to the attainment this end goal (though not necessarily on the part of Bernstein for who, famously, the ‘ultimate goal’ of socialism was nothing, the ‘movement’ everything).

But the ‘revolutionary’ resolution of the dilemma has always seemed to me not to be a resolution either. Indeed it’s the mirror image of the ‘reformist’ side-stepping of the terms of the problem. Crudely, it pivots on a kind of in-a-flash-everything-is-transformed semi-millenarianism. Few ‘revolutionaries’, of course, argue that we can move straight to socialism (first comes the transitional period of ‘the dictatorship of the proletariat’ after the ‘seizure of political power’) – but the point is that the idea of ‘the revolutionary seizure of power’ serves as a kind of magic-bullet solution to all problems and as such it is not really a solution at all but a rhetorical dodge.”.

As best I can understand him, Rooksby’s argument is based on practical difficulties that will be encountered after socialists come to power:

  1. All capitals cannot be expropriated on day one.
  2. The economy would remain substantially capitalistic for some time.
  3. Control of strategic firms within the economy would not be enough to carry through a socialist program of abolition of wage labor.
  4. Investment would thus remain in the hands of the capitalists even as political power was in the hands of the working class.
  5. Foreign trade would have to be managed with an eye to balancing imports and exports.

The above implies that:

  1. The socialist government would still need foreign exchange.
  2. The country would still have to be economically competitive.
  3. Wages could not rise faster than the productivity of labor; which means (conceivably) the revolutionary government will be on a collision course with the unions.

The first time I read Rooksby’s essay, I was as depressed as he was. “Jesus,” I thought, “This socialism shit is harder than I imagined.”

It took a few readings before I finally realized Rooksby wasn’t talking about managing a socialist society at all; he was talking about how difficult it is to manage capitalism. At the base of this depressing list is the core assumption that for some time the economic basis of production would be substantially unchanged, i.e., there would still be production for profit. A socialist government would secure bourgeois democracy, but the task of abolishing production for profit would still lie in the future.

Which raises a big question in my mind: I know the major social democrat parties of Europe have long since abandoned the goal of ending wage labor, but who are the so-called ‘revolutionary’ socialists who think we cannot move to socialism on day one? It seems to me that the lessons of Greece and Venezuela demonstrate not only can we move to socialism on day one, we have to move to socialism on day one. How long can you have a working class that claims to rule society, but daily sells its labor power to capital and submits to its extortion? Isn’t this a recipe for failure?

Capitalism, is production for profit. If you allow production for profit to continue, the mode of production will assert its own laws. Certainly there are limits to what a socialist government can accomplish on day one. For instance, we can’t immediately usher in full communism, i.e., the principle of to each according to need, but why can’t we immediately begin to bring wage labor to an end, i.e., the principle that he who does not work, neither shall he eat?

If I understand Rooksby correctly, he thinks the immediate aim of socialists is to eliminate the worst abuses of capitalism. That might have been sufficient in 1848, but it seems to me a socialist government in 2015 cannot be limited to this. The immediate aim of a socialist government must be to put an end to production for profit, to abolish wage slavery. This does not immediately create a communist society based on the principle of each according to their needs, but it does put an end to the parasite classes that live off the labor of others. The abolition of wage labor and production for profit should begin immediately with the assumption of power of a socialist government on its first day in office.

Which means, at least as far as I can tell, the election of a socialist government should see business confidence collapse as investors realize the party is over for good. We should see capital flight, a collapse of investment, a string of bankruptcies, and the whole nine yards. If capitalists are still investing on the day after your socialist party takes the reins of government, it is probably not as socialist as it claims to be. And if some capitalists are too dumb to realize you are a socialist government, you can very quickly convince them with a few measures.

Does business confidence matter?

QUESTION: Who in Washington thinks balance of payments or inflation matters? Do you think anyone in Washington cares about the trade deficit?

ANSWER: Nobody in Washington gives a flying fuck about the balance of payments deficit — nobody.

Likewise, nobody in Washington cares about the Federal deficit. Nobody in Washington cares about inflation. And nobody in Washington cares about capital flight either. Capitalist investment goes wherever profits are to be made and inflation is just a number — the Consumer Price Index doesn’t even measure inflation! Economists try to frighten socialists and workers with tales of economic horror if socialists come to power, but no one in Washington has ever made a decision based on worries over inflation, federal deficits, trade deficits or capitalist investment moving offshore.

In fact, to be perfectly honest, even fucking socialists don’t care about that stuff when it comes to their silly attempts to ‘fix’ capitalism. For instance, when Lapavitsas was trying to save Greece capitalism, he had no problem with 20% (even 50%) collapse in the purchasing power of wages denominated in his proposed new currency, the neo-drachma. Here is what he said at the time:

“If the exit was agreed and protected, and given where and how unit level costs have gone in Greece — in other words the destruction of labor, which of course has to be reversed but we cannot go back to where we started because that’s just not possible — then it’s possible that Greece would need only 15 to 20 percent devaluation because of the rearrangement of costs. Again, I repeat: wages must rise, but even if they rise, you’re not going to go back to where you were. It’s just not feasible at the moment. We need a growth strategy for that.

A devaluation of 15 to 20 percent right now might be sufficient to get the country going rapidly. If there was a devaluation of 50 percent in the case of contested exit and so on, there would be more problems for imports, of course. What you’ve got to appreciate, though, is this: devaluation would not work simply, or mostly, through exports. It would work through the domestic market, more than exports.

To save Greece capital, Lapavitsas was willing to sacrifice 50% of the purchasing power of wages of the working class. If Lapavitsas would do this to save capitalism, why would we care about inflation or capital flight or trade deficits when our job is not to save capitalism but to kill it?

Ending wage labor on day one

What does it mean to end production for profit? Contrary to popular opinion among socialists, ending production for profit does not require you have completely nationalized the economy and subjected it to a central plan. Centralized control over factories has nothing to do with control over social production.

Since all surplus value (profit) is the function of the duration of the social labor day, a socialist government has to slash hours of labor immediately and promise to keep slashing until all production for profit is abolished. Profit requires surplus value, surplus value requires surplus labor time; abolish surplus labor time and you abolish surplus value. Eliminating the production of surplus value is simply a matter of reducing hours of labor until there is no more surplus labor time.

How far do hours of labor have to be slashed to eliminate all profit from production of commodities? Today, this will take quite a big reduction. We already know the public sector is funded entirely by surplus value. In the United States, this public sector amounts to 40-45% of the total social labor day — the percentage is even greater in most European countries. Thus, without further ado, socialist can immediately slash up to 40% or more of the workweek, at least sixteen hours from a 40 hours work week — either outright, or phased in over a very short period of time.

Now, if you end production for profit, what do you think the capitalists will do? If they can no longer invest profitably in one country, they will move to another country. Duh! What is surprising about this?

Capital is supposed to leave your ‘socialist motherland’, because the capitalist can’t make a profit there anymore. I mean, really, what part of this do socialists not get? Now, if you need the capital, as was the case in the Soviet Union immediately after the revolution, that is another story. But does anyone really think the US suffers from lack of capital? If you drive capital from the United States, it now has to go to the less developed regions of the world market, like Africa, and invest in production there to make a profit. Why would socialists have a problem with accelerated investment in Africa? Why would you care about capital flight?

At some point, socialism seems to have taken a sharp turn away from the idea of immediately ending wage labor. Socialists began to argue that immediately ending wage labor was as ‘utopian’ as immediately creating a classless, stateless society. In place of the immediate aim of ending wage labor, it appears all socialists (not just social democrats) have begun to propose their own Thessaloniki Program of marginal reforms consistent with the continuation of the capitalist mode of production. How socialists ended up in this dead end is beyond me, but they certainly did not begin there. There was a time when ending wage slavery was the immediate aim not only of socialist parties but even the best unions.

Here is the thing: If you want to manage a business, you need to go to business school and get your MBA. Then you do an internship. Then you work for decades moving up the ladder until you get to the corner office. However, although you now might be qualified to run a company and produce a profit every year, you still are not qualified to run a capitalist economy. Put a Goldman Sachs guy, like Hank Paulson in charge of the Treasury and you end up with the sort of disaster we experienced in 2008. Managing a capitalist economy is not the same thing as running a business, although some socialists seem to think it is.

And managing the transition to a fully developed communist society has nothing in common with managing a capitalist (or mostly capitalist) economy. Our aim in the former is to convert the unpaid hours of labor into free disposable time for the whole of society.

The economic implications of eliminating production for profit

The immediate task of a socialist government is to end wage labor and production for profit. This is why you immediately reduce hours of labor to make production unprofitable. If you just reduce hours of labor to 24 hours per week, Washington would be forced to slash its spending. Once Washington’s spending is cut, the entire defense industry (pure profit for capital, by the way; because it produces nothing the working class can consume) will collapse overnight. Along with the collapse of the defense industry, subsidies for agribusiness, education and big Pharma will evaporate.

Although most socialists never make the connection between labor and profits, all of this spending in Washington is funded out of the unpaid labor of the working class and all of it will be gone as soon as hours are reduced. Moreover, tens of millions of workers will be displaced from their jobs and the only course the socialist government can follow is to further cut hours in order to share the work that remains.

But that is not all: At the same time, constant capital will be devalued and prices of commodities will plunge, suddenly making the US the low cost producer in the world market. Since capital in the US is devaluing (bankruptcies) and prices are falling (deflation), the US will be able to undersell all other countries. Capitalists sitting on trillions of dollars of US public debt will have to face up to the possibility that their lent capital is now worthless. Once this capital is devalued, the pyramid of global debt built on it will soon collapse as well. Trillions of dollars in excess capital loaned to the federal government will suddenly become worthless;  while the mountain of fictitious debt based on it will vanish.

Companies will be driven to bankruptcy, forced to merge and forced to find new export market for their capital — exporting the crisis into the world market. Those countries competing against US corporations will have to follow suit and reduce the prices of their capital and commodities or lose market share. US imports will collapse, sending shock waves out to those countries that rely most on exports to the US and exporting the crisis there. While US deficit spending will collapse and no longer serve as a haven for excess capital within the world market.

Our job is not to save capitalism, but to kill it

And all this would take is a single measure: a reduction of hours of labor from 40 hours to 24 hours. Within days of a committed socialist government coming to power in the United States, capitalism as a global mode of production will have essentially disappeared. There would not even be time enough for a civil war. It seems to me that socialists don’t have a clue how little it takes to bring down capitalism world-wide, if you hit it in the right place. Hit capitalism in the right place and use the right tools, capitalism will implode right in front of you. That is what almost happened in 2008. If Washington had not stepped in and bailed the planet out, capitalism would have disappeared. This time, however, Washington would not be there to step and save capitalism.

Some socialists seem to think we too should be stepping in to save capitalism. It never occurs to them that our job as communists is not to save capitalism, but force it to implode. One of the big sources of Rooksby’s pessimism, I think, is that he is trying figure out how to keep capitalism alive under a socialist government (so that we can eventually kill it?). Surprisingly (or perhaps not), it is really a lot more difficult to figure out how to keep capitalism alive under a socialist government  than it is to just bite the bullet and kill it.