The Real Movement

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Month: January, 2020

How the breakdown of production based on exchange value altered the terrain of Marxist strategy

At this point we have to ask ourselves two questions:

  1. How does the breakdown of production based on exchange value affect the terrain of classical Marxist strategy?
  2. Why would this impact on strategy have already been built into Marx’s assumptions from the beginning?

To begin to answer these questions it is necessary to understand what it means to say “production based on exchange value breaks down”.

According to Marx in the fragment on the machine, breakdown occurs because direct employment of human labor in production has been eclipsed by machines as the primary means of production of use-values. As machines become more important to the production of commodities than the direct expenditure of human labor, exchange value ceases to be the measure of use value.

In plain English, prices and profits begin to fall, an economic condition economists call deflation. Collapsing prices and profits are a signal to capitalist firms to curtail production. They begin to cut back their schedules, reduce orders, lay off workers, cut wages — all of which only serve to aggravate the crisis.

However, it is important to note that Marx argues exchange value itself ceases to be the measure of use value. This statement does not mean wages, prices or profit are too high or too low; rather, it implies that the very structure of production itself has changed. It is no longer individual production carried on for exchange.

Commodity production has been replaced by a cooperative social form of the labor process, involving the conscious technical application of science, the methodical cultivation of the soil, and the socialization of the instruments of labor for use as means of production by a combined, socialized labor.

Apart from whether society recognizes the material change that has occurred here, the actual transformation of production from individual production carried on for exchange to cooperative social form of the labor process is a real, material alteration in the material economic foundation of society.

As Marx explains in chapter 1 of Capital, use-values become commodities only because they are products of private labor carried on independently. These individual producers do not come into contact with one another until they exchange their products and their products do not exhibit a social character except in the act of exchange. Only by being exchanged do the products of labor acquire a uniform social status as values. The only evidence we have of the uniform social status of use-values as values are their exchange values.

Cooperative social production of the sort Marx identifies in chapter 32 involves no exchange of the products of labor similar to what he discusses in chapter 1 — a fact he even telegraphs by explicitly citing the modern factory example in chapter 1. Exchange value is, therefore, entirely foreign to this sort of mode of production.

This is a big problem for capital for two obvious reasons.

First, Marx traces the origin of money to exchange value. This would suggest that a system that is incompatible with exchange value is, therefore, incompatible with money. Given this, we should expect to see the breakdown of production based on exchange value to be expressed in a massive global monetary crisis of the sort that occurred at the onset of the Great Depression in 1929.

Second, labor power is simply a use-value unique to the mode of production, whose historically specific use for capital is the production of surplus value. If exchange value ceases to be the measure of use-value, this situation is true not only for a newly produced pair of shoes, but also for the labor power of the worker who produces them. If money (exchange value) is incompatible with social production generally, so is the buying and selling of labor power.

This is essentially the argument made by Grossman in his remarkable reconstruction of Marx’s theory of breakdown in 1929 on the eve of the Great Depression: at a certain point in the development of the mode of production, either wages have to be cut continuously or a reserve army must come into being. What mattered is not that wages were too high, but that they would always be too high.

It is also the argument made by Keynes from the viewpoint of the bourgeois class:

“A fall in real wages due to a rise in prices, with money-wages unaltered, does not, as a rule, cause the supply of available labour on offer at the current wage to fall below the amount actually employed prior to the rise of prices. To suppose that it does is to suppose that all those who are now unemployed though willing to work at the current wage will withdraw the offer of their labour in the event of even a small rise in the cost of living.”

“Wages must be cut continuously,” says Grossman, “or massive unemployment will result.”

“Oh, I have a plan for that,” Keynes responds.

So how do you cut wages once and for all?

Simple, if you sever your national currency from commodity money, it now will always express the exchange value of commodities, including labor power, as zero. No matter how high wages appear to be in currency denominated terms, its real (i.e., exchange value) equivalence will always be zero.

Revisiting Mike Macnair’s “Revolutionary Strategy”

According to Macnair, revolutionary strategy is the long-term framework within which communists develop their plans to achieve their goals over a series of tactical struggles. He suggests communists begin with a review of the strategy proposed by Marx, Engels and the classical Marxists in the period leading to First World War 1914 for two reasons:

First. in some respects social conditions we live under in the 21st century are more like that of Marx’s time than they are to the period after the outbreak of World War I. The world market of the late 19th and early 20th century was both more ‘globalised’ and more dominated by finance capitals than the world market that dominated the 20th century with its cold war and imperialist blocs. Also, the workers’ movement was only just beginning to emerge as an organized force. This is much closer to our own situation than the period of massively dominant socialist and communist parties that characterized the 20th century.

Second, World War I triggered a political crisis within the workers’ movement that led to the world historical defeat of the proletarian revolution. The legacy of this world historical defeat of the proletarians remains with us today and forms the subject matter of Macnair’s book. In my view, however, Macnair’s explanation of this defeat is painfully simplistic, irrelevant, if not complete nonsense. Essentially, the world historical defeat of the working class is reduced to the alleged theoretical weaknesses of strategic ideas introduced by Lenin, Trotsky and Luxemburg and the isolation of the revolution in Russia in the 1920s. Per Macnair, the alleged theoretical weaknesses of these communists were transmitted to other revolutions in due time, leading the revolution into a blind alley.

Macnair then makes this bogus argument:

When you are radically lost it becomes necessary to retrace your steps. In the present case, this means retracing our steps to the strategic debates of the early workers’ movement and the Second International, which defined the strategic choices available to socialists in the early 20th century, and in this sense led to the blind alley of 1918-91.

On its face, the argument might seem logical. You’re in a place you have never been before, lost, so what do you do? You try to get back to the last place you can recognize — a place with clear landmarks. You search the horizon, looking for the landmark in the distance that you recognize as the place where you began your journey. You want to use this starting point to reorient yourself.

But there is a problem — a huge problem.

Macnair has made an argument that in some respects life in the 21st century looks more like the period from 1858-1928 than it does the period from 1929-1991. As I noted in my last post, the dates he chose are significant: in 1858, Marx was busy writing what we now recognize as the Grundrisse. In those notebooks, in his fragment on the machine, he made his famous prediction that capital was embarked on a process that would eventually eliminate the need for direct human labor in production. Labor would become superfluous. This would lead to the collapse of production based on exchange value.

The other bookend in Macnair’s time frame, 1928, is equally significant in that it is the last year before the start of the Great Depression in 1929. With the start of the depression, capitalist production began to collapse; as would be expected, commodity money is withdrawn from circulation by its owners and employment collapsed. In one country after another, governments are forced to intervene and sever their currencies from precious metals. Only after governments sever the connection between their national currencies and gold do their economies begin to stabilize. For the first time in human history, no industrial country issues a commodity-based currency. Production based on exchange value had disappeared as Marx predicted.

The problem with retracing our steps as Macnair suggests is that somewhere around 1929 the landscape was fundamentally altered to such an extent nothing that remains is recognizable. There are no landmarks. Our maps are completely obsolete. Where rivers once ran, there aren’t even dry beds. Mountains have becomes valleys.

It is said that no strategy ever survives contact with the enemy. How then was Marx and Engels strategy supposed to survive the collapse of production based on exchange value?

What’s wrong with this statement?

This is from the final chapter of Mike MacNair’s groundbreaking 2008 book, Revolutionary Strategy: The Challenge of Left Unity:

I began this book with the argument that it was necessary to go back over the strategic debates of the past in order to go forward and effectively address strategy now. The primary focus of the book has been to attempt to understand critically the various strategic choices made by socialists between 150 and 80 years ago, rather than echoing uncritically one or another side of the old debates, as often occurs with the left today. It is necessary to follow the former course because those choices have led up to the defeats, demoralisation and disorientation that currently affects the socialist movement internationally.

Notice the timeframe.

MacNair’s book was published in 2008. This would set is his book in the period roughly between 1858 to 1928 — which is to say, roughly between the time Marx penned his prediction that the capitalist mode of production would break down and the actual event, the actual breakdown, in 1929.

In an interview last year on the Alpha to Omega podcast, MacNair had this to say about how the leading Marxists of that period, following the death of Engels, approached their work among the working class:

“We think the capitalists class are going to screw things up really badly. The regime is going to screw things up really badly. We can, by self-help, build up our organization and our skills to the point where when things really do get screwed up, we can intervene and take things over.”

In other words, the leaders of that period leading to the 1929 expected something catastrophic to occur. When it occurred, they expected the capitalists class would lose control of the affairs of society. The proletarians would get their chance to step in and assume power.

This assumption was not spurious. It was the conclusion explicitly projected in Capital, volume 1, chapter 32 as the inevitable result of capitalist accumulation:

“As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialisation of labour and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralisation of capital. One capitalist always kills many. Hand in hand with this centralisation, or this expropriation of many capitalists by few, develop, on an ever-extending scale, the cooperative form of the labour process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common, the economising of all means of production by their use as means of production of combined, socialised labour, the entanglement of all peoples in the net of the world market, and with this, the international character of the capitalistic regime. Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.”

If that projection had not been explicit enough, in 1880, Engels produced a pamphlet that became required reading for all young Marxists of the day — the Communist Manifesto of its time — Socialism. This little pamphlet again reiterated Marx prediction of a breakdown and warned that even if the working class did not seize power, the state would be forced to take over production:

In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.

If the crises demonstrate the incapacity of the bourgeoisie for managing any longer modern productive forces, the transformation of the great establishments for production and distribution into joint-stock companies, trusts, and State property, show how unnecessary the bourgeoisie are for that purpose. All the social functions of the capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital. At first, the capitalistic mode of production forces out the workers. Now, it forces out the capitalists, and reduces them, just as it reduced the workers, to the ranks of the surplus-population, although not immediately into those of the industrial reserve army.

But, the transformation — either into joint-stock companies and trusts, or into State-ownership — does not do away with the capitalistic nature of the productive forces. In the joint-stock companies and trusts, this is obvious. And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.

Okay, so what is my point?

Why waste your time once again quoting stuff I have quoted dozens of times in the past?

Simple: the strategy MacNair is talking about in his book was meant to prepare the working class to act when what we now know as the Great Depression plunged society into the long nightmare. That’s when they were supposed to seize power!

But by that time the workers’ movements were long past the time when they were politically capable of seizing anything — that strategy was thwarted by the Great War.

Nothing can revive MacNair’s strategy of patience — it’s as dead, dead, dead as the Marxists who created it.

Ask Tsipras.