Theory of decline and capital, part 2

Hillel Ticktin concludes his discussion on the theory of decline by examining its forms as capitalism makes way for a higher society

How does the decline of capitalism and the transition to socialism differ from the previous declines and transitions discussed earlier - see part 1

The former is both spontaneous and conscious. All previous systems went into decline spontaneously, almost automatically, without anyone understanding what was happening. They did understand that they were in decline - but very late, when their cities were conquered, when forms of government became ever more oppressive, or when there were huge levels of unemployment and the proletariat was bribed with bread and circuses. But they did not understand that feudalism was in decline when the crusades were launched or when merchant bankers were beginning to play a considerable role in the economy. The new mode of production came into being without being foreseen or planned.

By contrast the new mode of production after capitalism can only come into being as a planned society, controlled from below. In other words, it has to be both democratic in a way which has never existed before and planned in the interests of the direct producers by the direct producers. Obviously this implies the need for a political party.

The fundamental aspect of socialism/communism is that it is a society in which for the first time humanity becomes conscious of itself and takes its future directly into its own hands. This is only possible when humanity is no longer struggling with itself, but is able to act in the interests of everyone both as individuals and as a collective. We can look at human society as one in which there has been a constant struggle, on the one hand, to subdue nature, but also, on the other, to establish a social form adequate to that subjugation of nature. In other words, the social form of labour for the production of humanity’s needs can only be attained with communism.

Such a society cannot come into being either piecemeal or in one part of the world. This has been proven by what happened to the USSR. It requires to be introduced as a new system over much of the globe simultaneously. Some people have therefore argued that it is an impossible undertaking, not only because it must be a world system, but also because it has to be introduced as a whole system “all at once”. Milovan Djilas, who accepted the doctrine of socialism in one country, nonetheless argued that it was very difficult to introduce a new system at one moment - in contrast to capitalism, which developed into its fullest form over centuries.

Such people are forgetting the very concepts of decline and transition. Just as the various underdeveloped forms of capital came into existence in a declining feudalism, so distorted forms of the future socialist society have come into existence. It is perfectly true that socialism cannot be built out of nothing. It has to be based on existing society and its conditions.

In other words, in the period of the decline of capitalism there must a decline of all the old categories and movement towards the new. The move from capitalism to socialism is qualitatively different from that of feudalism to capitalism, in that socialism cannot come into being in the interstices of capitalism. The new society can only come into being when the world capitalist system is overthrown, but before that time pseudo-socialist and proto-socialist forms can exist. They are not socialist, but they do conflict with capitalism - at the same time as they prop it up.

Decline of abstract labour

In the period of decline of capitalism the fundamental categories of capital themselves undergo change. Value is increasingly replaced by organisation and management. Just as Marx pointed out that inside the firm ‘planning reigns’, so today government intervention, nationalisation, monopoly, cartels and implicit agreements are crucial in the declining market.

The basic contradiction within capitalism shows itself in the form of the opposites of exchange-value and use-value - and so abstract labour and concrete labour. The social form of labour under capitalism is, of course, abstract labour. If value is in decline, so too must the categories of labour-power and abstract labour.

The category of abstract labour is crucial for the operation of capitalism in four respects.

Firstly, because the labourer is reduced to the level of an abstraction, he is alienated both from his product and from his labour process. He is alienated from his species-being - ie, estranged from himself - and so from his existence as a human being and from humanity itself. He is also alienated from nature. The concept of alienation is therefore subsumed into the category of the abstract labourer.

Secondly, every worker is placed in a similar position within the capitalist system and within the division of labour. Hence the potentiality of a collectivity is established in the form of the working class. That is why in the USSR, where of course there was no abstract labour, genuine collectivity was virtually impossible.

Thirdly, it is abstract labour which is the basis of value itself. Alienation, the working class and value are the three fundamental categories which flow from abstract labour: “the qualitative characteristic that individual labour must present itself as abstract, general social labour only through its alienation” (K Marx Theories of surplus value Vol 2, London 1969, p504).

(There is a corollary: under socialism abstract labour will be abolished, along with value. Calculation of labour time therefore becomes only approximate. One labour can only be compared to another with abstract labour.)

Within capitalism the full flowering of abstract labour can only take place with the development of modern industry and so modern machinery. In other words, it is only with mature capitalism that we have established the true nature of abstract labour. Embryonic capitalism has only embryonic abstract labour.

With the development of abstract labour comes the homogeneity of the class and its ability to perceive itself as such. Abstract labour allows it to become conscious of its exploitation and of the need to reject its position as abstract labourers, wage labourers. This gives rise to the formation of trade unions and working class political parties.

Put another way, these conditions create the potential for consciousness of exploitation and the need for change. But at the same time they also produce the fetishism of the commodity - which induces the worker to accept his lot as producing quantised labour.

However, both the rejection of capitalism and the actual movement of capital itself - towards the production of machines by machines - undermines abstract labour. While only socialism can actually get to that point, capitalism moves in that direction and so throws millions out of work. Capital as capital can only use such workers unproductively in finance, advertising and the retailing of goods and services.

At the same time, the spectre of the future socialist society demands that health and education take social forms, while other sectors like transport and housing are also controlled, if not financed, by the state. In other words, sometimes these sectors are openly nationalised, particularly in periods when capitalism needs to make concessions, while in other periods these sectors are privatised but retain strong state involvement.

The point is that workers in these sectors cannot be reduced to abstract labourers of the earlier kind. At most they constitute a kind of hybrid form. The workers remain exploited, but they are not a homogenous entity.

Where does this leave the class? At first sight, it might look as if it is weaker, but in reality workers are no longer fetishised or controlled in the same way, allowing them to develop a general political consciousness in relation to the state and society as a whole. At the same time capital cannot permit this, so it attempts to subjugate workers to capital by finding ways of turning them once more into abstract labourers - proletarianising, for example, thousands of civil servants and education workers. In reality, this is impossible and ends in a muddle - but the muddle is sufficient to provide a common enemy.

Decline of law of value

Nationalised property, needs-based sectors, giant firms, the joint stock company itself, with its evolution towards increasing control by managers and bureaucrats - these are all forms which conflict with the essence of capitalism, which requires private property, owned by an individual, a family or a series of individuals rather than anonymous funds.

Finance capital, of course, understands the problem. Hence its imposition of what is called neoliberal or Thatcherite forms. But they cannot work over the medium to long term. These are utopian measures.

The various forms whereby the law of value has been replaced or supplemented constitute, in my view, forms which also contradict the operation of the law of value. As argued above, they also and necessarily change the relations of production. Concretely nationalisation prevents capitalists taking part in a particular sector. Furthermore, individual capitalists will normally object to such sectors - for example, the local government-owned construction firm operates without controls and cannot be competed with. There is nothing to stop such a firm from undertaking all state construction if the government so prefers - or, for that matter, all construction which covers its marginal costs - as long as government operations cover its fixed costs.

While state sectors often have the potential for unstoppable expansion unless reined in, the interface between the government and the private sector has become even more corrupt than in earlier periods. Private firms contracted to local councils have been notoriously corrupt, but the arms sector is equally notorious for overcharging the government. The point is that prices and profits are determined outside of value as a social relation, instead adopting a combination of administrative or bureaucratic relations and capitalist-worker relations.

Profit and targets

The welfare state, pensions, the reduced reserve army of labour (or indeed its absence) - all these imply a change in the sale of labour-power. It is still being sold, but the worker has limited forms of defence or control. The very act of bargaining for a price for his labour-power implies a degree of control. One can argue that this is a new, refined capitalism, but in reality it then malfunctions because the aim can no longer just be profits.

Capital, as always, still bases itself on profit as the bottom line, but in order to judge whether they are getting there individual firms use targets. Indeed the actual profits can appear as a consequence and not as the aim. The target may be to become the largest firm in the sector, to increase sales by a given percentage or to improve quality, etc. Profits are dependent on other variables and the extent of their dependence is such that firms can disaggregate them to the point where the individual components become semi-independent entities. In other words, the internal planning of the firm goes a step further. In certain industries the use-value may have to come first as a target, as in the case of precision instruments or items the quality of which is crucial to life.

Decline and decay

In theoretical terms, if a system and its internal forms are changing but it is not overthrown, certain consequences follow. It will malfunction to an increasing degree. That malfunction does not necessarily mean that it is in perpetual crisis, but it does mean that parts of the system begin to decay. Decay here means absolute decline towards extinction. An overripe system, in other words, begins to go rotten.

Decay in our society is shown by:

  • the enormous role of gangster outfits like the Mafia, Yakuzi, drug lords and the growth of drug production and consumption
  • the reduction in production over large parts of the world, at the same time as the majority do not have enough to eat or to clothe themselves with
  • the extensive spread of diseases like aids, TB and malaria, when they could quickly be dealt with if enough money were spent on research and free medical provision. The present threat of avian flu is another instance where the fact that only one firm - Roche - is providing the vaccine is preventing the provision of the required quantity
  • the never-ending wars and massacres
  • the stupidity of many of the doctrines now expounded - from ‘intelligent design’ to ‘new age’ theories (parts of the left are not excluded from this whole process)

Finance capital

The development and increasingly parasitic nature of finance capital provides another illustration of the decline of capital as a whole.

Britain was the first country where finance capital evolved as such. Money capital and industrial capital were originally merged, but the demerger created the new form of capital, which then partially transferred itself not just to the colonies but also to what became its competitors. The latter, however, could not exist as competitors, as opposed to subordinates, except through very close connections between banking and industrial capital, not to speak of the importance of the government.

Whereas in Britain finance capital was able to achieve its aims through indirect means of control, the latter countries had to do it directly. Concretely this means that in the case of Britain finance capital could obtain its share of surplus value through interest, rent, insurance, management fees, etc, with overseas investment all existing in separate institutional forms from industrial capital. The flow of investment went through finance capital. This was not self-sustaining, but industrial capital tended not only to pay a considerable proportion of surplus value in the above ways, but also in the form of dividends and the direction of funds to investment trusts.

The result was that finance capital came to control the potential for growth and the renewal of the existing capital stock. As long as it was simply a question of slow growth or no growth, industrial capital could remain operating along its own lines, fundamentally supplying finance capital with its source of funds. Once that changed, although individual firms might be able to raise their level of re­investment, the system required both much higher levels of investment than could be sustained by individual firms and also a more even investment to allow inputs, spare parts and machine tools to attain the quality required. This flow was then regulated by finance capital to the point of possibly not permitting much of a supply of funds at all. In this way the separation of the two forms of capital was reinforced.

In short, the characteristic of finance capital is that it attempts to raise its own rate of profit above an otherwise existing typical rate by using either unproductive capitals or less developed capitals with lower organic compositions and higher rates of surplus value, which may or may not be in the same country. In its crudest form it amounts to an outflanking operation in relation to the working class.

Finance capital is an abstract capital which has shifted away from its concrete form as fixed capital to one in which it becomes the form only of realisation in the process of circulation. In so far as it does so, it is parasitic, since capital can only exist as a unity of its two aspects, and any attempt to emphasise the one over the other only leads to a seizure. In this case, the sucking dry of fixed capital leads to the decline of capital itself, but not before the forms by which it does so have exhausted themselves. The essential point is that Britain had a particular social structure predicated on its head start in the industrial revolution, which outlasted its industrial decline. Thus it had a particular form of capital and a particular form of labour.

Finance capital’s chief characteristics therefore are:

  • It is capital in a form which attempts to make money out of money. As such it is not attached to any location. It becomes abstract capital, abstracted from the real economy.
  • It is parasitic - drawing value from the productive sector and subjecting it to its own nature and demands.
  • It draws other sectors in the circulatory process into its orbit. It starts from finance and thus banking, but extends to insurance, the retail sector, the property market and then to any sector which is able to extorts rents from the economy, such as pharmaceuticals, oil, etc.
  • It is chiefly concerned with the short term and the extraction of maximum returns.

As abstract capital it can organise or ‘plan’ the economy and society in the interests of the ruling class. In fact it can do so internationally. More accurately, it can plan the strategy and tactics of the class and for that purpose the economy.

Forms of waste

Finally, the decline of capitalism can be demonstrated by its increasing wastefulness, which is revealed in several ways:

  • The maintenance of a reserve army of labour in the form of unemployment. True, this is unable to operate under modern circumstances in the developed countries, with workers moving in and out of employment, but the real level of unemployment in the developed countries is nevertheless high - and much higher still in the underdeveloped countries (in South Africa the level of unemployment among the majority black population is officially over 40%, but probably even higher). In the UK the official levels are around three to five percent, but the number of people on the disabled register, the prematurely retired, together with those who have given up trying to get a job, may add up to around 20% of the workforce.
  • The cyclical nature of production and consequent underutilisation of resources, such as agriculture or steel, which are taken out of production, even though the needs of society require them. The surplus produced continues to increase and so too does the extent of underutilisation. It is dealt with by closing down plants or taking land out of cultivation.
  • Non-productive sectors like advertising and finance. Advertising today occupies a very large proportion of economic activity - newspapers, radio, television, films, packaging, hoardings, etc. Although some informational advertising will always be necessary, the vast bulk serves the purpose of creating or intensifying wants and is both undesirable and wasteful - not to say harmful, as in the case of junk foods and tobacco.

The financial sector today is vast, including as it does banking, insurance, property, pensions, stocks and shares, etc. The percentage of the workforce employed in this sector is considerable and rising. Most are better paid than other workers, sometimes receiving vast incomes.

  • Over-rapid obsolescence or production skewed towards forms dictated by the rich. Eg, private cars rather than communal transport.
  • The maintenance of a huge defence sector, an apparatus of repression and the destruction of human talent. Whole populations are liquidated in wars.
  • The market. Competition involves a massive duplication of effort, as well as the underutilisation of resources. Monopoly, on the other hand, leads to a restriction in production, reduction in innovation and rise in bureaucratic forms.

Within capitalism it is obvious that competition is able to achieve more than monopoly/oligopoly. However, the comparison that ought to be made is between capitalist competition and a genuinely democratic planned society.

Originally published in the Weekly Worker


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