Thursday, November 18, 2010

The Underconsumptionism of Molyneux and Taft

Below is a response to an article written by John Molyneux who is a leading member of the British Socialist Workers Party. It was published on the website on October 10th 2010.

My piece endeavours to show that there is no essential difference between the politics of John Molyneux and Michael Taft from the Labour Party. Both view the current Irish economic situation from a utopian underconsumptionist reformist perspective as a means of containing the workers through deception.
Michael Taft and the SWP have been both promoting the patriotic defence of the Irish capitalist economy by calling for more state spending in order to save capitalism. They form part of a broad alliance extending from elements within the media (David McWilliams), much of the trade union leadership, Sinn Fein, the Socialist Party and the Socialist Workers Party (Ireland). Indeed virtually the entire “left” leadership of the Irish working class are calling for increased state spending. What chance has the Irish working class in the face of a leadership that waves this exclusively bourgeois programme in its face. With the exception of the odd isolated voice there is no revolutionary alternative being offered in Ireland.

“..., Keynes (and Taft) only grasps one aspect of the crisis of capitalism, namely the problem of over-production, or ‘lack of effective demand’ (which Marx, incidentally, had analysed as early as The Communist Manifesto of 1848) and not the problem of the ‘falling rate of profit’.”

But the above remarks of Molyneux indicate his identification of overproduction with ‘lack of effective demand’. This is an indication that he does not understand the nature of the law of the tendency of the general rate of profit to fall. This law creates a tendency within capitalism to periodically overproduce capital and commodities. The problem then centres around overproduction and not ‘lack of effective demand’ or underconsumptionism. In this respect there is no difference betweenTaft and Molyneux.

“In Capital Vol. 3 Marx shows that capitalism, a system based on production for profit, nonetheless generates a tendency for the rate of profit to fall. This is because all profits derive from the ‘surplus value’ extracted from labour (‘surplus value’ is the technical term used by Marx to refer to the gap between the wages paid to workers and the value of what they produce).However, each individual capitalist tries to increase their share of the total profits in society by investing more and more in labour-saving machinery. This has the effect of reducing labour as a proportion of total outlay and thus reducing the overall rate of profit (the proportion of profit to total investment). When the rate of profit falls capitalists become reluctant to invest.”

Again Molyneux demonstrates in the above piece his inability to grasp the nature of Marx’s Capital. The falling rate of profit is not, as he claims, the problem. The problem emerges when capital fails to generate enough total surplus value to compensate for the fall in the rate of profit.

“Keynes’s ideas were generally not accepted in the thirties (though Roosevelt’s New Deal in America could be seen as a kind of partial, and not very successful, Keynesianism) and the Depression was only brought to an end by the Second World War which ‘stimulated’ economy activity and ‘restored full employment’ by slaughtering 50 million people.”

The above remark of Molyneux’s suggests that the slaughtering of 50 million people was the underlying cause of post-economic recovery and full employment. According to this crazy logic the solution, then, to the current Irish economic downturn is the decimation of the Irish people.

It was the massive defeats suffered by the working class from, let us say, 1914 onwards, the enormous destruction/devalorisation of capital caused by world war and the stimulus provided to the US economy by the Second World War itself that provided the basis for post-war economic recovery lasting intol the early seventies. The post-war mixed economy was introduced to placate the western working class. In that way capitalism hoped to create a pacific working class that would not threaten a capitalist system that had been shaken to an unprecedented degree by both economic and political events.

“When a Keynesian economist like Michael Taft, Political & Economic Researcher with Unite union, says: “Expand demand – more spending, not less, is what the economy needs to maintain and expand business activity... You can’t cut-and-tax your way out of a recession – you spend”, it is a breath of fresh air compared to Cowen and Lenihan’s cuts.”

Further evidence of the underconsumptionist ideology that Molyneux shares with Taft is the following quotation from his piece. The only distinction is that he does not think that Taft is radical enough in his demand raising action programme:

“And when Taft demands, ‘A flat-rate base pay increase between €25 and €30 per week,’ and says “Re-introduce pay-related unemployment benefit’ [quotations from his article of November 2008 Towards a New Economic Narrative] the workers’ movement should certainly agree.

Unfortunately neither Keynes analysis nor Taft’s proposals go nearly far enough to solve the crisis or point a way forward for the working class. The problem with Michael Taft’s understanding is not one of his proposals not going “nearly far enough to solve the crisis or point a way forward for the working class.”

The above piece shows too, which is not unrelated to Molyneux’s radical underconsumptionism, that for both of them the problem is merely one of quantity as opposed to quality (not going “nearly far enough”). Michael Taft’s proposals suggest that the problem is merely a distributive one. To sort the problem out, all that is needed, for Taft, is a change in income distribution in favour of the working class and its lumpen edges. In other words a revolutionary change in the character of society is not necessary merely a radical adjustment within the capitalist mode of production.

“You can’t cut-and-tax your way out of a recession – you spend.”

But the capitalist class can just do that. As John Molyneux in his piece observes “Whenever there is a serious economic crisis, as there obviously is at the moment, ... the ruling class responds, as it always does, with vicious cuts and mass unemployment...” This is because it is the only course open to the bourgeoisie. It does not engage in such an offensive out of malevolence. Indeed such an offensive poses risks for the ruling class itself. When profitability falls dramatically leading to a serious international economic crisis. To restore profitability and create the conditions for real recovery the general rate of profit must be restored by means of devalorisation of capital (including constant and variable capital), destruction of capital and an increase in the rate of surplus value. The latter, the rate of exploitation, must increase to such a degree that total surplus value produced compensates for the insufficient rise in the general rate of profit. This means that the technical composition of capital must increase significantly leading to big increases in the productivity of labour power. Tied in with this is the need for significant increases in the centralisation and concentration of capital. So the capitalist state’s offensive against the working class also involves a reconfiguration of capital itself whereby weaker capitals go to the wall. The result is a leaner meaner capitalist social system with numerically (proportionally speaking) less but bigger capitals. This is why it so absurd to hear puny shows like Frontline and Prime Time run programmes that discuss the issue of these bad Irish banks that will not give loans to poor Irish businesses. The reason these loans are not advanced to them is largely because they are weak and thereby unreliable investments. These bubble businesses need to be crowded out so as to open up space for the more powerful businesses to expand capital. You don’t solve an economic problem by artificially increasing demand to save these businesses when it is these very bubble businesses with their bubble jobs that are, in a sense, the source of the profitability problem.

Indeed the very problem facing the Irish economy is the fact that the banks supported by the Irish state have been providing, in a sense, enormous artificial stimulus to the economy. This is what led to the burgeoning of bubble businesses in one form or another. The Irish state was spending in a most generous way. Yet Taft and Molyneux want a continuation of Ahern’s generosity by other means. Yet he has been be among the first to attack that very government liberalism –and that of former finance minister McCreevy. Right now the state is doing precisely what Taft seeks spending beyond its means. This in itself is a form of economic stimulus that Taft advocates. And John Molyneux wants this too.

The Irish state does not have as its function the well being of the working class. It exists to serve the interests of capitalism. And capital is not immediately concerned over issues such as unemployment, the living standards and well being of the working class. It exists solely to serve the interests of the ruling class. If it can do this under conditions in which the working class have a standard of living that is very low There is really social force concerned with the living standards of the working class and that is the working class. So John is right when he says: “First it must be understood that when Taft says ‘We’ should expand, there is no ‘We’.”

Cutting taxes imposed on the working class and increasing state spending by a capitalist state cannot serve as a proletarian solution to the present economic crisis (heading towards a political crisis too). At best it can only amount to a capitalist solution. Yet the Left insists on making such patriotic calls to rescue capitalism. Revolutionaries are not in the business of rescuing capitalism. Their business is the destruction of capital along with its state. Apart from this their bourgeois action programmes are no more than mere attempts to engage in populism in the hope that they can win votes at the hustings and thereby ultimately become a new capitalist government. But an underconsumptionist programme that includes increased public and private spending is not a solution to the problem either from a left or right perspective. Underconsumption is not the cause of the crisis and has never been. The economic crisis is a crisis of the over-production of capital. Under capitalism commodities are not produced simply to provide use-values. They are primarily produced to increase surplus value. Use-value production is merely a medium for the production of surplus value in the form of profit. When the capitalist production of use-values increasingly fails to produce and realise surplus value as profit then it correspondingly discontinues its use-value production. This leads to the existence of unsalable commodities such as houses and other properties along with household goods. These use-values loose their value as commodities. In effect they cease to be commodities or forms of capital. The greater the fall in the general rate of profit the greater is the over-accumulation of capital in the form of commodities.

Declining economic activity persists until the conditions for profitable production are restored. This happens under conditions in which capital has been both destroyed and significantly devalued. The price of labour power will have fallen too –even below its old value. Capital will by then have become more centralised and concentrated. Under these conditions there is a takeoff will tend to take place. However there is no guarantee of this. It depends on a number of factors including the character of the political situation –whether or not an acute political crisis obtains. It is only under these circumstances that the state can effectively provide economic stimulus leading to a takeoff. However to launch an economic stimulus prematurely can only compound problems either in the short or long run making economic conditions ultimately even worse. People like Michael Taft and John Molyneux are guilty of making premature calls for government induced stimulus. Do they think the Fianna Fail government want to get up people’s backs by increasing taxes and cutting spending? Such measures neither please the working class, the middle class nor even some of the weakest sections of the capitalist class. The current government is serving the class interests of the bourgeoisie by adopting tax raising/cost cutting measures because they have no choice. This is what capital, in general, requires if capital is to recover. This is how the economic crisis acquires an increasingly political character. This too is why the principal bourgeois parties don’t substantively differ with the government as to what needs to be done. Sinn Fein, The Socialist Party and the SWP can call for as much spending as they like because they stand little chance of becoming the next government.

“This is why, going beyond anything Keynes would have proposed, we need demands that challenge capitalist control of the economy such as demands for one publicly-owned bank which serves the people, and for seizing the assets of the rich. Ultimately we need a workers’ movement to take control of the government and the state, that is, we need socialism.”

The comments above contain a paradox. To seize the assets of the rich (presumably this is Molyneux’s euphemism for capitalist class) the capitalist state must be destroyed by the working class. There cannot exist a capitalist free society alongside an Irish capitalist state whether apparently controlled by the workers’ movement or not. It is a contradiction. The indigenous state must be eliminated and replaced by the organised and democratic workers power. But the biggest problem is that a such a form of political power is not possible under world capitalism. A relatively powerless country such as that of Ireland would prove too weak to defend itself against world capitalism. A capitalist free Ireland would be encircled by imperialism. Consequently it would not be too long before the power of the indigenous working class would ignominiously collapse. The likely bloodbath entailed would not make the effort worth it. Revolution has to break out first in imperialist countries such as the US, West European countries such as France or Germany. From these powerful centres it spreads to weak countries such as Ireland. Notwithstanding the utopian contradictory claim that ”ultimately we need a workers’ movement to take control of the government and the state” Molyneux, as we above, still advocates an interim underconsumptionist programme.

Given that revolution cannot be consolidated in Ireland communists must be all the more internationalist in their perspective and politics. They must have transcended narrow nationalism substituting it with internationalism. Those that seek an Irish revolution are essentially seeking to achieve 19th century national self determination under the guise of being communists. Their nationalism is a form of Stalinism that can only but arrest the world revolution. They misrepresent the nature of both capitalism and revolution. In the light of this there is no place for the official programme of the SWP and the Socialist Party in Ireland.

“If public spending, wages and employment are increased, as the Keynesians and socialists both want, the capitalists will likely respond with an investment strike which, if they are left in control, will again plunge the system into crisis and throw workers on the dole.

On the one hand avoiding the need for the massive cuts and job losses being imposed by the likes of Fianna Fail or the British Tories, and on the other avoiding the need for major working class struggle or – God forbid! – revolution. Keynes also appeals to some quite radical people who either think his ideas were more radical than they really were or simply doubt the possibility of a real anti- capitalist struggle.”

The above comments of John Molyneux’s make sense. Taft advocates Keynesian policies as a means of diverting the Irish working class away from major struggles against capitalism. As a bourgeois ideologue he see underconsumptionist ideology as a device for containing struggle and saving capitalism by deceiving the working class.

“This was because, it was claimed, the laws of the market, left to themselves, would produce the best possible allocation of resources and indeed make any prolonged period of mass unemployment or recession impossible. Government intervention in the economy was not only unnecessary, but positively harmful as it would upset the spontaneous and inevitable restoration of balance and equilibrium.”

But, in a sense, the neo-liberal remedy outlined by John Molyneux above is correct. Keynesian type spending today can only store up the very economic and financial problem that devastatingly manifested itself in the West over the last two or so years. Increasing interventionism by imperialist states to mitigate recession and maintain equilibrium since the early seventies have ironically led to the very economic difficulties that are becoming increasingly unavoidable. Increasingly it is becoming impossible to continue this interventionism because it is rendering future problems even more acute. Because the capitalist class fears the mass popular mobilisation of the world’s working class that it is reluctant to engage in any full frontal attack on the working class. An attempt to radically reconfigure capitalism is full of danger –even dangers from elements within the bourgeoisie itself leading to splits within it.

“What was required was to increase, not cut, public spending so as to raise the purchasing power of the population (what economists call ‘effective demand’) and thus stimulate demand for goods which would in turn generate more production and more employment in an ongoing upward spiral (a ‘virtuous’, as opposed to a ‘vicious’ circle).”

To the objection, heard then as now, that such an increase could not be afforded, Keynes argued that governments should run a deficit i.e. borrow so as to spend above their income for a period, on the assumption that as the economy expanded so the government’s income from taxation would increase and the deficit would be eliminated.”

In the aftermath of the war governments did largely follow the policy referred to above. But rather than reinforcing stability it led to hyperinflation and stagnation.

There are only two solution to the current international economic crisis: social revolution or reconfiguration of capitalism at the expense of the working class. The latter will entail the a defeated and demoralised working class forced to work for wages less than the value of labour under conditions that are much worse than they have been. There can be no solution, contrary to Taft, in which the price of labour power of living and conditions of work improve within capitalism.

Both Michael Taft and John Molyneux are prisoners of an underconsumptionist reformist ideology designed to disarm the working class. The chief distinction between them is that the latter presents a more radical underconsumptionist programme with utopian rhetoric opportunistically tacked on to it. Both programmes are designed to diarm the working class in the face of an onslaught by the bourgeoisie.