Thursday, August 2, 2012

Why There Is No Communist Movement Today?


It took two world wars involving the deaths of over 60 million people, millions of injured and the massive destruction of houses, factories and other buildings to create the postwar conditions that were to prevail in the West. These conditions entailed a most peculiar contradictory development of capitalism. These are one's in which exploitation of the working class itself together with oppression persisted alongside economic protection by the state and eventually by emerging unprecedented social liberalism in the West. This peculiar state of affairs reflects the fragile balance that has persisted for all these years and which is now coming to an end because of the emerging constraints imposed by growing objective limitations. What made this epoch so peculiar was this strategic aspect involving the apparently 'magnanimous' character of Western capitalism. Now capitalism has no choice. It cannot pursue this strategy any longer. Growing costs can no longer allow it. This means that the only choice is capitalism minus these socio-economic frills or world social revolution. Given these conditions this determined that this strategy could not be indefinitely sustained. It was merely a provisional strategy. 
Modern western capitalism today presents itself in socially liberal and social welfare forms giving off the appearance that it solves working class problems. Since World War Two the growing affluence of the Western working class has been extending itself so much so that much of this working class has increasingly lacked any working class identity. Consequently, notwithstanding its negative character, capitalism has been giving off the appearance of itself as a free, just and democratic society invested with diversity and even colour. We are presented with a capitalism that has plausibly realized Gay rights, black rights, travaller rights, children rights and many other forms of civil and social rights. In a sense this liberalism is an illusion designed to fool the masses that they live in a free, just and democratic society capable of capable further expanding its horizons in those directions.
Generally in the West individuals, in a quailfied way, are free to express their views independently of how subversive those views may be. They are even, in a sense, free to organise themselves against the government. Marxists even become professors in bourgeois universities. Given that capitalist society is defined by Marx as inherently oppressive it appears as an inexplicable contradiction that it should have this free and just character in the West while still retaining its inherently exploitative and oppressive character. Capitalism's inherent nature contradicts its plausible appearance. Given these extraordinary contradictory conditions the present capitalist period has been a most peculiar one. Modern Western capitalism has largely provided much of what the Left has  sought through the ostensibly ultimate destruction of capitalism --social revolution. 
Communism has been effectively undermined by this strategy of capitalism's. This is why communism, as a politics and even theory, is virtually non-existent. Communism can never be successful while this strategy of capitalism's is both sustained and sustainable. Western Capitalism, in a sense, has stolen  radical socialism's clothes. As a result it has succeeded in the virtual dissipation of potentially dangerous oppositional forces while achieving the (relative) pacification of the working class. But the bourgeoisie have paid a big price for this unique, even fragile, balance of class forces. It is a balance too that has "artificially" tended to give reformism an extended lease of life. This in turn tends to obstruct the emergence of a communist movement. Instead its role is replaced, in the main, by a plethora of reformist political groups, many of which are disguised as revolutionary  (revisionist).
The bourgeoisie by providing a public sphere within which radical leftism, in its diverse forms, can exist and even burgeon induces 'the more conscious' elements within the working class to mistakenly experience capitalism as an acceptably progressive system merely in need of reforms rather than replacement. The growing integration of leftist elements into the mass media, academia and the institutions of the bourgeois state tends to further domesticate their putative subversive politics. Consequently false consciousness crystallises into a universal reified ideological formation within the working class. This, in effect, leads to revisonism/reformism as the key ideology and politics of the working class.
Complementing social liberalism is welfarism in the form of social protection and the many other benefits that are dispensed to the lumpenproletariat and to, perhaps, a lesser degree the low income strata of the working class. The economic protection of the lumpenproletariat and the working class appear to protect the masses from the harsher realities of life. The upshot of this is the insulation of the masses from class politics and thereby the insulation of capitalism from communist revolution. Elements within the bourgeoisie benefit from what is described as “corporate dole” and other forms of support. This helps keep otherwise disgruntled sections of the bourgeoisie quiet. The farming bourgeoisie and petty bourgeoisie receive financial and other support too. This undertaking by the state helps maintain the cohesiveness of the bourgeoisie. In a contradictory way capitalist society is emancipated from class struggle and thereby revolution. Social reality is turned upside down.
Because of the way in which social welfare is organised and distributed what is, in a sense, a single comprehensive issue, the issue of communist revolution, is split into a diverse number of issues. Generally these issues are experienced as having no necessary connection with each other. Consequently the immediate conditions for a unified class struggle are conspicuously absent. These conditions tend to encourge a plethora of single issue campaigns that have no inner relationship to each other. By splitting the class struggle into a myriad of atomised single issues its inherent subversiveness suffers. The result is identity politics and the marginalisation of class struggle. Single issue campaigners tend to be of the view that individual issues can be realised within the framework of capitalism. They tend to be indifferent to other issues, other than their own, even to the point of not envisaging any relationship between the issues. The splittting of the class struggle into a multiplicity of issues eviscerates it thereby rendering it ineffectual. This leads to the political atomization of the working class. It also renders it easier for the bourgeoisie to confront this atomized working class in a variety of ways that involves playing one element off against the other.
Formerly opposition to capitalism had a more challenging and subversive character. Eventually capital adjusted itself so that it now met much of what this movement was demanding in a superficially emasculated way. It eviscerated the demands of "the anti-capitalist" movement by integrating them into capitalist society. However along with the economic benefits of the social welfarism they proved enough to pacify the bulk of popular opposition. This happened time and time again as if it bore law like qualities. This absorption (defeat) of proletarian opposition assumed a variety of forms. Sections of its leadership turned into the very "thing" against which it had been mounting opposition –the bourgeoisie. Another form was the meeting of its demands in an eviscerated form --expurgated of their substance. The countercultural movement that began in the 1960s is a classic example of this. There were, and are, others such as women’s' rights, black civil rights and gay rights movements. The counterculture involved opposition to many contemporary aspects of capitalism including U.S. military engagement in Vietnam. Eventually capitalism managed to undermine this and other movements by conceding to many of its demands superficially.
 Western Capitalism has assumed its current form as a means of preventing popular opposition from mounting an effective challenge against it. This was achieved by the transformation of sections of working class leadership into bourgeois institutional forms while superficially meeting the popular opposition's demands in a formal way. Initially the opposition appeared to have a more authentically subversive form. Its social welfare policy is a device to keep the working class down while posing as an emancipatory agent. Capitalism in presenting itself as the pioneer of freedom, reason and justice is, essentially, it’s very opposite. This renders it increasingly more difficult to convincingly expose the system and mobilise popular support for communism.
However given the acutely contradictory character of this strategy it has been increasingly bumping up against capitalism's objective limits --the growing tendency of the general rate of profit to fall. The financial and economic crash in 2008 is an acute expression of this growing tendency. Its aftermath has led to inroads having to be made on living standards and conditions of the working class. As the contradictions and objective limits of this historic strategy become increasingly acute social protective measures will have to be atrophied if chaos or social revolution are not to ensue. This socio-economic liberal strategy has become, let me say, too costly. Conditions have been reaching the stage whereby all round cutbacks are becoming increasingly necessary if capitalism is to sustain itself. Capitalism now faces a structural as opposed to a conjunctural crisis. However there is no guarantee that the capitalist class can successfully free itself from its social welfare character in order to avoid revolution.
Under modern capitalism human needs are met in a trivial, unbalanced formal way. These needs are presented as a common popular good conveying the impression that all people are essentially the same and desire the same thing --the market as abstract equaliser. It is, in one form or another, believed to be the sole form by which human needs today can be satisfied. Our behaviour then is conceived as identical for every member of the human species. Behaviour "can be recorded on some central data base." Consequently all humans "have to do to understand how they should behave is to log onto this data base. Given this, human individuals have no hope "of experiencing individual needs, creativity, adventure and innovation." It is this that constitutes the qualitative and significant gap obtaining between any form of capitalism and communist society. It is this gap that cannot be filled no matter what social appearances capitalism throws up. It is intended as a device to deceive and prevent the abolition of capitalism. It is an illusion that envelopes the Western masses. Whereas individual needs are an end in themselves. It is this that only communist society can fulfill. Capitalist success in creating popular satisfaction with such an arrangement is a clear indication that the masses have been pacified and thereby turned into a subject populace. Under such conditions it can never mount a challenge to capitalism. Consequently under these conditions a communist movement can never exist.

The End


Saturday, June 30, 2012

Ireland And The Lumpenproletariat

Today in Ireland the working class is of a fundamentally different character than that of the Irish working class at the turn of the century. This is because what is considered the Irish working class consists of a large element that is ultimately parasitic on the industrial working class. Much of the radical left represents the interests of what Marx and Engels would describe as lumpen in character. It seeks to protect the interests of the permanent and semi permanent unemployed. Much of this stratum has no interest in being employed as registered workers. They are under the naive illusion that capitalism can eternally sustain a massive parasitic social stratum that in a sense shares a commonality with the financial bourgeoisie. Both are parasitic.

The working class at the turn of the century was much more impoverished and deprived than it is today.There was no social welfare protection as there is today. This meant that unemployed workers were generally impoverished and eventually descended into the lumpen working class --even died. Admittedly there was a section of the working class, some craft workers, that was relatively privileged thereby experiencing a more comfortable life style than that of the majority of the working class. Indeed the working class has been and is composed of different strata.

Today what is described as the Irish working class is of a different character. Much of the working class work a three day week or don’t work at all. But they and the so called low paid worker receive a basket of benefits from the capitalist welfare state that bring their living standards up to the level(and even beyond) of the higher strata workers who, prima facie, appear to be better off. But much of this strata may earn less revenue, in effect, than many of these workers from the lower strata. This huge socially protected section of the working class works little and is, in some cases at least, relatively affluent. This allows them to lead a nice social life, have cars and go on holidays etc. This section of the working class tends to have little interest in politics. For them socialism already exists. It has no interest in revolution. This is why there is only marginal interest and support for communist politics. This "working class" tends to be vulgar, anti-intellectual and ostentatious with little depth.

At the moment the surplus value wasted to financially support these strata of the working class is coming from the EU and the world at large including the higher strata of the Irish working class.Right now the Irish state is borrowing billions of Euro to support this strata.Workers from the Irish state sector have had their incomes and conditions of work slashed to support the relatively leisured lifestyle of this semi to fully employed workforce. Some of them have never worked an official day in their life. They get rents subsidised, house purchases subsidised, medical cards, cheap fuel, free baby buggies etc. Many of them can work fifteen hours a week while still receiving their package of state benefits. Some of them don’t even have to get the points generally needed to qualify for university courses because they are considered by the state as vulnerable. Many quangos are financially supported by the state to promote the interests of this so called vulnerable section of our society.

Figures for this state of affairs are not easy to acquire. This is because there is an attempt to hide the extent of the problem from the more highly motivated skilled section of the working class and even middle class.There will never be revolution in Ireland while a mass of people are given "bread and circuses" Much of this section too consists of immigrants too.

Today there is a hidden and open censorship that denies us free speech. If individuals draw attention to this reality they are attacked for being extremely right wing, even racist and fascist. I am a communist and am saying these things.I am convinced that a substantive communist movement will never exist while this parasitism obtains in Ireland. Future generations, our children and grand children, will have to pay for this social parasitism. Because billions are being borrowed to pay for this parasitism the current and future generations will have to suffer by paying for "the vulnerable"in taxation.

I don’t attack social protection being dispensed to the genuine vulnerable. In the Ireland of today the vulnerable are a small minority. The government has actively supported this development as a means of buying votes and keeping the masses well away from insurrection.

Sunday, January 22, 2012

An Outline Of A Model Of The Capitalist Industrial Cycle

The Capitalist Crisis

The capitalist economic system is a cyclical system  of interrupted reproduction of wealth. It is this cyclical interruption that is known as the economic crisis or depression. Consequently invested constant and variable capital is significantly reduced. There thereby follows a significant decline in the scale of the reproduction of wealth and thereby the consumption of wealth by humanity. The result is increased poverty.

Capitalist crises tend to have an inherently cyclical character entailing the indefinite sequential expansion and contraction of the reproduction of capital. The capitalist economic cycle involves sequential phases that regularly repeat themselves. This is the necessary and contradictory form by which capitalism regulates itself indefinitely. It is a form of regulation that is inherently unstable tending to generate political crises, wars and even social revolution. Consequently the sustained  existence of capitalism cannot be guaranteed.

Typical crises have a unique form peculiar to capitalist society. Under capitalism the material destruction of the elements of production occur not as the cause but as the result of the cyclical crisis. It is not because fewer workers are engaged in production that a crisis breaks out. Instead the opposite is the case: Fewer workers are engaged in production as a result of the break-out of a crisis. What appears to be the case is not the case. Reality is reversed. A capitalist crisis is a crisis of overproduction of exchange-values in the form of capital. On the market commodities fail to find buyers thereby rendering these commodities  unsalable. Full employment is the exception rather than the rule under capitalism. At best full employment tends to have a cyclical character. Capitalist crises tend to have a generalised global character.

The intrinsic contradiction of the commodity, the contradiction between use-value and exchange-value, is externalised in the form of the splitting of the commodity into the commodity itself and money. The split creates the general possibility of capitalist crises. This contradiction means that to appropriate use-values one has to be able to buy them. To buy or sell one has to be a buyer or seller. Individuals exist, then, in the form of a buyer or a seller. They need only exist in this narrow abstract form. Power resides in one’s existence in the context of the constraining narrow abstract forms of buyer or seller. This circulation process plays a role in determining the character of the working class and the capitalist class.  Consequently individuals are reified as the personifications of buying, selling and consumption. Consequently success is circumscribed  by the constraints of the reified forms of buyer, seller and consumer. The worker as seller of labour power is only conceived from within that narrow form. This is why s/he is so summarily disregarded by the ruling class. His/her more humanist nature is thereby precluded, except marginally, from conceptions based on this socio-economic. One’s commercial value or status is significant not one's kindness, say, towards others. Consequently one is celebrated as a musician or artist because of one’s commercial success but not for one’s virtuosity and creativity.  Since the worker’s existence is exclusively grounded in this constrained form, seller of labour power, his/her existence concerning every aspect of his/her being is conditioned by this narrow reified form. In past societies this was not necessarily the basis of economy. The separation between the commodity and its money equivalent facilitates the emergence  of  the systems of trade, credit and eventually capitalism. Accordingly these systems of reification conditioned the development of social being in such a way that they indelibly inscribe themselves on existing human conduct.

The Process of Circulation of Capital

The existence of circulation and thereby circulation time means that there is a time interval between sale and purchase or selling and buying. Circulation or the process of exchange rather than ensuring that every sale  matches every purchase excludes any guarantee of the existence of such a condition. Circulation renders Say’s Law (supply creates its own demand) impossible. It prevents any guarantee that sales must match every purchase. In short there is an element of inevitable contingency featuring in the exchange process. It is this peculiar reification of human relations (circulation) that creates these conditions --the possibility of crises.

The circulation process is an inherently contradictory process. It is the necessary social form, albeit reified, by which commodities are distributed. It never guarantees that this distribution and realisation of exchange values will take place. There is thereby, as intimated, an element of contingency entailed in this process of reification. It is a contradiction that entails the existence of both necessity and contingency. This means the process of reproduction of both exchange value and thereby wealth can never be guaranteed under capitalism. This renders the general process  of reproduction itself contingent. It is subject to chance  even perhaps permeated by chance. Consequently the future can never be predicted with any certainty or accuracy. This being so capitalism can never be depended upon to reproduce wealth or to reproduce the present and thereby the future. This is why it must be dispensed with. The capitalist circulation process is both a combination of necessity and contingency. Without chance there can be no novelty, change nor development. However with chance there is the danger of the opposite occurring  -loss.

Many agents active on behalf of the bourgeoisie in times of crisis are forever endeavouring to enhance or improve the circulation system. They hope to render the circulation process more rational and streamlined in such a way that as a mode of realisation and distribution it cannot hinder the flow of commodities and capital through the system. But this illusion entertained by these ideologues indicates their inability to comprehend the nature of capitalism and its circulation process in particular. They are under the illusion that it is the task to restructure the circulation process in such a way that Say’s Law can freely assert itself and thereby create economic freedom. Depending on their political allegiances some are of the view that circulation needs to be cleaned out by eliminating “the debris” (such as oversized banks and excessive regulation) fouling up the circulation sphere. For them the problem  is the lack of authentically free markets. For them  markets are over-regulated.
On the other side the circulation process or the market is too free. It needs much more regulation and interventionism to guarantee that it operates harmoniously serving the interests of the public.

But both sides effectively support the market, in one way or another, believing it to be a necessary social form  of regulation. This means that both sides support capitalism. But today’s massive over-accumulation of debt is evidence that market relations (the circulation process), in whatever form, cannot form a central part of the solution. Neither can they see that the core problem lies much deeper --deep within the heart of the production process itself. The source of the problem is the contradiction that exists within the capitalist process of production itself. This process either has to be  abolished (communism) or cyclically transformed under the freely operating industrial cycle.

Say’s Law

Vulgar economics argued that the total value of commodities is equal to the total incomes of the various classes of society. From this it is concluded that the total production of commodities is at the same time the production of the incomes needed to absorb these commodities. Hence arose the law of markets called Say's Law. This law excludes the possibility of general overproduction. At most it allows for the existence of partial overproduction, overproduction in some sectors alongside  underproduction in others. This, it is claimed, is caused by the unbalanced distribution of the "factors of production" within the economy. The mistake of the law of the markets arises from neglect of the time-factor. It assumes a static system instead of a dynamic one. STOPPP

During intervals between sale and purchase the prices of commodities can vary, in either direction, thereby creating a surplus of incomes or a surplus of commodities without the corresponding change in the money form on the market. Furthermore the incomes distributed during a certain period of time will not necessarily be used to buy commodities during this  period. Only the incomes of wage-earners tend to be immediately and entirely spent. Capitalists are under no obligation  to invest all these exchange- values immediately thereby using them as purchasing power to acquire  goods. With falling profitability many capitalists tend to postpone such expenditure. The hoarding of incomes, non-productive saving, may thus give rise to a surplus of income which corresponds to an overproduction of certain commodities. This, in turn, brings about an initial reduction in employment which may lead to overproduction spreading throughout other parts of the economy  leading to a further decline in employment. In this way the vicious spiral progresses.

Disturbances  may arise from the injection of money into the circulation process. Within the production process fixed capital is gradually written off over a number of years and then all at once replaced by the expenditure of the accumulated depreciation funds. In a smoothly working  system, the annual fixed capital replacements are equal to the annual depreciation allowances. If the age-composition of existing machinery is unequal  or if  business conditions suggest a speeding up or postponement of renewals, orders for replacements will exceed depreciation allowances in some years and fall short of them in others years. This discontinuity in the expenditure of depreciation allowances for capital replacements disturbs the smooth course of the circulation process. This is responsible for fluctuations in employment and thereby profit. The accumulation of depreciation funds is a sale without a purchase, as is any saving, while any investment is a purchase without sale.

Indeed interruptions, delays in sale or purchase, are  the necessary contradictory nature of the circulation process. This form is a necessary condition for the realisation of capital accumulation.  Consequently circulation is both a form of motion and non-motion.

Say’s Law would only tend to hold under conditions resembling  universal simple commodity production. However such an economic system is an impossibility.  A society exclusively producing mere use-values, not values, cannot create overproduction. Increases in the organic composition of capital leading to a consequent downward tendency of the general rate of profit form the general laws of development of the capitalist  mode of production. The capitalist mode of production thus acquires its characteristic rhythm of development. This rhythm  proceeds in the form of cyclical alternate contractions and expansions.

During the crisis phase the commodity split into itself and money is stretched to the utmost leading  inevitably to slump. The long-term tendency of the general rate of profit to fall does not assert itself in a linear form. Instead it asserts itself in a cyclical form. The stages of a classical cyclic model of capitalism are as follows:

Economic Recovery

Under conditions of the over-production of  capital under-utilisation of existing production capacity leads to stock elimination. Consequently the demand for goods tends to exceed supply. Prices and profits eventually start to rise again. Some factories (probably under new ownership) which have been closed  open again. Others operating below capacity eventually increase their operations to full capacity. This encourages capitalists to increase investments. This is because, when demand exceeds supply, less social labour is crystallised in commodities present than socially necessary.  This implies that the total value of these goods easily finds its universal equivalent on the market. The factories operating at higher  productivity levels, higher than the average, realise  super-profits. Less productive enterprises, still surviving after the crisis,  realise the average (normal)  profit. The circulation time of commodities is reduced. Gaps between selling and buying grow increasingly shorter.

The orders for equipment from the consumer goods sector  make possible  recovery in several capital goods sectors. Recovery reduces unemployment and increases purchasing power which stimulates a new wave of investment.

Capital goods production is much less elastic than that of consumer goods. When recovery is well underway an interval appears between the order for additional constant capital and its delivery. During the interval there is a relatively big demand within Department Two for the commodities from Department One that are already available on the market. The prices of these goods will rise faster than the prices of consumer goods. This produces different rates of profit in the two sectors. The disproportion in the two sectors is shifted to prices and profit. Wages tend not to rise at the beginning of recovery owing to pressure from the industrial reserve army of the unemployed  on the labour market. Factories not working to full capacity re-engage workers without any plant change. This tends to lead to a lowering of the organic composition of capital thereby increasing the rate of profit.
The expansion of production is slow at first. The demand for constant capital in the form of new plant and technology remains at a level lower that the supply which implies that the rate of interest remains very low. The coincidence of a low rate of interest with a rising rate of entrepreneurial profit leads to a general tendency by entrepreneurs to renew fixed capital. Investment in new plant cannot be generally undertaken incrementally. Assuming a constant rate of increase in output an individual firm cannot alter its fixed capital at a parallel constant rate.


Much of the available capital flows into production in order to take advantage of the increase in the average rate of profit. Investments rapidly increase. New enterprises are set up  and old ones modernised. The newly launched enterprises raise the average level of productivity. So long as supply is exceeded by demand  prices continue to rise and the average rate of profit remains high. The most modern enterprises realise substantial super-profits which stimulate fresh investment and develop credit, speculation etc.

The disequilibrium between rates of profit in the two sectors is now transformed into a disproportion between the rate of increase of their production. The capital goods sector experiences a burst of frenzied activity.  It causes an increase in demand for consumer goods and even leads to  shortages. Given that demand exceeds supply prices are higher so that the more productive firms earn super-profits. The rate of interest begins to rise. Eventually profit is maximised and aggregate effective demand is met. The cycle reaches its first critical  point. One would expect falling demand to lead to a corresponding contraction in production. Such rationalism is impossible because of the inherent contradictory nature of capitalism. We see here how capitalism’s character obstructs the development of rationalism. In fact its anarchic nature promotes irrationalism. This helps explain why irrationalist ideology and religion is still prevalent.

A contraction of production leads to an increase in depreciation charges thereby raising costs. Capitalists try to overcome this problem by intensifying the use of  the production apparatus and increasing the intensity of labour. An increase in the mass of surplus value is needed to offset the lowering of the general rate of profit. This  implies increased productivity by means of technological progress.

Capitalists cannot know when equilibrium has been reached. Complications such as the publicly unaccountable existence of hidden inventories in the hands of speculators thwart access to such knowledge. Over and above all this, although not unrelated to it, markets don’t feel the effects of maximum productivity until months after that stage has been reached. Production therefore continues to increase. Due to credit expansion this goes on even longer. But ultimately there is a limit to credit expansion. Then banks stop lending money.

Put simply overproduction of capital and thereby commodities is not felt by the markets until months after that stage has been reached. Production  persists even after the stage of overproduction has been reached. Credit relations accentuate this situation. Retailers and the firms in intermediate stages of production have to replenish stocks exhausted due to the depression. Sales increases encourage industrialists to undertake further production which may coincide with stagnation or even slight shrinkage of ultimate consumption. Even when final consumption has been reached factories continue to produce and retailers continue to stock up


As more and more commodities are hurled onto the market the relations between supply and demand change. Some of the commodities produced under the least favourable productivity conditions contain labour time which is wasted from the social standpoint. These commodities have become unsaleable at prevailing prices of production. Thanks to the expansion of the credit system these unproductive factories go on producing for a certain period. This is reflected in the accumulation of stocks, the lengthening of the circulation time of commodities and the widening of the gap between supply and demand. At a certain moment it becomes impossible to bridge the gap with credit. Prices and profits collapse. Many capitalists are ruined and the enterprises that work at too low a level of productivity are crowded out.

The disequilibrium between Department One, the capital goods sector, and Department Two, the consumer goods sector,  first shows itself in the sphere of prices and the rate of profit thus spreads more and more into the spheres of production. The total amount of purchasing power for consumers' goods does  not increase any further or at least very little. But production still continues to increase. Stocks  first grow at the final stage (retail trade) then at the wholesale stage and finally in the industrial enterprises themselves. As this increase in stocks grows the entrepreneurs resist any immediate price falls which would mean a lowering in total stock value --a serious loss. Circulation credit is increasingly sought from banks. The banks themselves would have already extended substantially to  enterprises in this sector. They put off as long as possible any credit refusal. This is because this would bring about the  bankruptcy of these enterprises and so the entire loss of the capital already advanced in loan form. In the case of Ireland the fact that the banks were forced to stop lending to  businesses meant that they lost much of the  money capital lent to them. This increased the losses of the bank and thereby created the situation they sought to avoid. This leads to credit inflation leading to speculation and swindling. This tension on the money market and the finance market comes just before the reversal of the conjuncture and is marked by a sharp rise in interest rates.

Now obliged to put off their investment projects many enterprises use this capital to meet added circulation costs.  (Some may even create hedge funds to conceal their debts so that their enterprises continue to appear to operate at profit ). The orders for capital goods thus increasingly fall. Production starts falling off in the consumer industry. The capital goods sector follows it in a vicious downward spiral.

The rhythm of production in the capital goods sector is governed by the expansion and contraction of production in the consumer goods sector. The capital sector uses borrowed money much more than the consumer sector. This is because of the higher rate of profit in this heavy industry sector. Rises in interest rates hits them harder. Emptying of their order books means falling consumer demand and rising stocks and falling profits due to rising wages and costs.

Demand for circulation credit accumulates. But the supply of money capital declines because the difference between the rate of profit and interest increasingly disappears. Enterprises short on money capital draw out their bank deposits and sell off their property, securities, shares and bonds. This brings about falls on the stock exchange and other financial markets. A snowball effect sets in. The massive burgeoning of  derivatives, especially devices such as credit derivatives more than add to this problem. Banks refuse credit leading to increased bankruptcies debtors dragging down creditors. Soon an avalanche sets in. Investors are forced to sell stock at any price. This is the cyclical character of the capitalist economy.


The fall in prices means that only the enterprises working under the most favourable conditions of productivity survive. Firms with super-profits now have to be  satisfied with average rates of profit. A lower level of average profit is attained. This corresponds to the new organic composition of capital. The bankruptcy and closure of many factories means large-scale destruction of  machinery and thereby fixed capital. The total capital of society is reduced through the devalorisation and destruction of capital. This smaller amount of capital is now more profitable than the previous amount of capital. Indeed it was the previous oversized capital that was the cause of the crisis.

The cyclical movement of capital is thus nothing but the mechanism through which the  general  rate of profit asserts itself. The latter regulates the reproduction of capital and thereby its development and decline. The tendency of the rate of profit to fall forces the adaptation of the amount of labour which is socially necessary, the individual value of commodities, to their socially determined value.  Because capitalist production is not a consciously planned and organised process these adjustments take place  a posteriori. For this reason the regulatory process  necessitate violent shocks involving the destruction of enormous quantities of values and created wealth. Over and above all this it causes damage and destruction of thousands of lives.

The Depression

It takes time for stocks to be disposed of  which means there is no change in unemployment. Many firms have had to use funds normally made use of for the renewal of fixed capital for other purposes. Consequently the activity of enterprises in the capital goods sector is much reduced. The consumer goods sector does not decline as much as the capital goods sector. Even the unemployed have to eat. Perishable goods cannot be put off to another time. Workers’ wages don’t fall as much as the fall in prices which helps keep up the sale of perishable goods. The demand for semi-durable goods does not collapse as much as those of durable consumer goods. Yet durable consumer goods sell more easily than capital goods. In the depression the disproportion between the two sectors will spread to the sphere of prices and profits.

The Return Of Economic Recovery

While the depression lasts industrial activity remains at an abnormally low level. However it never absolutely collapses. There is always some industrial activity. When the rate of profit is very low no reduction in the rate of interest will make any difference to a revival of investment. But the very logic of the stagnation creates the elements of recovery. The contradiction of capitalist stagnation contains the conditions of recovery, As stocks are disposed of thanks to the collapse in production the consumer sector is able to slightly increase its activity. The prices of these goods  find a floor that tends to steady things. It is enough for these enterprises to remain stable for a certain period for these enterprises to start re-equipping. Everything encourages this. The price of raw materials and means of equipment are very low.

Funds at first hoarded make their way back to the banks. There is a reduction in the demand for money capital  because of the absence of investment activity which is why interest rates are low. The low rate of profit which produces recession compels enterprises to introduce new methods of production. Costs of production falls make possible an increase in the profit rate. Investment thereby begins in the consumer goods sector.

Thursday, January 12, 2012

State Education Versus Private Education

Kieran Allen and David Quinn featured on the Pat Kenny show on RTE, Radio One, on 11/1/2012 in relation to the issue of state and private education in the Irish Republic. Kieran,on this show, essentially suggested that education, as provided by state schools, is inferior to that of private schools. Yet ironically he nominally expresses support for state education over private education.

Contrary to Kieran it is questionable as to whether private education, at secondary level, is superior to that of state education. As Pat Kenny indicated the character of the catchment area is of decisive importance concerning quality of education.Kieran argued, on the show,for meritocracy in relation to the 3rd level postgraduate area. Again Pat aptly pointed out that there is a relationship between merit and economic and social privilege. Meritocracy,then, does not,as Kieran intimates,transcend class relations.

The problem with Kieran Allen is that he wants to have his cake and eat it.He is a prominent member of a Trotskyist organisation,the Socialist Workers Partey who claims to be a Marxist. Yet his arguments on radio and television are that of a left liberal(or left Labour Party member). He is forever offering solutions that can make capitalist society more efficient.He wants to save capitalism not overturn it.

Concerning second level education he argues that state education under capitalism is the desired form of education. He never suggests that all education supported by the state is inherently oppressive and designed to mould its "students" into agents of capitalism --bourgeois education. Neither does he see that 3rd level education is bourgeois and thereby reactionary too.

Communists oppose bourgeois education in all its diverse forms. Indeed communists can set up private forms of education which play a revolutionary role in worker education. So even his preference for public education does not hold. Indeed the SWP is a private institution as is its teach-ins (summer schools etc).

It is time for Kieran and other spokespeople for the SWP to publicly out themselves as left liberals. Both the Socialist Workers Party and the Socialist Party are going the way of Pat Rabitte and Pronsias de Rossa.

Kieran Allen's purpose is to fool the working class into supporting him (and his party) under the illusion that he is a Marxist --dare I say Communist.