Friday, 31 August 2018

Friday Night Disco - Will You Still Love Me Tomorrow - The Shirelles

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 7(10)

End of The Boom and The Limits of Economism

I don't accept the argument that it was a breakdown of working-class community that led to defeat in the 1980's. It had not led to defeat ten years earlier, in the Miners Strikes of 1972 and 1974, or in the struggle to release the Pentonville Five, to defeat In Place of Strife, and so on. In fact, even in 1981, Thatcher was forced to retreat over pit closures, having to wait until 1984 before they were strong enough to launch their offensive. Nor can the role of Stalinism nor social-democracy explain the defeat. The role of the latter has been a constant going back 150 years, and the former had played a treacherous role for already half a century by the 1980's. The cause of the defeat, as with every other defeat, in every other long wave cycle, was that the economic conditions turned against the workers in conditions where their only strategy was based on Economism and where they had no history of building up independent working-class property and self-government, as bulwarks from which to defend or advance their position. Indeed, they had less of that in the 1980's, as a result of welfarism than in previous such periods. The most obvious manifestation being the development of a “dependency culture”, that turns them into modern day serfs, and recreates a paternalistic society.

Paul examines Italy as a case study to illustrate his point. In fact, the picture provided by Paul confirms some of the points I have set out earlier. For example, he writes,

“Real wages had risen 15% in the decade to 1960. The major industrial brands invested heavily in canteens, sports and social clubs, welfare funds and designer overalls.” (p 204)

He goes on to illustrate the further point I made earlier that this new more technological capitalism also requires a different, better educated kind of labour-power, and so the number of students, in 1968, was double what it had been a decade earlier. The problem for capital was that, at the point that its boom phase starts to falter, towards the end of the 1960's, as labour shortages push up wages, and squeeze profits, all of these students came increasingly from the working-class. At the time of the 1926 General Strike, the majority of students came from the middle class; they were a significant element used, however chaotically, and dangerously, to drive buses and trucks, as part of a scab army of strikebreakers. The problem for labour, however, was that its agenda was still based upon economism, and a focus on what it was against, rather than what it was for. The point is illustrated in this quote given by Paul,

“We set off; just the seven of us. And by the time we got to the head offices where all the staff hung out, there were about seven thousand of us!... Next time we'll start with seven thousand and end up with seventy thousand, and that'll be the end of Fiat.” (p 205)

This is the kind of mindless strategy of the SWP, ironically reminiscent of the mantra of Bernstein that the movement is everything, whereby everything is seen simply in terms of building the next, bigger protest/demonstration etc. Even if it had been true – and, of course, half a century later, Fiat is still with us – the question arises, as indeed with the Occupy Movement, what then? The Fiat workers still required jobs, other workers still required cars, trucks and so on, in which case putting an end to the existence of Fiat would have been a reactionary step, not a progressive one! It's rather like the quote given by Nye Bevan about the General Strike, where the government said to the TUC leaders that if the strike continued the government would fall, and power would then fall to the TUC. “Are you ready to assume that responsibility?”, the Ministers asked, and at that moment, Bevan notes, the TUC leaders knew they had lost.

Its Time For Field and The Labour Right To Put Up

The vile, right-wing MP, Frank Field, quit the Labour Party before his own party members kicked him out.  His party members, almost unanimously, from those on the Left to those on the Right, had combined to pass a vote of no confidence in him, after he had lined up with the Tories, and thereby kept Theresa May's government in office, at a time when we had the opportunity to kick them out.  It's not the first time that his members have done so.  They voted to deselect him 20 years ago, but in typically undemocratic fashion, the party leadership of the time overrode the democratic decision of the party, and bureaucratically reinstated Field, as the party candidate.  Yet, those same Blair-rights, today, have the nerve to talk about the party being controlled by small undemocratic cliques!

Field is just the latest of these right-wing MP's, and Councillors who have been rejected by their party members, and who have jumped ship, to try to save face, and who have then thrown out ridiculous allegations, to try to give some kind of cover to their decision.  As I wrote a month ago, we saw a similar thing with John Woodcock, and with various council leaders.  The use of the charge of anti-Semitism is clearly just a convenient means of justifying their decision to leave, whilst enabling them to implement their scorched Earth policy, of trying to throw as much dirt at Corbyn and Labour as possible, in the hope that, no matter how ridiculous the charges, some of them might stick.

Field has followed the well trod path, after it was pointed out that he has resigned, now, only after his party passed the no confidence vote in him, and was about to ditch him, of claiming that the vote against him was based on thuggery, and small undemocratic cliques.  But, the vote against him was near unanimous, combining opposition from left and right within his local party!  But, this ridiculous charge of thuggery and intimidation is one that the Labour Right have thrown out willy-nilly as standard fare.

When Angela Eagle had the window of her office broken, at the time she was challenging Corbyn for the Labour leadership, the charge was made that it was Corbyn supporters that were responsible.  No evidence was provided for that claim, and, as far as I am aware, no one has ever been charged with the offence.  No one doubts that some Jewish Labour MP's have faced vile anti-Semitic attacks on social media, and they are quite right to demand that the party support them against such attacks.  But, again, the impression was given that these attacks were being made by Labour Party members who support Corbyn.  In fact, all of the cases that have come to court, where people have been apprehended by the police, for having made such attacks, have been not Labour Party members, but supporters of right-wing groups, as with the killer of Jo Cox.

What about the charges made by John Mann and others that "Marxists", or members of Momentum, or Corbyn supporters, sent his wife a dead bird in the post, when, according to Daily Mirror Associate Editor, Kevin McGuire, on Twitter, that incident happened in 2012, long before Corbyn was Leader, long before Momentum ever existed! And, McGuire points out, Mann has form in making such unsubstantiated claims in the past.  As I pointed out in April, decent Labour Party members, like Marc Wadsworth, who have a proud record of fighting racism, are facing disciplinary action, whilst the Labour Right throw out unsubstantiated accusations.

Field claims that he has faced "thuggery" in his party.  In that case, he presumably knows who these "thugs" are.  So, presumably he has reported them to the party, for action to be taken.  Indeed, if what he has faced is actual thuggery, then he will no doubt have reported those thugs to the police, won't he, for them to take action?  But, of course, no such thing has happened, because what Field calls thuggery is actually only the fact that the majority of his party members oppose him, and his vile politics, which have led even Bishop Peter Selby to describe him as a racist, whose views are as bad as those of Enoch Powell.  What Field and the other right-wing Labour MP's and councillors describe as thuggery, is only the fact that the majority of the party disagrees with them, and is calling time on them, and they no longer have Blair, and a bureaucratic right-wing party machine to override the wishes of party members and keep them in their cushy jobs.

If these right-wing MP's actually are facing real thuggery from party members they should report it to the party, and indeed to the police, rather than simply throwing out these unsubstantiated accusations.  Its time for them to put up or shut up.  Field claims that he has the backing of tens of thousands of Labour voters in his Birkenhead constituency, and that that is more important than the opposition to him from party members.  If he actually believes that, and the same goes for all those other right-wing MP's that have come out to support him, over the last 24 hours, they should again put up, and show they have the courage of their convictions.

Now would be an excellent time for Field and the Labour Right to test their argument.  Field, like Woodcock, having resigned the Labour Whip should immediately stand down as MP's, and stand for election on their own ticket.  If their argument is correct that it is their own wonderful personal qualities that is responsible for them being elected, and not the fact that they simply stand as the Labour candidate, with the backing of thousands of Labour Party members who go out to get them elected, then they should be eager to prove that point, and set an example for all of those other right-wing Labour MP's who claim the same thing.

So, is Field and Woodcock rushing to resign their seats, so as to stand in a parliamentary contest in their own name?  Not likely, because they know the truth that throughout history all such endeavours have seen such candidates disappear from view, once they no longer stand under the Labour banner.  Even when they split from Labour to form the SDP in 1981, in far more favourable conditions than exist for them today, they quickly dissipated, and ended up having to liquidate themselves into the Liberals.  Ironically, today, one of the original Gang of Four, David Owen has given a large donation to Corbyn's Labour, and says he has no problem with Corbyn as Prime Minister.  And, for all their claims about some silent majority being eager for some centre party to be formed that they can vote for, the fact is that such a centre party already exists.  It is the Liberals, and that centre party got annihilated in the 2015 election, and again in the 2017 election.

The Labour Right will not split to form such a centre party, because they know it is doomed.  They will continue to throw out their ridiculous and hysterical charges to try to do as much damage to Labour as possible, and will, like Field and Woodcock, simply resign the Labour Whip, individually, as their party memberships vote to ditch them.  They will not, of course, then put themselves up for election as independent candidates, because they know they will lose badly.  But, the truth is that Labour also cannot allow these destructive elements to remain as Labour MP's, until after the next election, because at that time, they could undermine a Labour government, and would, as with Field, Hoey, Mann etc. simply line up with the Tories.

Its time for the Labour Party to tell these right-wing MP's to go, and to test their support with the voters, by standing in their own name.  Its time the party introduced mandatory reselection, and that local parties started selecting decent candidates that reflect the views of the party, and who will fight the next election on that basis.   

Theories of Surplus Value, Part II, Chapter 17 - Part 64

[12. Contradictions Between Production and Consumption under Conditions of Capitalism. Over-production of the Principal Consumer Goods Becomes General Over-production] 

Capitalist production has been analysed as dividing into Department I, means of production, and Department II means of consumption. In Capital II, it was also described how Department II itself divides into IIa, the production of necessaries, and IIb, the production of luxury items. In terms of supply, of production, workers produce all of the commodities in Department I and II, and yet, in terms of demand they only buy the output of Department IIa, though, on occasion, when wages rise above the value of labour-power, or revolutions in productivity reduce the value of some commodities, in Department IIb, they may also buy some of these. But, the majority of IIb is bought by the exploiting classes – the capitalists, landlords and rentiers, and their lackeys within the state. Workers never buy the commodities that comprise Department I, because they do not own their own independent means of labour. As Marx points out, this illustrates the nonsense of the idea that producers and consumers are coterminous. The landlords, rentiers and their lackeys produce nothing, and yet they consume the output of both Department IIa and IIb

The workers, because they use the instruments of labour, and process means of production, thereby consume these commodities, as part of the production process, but although they thereby consume these means of production, they are not buyers of them. Only the productive-capitalist is a buyer of means of production, although they do not thereby consume them. Workers then are precluded from being buyers of a whole series of commodities, of which they are nevertheless the producer. 

“They are never direct consumers or buyers of this large part of their own products, although they pay a portion of the value of these products in the articles of consumption that they buy.” (p 518) 

The fact that it is their employer who represents them in the market, in the purchase of these means of production itself demonstrates the difference in the conditions under which this purchase takes place and the possibility it thereby creates for crisis. Incidentally, this is also the difference between the free labourer, and the slave as outlined by Marx in The Grundrisse. It's not only in respect of the purchase of means of production that the slave owner represents the slave in the market, as purchases of means of production, but also as purchaser of the slave's means of consumption. So, the slave or serf occupies no different role, no more independent position than does a beast of burden, or a machine, or other element of constant capital that must be maintained

If we take the petty commodity producer, in order to continue to produce, they only need to ensure that, in selling their commodities, they are thereby enabled to reproduce the means of production used in their production, along with their own wages, i.e. the value of the means of subsistence required for the reproduction of their labour-power. But, that is not the case for the capitalist. The capitalist, in selling commodities must not only reproduce the value of the means of production, and the wages of their workers, they must also realise the surplus value contained in those commodities. At the very least, if the capitalist does not realise this surplus value, they cannot fund their own basic consumption. But, the capitalist does not advance capital even just to be able to barely subsist. The capitalist advances their capital in order to increase their wealth, and also to be able to produce sufficient surplus value as to be able to accumulate capital
“He therefore requires a wider market than they would require. It depends, moreover, on him and not on them, whether he considers the conditions of the market sufficiently favourable to begin reproduction.” (p 518-9) 

It makes their ability to produce, and therefore, their ability to consume, dependent upon the capitalists consideration as to whether the potential profit from such activity is adequate. 

“Thus nothing is more absurd as a means of denying crises, than the assertion that the consumers (buyers) and producers (sellers) are identical in capitalist production. They are entirely distinct categories. In so far as the reproduction process takes place, this identity can be asserted only for one out of 3,000 producers, namely, the capitalist. On the other hand, it is equally wrong to say that the consumers are producers. The landlord does not produce (rent), and yet he consumes. The same applies to all monied interests.” (p 519) 

Thursday, 30 August 2018

Frank Field Resigns - Hurrah!!!!

The vile right-wing MP Frank Field has resigned the Labour whip.  Hurrah, don't let the door hit you in the arse on your way out.  The truth is that Field should never have been a Labour MP to begin with, and he has jumped ship now before his party members got shut of him.  Field is a vile right winger not just in Labour Party terms, but in almost any terms.  The atmosphere in the party is much healthier without him.  We can only hope that those who think like him clear off as soon as possible too.

Field's accusation of anti-Semitism as the basis of him resigning is clearly hogwash.  He needed something to hang his resignation on, and anti-Semitism is the hook upon which the Labour Right and their Zionist allies have chosen to hang their opposition to Corbyn, and the vast majority of party members.

Field's charge that the party is a force for anti-Semitism, is clearly nonsense, and everyone knows its nonsense.  But, it is no more nonsense than the other such accusations that have been systematically levelled at Corbyn and the party over the last few weeks, as part of a concerted, and increasingly hysterical propaganda campaign.  Field's accusation is no more nonsense, for example, than the charge made by former Chief Rabbi, and ultra rightwinger, Johnathan Sacks, who ridiculously claimed that statements made by Jeremy Corbyn five years ago, were the worst example of racism since Enoch Powell's Rivers of Blood Speech fifty years ago.  They were clearly so bad that it has taken Sacks five years before he was even able to make any comment upon them!  In fact, Corbyn's statement was not anti-Semitic at all, but was a comment about particular Zionists.  So unless Sacks wants to claim that all Jews are Zionists, which would thereby mean that any criticism of Zionism would be equated with anti-Semitism, his accusation is clearly just a piece of hysteria.

It follows on from the similarly hysterical and co-ordinated front page stories by the three Jewish newspapers ridiculously claiming that Jeremy Corbyn and the Labour Party represents an "existential threat" to British Jews.  Even some representatives of the Tory media that has given such attacks full rein over the last few months, were led to point out that perhaps that went rather a little too far into the realm of hyperbole.  What it means is that they are equating Corbyn with Hitler - something of course, which no one criticising the racist policies of the Israeli government is allowed to do, on pain of accusations of anti-Semitism!

What they are doing is essentially just trolling.  As with internet trolls, or as with Donald Trump, who many of these opponents of Corbyn associate and identify with, they simply throw out one unsubstantiated and ridiculous charge after another.  Every time one charge is shown to be nonsense, they simply throw out another, facilitated by the Tory media.  The charges are so clearly ludicrous, and the fact that the Labour Right are at the forefront of propagating them, that it is clear what their real purpose is.  Having repeatedly failed to be able to present any kind of credible political alternative to Corbyn, having continually failed to be able to mobilise forces behind them, and  increasingly seeing the writing on the wall, as the masses of party members in the constituencies begin to show them the door, they are implementing a scorched earth policy, trying to do as much damage as possible before they disappear into oblivion.

The Labour right and their Zionist allies (many of whom are acknowledged Tories, who will drop them if they were to get what they want) obviously think that Labour voters are so stupid.  They seem to think that with the help of the Tory media they can simply pump out these ridiculous charges and Labour voters will take them as good coin.  Labour voters are not that stupid.  They know that Jeremy Corbyn is a decent bloke.  They know his whole life has been devoted to fighting bigotry, oppression and racism of all kinds.  Its Corbyn that for the last 40 odd years has been on the streets actively fighting the racists and anti-Semites when the Labour Right and their allies were nowhere to be seen, and indeed, some of whom gave a free pass to racists like Trump, and Orban etc.

If the Labour right had any actual contact with ordinary working-class people and Labour voters, they would know that they are not so stupid as to be taken in by these increasingly hysterical attacks, that become ever more hysterical, the less they have any impact.  In fact, the Labour Right, and their Zionist allies are doing Corbyn and the left in the party a great favour by these ridiculous attacks, because the more hysterical them become, the more Labour voters, and workers more generally see them for what they are, and see the Tory media that provides them with a free platform for what it is.  It means workers and Labour voters can more easily see the rabidly biased nature of the Tory media, and the desperation of the Labour Right, as it ponders its consignment to the dustbin of history.  The more hysterical and removed from reality these attacks become, the more Labour voters and other workers will be led to question all of the other ridiculous charges that the Tory media level against Corbyn and Labour, and their biased reporting of other issues.

Unfortunately, the other consequence of these hysterical attacks is that it undermines the real fight against anti-Semitism, but then the Zionists have always been prepared to subordinate the fight against anti-Semitism, in order to promote Zionism, and to equate anti-Zionism with anti-Semitism.  The sooner these elements follow Field into the wilderness the better.

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 7(9)

Reason In Revolt

Its true, as Paul says, that states adopted full employment policies, but that was easy, in the conditions of long-wave boom that led to labour shortages, rather than surpluses! Capital always wants full employment of labour, in so far as as the more labour it employs the more surplus value it produces. It only fears full employment of labour, at the point that it leads to rising wages, and a consequent reduction in the rate of surplus value, and squeeze on profits. Indeed, as recent events have reminded us, its 70 years since 1948, when the Empire Windrush brought thousands of Caribbeans to Britain, answering the call to come and fill some of the many vacant jobs, that capital needed filling. And, herein also lies the reason for rising wages at that time. Not an attempt to buy off revolt, but competition between capitals for scarce labour-power. As described previously, and elsewhere, in the 1950's, this could be addressed by encouraging married women into the workforce, a large rise in the overtime worked – my father during this period (though he generally argued against overtime as a poor alternative to higher basic pay) often worked from 8 a.m. to 8 p.m., plus half a day on Saturday's – as well as immigration. By the early 60's, some of the baby boomers also increased the labour supply, thereby increasing the total social working day, and total absolute surplus value, but, by this time, the potential to raise the total social working day, and mass of absolute surplus value begins to reach its limit, so that wage share rises, and the 1960's/70's profits squeeze sets in. As wages rose in the 1960's, those like my father, who only worked overtime to get the wages they needed, were able to refuse it. 

“Workers abandoned the ideologies of resistance that had sustained them in the third long wave. Communism, social-democracy and trade unionism became – whatever the rhetoric said – ideologies of coexistence with capitalism. In many industries trade union leaders effectively became an arm of management.” (p 198) 

But, that was not at all a post-war development. Trades unions had always been organisations whose basis was coexistence with capital. The trades union leaders always played a mediating role, and that became more the case as they formed into a bureaucratic stratum towards the end of the 19th century. They increasingly sought respectability. Its depicted well by James Bolam, playing the role of Jack Ford, in the 1970's serial “When The Boat Comes In”. And, those ideas were also always at the heart of social-democracy. The theory of Socialism In One Country, developed by Stalin, in the 1920's, also had at its heart coexistence with capital, manifest in the sabotage of revolutions elsewhere, and also in the Popular Front. 

I'm surprised that Paul repeats the arguments of the so called “embourgeoisement theorists”, because those ideas were fairly thoroughly refuted by Goldthorpe et al, in their “affluent worker” studies. It was never the most immiserated workers that stood in the forefront of the labour battalions, but those like the car workers studied by Goldthorpe, and, as their studies showed, simply being able to buy a car, a washing machine, or take a foreign holiday was not enough to detach those workers from their support for Labour at the polls. It was not prosperity that weakened that link, but the failure of social-democracy to live up to its side of the bargain, in the 1970's and 80's. 

“The automation levels of the time were crude, but advanced enough to illustrate what the future of work would be like. Though the actuality of a factory run by computer was decades away, and robotisation even further, workers understood that these things were no longer science fiction but distinct possibilities, There could come a time when manual work was no longer necessary.” (p 200) 

Actually, I don't think anyone in the 1960's saw that as a remote possibility. When I was still at school, in the 1960's, computers were still big mainframe contraptions only used by governments, or very big corporations. For a time, my father worked at English Electric, in Kidsgrove, as an engineer, producing the casings and so on, but, beyond that, most people had no real conception of what they were, other than boxes with spinning tapes, and flashing lights, as they appeared on The Man From UNCLE. In fact, as the prospect of having to leave school began to enter my head, as I passed 14, it filled me with some dread, thinking whatever I might do, given that I had never shown the slightest ability when it came to woodwork, or anything that required any degree of manual skill. Most of my friends left school at 15, to become engineers, joiners, plumbers or electricians. My brain saved me, but, as a further indication, when I started work, as a cost clerk, the most advanced calculating device at my disposal was a slide rule. It was some years later, before electronic calculators became available, the first one of which cost me more than a day's wages. 

Its an indication of just how rapidly technological change occurred, in the late 1970's, and more specifically in the 1980's, that what is actually more specific to the ideas developed in this later period, are transposed back, by Paul, to the earlier times, when they had not actually entered people's minds. The difference of this 20 years is significant. I am more of Paul's generation, hence our shared experience of Northern Soul, though I am a bit older, and yet, despite us both coming from working-class families, in working-class communities, I can relate more, in many ways, to the conditions he describes in relation to his father. 

Paul's grandmother was born in 1899, my mother and father, both in 1919, though my mother was the oldest of her family, whilst my father was the youngest of his, and both came from the same kind of typically large families of the time. Even until I was about 12-13, I had my weekly bath in front of the fire, in the kind of zinc bath tub, Paul describes in the old photographs he showed to his grandmother. At the end of the street, where my mother lived with her family, in a rented miners house, were what we used used to call, when I was a kid, as had my parents before, the Starvation Banks. They are at the top of Kidsgrove Bank, on the A50, and, for the last 50 odd years, have been forested. When I was growing up, they were just a slag heap, of spoil from Birchenwood Colliery, where my grandad worked, and got their name from the fact that, in the 1920's, miner's families, who were being starved out, during the General Strike, eked out what they could, picking bits of coal from the slag. That was in the living memory of my mother, and I remember her telling me about coming home from school, one day, to find they were eating her pet rabbit for dinner. 

Theories of Surplus Value, Part II, Chapter 17 - Part 63

The rise in the value of commodities, in general consumption, resulting from this rise in raw material prices, may have other consequences, if the consumption of these commodities is not reduced. The importance of Marx's analysis, in Capital III, and later in this chapter, in respect of the heterogeneous nature of consumers is illustrated here. In other words, consumers are not just workers and capitalists, they also comprise landlords and rentiers, whose revenues may be relatively fixed. 

If the price of bread rises, workers who need to consume a quantity of bread, see the value of their labour-power, and consequently wages, rise. They continue to consume all of the required use values as before. Profits fall, as a result and the capitalist may curtail their own personal consumption, or their accumulation of additional capital. But, bread is also consumed by landlords and rentiers, whose rent and interest may be unchanged. If they continue to consume the same amount of bread, at the higher price, they must then consume less of some other commodity. 

“and consequently prevent their reconversion into money at their value, thus disturbing the other aspect of their reproduction— not the reconversion of money into productive capital but the reconversion of commodities into money. In any case, the volume of profits and the volume of wages is reduced in this branch of production thereby reducing a part of the necessary returns from the sale of commodities from other branches of production.” (p 516) 

As described previously, the supply and value of raw material may be unchanged, but the process is upset, either by a disproportionate accumulation of surplus value into fixed capital, or a revolution in technology that brings about the same effect. 

“This therefore arises from the disproportionate conversion of additional capital into its various elements. It is a case of over-production of fixed capital and gives rise to exactly the same phenomena as occur in the first case.” (p 516-7) 

“Or they [the crises] are due to an over-production of fixed capital and therefore a relative under-production of circulating capital

Since fixed capital, like circulating, consists of commodities, it is quite ridiculous that the same economists who admit the over-production of fixed capital, deny the over-production of commodities.” (p 517) 

For example, when spinning machines were invented, they required far more cotton than when cotton was spun by hand, and, at the same time, threw a great deal more yarn on to the market than had previously been the case. The crises of the first form then arise, because the circuit of capital is disrupted. Either the commodity-capital value cannot be realised by sale, or else it is realised, but a rise in the value of the commodities that comprise the productive-capital prevent this money-capital itself being metamorphosed into productive-capital, at least on the previous scale. 

Wednesday, 29 August 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 7(8)

Reformist Myths and The Welfare State

Paul says, 

“As the Allied powers collapsed, with significant pro-Nazi wings emerging among the ruling class in the Netherlands, France and Britain, it was clear to any working-class family with a radio that the very survival of their culture would rely on the military defeat of Germany.” (p 197) 

I don't think that is true. In the 1930's, in Britain, class politics had already broken down, under the weight of reaction, and the atomisation of the working-class. In large part, that had already been achieved by the late 1920's, after the defeat of the General Strike (itself opposed by Attlee), much indeed as happened in the 1980's after the defeat of the miners in 1985. A large part of the defeat of the General Strike was down to that same Churchill that Paul now thinks workers turned to as their saviour. Large sections of the British ruling class had openly displayed their support for Mussolini in the 1920's, and for Hitler in the 1930's, including Churchill.  And Churchill had shown himself prepared to use similar methods in his use of troops against miners at Tonypandy.

Even an independent Labour representation in parliament now effectively no longer existed, after the betrayal of MacDonald, and the formation of the National Government. And, as war broke out, trades union activity was outlawed, Communists were arrested, and so on. It was left to the Commonwealth Party of J.B Priestley and Tom Wintringham to keep the prospect of independent working-class representation in parliament alive. Wintringham, himself a left-communist, and Spanish Civil War veteran, had fought for the establishment of what was to become the Home Guard, and he taught many of the guerilla tactics he had learned in Spain. Yet, because of his politics, he was barred from holding any position within the organisation. 

Few of the more advanced or active members of the working-class had any illusions in the nature of the British ruling-class, as far as the war was concerned. My own father, who was 20 when the war started, worked as an engineer at Rolls Royce, Jaguar, Triumph, and pretty much every other car company in the Midlands, during that period, and was moved on from each one for leading workers' grievances, before eventually getting his cards literally filled with blank ink, before he went into the army. But, when he left school in 1933, he had also gone to Dole School, along with lots of other unemployed kids. As he pointed out to me, many years later, “Don't think that everyone in Britain thought that Hitler was the main enemy. Many people saw the way he put people to work, building the roads and so on, as a good thing that the government in Britain should have been doing.” Its an important reality check, when today we see the support for Trump, and other right-wing populists and nationalists. 

And, Paul says, 

“After the war, those who survived the slaughter, conscious of how close organised labour had come to total obliteration, now sought a strategic accommodation.” (p 197) 

But, that implies that this accommodation was not a feature of life prior to the war. That accommodation is social-democracy, and Marx had identified its basis and existence as far back as The Eighteenth Brumaire of Louis Bonaparte, as well as Engels describing it in his Preface to the Condition of the Working Class. 

It can be seen in the latter part of the 19th century, in the US, with the development of company welfarism, in Germany with Bismark's introduction of National Insurance, with the plans for a welfare state drawn up, in the 1920's, by Neville Chamberlain, and codified in the 1930's by the Liberal Beveridge. It's not the war that leads to the accommodation, but the very functioning of large scale socialised capital, and its need for planning and regulation, within the context of a social-democratic state. 

Paul repeats the old saw that it was fear of a repetition of the revolutionary events of 1917-21 that “would force a hike in workers' living standards and a tilt in the balance of wealth distribution towards the working class.” (p 197) 

But, that is clearly not true. As described earlier, company welfarism dated back to the 1880's, in the US, welfarism was a central aspect of Bismark's programme, and so on. This reflected the needs of large scale industrial capital for planning and regulation, including planning and regulation in relation to the most important element for capital, the supply of wage labour; for a different kind of labour-power; and the expansion of the market on the basis of an ever expanding range of needs. One of the problems of developing economies is that they expend a lot of social labour-time producing the commodities required for the production of the next generation of workers, i.e. feeding, clothing, sheltering, nurturing and educating children. But, with high infant mortality rates,, to view it brutally, much of that expenditure is wasted. The value put into producing this new labour-power is never reproduced, because the children do not live long enough to become suppliers of labour-power. The same thing is true where workers are constantly ill, or die young. All of these factors raise the value of labour-power, and thereby reduce the rate and mass of surplus value. As Marx sets out in Capital, the capitalists were keen from early on to encourage workers to use their wages to buy those commodities that reproduced that labour-power, and not those, like alcohol, that diminished it. 

My grandmother started work on a potbank at the age of 10. But, even by that stage, as the labour process necessarily became more technological, capital had found the need to provide some basic level of education with the introduction of the 1880 Education Act. Early in the 19th century, the cooperative movement had started to provide libraries and classrooms above its premises. If workers are going to learn to read, capital would much prefer that they do so on its terms, in conditions which act to socialise them, and incorporate them, rather than being taught to read by socialists, and radicalised by learning to read from socialist texts. For the same reason, Marx argued that education in schools should only be based upon those subjects like maths and English not so open to class interpretation. 

“Nothing could be introduced either in primary, or higher schools that admitted of party and class interpretation. Only, subjects such as the physical sciences, grammar, etc., were fit matter for schools. The rules of grammar, for instance, could not differ, whether explained by a religious Tory or a free thinker. Subjects that admitted of different conclusions must be excluded and left for the adults to such teachers as Mrs. Law, who gave instruction in religion.” 

Regimented production units on a Fordist, production line
in a State Capitalist Education Factory.
Moreover, as can be seen with the very high savings rates, in China, where workers have to cover themselves against possible sickness and so on, this is very wasteful. Every worker must assume the worst possible, rather than the average, set of conditions. Each worker thereby over-saves, taking demand out of the economy, whilst tending to increase the value of labour-power. Capital has an incentive to establish welfare systems, and National Insurance schemes, because it thereby reduces this over-saving, and reduces the value of labour-power. It means that education and healthcare can be supplied on a mass production, Fordist basis, under its control, and also thereby provide the social-democratic state with huge economic levers to plan and regulate economic activity at a macro-economic level, in the interests of capital. 

And, its simply not true that, in the aftermath of war these social-democratic states made a shift of resources to workers to buy off the potential of revolutionary uprisings. In much of Europe, devastated by war, workers suffered terrible deprivation, in the post-war years. The USSR kept a lid on workers in the Eastern Bloc, but equally, Allied armies kept a lid on workers in West Germany, Italy, Greece, Japan and so on, whilst in Spain and Portugal, workers were still under the heel of fascist regimes. The allies had been intent on ensuring that it was DeGaulle who exercised power in France, suppressing the communists, who had been the backbone of the resistance. 

In Britain, rationing continued into the 1950's, and was ended by the Tories, not Labour. Attlee, not only diverted scarce resources away from workers and into the development of nuclear weapons, as well as into the huge waste of the Korean War, and Britain's continued adventures across the globe, in Africa, Aden, Cyprus and so on, but also sent out troops to break workers strikes

The reason for the expansion of the welfare state was not fear of revolution, but that it was in the interests of large-scale, socialised capital; the reason it was able to expand so rapidly, and that workers living standards rose during the 1950's, was that the post-war, long wave boom saw a large rise in productivity, as all of those new technologies that began to be introduced in the 1930's, were rolled out extensively, and whole new ranges of commodities, based upon those technologies began to be sold, at prices that workers could now afford.   It was not fear of revolution that led to the welfare state, but the needs of large-scale capital, it was not fear of revolution that led to rising wages but the normal functioning of the long wave, as the expansion of capital led to a rise in the demand for labour-power, as had happened in every previous cycle, as unemployment fell, and wages rose.

Is Wonga Today's Northern Rock?

Wonga looks like it has itself run out of wonga, and is about to go bust. It will probably not be the last of the usurious lenders to go bust, as they face a double whammy, as with the financial crisis of 2008, whereby they face increased borrowing costs of their own, and at the same time rising defaults, or what amounts to a similar thing, a rising level of compensation claims levied against them by ambulance chasing solicitors, and specialist claims companies, acting on behalf of borrowers. The demise of Wonga is just part of a set of conditions that have considerable similarities to the collapse of Northern Rock, the onset of the credit crunch, and the outbreak of the financial meltdown of 2008. For example, in both the US and UK, there has been a sharp slow down in the sales of houses, partly as a reflection of the fact that house prices are grotesquely inflated, and partly as a consequence that interest conditions for mortgages are starting to tighten. 

In the UK, house prices in the most expensive parts of London are already down by around 25-30%, and demand for houses across the country has stagnated. Many estate agents in London have seen their share prices tank, as the housing market stagnates and contracts. And, now Countrywide, one of the largest chains of estate agents in Britain, has been forced to raise cash

The irony with Wonga is that the ambulance chasing solicitors and specialist claims companies that are now going after it, as their feeding frenzy for PPI claims draws to an end, is part of that same money for nothing, gambling culture that fed the speculative gains in financial assets and property over the last thirty years, which astronomically inflated house prices, along with stock and bond prices, and which encouraged reckless lending and borrowing practices, based on the mirage of rising asset prices as collateral, and simultaneously fuelling that very illusory rise in those asset prices. 

Wonga, like Northern Rock, and like many of the financial institutions that went bust in 2008, does not obtain funds from savers. A small amount of its capital comes from its own shareholders, and bondholders, but the majority comes from borrowing in the money market. As in 2007/8, as interest rates rise, the cost of that borrowing rises. That together with the fact that it is now facing these rising compensation claims has thrown it into a loss. The question will be how many other financial institutions that it has itself borrowed from, might be taken down with it? Indeed, as other usurious lenders go the same way, what effect will that have on other financial institutions? 

The problems faced by Countrywide illustrate the stagnation in the housing market. According to Rightmove, asking prices for houses fell by 2.3% in August. US existing home sales have fallen for  – four months in a row. US new home sales are also faltering, again hit by astronomical prices, and steadily rising interest rates. 

In the US house prices fell by up to 60% in 2008, before the Federal Reserve slashed its official interest rates, and Obama's government introduced the Troubled Assets Rescue Programme (TARP) which enabled it to bail out the banks, and mortgages, as homeowners began to simply walk away from properties whose price had fallen to a fraction of what they owed on it. US house prices, however, fell more, than in Britain, where they dropped by around 20% in 2008, before the slashing of interest rates, and introduction of various government scams such as Help To Buy, and tax subsidies for Buy To Let landlords pushed them back up again. US house prices probably need to fall by around 40% to get back to long-term sustainable levels, whereas UK house prices need to fall by around 75-80% to get to that level. In Europe, house prices in Spain, Portugal, Ireland and Greece, as in the US, fell by around 60%. Most of them have not recovered their previous levels, but they too probably need still to fall by around 30% to get to a long term sustainable level. 

The astronomical prices of property are just another manifestation of the hyperinflation of all assets, that has resulted from speculation, initially driven by low and falling interest rates in the late 1980's, and 90's, further encouraged by the scrapping of credit controls and financial regulations by Thatcher and Reagan, and then further hyperinflated, each time they threatened to crash by global central banks, keen to protect the fictitious wealth of the top 0.01%. On the basis of Robert Schiller's CASE index of cyclically adjusted price earnings, the US Dow Jones Index is as overpriced today as it was in 2007, 2000, and 1929. But, the Dow is not unusual. That level of overpricing is common to all global stock markets, and if anything bond markets are even more overvalued than stock markets, having been given protection from price falls by QE. 

The only thing that differs today from 2007/8 is that the level of private debt is much, greater, asset prices have been inflated to an even greater degree, official interest rates have already been reduced to near zero – in 2007 they were around 5.25% for the Fed Funds Rate, and the US Federal Reserve has inflated its balance sheet by about $4 trillion as a result of QE. In other words, the scope for remedial action has been severely reduced, whilst the scale of the bubbles, and of the debt likely to default has risen substantially. The Dow Jones peaked in October 2007, at just over 14,000. Today, the Dow stands at over 26,000, nearly double its level at the height of the previous bubble. 

In Britain, the tax subsidies given to buy to let landlords are being removed, so that many of them are now making losses, and those losses will increase as mortgage rates continue to rise, whilst the existing tax subsidies are removed. The number of buy to let mortgages is falling as more landlords begin to sell properties than are taking out mortgages for new additional lets. The only thing keeping them holding on to rental properties, as losses rise, is the prospect of capital gains, from rising property prices, but as house prices start to sink, that incentive becomes a disincentive. When they come to sell, these landlords will all rush for the door at the same time, and with housing demand already stagnant, the result will be a sharp crash in house prices. 

Its only massive levels of QE, and intensive state intervention to prop up asset prices, even at the expense of doing massive damage to the real economy, that has prevented that from happening already. 

Harold Wilson opposed the introduction of Premium Bonds, because he saw it as encouraging gambling rather than real wealth creation. In the 1980's, Thatcher took the exact opposite view. With the Right To Buy programme, offering massive discounts up to 60%, she encouraged the view that it was possible to get rich on the back of gambling and speculation on asset prices. That view was reinforced with the privatisation programme that sold off nationalised assets at prices that guaranteed that speculators who bought the shares would make a sizeable capital gain, often within a matter of weeks, or even days. The gambling culture was further encouraged when credit controls were scrapped, and financial regulations abolished in the late 1980's, by Thatcher in the UK and Reagan in the US. It set in place, the massive asset price bubbles of the 1980's and 90's, and each time they burst, such as in 1987, 1994, 2000, and 2008, the state and central bank was there to blow them up again conveying the message that it was safe to gamble on asset prices rising, because whenever they fell the state would be there to reflate them. 

This gambling mentality and culture was also encouraged by John Major who introduced the National Lottery, and by Tony Blair who not only extended it, but who also promoted the idea of super casinos, and extension of gambling, now supplemented by a huge online gambling industry, often going side by side with the provision of loans to susceptible individuals to engage in such gambling, by the usurious lenders like Wonga. In the 1970's and 80's, we started to see legal action against the big tobacco companies by people who had suffered ill health from smoking. Today, gambling is likewise recognised as an addiction, just as smoking was in the past. The various specialist claims companies, facing the drying up of PPI claims have an obvious new target, not just in the payday lenders, but also in all those betting companies, slots providers, bingo companies etc. that have led at least tens of thousands into a serious gambling addiction, resulting in serious damage to their finances, their health and other aspects of their lives. 

It is reminiscent of the last days of a decadent Roman Empire, in which various forms of debauchery all contend to bring about its demise.

Theories of Surplus Value, Part II, Chapter 17 - Part 62

Here, Marx does not deal with these variations, set out in Capital III, Chapter 6, but simply sets out the case where the previously realised money-capital can no longer be metamorphosed into the required quantity of raw material, as a result of the rise in its value, due to the crop failure. 

“More must be expended on raw material, less remains for labour, and it is not possible to absorb the same quantity of labour as before. Firstly this is physically impossible, because of the deficiency in raw material. Secondly, it is impossible because a greater portion of the value of the product has to be converted into raw material, thus leaving less for conversion into variable capital. Reproduction cannot be repeated on the same scale. A part of fixed capital stands idle and a part of the workers is thrown out on the streets. The rate of profit falls because the value of constant capital has risen as against that of variable capital and less variable capital is employed. The fixed charges—interest, rent—which were based on the anticipation of a constant rate of profit and exploitation of labour, remain the same and in part cannot be paid. Hence crisis. Crisis of labour and crisis of capital.” (p 515-6) 

Even if this does not result in a crisis, it still represents a disturbance in the process of reproduction. The proportion of the capital which must be reproduced in the value of output rises. (This applies also where such conditions might apply to the total social capital, although the general rise in social productivity more frequently results in the opposite situation, i.e. the value of materials, wear and tear of fixed capital, falls rather than rises). The consequence is that the organic composition of capital rises, as a consequence of a rise in its value composition. 

This rise in the organic composition is reflected in a fall in the rate of profit, whilst the value of the output rises, reflecting the rise in the value of constant capital. 

“If this product enters into other spheres of production as a means of production, the rise in its price will result in the same disturbance in reproduction in these spheres. If it enters into general consumption as a means of subsistence, it either enters also into the consumption of the workers or not.” (p 516) 

So, if the price of cotton rises, this raises the value of constant capital, for the yarn producer. Unless the yarn producer advances additional capital, they must buy less cotton, and labour-power, and scale back production. But, having done so, the proportion of the value of cotton in that output rises relative to variable-capital. Their rate of profit falls. But, the value of a kilo of yarn still rises, reflecting the higher value of cotton. If workers buy yarn, they face this higher price, which, in turn, causes the value of labour-power to rise, which causes surplus value to fall, generally. 

The majority of yarn, however, will be bought by weavers, which means that, for them, it represents a higher material cost, which increases the value of their own constant capital relative to variable-capital, and thereby causing a fall in their own rate of profit. But, it also thereby causes the value of cloth to rise. In so far as workers buy cloth, it causes the value of their labour-power to rise, and so on. 

The effect of the rise in the value of cotton, yarn, cloth, clothes in so far as it affects the value of labour-power, is different to its effect on constant capital. The rise in value of materials causes the value of constant capital to rise, and thereby the rate of profit to fall. But, this rise in the value of constant capital causes a corresponding rise in the value of output. 

A rise in the value of those commodities, in so far as they constitute wage goods, and so cause a rise in the value of labour-power, however, has no such effect in causing the value of commodities to rise. A rise in the value of labour-power has no effect on the amount of new value created by that labour; it only affects the division of this new value between wages and surplus value. The rise in the value of wage goods, therefore, by causing the value of labour-power to rise, causes the mass of surplus value to fall, and so the rate of profit to fall, but has no effect on the new value produced by labour, or, therefore, on the value of commodities. 

Tuesday, 28 August 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 7(7)

Cooperatives, Workers Control and Capital Accumulation

The real solution had been provided by Marx long before, in Capital III, Chapter 27. A worker-owned cooperative can expand out of its own profits, but it can also expand using credit. A cooperative federation can utilise the profit from all of the companies within it to expand. Each cooperative enterprise acts to improve its own efficiency and profits, but has also an incentive for every other cooperative within the federation to succeed, so they share best practice, and so on. Nor is such a cooperative federation limited within nation state borders, as occurs with the nationalistic, reformist solution of nationalisation. 

The cooperative may have to also utilise bank loans and other financing, but that does not give those money-lenders control over the cooperative's capital. That is the difference with a joint stock company. The capital of a joint stock company, as with a cooperative, is mostly provided by its own workers. In other words, the capital is increasingly comprised of the reinvested surplus value/profits created by the workers. When the company is started, it may use borrowed money-capital, which it raises by selling shares or bonds, or by obtaining a loan from a bank, and at various times, when it does not have adequate internal resources for expansion, it may again resort to such means. But, the longer a company is in existence, the more its accumulated profits are the real source of its productive-capital. The difference here is that a specific type of money-lender, the shareholder is enabled, by law, not only to exercise property rights over their own property, i.e. the share certificates they have bought, and to receive interest/dividends, in return for the use of the money-capital they have loaned, but is also enabled to exercise control over capital/property they do not own, i.e. the productive-capital bought with the loaned money-capital. 

The simple basis on which to proceed, therefore, was to remove, in law, that privileged and unjustified position held by shareholders. In line with the demands for industrial democracy, such as those contained in the strategy of the Welsh Miners, it was simply necessary to remove the voting rights of shareholders, and to change company law so that Boards of Directors were elected by all of the workers employed in the company. The existence and example of the worker-owned cooperative could have acted as a powerful lever in pushing that forward. It is also the simple and straightforward answer to the grotesque current overpayment of company executives, whose remuneration stands in inverse relation to the amount of labour they provide, and value they add to production. 

The benefit of this ground up approach was spelled out by Marx in The Critique of the Gotha Programme. 

“That the workers desire to establish the conditions for co-operative production on a social scale, and first of all on a national scale, in their own country, only means that they are working to revolutionize the present conditions of production, and it has nothing in common with the foundation of co-operative societies with state aid. But as far as the present co-operative societies are concerned, they are of value only insofar as they are the independent creations of the workers and not protégés either of the governments or of the bourgeois.” 

It requires, in any enterprise, or group of enterprises, that the workers themselves feel prepared, and willing to undertake the management and control. Some may fail, but the more who succeed are able to grow rapidly and to spread their knowledge and experience to others. 

Paul describes, however, the reality of what happened in the period after 1916 and into the 1920's. The drive for workers' control of production broke out in a rash of revolutionary struggles across Europe, with strikes and factory occupations. But, in many cases, the workers involved had no real concept of what running the business involved. The demands for workers control arose more as a defensive response from workers to lock-outs or a shutdown of production, in much the same way as happened in May '68, and at UCS. And, that is not surprising, because both periods are within the crisis phase of the long wave cycle, when the ability to easily grant reforms, or improvements in pay and conditions becomes more difficult. But, for that reason, the ability of workers then to resolve their problems simply on the basis of workplace solutions, also becomes more difficult. Either a society wide solution was imposed, as in Russia in 1917, or else the workers were defeated, atomised and reaction triumphed. 

Theories of Surplus Value, Part II, Chapter 17 - Part 61

Marx deals here then with a crisis caused by a rise in the value of raw materials, due to a bad harvest. He excludes fixed capital from the analysis, on the basis that technology remains constant, and that the only contribution of fixed capital to value creation is wear and tear, which is set to zero. 

“Since the reproduction of raw material is not dependent solely on the labour employed on it, but on the productivity of this labour which is bound up with natural conditions, it is possible for the volume, the amount of the product of the same quantity of labour, to fall (as a result of bad harvests). The value of the raw material therefore rises; its volume decreases, in other words the proportions in which the money has to be reconverted into the various component parts of capital in order to continue production on the former scale, are upset.” (p 515) 

Marx's explication of the crisis that unfolds, as a result of these conditions is not as complete as it is in Capital III, Chapter 6, where he deals with this same set of conditions. There, Marx deals with a number of variations that may exist when the market price or value of raw materials rises. As I said earlier, one aspect will depend on the extent to which, say, producers of yarn already have large stocks of cotton waiting to be processed, or in the process of being spun, as well as being in the form of finished goods. If large amounts are in this form, then the rise in the value of cotton will provide a significant capital gain, as all these stocks are revalued. Any yarn sold at this higher value will then reproduce the value of the cotton consumed in its production, on the basis of its current value, irrespective of its historic cost. In that case, the rise in value of cotton due to a crop failure will have no effect, as this higher value of cotton, reflected in the higher value of yarn, will enable the consumed cotton to be replaced, on a like for like basis. The problem arises where the yarn has already been sold, at the old value, and where the stocks of cotton, and work in progress are small, in proportion to the cotton which must be bought, at the new higher value

Moreover, as Marx sets out, in Capital III, Chapter 6, even where the value of cotton rises prior to the yarn being sold, it may not be possible to pass on the rise in cotton prices to yarn prices. Any rise in yarn prices will cause a reduction in demand, and consequently, market prices would fall back, if yarn supply remains at the previous level. That means that some of the rise in cotton prices would have to be borne out of the profit of the yarn producer. The bigger the rise in the cotton price, and the greater the price elasticity of demand for yarn, the less the ability there is to pass on the rise in the cotton price, and the more must it be absorbed from profit. On the other hand, if the rise in the cotton price is the consequence of a revolution in yarn production, that significantly increases demand for cotton, that may be offset by the rise in productivity in yarn production, so that although the price of cotton rises, the price of yarn does not, or even falls, whilst the demand for yarn rises. 

It may be the case that the yarn producers, faced with falling demand, if they raised the price of yarn, in line with the rise in the price of cotton, cannot reduce their supply. Capitalist production is mass production, premised upon technically determined minimum efficient levels of production. A yarn producer will not find it efficient to only run 80% of their spinning machines, or to run all of their machines at 80% capacity. They are led then to run at full capacity, and to hope that any overproduction in the market is borne by their competitors and not by them. In this way, production continues, and overproduction continues, not because surplus value is not being produced by the workers, but because this surplus value cannot then be realised, in the sale of the yarn. 

Monday, 27 August 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 7(6)

Marx v Lenin?

Paul discusses Lenin's “What Is To be Done?” in orthodox Leninist/Trotskyist terms. The first political education meeting I recall attending was on the difference between Marx's view of the development of working-class consciousness, and that of Lenin. It was one rainy night, in a small terraced house in the back streets of Newcastle, rented by some of my comrades at that time who were students at Keele University, apart from one who was an AUEW/TASS steward. The difference, as Paul repeats here, is said to be that Marx believed that the material conditions of life, created by capitalism, drive the working-class to arrive at a working-class consciousness, to become “a class for themselves”, and thereby to engage in class struggle to conquer political power. By contrast, Lenin argues that the working-class, on its own can only ever achieve “trades union consciousness”, it is driven by the material conditions of life, under capitalism, to settle simply for bargaining within the system, for accepting the continued existence of capitalism, so long as it can negotiate to sell its labour-power for higher wages

I remember, back in 1975, at that political education meeting, not being convinced by this argument, and I'm not convinced by it now. Firstly, a look at what Marx says in “Value, Price and Profit” about trades union struggle being a dead end, and the need for a political struggle, indicates that Marx was well aware of the limitations of the material conditions in imposing a purely trades union consciousness. Secondly, if Marx believed that it was all a question of the working-class arriving spontaneously or organically at this socialist consciousness, why did he and Engels bother with their own political activity? They were both bourgeois, and particularly in Marx’s case, could have had a far more pleasant life, as such, without any detriment to the struggle for Socialism. 

The reality is that neither Marx nor Engels held this idea that workers would arrive spontaneously at a developed class consciousness without support from outside. As Marx points out, the nature of reality cannot be grasped simply on the basis of a superficial inspection of surface appearances, but only by a scientific examination of the structures, composition, and mechanisms of phenomena that lie beneath the surface. Such scientific analysis requires individuals who have the time, education and ability to undertake it, and initially that means that workers are precluded from undertaking it. Indeed, as Marx sets out in Theories of Surplus Value, Chapter 21, even when workers do begin to undertake such a study, on their own behalf, as with Thomas Hodgskin, they are led to take as their starting point, the categories and theories of the bourgeoisie, hence the development of Ricardian Socialism. 

Its not that Marx believes that workers are unable to understand these ideas, only that in the development, it is only those with the time and education, who can uncover them. Once uncovered they can be conveyed and taken on board by the workers themselves. Its on this basis that he and Engels believe that the Communists cannot separate themselves from the workers, on the sectarian basis that the workers do not yet see as far and as clearly as they do, but precisely for that reason must work steadfastly with the workers so as to raise them to that level. 

Neither Marx nor Engels believed that workers somehow mechanically or organically developed a socialist consciousness. Its why both of them spend so much time meticulously analysing society, and taking that analysis into the working-class; its why both of them act as practical revolutionaries, engaged with the working-class, as the left-wing of the German Democrats in 1848, in working with the Chartists, and setting up the First International, and so on. 

But, Lenin's position has also been falsified. It has been used by Stalinists and Trotskyists to justify their own elitist positions. The Stalinists had obvious reasons to falsify Lenin's ideas on a whole range of issues so as to justify the existence of their grotesque, bureaucratic state apparatus, sitting on the backs of the Russian workers. Though, as David Law demonstrated, back in the 1980's, in Critique, the picture painted by Trotskyists is not true either. It was Trotsky who sought to impose the militarisation of labour, and remove the independence of trades unions. As Trotsky himself says, it was he, not Stalin, that the bureaucracy initially looked to as their champion, and as Law points out, in the party elections, it was amongst the workers that Stalin won the largest support, with Trotsky winning the support of the bureaucrats and students. 

“Besides considerable strength in Moscow, perhaps even an actual majority, the Opposition had managed to capture Party organisations in Ryazan, Penza, Kaluga, Simbirsk and Chelyabinsk. The Opposition’s strength in these provincial towns was plausibly attributed to there being, in those centres, a predominance of Party officials transferred as a reprisal for their dissident opinions. In Moscow the strength of the Opposition lay in the State administration (particularly in economic bodies), and student cells. The opposition was comparatively weak amongst the working class. No doubt this was partly a result of the past record of various members of the Opposition on questions of industrial management, and also partly because questions of immediate working class interest, such as wages, were not given any prominence. Whatever the reasons, in Moscow, at a time when it was gaining majorities among the students, the Opposition could only win 67 out of 346 cells of industrial workers.” (Critique 2, “The Left Opposition in 1923”, p 47) 

For the Trotskyist sects, increasingly remote from the working-class, the concept of a vanguard party, a a small group of “professional” revolutionaries is more a justification for their existence and isolation than anything else. Lenin himself in “What Is To Be Done?” makes clear that what he means by a professional party of revolutionaries is something akin to the German SPD, which was his model. By professional he means that such a party, as with the SPD, should be efficiently organised, and should have representatives capable of engaging in discussion on every topic, in all layers of society. What the Trotskyists focus on is just one small element of what Lenin says, and which he makes clear is due to the specific conditions at the time in Russia, as a police state. They conflate these elements of the need for a small, secretive organisation with the separate idea of a mass, professional workers party. 

Paul turns to Lenin's explanation for reformism and the collapse into social-patriotism, culminating in WWI. Its surprising that Paul does not suggest the real basis for both these phenomena. He says, 

“The source of patriotism is, unfortunately, patriotism, owing to the fact that just as classes are material, so are nations.” (p 192) 

But, this really takes us no further forward. The basis of reformism was what it had always been, and warned against by Marx. Workers daily lives leads them to sell their labour-power as a commodity for the highest price they can obtain for it. The growth of large trades unions that are able to undertake such negotiations, on their behalf, especially as those trades union negotiators increasingly do so in negotiations with professional managers, leads to a more systemic view of society as a machine whose operation simply requires the right levers to be pulled, so that it progresses harmoniously, meeting the shared interest of both labour and capital. This is the underlying foundation of social-democracy as Marx describes in The Eighteenth Brumaire of Louis Bonaparte. 

“The peculiar character of social-democracy is epitomized in the fact that democratic-republican institutions are demanded as a means, not of doing away with two extremes, capital and wage labour, but of weakening their antagonism and transforming it into harmony. However different the means proposed for the attainment of this end may be, however much it may be trimmed with more or less revolutionary notions, the content remains the same. This content is the transformation of society in a democratic way, but a transformation within the bounds of the petty bourgeoisie. Only one must not get the narrow-minded notion that the petty bourgeoisie, on principle, wishes to enforce an egoistic class interest. Rather, it believes that the special conditions of its emancipation are the general conditions within whose frame alone modern society can be saved and the class struggle avoided. Just as little must one imagine that the democratic representatives are indeed all shopkeepers or enthusiastic champions of shopkeepers. According to their education and their individual position they may be as far apart as heaven and earth. What makes them representatives of the petty bourgeoisie is the fact that in their minds they do not get beyond the limits which the latter do not get beyond in life, that they are consequently driven, theoretically, to the same problems and solutions to which material interest and social position drive the latter practically. This is, in general, the relationship between the political and literary representatives of a class and the class they represent.” 

The chart of the UK Unemployment Rate, going back to 1881,
shows  the periods of the long wave clearly, as it spikes in the
period of stagnation in the 1920's/30's, and then sinks to around
2%, as the post-war boom unfolds, into the 1950's and 60's,
before rising into double digits (despite Thatcher manipulating
 the figures, in the stagnation of the 1980s and 1990's.  During
the periods of low unemployment, the idea of bargaining within
the system can easily take hold. 
In the period after 1890, as the potential for higher wages expanded, its not surprising that this ideology gains ground. The same thing happened when those conditions were replicated in the post-war boom, during the 1950's, and 60's. As stated earlier, Marx noted the danger of that Economism in Value, Price and Profit, as well as noting the danger of a top down approach, in The Critique of the Gotha Programme. Engels, in further letters warns against statism, and reformism, which again illustrates how far both were from the idea that workers somehow spontaneously arrive at a socialist consciousness. Engels, in his letter to Bloch, sets out their view on the relation between material conditions and consciousness, and the way that both ideas and political superstructures take on the form of material conditions. 

Its fairly easy to see how social-democratic ideas about society as a mechanism that can be operated by skilled technicians leads to the idea that the most effective way of bringing that about is via control by the state, and that idea is put forward by Kautsky in The Road to Power. It is adopted by Lenin and others, in various forms. The idea of Finance Capital, developed by Hilferding, encourages this view. If industrial capital is all controlled by the banks, then why not just take control of the banks, and thereby take control of industrial capital, in one fell swoop? 

The idea of worker-owned cooperatives is retained, but increasingly is seen as something to be developed after the seizure of state power, rather than as a means of creating the conditions for the seizure of state power. Given the conditions of today, its perhaps difficult to comprehend the mental processes going on amongst the socialists of that time. A multi-million strong movement has sprung up, almost overnight, in historical terms; it has gone from being outlawed, disenfranchised and so on, to being on the verge of winning electoral majorities. At the same time, within living memory of those involved, it has gone through the revolutions of 1848, the US Civil War, the Paris Commune, and so on. Is it any wonder that the socialist leaders of the time, saw a tide of history rushing in their direction, and that all they needed to do was put themselves at the head of it? 

But, in doing so, they undermined the real basis of bringing about historical change. Once the long wave cycle turned, the material conditions that had facilitated that progress, over the previous 25 years, ended. Now, bargaining within the system meant bargaining for a smaller pay cut, or smaller reduction in hours, as the British Miners found in the early 1920's. Competition now meant worker was set against worker in the same workplace, in one workplace with another, and ultimately one nation against another. The basis of patriotism in this context is not patriotism, as Paul suggests, but is capitalist competition.