Critique Notes 68
The next three Critique conferences will be around the question of the Russian Revolution, its historical evolution, the political economy of Russia and the Great Powers of the time, the nature of capitalism and the evolution of the left. We will draw up leaflets calling for articles, and papers for the conferences and for printing in Critique. The Russian Revolution of October/November 1917 was the defining moment in history of our epoch. It heralded the end of capitalism, but was itself thrown back by Stalinism and buried by Yeltsin and Putin to the point where people today actually believe the Russian official line that the Revolution was no more than a coup.
I: What is the Capitalist Strategy?
Economy: Recovery or Stagnation
Hardly a day goes by when the broadcast media do not talk of the recovery and the tabloid newspapers attempt to document it with headlines and photographs. At the same time, governments continue to maintain an official policy of austerity. Government expenditure continues to be restricted, and investment remains static. In the entire 4 year period from the official downturn in 2008 to the present, in the third quarter of 2014, money continues to pile up in the corporations and investment has not increased. If one substituted a period during the great depression of the 1930s it would not look very different.
It seems that the top 2000 global companies had US$4.5 trillion of gross cash in 2013 but spending this year, 2014, will decline by 0.5 per cent on top of a 1 per cent decline in 2013. The situation for the Third World is worse. Capital expenditure by emerging market companies is going down, declining by 4 per cent in 2013 and another 4 per cent expected in 2014.1Much of the cash and expenditure relates to metals, mining and energy and hence the Third World, even if the companies like Vale, Riot Tinto Zinc, BHP Billiton and the oil companies are First World. 2
Curiously, the article involved refers to reasons for optimism given by Standard and Poor, who provided the figures. These amount to saying that the spending is low and therefore will be higher in an economy that is recovering. Since the point of thearticle is to point out that the low capital expenditure throws into doubt any recovery, the article effectively ends by showing the confusion or perhaps despair of Standard and Poor. Indeed, they share their state of mind with most of the economists and government advisors.
The Eurozone is in the gravest trouble with deflation on the cards. An editorial in the Financial Times cites the International Monetary Fund referring to the low growth, high debt and low inflation there. It then continues, crucially, ‘Even without such instability, vulnerable countries are, on present policies, condemned to needlessly high unemployment for many many years’.3It goes on to call for quantitative easing and hence the buying of sovereign bonds. Since the buying of government bonds amounts to helping to fund government deficits, this would be controversial, especially in Germany.
The USA is in a better position, in that there is positive growth in the number of jobs and overall growth in GDP. However, the situation is anything but rosy. Although employment is picking up, skilled workers who lost jobs disproportionately in the downturn are not returning to or getting the jobs. Long-term unemployment, and ‘a declining participation in the labour force’ have been a feature of the US labour scene. Wages are static.4
The actual growth level is low, something already true before 2008. This is a feature widely discussed among newspapers and journals. They point to declining levels of participation in the labour force and lower immigration but also to lower levels of productivity per worker.5The Economist, conservative as it is, naturally argues that less regulation, and lower corporate tax plus infrastructure investment, would raise investment and boost productivity.6Clearly productivity would rise with more investment all round and government investment in areas additional to infrastructure could make a big difference. However, the failure of the capitalist class to invest, and the continuing government inability to increase investment in the economy is a feature of both this depression and the last one.
We have discussed the failure to invest the enormous level of funds held around the world several times in these Notes, and in an article in the last issue of Critique. The whole issue has been given much greater publicity with the decision of Lawrence Summers, former President of Harvard University and economic adviser to presidents, to revive the discussion around the question of stagnation7as put forward in Keynesian theory. It was subsequently taken up by Paul Krugman and other Keynesians.8The argument, as put forward by Keynes and his followers, is simplistic in real terms, however sophisticated the economic language. It basically states that, given inequality in incomes and the tendency of the rich to save, demand for goods and services will be restrained. As income inequality is soaring, demand within the economy can only be limited. The conclusion is that wages and salaries should be raised and the incomes of the rich consequently taxed.
The point, though, now put forward by Summers and endorsed by Krugman, is that the economy is chronically in trouble as a result and needs ‘bubbles’ to boom at all.9The point that Krugman makes at this juncture is that the economy has been chronically depressed since the time of Reagan, only saved by so-called bubbles, which amounts to special stimuli.
The theoretical problem with these statements is that they assume a number of things and ignore others. First, they presume that the rich only exist as atomised entities deciding to save and not spend. In reality the rich are only rich because they own businesses or other wealth-creating or rather wealth-controlling entities that provide them with their income. The decision to spend is not one of buying luxury items but of re-investing in their own or other firms. In other words, the question is posed in the wrong form. Second, the whole issue is posed in the usual abstracted economic structure. It is assumed that the rich, who, of course, are part of the ruling class, will agree to be taxed in order to increase government expenditure and to redistribute income, rather than organise a powerful opposition. In third place, the specific way in which the surplus is pumped out of the population is wholly ignored. The role of the Cold War and so the acceptance of the state in what is called military Keynesianism is ignored. The flow of money from the Third World to the imperial power is also avoided and its particular role is left out. Finally, the change of strategy to finance capital is regarded as a technicality and hence its specific and controlling role is not discussed.
Basically, the bourgeoisie is not investing for a number of reasons. First, they are not investing because there is no medium- to long-term perspective that allows them to invest. Given the depressed state of the economy, even short-term investment of substantial amounts may be dubious. In second place, they are not prepared to go for long-term investment that will end up with full employment. The change mentioned by Krugman referred to above reflected the decision of the bourgeoisie to end the postwar settlement, and ensure efficient controls over labour. They are not going to return to full employment with the government playing a substantial role in ensuring an economy that provides for it. The government and the Central Banks are explicit in setting their target as a minimum of 5% unemployment, which has in practice meant a figure of up to double that figure. In third place, the policy of austerity means that the state is not providing the opportunities or the guarantees normally required. Underlying the problem is the fact that we do not live in the 19th century with a high level of competition so that firms control the market and further investment involves special conditions. This requires both innovation and substantial reequipment. Both are less necessary under conditions with very limited competition.10
The upshot is that there is no chance that the situation will change in the short term. In the USA, the Republican Party is opposed to government administration expenditure, including subsidies for private firms, and the Tea Party endorses that line.
Ruling Class Strategy
What is the strategy of the ruling class at the present time? It cannot invest, it supports austerity and it has learned the lessons of the failed war in Iraq. Is the ruling class now supporting depression as the economy of the future? Its current line follows and partially continues the route taken when it switched to finance capital at the end of the 1970s.
The fundamental way in which capital rules is through its control over the surplus product, which involves maintaining the form of wage labour. That is done through the two economic forces of commodity fetishism and the reserve army of labour. In mature capitalism they suffice to ensure the stability of the system. However, as capitalism declines they become less effective. Working class opposition, trade union action, the scarcity of skilled labour at various times, uncontrolled booms, the need to obtain political support and the welfare state have eliminated much of the form of a reserve army of labour. In parallel, the apparently inhuman rule of the commodity, or the market, standing, as it appears, above human control and people’s needs is no longer omnipresent or accepted as necessary. Government control, administrative regulation of the market, nationalisation of sections of the economy and centralised administrative control over money, have gone through various phases. Whatever the reality at any one time, it is clear that the support for the market is an ideology and an alternative is possible. Today the question is bitterly contested, with conservatives trying to privatise as much as possible. The idea that management could be elected, that there is no need for income inequality or indeed even private property is in the minds of the working class. History has ensured that these concepts cannot be wiped out. The issue is more profound than that. Apart from the examples of non-market forms given above, modern economies are ruled by giant monopolies, which contract out more or less of their work, under their supervision. The idea of the little entrepreneur inventing and taking to market some successful new product or process every so often is of secondary importance. Modern economies have very limited competition, usually confined to small firms, which are themselves subject to their larger customers.
Competition is limited, and the unemployed do not constitute a genuine reserve army of labour. How can capital rule if its fundamental form is itself changing? Nor is it just the overall market and control over labour that has changed. There is no way around the need for medium- to long-term ‘planning’ both within the central governmental administration and within large firms. The discussion on bureaucracy in the 1930s provided the groundwork for the modern form, which has evolved further. The intra-form relationship is direct with a series of arrangements like mission statements to provide direction, a clear promotion procedure, departmental ethos and, above all, targets. In turn, these are distorted by workers trying to be successful in their positions. There is a necessary conflict between the needs and practices of workers and the demands of management. This is well known although not necessarily well understood. ‘Leadership’ is a contemporary slogan, but leadership can only work if there is a common interest, as opposed to a work ethic based on economic force. In practice, there is a compromise where management accepts what is possible and workers limit their work in depth and extent. Management can use promotion, pay, threats and loyalty to the firm to ensure targets are met. There is a large management literature of course, but the point here is only that the bourgeoisie has to rule through a conflicted form, which can easily founder if the management lacks the skills needed. Under conditions where pay is held down, while management pay rises exponentially, discontent will obviously rise. The main instrument that the bourgeoisie holds is that of dismissals, and so the division of the work force into those permanently employed and the rest, of whom the most unhappy are those ultimately reduced to zero hour contracts. This, however, is not an efficient solution in that the company loses skilled workers, sometimes highly skilled workers. Loyalty is lost as a motivational force.
The form of capital itself has, therefore, changed. The introduction of the Joint Stock Company marked the beginning of its transformation into a complex bureaucratic- market structure. That has now evolved to the point where the top management has been enfranchised within the capitalist class itself in that their salaries and share holdings may give them more income than the controlling shareholders.
The bourgeois response to the change in form, therefore, has been to try to turn the clock back to the 19th century, with a competitive market of a large number of small firms, requiring the break-up of companies, privatisation and the hiving off of parts of companies or parts of the administrative machine of the state. Industry was sent to the Third World, where poverty provides a huge army of the unemployed. Control was assigned to finance capital, today largely represented by private equity. Trade unions were restricted and union membership plunged.
How successful was this strategy? Its immediate weaknesses are extensive. We can list them as follows. First, the idea that small to medium-size firms can play a crucial role in modern capitalist society is simply utopian. Second, as discussed above, there is a ceiling to investment at the present time. Third, there has been a relatively quick and largely spontaneous self-organisation of labour in the Third World, as shown in South Africa. Fourth, finance capital has in fact imploded and is now under regulation, limiting its ability to control. Fifth, there is tremendous discontent in the increasing inequality of incomes, partly shown by the incredible popularity of the Picketty book. Sixth, the ruling class is itself divided, most obviously between management and the nominal owners of the enterprises, that is, the shareholders. Seventh, the decline in the role of trade union leadership among the working class has meant that the trade unions cannot now play a mediating role between the classes as they have done for over a century. This was the role so deplored by Lenin in his seminal work What is to be Done.11Finally, as an extension of this point, the loss of social democracy as a credible defender of capitalism has removed a barrier to confrontation with the working class. This issue is continued below.
The reduction in welfare benefits and growth of the unemployed have meant that social democracy has had to choose whether to become more militant or abandon social democracy altogether. By and large, social democratic parties are today little more than a shadow of their former selves, whatever that was. The effect has been disastrous for political democracy not in the simple elimination of social democracy but in so far as there used to be a party that proclaimed that it stood for a socialist society, however distant. Although there was a great deal of hypocrisy and betrayal, nonetheless, there was at least a formal statement of principles dedicating representatives to genuine change. Its elimination has made Parliamentary democracy appear as a contest among political parties whose members have no principles and whose parties do not essentially differ in their aims. The increasing anger among the population following the financial implosion has found no outlet. The logic of the situation leads to a search for more radical parties. That has showed itself in Greece with a move to the left, although in other countries the move has been more to the right, with some shift to the left. This, however, could just be the beginning of a longterm adjustment in which people will begin to seek out left-wing candidates who stand for clear socialist principles. Even a mediocre conservative can see the possibilities. A genuine anti-capitalist programme proclaiming the aims of socialism, standing as it does for a good life for all, where all participate in decision-making, appears as a utopian dream, given the history since 1917, but it is clear that it will always be the case.
When this situation is considered, it cannot look very attractive to the bourgeoisie. They have lost their allies in the unions and social democracy, they are divided and the population is increasingly discontented, if not angry. They cannot continue with their previous strategy of finance capital, given the increasing level of militancy in the Third World, as in China and South Africa, and the subjection of finance capital itself to regulation, which is worldwide, both by governments and by international organisations.
An Historical Excursus
A historical summary provides further support for the view that there is no capitalist solution other than the utopian one now being followed. In a period of capitalist decline, from the 1870 onwards, the bourgeoisie could no longer rely on the automatic stabilisers of the system, as they were undermined, and they turned to imperialism and war. Direct force was employed to suppress revolutions or potential revolutions most particularly in the period 1917-1923 in Europe. Fascism served the same purpose between the wars.
In the period since the Second World War, the concessions made, in a period of military Keynesianism, were supported by Stalinist control over the working class. However, by the 1970s the working class began to act, and the bourgeoisie pulled the plug, while Stalinism came to an end.
In short, imperialism, war, social democracy/welfare state and Stalinism were no longer present or able to support capitalism. The final throw was the return to finance capital, now under regulation and criminal investigation.
The switch to finance capital was effectively a last despairing throw of the dice in that control was shifted to finance capital, which exerted an extreme form of control over the extraction of profits. Finance capital is intrinsically short-termist. It cannot be anything else, since its raison-d’etre is to make money out of money. Money, however, is not in itself capital, it has to be used to buy labour power to create more value. So, on the one hand finance capital squeezed the industry that it owned to the limit, while on the other it ceased to invest when it could not find the quick return required. Given the situation where limited competition meant that the market either did not increase or increased slowly, attempts to squeeze the value-producing sector still further could not work. Profits flowed but they did not allow for still higher returns and more extensive fields for profits. The ultimate solution was to save the money and put it into banks on interest where possible. Money could not become capital, and the capitalist class was becalmed, rich beyond its dreams but no longer capitalists.
The system was in a general crisis from the 1970s onwards, as already argued. The measures taken, some of which are enumerated above, have been called neoliberalism. They led to a wild ride in search of super-profits. In utter desperation, finance capital turned to cannibalism, using derivatives on a gigantic scale, in a way that was easily susceptible to mass high-level fraud. The crash that has followed has discredited finance capital, even though it continues to function. A reversal of deindustrialisation is being talked about, but investment remains static.
Like a horse whose embattled rider has lost his head, capitalism continues to move in the same direction as before, until the dead rider falls off and the horse (capital) gets the point and stops.
Their Older Strategies are Exhausted
It may be said that capital can rule as all undemocratic rulers have ruled in the past through direct force, through division of the working class, through control over the
media, education and general propaganda. It is, of course, doing so, but the problem for capital has always been that it unites the working class in order to have a workforce that can work efficiently and well. At the same time, capital is international today and a divided workforce and divided society are less efficient. It is more difficult today to discriminate as harshly as before against women, non-whites, Jews, gays, etc. Hitler could use the traditional scapegoat of the middle ages, the Jews, but that is no longer possible today. Education, travel and the media itself have made propaganda more difficult to believe. The Orwellian or Stalinist world could never be one in which the population was indoctrinated. When reality differs from the propaganda so blatantly, people become increasingly sceptical of official pronouncements. Cynicism rules, or at least appears to rule. Most people are more intelligent.
The bourgeoisie is in dire need of a new policy, having lost all its old strategies from imperialism to Stalinism. The latter was not, of course, a capitalist strategy, but it accepted it as a means of survival.
The present impasse is shown in its foreign policy, where it has invaded Iraq and Libya but failed to improve its own situation. The whole of the Middle East is now in a total mess, in large part because the capitalist hegemon, the USA, cannot find a solution. There is, in fact, no solution. They destroyed the Communist Parties, they destroyed the nationalist parties and they promoted religious fundamentalism, which has now got out of control. Their political failure is a mirror of their economic failure. The world is crying out to move to a new stage where society is ruled from below in the interests of all, through an agreed series of plans. Governments have no money and cannot even bribe their way through crises, as they have done in the past. The countries of the former Soviet Union remain in a state of transition as exemplified by the failure of Russia to develop and the considerable difficulties of the Ukraine. Although it is in the interests of capital to bring them fully into the capitalist form, it has failed to help them move in that direction.
Most right-wing theorists might have expected the capitalist class to provide the money and the measures to allow, or even force, the states of the former Soviet Union to become full capitalist countries. Instead, capitalism rather saw them as a resource and a market with which to increase their turnover and profits in the West. Western firms did not want competition and saw to it that there was none. There is, however, no perspective for a country based very largely on extractive industries, as in the case of Russia. There is even less of a future for the Ukraine, which does not have the mineral wealth of Russia. Western strategy in relation to the former Soviet Union and Eastern Europe also can only be called non-existent. The consequences are becoming clearer with Hungary moving in a far-right, possibly semi-Fascist-direction and other countries having authoritarian forms. Even those that have regular elections, like the Baltic Republics, cannot be said to be ‘democratic’ since, as in the instance cited, they have found an excuse to exclude a section of the population from citizenship.
The Final Round: Austerity and an Impossible Keynesianism
They are not investing so there is a low rate of growth and they are afraid to go for full employment, in case the 1970s repeat themselves. Instead, the strategy is one of austerity combined with the remnants of a stricken, if functioning, strategy of finance capital.
Austerity is already a failed strategy, but it is worth spelling it out. At the present time, the rich get richer, the poor poorer and the middle class is getting wiped out. On the one hand, there is much talk about SMEs (small and medium-size enterprises). On the other hand their position is not getting better, given the difficulty in getting loans and finding customers. On the contrary, the unemployed middle class has entered their ranks and finds it difficult to survive. The educated middle class, in the professions, doctors, teachers, academics, engineers, etc., have declining salaries, while their costs, in housing, education, etc., are rising. It is almost as if Eduard Bernstein’s complaints12that Marx was wrong in predicting such a future have themselves been proved wrong. The public sector, being harshly cut, is particularly hard hit. At the same time, workers’ conditions, whether skilled white collar or unskilled blue collar, are worsening.
Can the bourgeoisie go for concessions, a Keynesian strategy? It has never been tried in the absence of war, so it would be a dangerous trial to attempt and they know it. It is highly unlikely. Will they go for more repression? Historically, much of Europe fell into the hands of fascism, which repressed the left and the workers as a whole. Fascism itself is not repeatable. The logic of austerity leads to the full re-institution of commodity fetishism and the reserve army of labour. While the return to the imprisonment of workless families to the workhouse and the total privatisation of everything, including the return of gold as the currency, is also out of the question, movements in that direction, if not the ultimate goal, are already in place. Nonetheless, it is highly unlikely also.
A population scrounging for food in food banks already exists, and a substantial proportion of workers live a precarious working life, going in and out of employment, losing their original skills. The logic of this situation is one of permanent riots and the growth of anarchism. This too is not a realistic labour or political policy. A simple continuation of the present situation will lead to a sharp shift to the left among the population, sooner rather than later. At the moment, workers are looking for immediate and comfortable solutions like independence in Scotland, but as they disappear socialism will present itself as the only reasonable replacement.
This limited analysis is well known to bourgeois theorists and the more realistic will try to find an alternative. Interestingly, some of the attempts to hold the fort, such as the re-writing of history, the demand for patriotic textbooks, and the need to teach British values, all of which are deeply sinister, are seen for what they are. There is, in fact, no alternative other than continued austerity and the continued undermining of the welfare state and exclusion of unions from the body politic, all in the name of democracy.
No Middle Road: Delay and Confusion as a Strategy
The fact is that there is no middle road. One cannot mix the sperm of a dog and cat and expect to get a dot. Or as one lecturer put it when we were debating market socialism, the latter is like fried ice. A worker subject to the discipline of the factory, under the control of management, is exploited and oppressed, whether the factory claims to be socialist or capitalist. In Marxist terms abstract labour has to be abolished. If it is abolished there cannot be a market. It is not just that there is no middle way. However, there is a use for the failed middle way.
The nature of nationalised forms within capitalism may be inferior to both their privatised and socialist forms. The nationalised entity, in capitalism, cannot complete the process of transformation of the institution or enterprise by electing management and running the ‘firm’ for the benefit of both the society and the workers. Within capitalism, the ‘firm’ is usually compelled to run as if in a market, with pay, promotion and hierarchical structures for workers and a financial and economic structure based on either making a profit or not making a loss. On the other hand, the nationalised firm has to conform to government rules and abide strictly by the law. The result is that trade unions are relatively strong, jobs are protected and wages and salaries paid at some median level for most workers. Incentives become a mixture of the financial and working for the greater good. In the so-called natural monopolies like the health service, public transport, the utilities, etc., the result is a middling service, inferior to what is possible and often inferior to what private enterprise may provide. The problem for a nationalised firm is that it cannot use the ruthless control exercised by efficient capitalist management in firing incompetent workers, or in hiring the most skilled professionals at exorbitant salaries. Nor can they use the stages in between the polarities involved.
However, it is frequently not the case that privatisation is superior. A national integrated service with one provider has natural advantages, which may be enhanced through good management and relatively high pay. A nationalised service such as health relies on the goodwill of its employees, the doctors and nurses, because that is in the nature of the service. However, capitalist incentives conflict with the humanitarian nature of the service. The US health service, being largely based on the market, outside of the old and the very poor, is manifestly inefficient except for the rich. If someone is a worker, customer or observer of enterprises that vary in their ownership, whether public or private, such a worker may well be confused as to which kind might be supported. Such confusion might be extended by the failure of Stalinism. Socialism cannot be built by constructing islands within capitalism whether the islands are small co-operatives or large countries, still less nationalised firms. At the present time, however, confusion reigns precisely because the laws and proto-laws of the old capitalist system, and those of decline, mix with those of the future struggling to show themselves.
Social democracy has manifestly failed and Stalinism has not only ended but provided a permanent excuse to the capitalist class for opposing socialism. With the difficult reality confronting most people, they do not yet know which way to turn. Popular confusion provides the bedrock of the relative stability of capitalism at the present time, rather than the traditional bases of commodity fetishism and the reserve army of labour.
The confusion is supported by the dominant currents of thought among those considered intellectuals. In the period before the First World War, and between the wars, there were many socialist writers in many languages. It is no accident that Mr Gove, former Secretary State for Education in the UK, wanted to effectively ban Steinbeck from school literature. While he was widely derided, the fact is, he thought he could get away with it.
It has taken almost a century, from the time of the Russian Revolution, to reach a point where its ideals could be discussed without a Stalinist interpretation. It can now be more widely understood that it was defeated by Stalinism, with truly destructive and world-shaking consequences. Effectively, socialism has been delayed a century and it can be further delayed by the belief that it is a utopia and possibly even a destructive utopia. Delay is also a strategy, whether through demoralisation, confusion or fear. It is now the task of socialists to convince the working class, effectively the population, that the new society is not a utopia and the groundwork is present in the declining capitalist society. All it requires is a sustained push, in whatever form, to get there.
II: Scotland and Independence
Most of the Scottish left is supporting the drive to independence led by the Scottish National Party. On the one hand this is understandable in that Scotland is in principle no different from other parts of the world subjugated by British Imperialism. The fact that Scottish soldiers, doctors, bankers and ordinary skilled and unskilled workers participated in the conquest of Empire is undoubtedly a negative aspect of that reality, but they cannot be said to have had any choice. The English bourgeoisie at the beginning of the 18th century virtually forced the Scottish bourgeoisie to join with England by threatening economic and other sanctions. The ordinary population was not in favour. There remains in Scotland a strong sense of grievance going back three centuries as a result.
The further argument that is powerful on the Scottish left is the legacy of John McLean, the Scottish Marxist leader, whom Lenin appointed Soviet consul, during the First World War and after. He argued that, since the Scottish working class was more advanced than the English, they should take power as a first step towards socialism in the UK. If indeed Scotland were ready to move to socialism and prepared to be part of a global battle for socialism, which he was suggesting, then it would be the correct thing to do. At that time, after the First World War, the argument was based on reality, even if there are obvious counter-arguments.
There is a further subordinate argument in this regard. Other provinces of European countries and beyond are looking to the success of the Scottish referendum to make a break. That applies most obviously to Catalonia, but not only to Catalonia. (Quebec has been trying unsuccessfully for some time, although it is not in Europe and the left is much weaker in North America.) If indeed the break-up of the UK would lead to the break-up of a number of countries, and so the power of the ruling class in those countries, and possibly, therefore, a weakening of the ruling class in general, one might consider it an additional reason to support the independence of Scotland.
In fact the debate in Scotland has been conducted on other terms. The Scottish National Party has tried to argue for independence on social democratic grounds. They have made higher education, medical prescriptions and care for the elderly free. The Labour Party opposes these concessions. The dominant discourse is in terms of a fairer society, freed of English conservativism. In addition it is said that Scotland will be better off financially.
The official opponents, the Labour, Liberal and Conservative parties, are united against independence, saying that Scotland will be worse off and further concessions will be costly. Their views are classically right wing and worth very little. They tend to side with the Conservative view that fuller fiscal devolution is worthwhile because it would force the Scottish government to increase taxes and reduce welfare expenditure. The fact that they do not go further and support independence shows that there is a more powerful ruling class anxiety involved.
The left argument, as generally expressed, is not worth the paper it is written on either, whether for or against. The idea that Scotland could build socialism in one country is both fantastic and illiterate. While many socialists who support independence do not think that socialism in one country is possible, enough do come close to that viewpoint.
One has to look to the fate of two social-democratic French presidents who gave up even the idea of limited concessions to the working class, and went over to so-called neo-liberalism and austerity (Mitterand and Hollande). The fact is that there is a world division of labour that can only be pushed aside at a suicidal cost, as became very clear in the case of the USSR. Today, the cost is far higher than even 40 or 50 years ago, let alone a century ago. A socialist or social democratic party will have to pay global prices for its imports and charge global prices for its exports. It will have to structure its economy according to the global division of labour. If it does not pay managers and highly skilled workers global rates, a proportion will leave the country. It will have to remain a capitalist country in other words. Scandinavia is now ruled by parties that are either conservative or on the right of social democracy. In Scotland much is made of the Scandinavian example, forgetting the particular conditions under which Scandinavia was able to introduce social democratic reforms, and the shift to the right.
The concept of market socialism, always a chimera, although beloved of some ‘socialists’, has died a real death. If one is to have socialism, then the subjection of the worker to the manager/owner has to be ended. That means that the whole concept of working at similar competitive rates has to be abolished. Spending one’s life working one’s guts out under penalty of demotion or dismissal is a cruel and inhumane existence. Competition in work and out of work has to be abolished to allow common co-operation in an agreed plan controlled from below. In Marxist terms abstract labour has to be abolished. With it goes any possibility of exact calculation of labour time and so the possibility of more than rough calculation under socialism. Scandinavian countries are like all other countries in subjecting work to the market. They differ, in so far as they do differ, in lower levels of inequality and unemployment.
Scotland, however, has lost its industrial heritage and the oil is an insufficient replacement. Unfortunately the Scottish National Party is banking on the price of oil to rise, when it is quite likely to fall. It has remained static for two years but the new extraction of shale oil and gas in the USA will eventually hit the global market. The same will apply to other countries when they get round to extracting their shale oil and gas. It is even possible that the price of oil will drop drastically through a combination of increased supplies and more competition from other renewable sources of energy. Yet the calculation is that the price of oil will rise. We can assume the best case, which is that the price is static. That will not be enough to get to a fairer society, in itself, and nor would a 20 per cent increase, as projected.
We can assume that the nationalists will take a firm line on the division of assets and liabilities with England. We do not need to take the scare tactics of the antiindependents. Scotland could have its own currency and be more independent than otherwise. However, the dreams and ideas put forward have predecessors in the history of the ex-colonial countries. They require an initial period of primary capital accumulation in which savings are invested in new industries or the revival of old industries. If that is done carefully with popular support, allowing a move to full employment, there may be a chance of success in that the standard of living will be raised and the youth will see a future. It will not, however, be an easy road. It will require at best static incomes, with rising taxation for those who are better off. The rich will complain and possibly leave the country. The right will demand privatisation and lower taxation. The bourgeoisie will insist on reducing social democratic gains and oppose their extension. The history of nationalist parties in this regard is universally awful. They turn on their left, persecute them and even imprison them or worse. That kind of brutality may be avoided. Interestingly, in Quebec the nationalists lost out nationally to the social democrats, and they did not even do well in the local elections recently.
The problem for nationalist parties is that they make social democratic or left-wing promises but the exigencies of independence require a programme as outlined above to fulfil those promises. Unfortunately the usual course of events for nationalist parties is one in which the economy turns downwards as the local and international bourgeoisie either withdraws investment or fails to keep to its promises. The world economy inevitably wobbles at some point or fails to move upwards, leaving the newly independent country in trouble. This does not have to happen, of course. The Scottish National Party has done its best to ensure that it does all the right things like keeping the Queen as head of state, joining Nato and implicitly promising to side with the global imperial power, the USA, even though it is calling for nuclear missiles to be removed.
Although the Scottish National Party has held together, it is unlikely to do so once the strains of independence show themselves. Uniquely it faces a Labour Party standing to its right, which might make it easier for them. Nonetheless, it is not possible to support both capital and labour, as Alex Salmond has tried to do. The capitalist class in Scotland is weak, having lost its industrial base. It rests more on finance capital, but it too has hollowed out. That must also apply to the working class, which continues to have a strong ideological/subclass division. The recent Euro elections showed that the biggest section of the population voting for the far-right UKIP were from North and South Lanarkshire, areas of the most backward sections of the class that supports the right-wing Protestants of Northern Ireland. The nonindustrial state sector, teachers and academics are closer to the left. Indeed one might expect sections of the staff working for the large banks to be similar.
Half the young people go through higher education, without the prospects of a job and probably no hope of a really good job able to last the length of their working lifetime, even if not with the same employer. Unless the Scottish government sets out to change the economic structure of Scotland, the situation for young people can only get worse, quicker, in fact, than in the rest of the UK. The remedy, however, does not rest with private enterprise, since the problem is not dissimilar, although possibly more advanced, than what exists everywhere in the UK outside of the South East. The only solution lies in large-scale investment in and through the public sector. That involves both infrastructure development—in roads, water and electricity as well as in public housing and new public-owned industry, whether the most advanced or not. It is theoretically possible for a new administration to take this path, but it involves direct confrontation with the Scottish bourgeoisie and petite bourgeoisie, and its political representatives. Given that the world is in a depression and the governing class insists on austerity, it is hard to see how Scotland could even get to the point of discussing the investment involved.
Salmond has tried to steer a path between the classes while maintaining close contact with the bourgeoisie. He is a skilled political operator within capitalism and Scotland itself is very small, with a population of 5 million, which might manage to manoeuvre its way through the next 20 years or so, without too much trouble or at least with less trouble than if it was part of the UK.
The Socialist History of the Question of Independence
There is a considerable socialist literature around the question of independence for national groups within a multinational state. The classical literature took the example of Austro-Hungary and theorised the need for autonomy rather than independence. Such was the discussion among Marxists in Central Europe, among German and Austrian members of the SPD and the Austrian equivalent. Lenin took a strong stand in favour of the right of nations to self-determination, most particularly within the Russian Empire. During the First World War President Wilson of the USA took the same line, at least officially. Luxemburg opposed independence for Poland in the context of its division among three countries.13
Luxemburg was right, in the abstract, when she said that independence was impossible under capitalism and irrelevant under socialism. It is obviously true, as briefly argued above, that no country, other than the imperial powers, can be genuinely independent. However, a united Poland in which the Polish language and culture could be promoted and a series of national policies followed as in education, health, housing, etc., however limited, did make a difference to the population. However, an autonomous Poland in a freely united country would have been better off. 14 Indeed, that is where it is going today, as part of the Euro area and in future part of the Eurozone. Unfortunately, this was not true for the whole Polish population, as national minorities like Jews, Ukrainians, etc., suffered in the pre-war years. It is also very difficult to take the support for the pre-war Baltic republics seriously, given their fascist nature, and the way sections of the government and population supported the Nazis.
On the other hand, Luxemburg supported national independence in Turkey, in the Ottoman Empire, particularly for the Armenians, essentially on the grounds that
there was no socialist struggle and hence it was necessary to support the struggle against national oppression through independence.15
The last paragraph raises the question of the meaning of independence in the historical and global contexts. Although Lenin supported the concept, he did not always apply it himself. The Ukraine and other republics were brought into the Soviet Union through the power of the Soviet army or the lack of an alternative. Lenin was also accused of conceding to nationalism by Paul Mattick, and it is clear that Lenin adopted a policy of a real-politik. Effectively, he used it as a means of breaking the power of the ruling class. President Wilson in parallel supported independence as a means of breaking up hostile powers. In other words, the left cannot support independence as an absolute, without considering the context.
Discrimination, disparagement and outright persecution have been the fate of a series of so-called national minorities or ethnic groups. Scots do complain that they can be treated as inferior by the English.
Luxemburg has put the issue very clearly. Where the question is one of the working class taking power that has to be the fundamental issue, and the national question has to be part of that struggle. Where, however, as in Turkey, there is no working class movement, there can be no question but that independence will therefore help to right an historic wrong. Genuine autonomy within some kind of unitary structure is not on offer. Both on the grounds of civil rights, as it were, and to correct an historic wrong, independence is a reasonable solution as a first draft as it were.
However, the political economy of the present context dictates that bourgeois solutions at a time of historic capitalist decline, when that decline is re-inforced by a depression, are unlikely to work. Furthermore, following the classic socialist line, as expressed by Luxemburg, but effectively adopted by Lenin and Trotsky, the demand has to be for national autonomy within a united socialist framework. Clearly this is not on offer.
How should one vote? Should one take the line that unity is strength and therefore one has to unite with the English and Welsh working class to overthrow capitalism? Undoubtedly that is correct. The problem is that the actuality of the class in motion is still to show itself. The working class of an independent Scotland can unite with the English working class with or without borders. The UK itself cannot go socialist, it would have to unite with the class on the continent of Europe in order to overthrow capitalism. The fact is that the unions have separate Scottish divisions, and that can continue.
The problem is not the technicality of borders but the possibility that Scottish nationalism will cause the workers of Scotland to unite with their petite-bourgeoisie and bourgeoisie. Voting yes will not itself act against unity of the class but a nominally independent Scottish government and bourgeoisie might well use all the apparatus of nationalism to prevent the growth of socialism. There is a further issue. The likelihood is that the vote will be sufficiently close, if lost, to give hope that a future referendum will be won. If that is the case, nationalism will probably grow with constant demands to set a new date, and a rallying of the troops to force the powers that be to concede the new referendum.
It does look as if the forces of unity and a no vote have already lost. There is only one way to achieve a true victory for those who want British unity. That requires very substantial economic concessions such that there is rapid economic growth in Scotland for a couple of decades. That coupled with effective cultural autonomy will give the prospective yes voters what they want within the UK. However, this is not realistic in an era of permanent austerity. The likelihood, therefore, is that the unsolved issue of Scotland will remain a long-term sore even after a bitter separation some time in the future, assuming the opinion polls are right.
Hopefully, the above will prove untrue and the internationalism of the working class will proclaim itself as workers demand socialism as the only truly human society in the next few years and society will celebrate national differences.
Logically, a Marxist could vote three ways. No, in opposition to nationalism and for working class unity, yes on grounds that there is no working class unity, and the border will not obstruct it when it comes, or abstain on the grounds that it is the wrong question at this time. Socialists of impeccable integrity are in fact facing all three ways. Abstention may have the strongest case. On the other hand there is a negative case: it is a fact that the British bourgeoisie is strongly opposed, and indeed that the global bourgeoisie is worried by it. On that basis there may be a marginal reason to vote yes, without any illusions, and many regrets.
- 1.Sarah Gordon ‘Capex Data Cast Recovery Doubts’, Financial Times, 1 July 2014, p.17.
- 3.Editorial, ‘Eurozone Needs Quantitative Easing’, Financial Times, 20 July 2014, 7.14 p.m., ww.ft.com/cms/s/ 0/2561130a-0e95-11e4-ae0e-00144feabdc0.html#axzz38DS6VWXK
- 4.James Politi, ‘US Jobs: Slim Pickings’, Financial Times, 20 July 2014, 3.59 p.m., http://www.ft.com/cms/s/2/ 3676ad9e-0de1-11e4-b149-00144feabdc0.html
- 5.Leader, ‘America’s Lost Oomph’, The Economist, 19 July 2014, p.11.
- 7.Lawrence Summers, ‘Why Stagnation Might Prove to be the New Normal’, Financial Times, 15 December 2013, 8.41 p.m., http://www.ft.com/cms/s/2/87cb15ea-5d1a-11e3-a558-00144feabdc0.html#axzz38DS6VWXK
- 8.Paul Krugman, ‘Secular Stagnation, Coalmines, Bubbles, and Larry Summers’, New York Times, 16th November 2013, 3:47 p.m.
- 9.‘We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate.’ Ibid.
- 10.For a more detailed discussion of the question of competition and the role of monopoly see the important work by John Bellamy Foster and Robert McChesney, The Endless Crisis (New York: Monthly Review, 2012) and the article by Fred Magdoff and John Bellamy Foster in Monthly Review, 66:1 (May 2014), http://monthlyreview. org/2014/05/01/stagnation-and-financialization/
- 11.V.I. Lenin: What is to be Done? (Stuttgart: Dietz, 1902), mostly easily accessed at https://www.marxists.org/ archive/lenin/works/1901/witbd/. It should be noted that Stalin altered Lenin’s works, so that the first three Russian editions are considered genuine, even though there were footnote alterations in the third edition. The first English editions follow the fourth Russian edition, which is dubious. (At one point I found at least one article which was translated in the opposite sense to the Russian, although whether that was the translator or the censor is not clear.)
- 12.Eduard Bernstein, Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemokratie (Stuttgart, 1899); first published in English under the title Evolutionary Socialism in 1907 by the Independent Labour Party. See http://www.marxists.org/reference/archive/bernstein/works/1899/evsoc/. Bernstein argued that inequality in incomes was diminishing and the middle class growing. He contrasted this with what he thought was Marx’s views. He projected the declining inequality forward. He ended up arguing and defending in the concluding chapter of this book the view that the final aim is nothing, the movement is everything, partly as a result. The fact that he has been repudiated statistically in such a graphic way over a century later lays stress on the need to understand the reasons. The Great Depression did lead Bernstein to accept that he was wrong, it seems, but the present provides a graphic extreme. In reality, Bernstein laid the foundation for social democracy.
- 13.However, this, as we said, by no means implies that the proletariat is capable of taking upon itself the historical task of the schlachta, as the anachronistic minds of petit bourgeois nationalism would have it; this task, to restore Poland to its existence as a class state, is an objective that the schlachta itself abandoned, and the bourgeoisie has rendered impossible through its own development. Yet our proletariat can and must fight for the defence of national identity as a cultural legacy, that has its own right to exist and flourish. Today our national identity cannot be defended by national separatism; it can only be secured through the struggle to overthrow despotism and solidly implant the advantages of culture and bourgeois life throughout the entire country, as has long since been done in Western Europe.
- 14.‘Nor does this solution stand counter to the national interests of the Polish proletariat. Its real interests in this respect liberty, the free development of the national cultural heritage, bourgeois equality, and the abolition of all national oppression—find their only effective, nay, only possible expression in the universal class strivings of the proletariat for the broadest democratization of the partition countries, to which national autonomy is a self- evident corollary. Beyond this, however, to think that appropriation of the state apparatus in an independent class society under existing conditions is in the interests of the working class is no more than a utopian delusion, rooted in the prejudices of the petty bourgeoisie, and, as such, is alien to the real interests of the proletariat as it is to the thought of scientific socialism in general.’ Rosa Luxemburg, The Polish Question and the Socialist Movement (1905), http://www.marxists.org/archive/luxemburg/1905/misc/polish-question.htm (accessed 23 July 2014).
- 15.The national struggle is not always the appropriate form for the struggle for freedom. For example, the national question takes a different form in Poland, Alsace-Lorraine and Bohemia. In all these cases, we are faced with a directly opposing process of capitalist assimilation of the annexed lands to the dominant ones, which condemns the separatist efforts to impotence, and it is in the interests of the working class movement to advocate the unity of forces, and not their fragmentation in national struggles. However, in the question of the revolts in Turkey, the situation is different: the Christian lands are bound to Turkey only by force. They have no working class movement, they are declining by virtue of a natural social development, or rather dissolution, and hence the aspirations to freedom can here make themselves felt only in a national struggle; therefore our partisanship cannot and must not admit of any doubt.