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Reconstituted Socialist Party of Great Britain (1991) Socialist Education Series - Capitalism: A Fetter on Production

Reading Marx and Engels.

In the early days of the Socialist Party of Great Britain a great deal of weight was placed on a thorough study of the materialist conception of history and a careful reading of the standard works of Marx and Engels which included the COMMUNIST MANIFESTO, WAGES PRICE AND PROFIT AND SOCIALISM; UTOPIAN AND SCIENTIFIC.

During the late 1960’s this tradition in the SPGB began to tail off with the disappearance of Economic and History classes. And with disastrous results. A broad understanding and application of Marx and Engels’s ideas to the modern world began to disappear to be replaced by untenable propositions about capitalism and capitalist production.

What was understood by early SPGB members about capitalism being a “fetter on production” was largely forgotten. Questions about the techniques of production and productivity have to be understood because of their importance in relation to the establishment of Socialism, production for use and free access.

The same applies to Marx’s careful use of the words he used to understand capitalism; words like profit. He did not say that profits are made on the stock exchange. Some speculators gain others lose. They no more make profits on the stock exchange than they do by backing the winner in the Grand Derby. What Marx did show was that profit came out of the surplus value exploited from the working class. He showed that the sum total of surplus value equalled the sum total of industrial profits which were then divided into the unearned income of rent, interest and profit.

Political events also need to be explained with reference to the materialist conception of history otherwise mistakes will be made and class interests and class struggle overlooked.

Take the case of the closure of the coal mines in the 1990’s. The Media gushed forth a crass sentimentality at the sight of 200,000 miners marching to save the mines from being closed. Yet a few years earlier in 1984 the miners were being denounced by the very same newspapers for going on a year long strike, which, incidentally, they lost.

A similar outburst of sentimentality took place during the 1889 Dockers strike. The strike began on the 12th August and virtually all the various dock trades came out. Writers of the time like G. D.H. Cole, Raymond Postgate and the Webbs said that “everyone loved the Dockers” including the Lord Mayor of London and Cardinal Manning. When they marched in London, the employers believed that the police would prevent the march. It did not happen. And for a very good reason.

John Burns, a leading representative of the Dockers took advantage of the situation and kept in touch with the authorities including the police. On the day of the march John Burns was at the head of the procession with the Superintendent of the Police and there was nothing the employers could do about it.

The immediate effect of the strike was a rapid growth in the trade-union membership from 750,000 in 1888 to 2,000000 by 1900.

But in the long term strikes for higher pay and better working conditions did not do much for the Dockers. True, as Marx noted in WAGES,PRICE ANS PROFIT; “By cowardly giving way in their everyday conflict with capital, they (the working class), would certainly disqualify themselves for the initiating of any larger movement” (ESSENTIAL THINKERS, page 136). However, the struggle for wages and better working condition does not remove the social pressures imposed on workers by capitalism. The capitalist class own the means of production and direct it towards making profit. Trade union action has severe limits placed upon it.

As Marx noted:

They (workers) ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material condition and the social forms necessary for an economical reconstruction of society. Instead of the conservative motto, “A fair day’s wage for a fair day’s work!” they ought to inscribe on their banner the revolutionary watchword, “Abolition of the wages system!” (loc cit p. 137).

It was Marx who noted that the class struggle was in fact a political struggle. It is a struggle over the ownership of the means of production. While the capitalist class own the means of production workers continue to face numerous social problems which will not go away.

Workers, for example, are vulnerable to changes in the means of production as new capitalists supplant old capitalists. Whole industries can disappear to be replaced by new ones.

Until the 1960s, the ways in which the goods carried by cargo liners were packed remained much as they had been in the early 20th century. Crates, boxes, bags of various shapes and sizes filled the holds.

Large numbers of port workers were employed in loading and unloading these individual cargo items - a laborious skilled process that meant that as much as half of a ship's time might be spent in port. A further point of inefficiency was the break in the transport process as goods transferred between vessel, warehouse and inland transport like trains and Lorries.

Containerisation changed all this, and much besides. Cargoes pre-packed in the standard-sized box can be handled in a fraction of the time, with a fraction of the workforce needed in the past. The same container can carry goods from a producer in one country and ship these, undisturbed, across the oceans to a consumer on the other side of the world. Traditional liner ship types have been replaced by the container ship; container terminals have displaced or transformed established ports, with profound consequences for local communities. Now world-wide shipping owners exercise power once held by the Dock owners.

Coal is another recent example.

To look at the issue of coal in terms of the materialist conception of history we have to consider the period in British capitalism when Coal was king. In 1900 there were over one million miners producing 225.2 million tonnes of coal a year for homes, fuel for furnaces producing iron and steel, railways and steamships, gas lighting and the chemical industry. 25.9 % of coal was also exported. By the beginning of the First World War, 282 million tonnes of coal was being produced.

When coal was a new source of fuel it bought into being a new group of capitalists, a powerful group of employers who organised themselves into the Employers Federation of Coal Miners. They had considerable power within the capitalist class and exercised great influence over the government of the day.

After the war British collieries were poorly equipped with outdated machinery. A bitter class struggle was taking place between the owners and miners. The coal industry found it difficult to compete overseas particularly against countries like Poland, Spain and the Netherlands who had opened up new well-equipped collieries during this period.

In addition, alternative forms of energy with new capitalists and different class interests were gaining ground. Oil was used in ships and power stations and hydro-electric power was being developed in Scotland and Wales. Gas was being used as a domestic fuel.

It was because the coal pits had become unprofitable but were needed by the capitalist class as a whole that the Labour Government of 1945 nationalised the coal industry. It had nothing to do with Socialism.

By the 1950’s a number of collieries were closed. By the late 1960’s the National Coal Board (NCB) tried to make the coal industry more profitable and efficient. This failed and a new strategy was announced in 1974.

Some progress was consequently made but the NCB found it difficult to make a profit. In 1983 the new Yorkshire coalfield near Selby was opened and plans laid to exploit large reserves of coal in the Vale of Belvoir. However, in 1982-3 the NCB admitted it was losing £11 million a year.

Further cuts were made leading to the miner’s strike of 1984-5. Following the miner’s defeat further pit closures were announced with 4000 miners being made redundant in South Yorkshire.

Now coal cannot compete with other forms of energy like gas, electricity and nuclear fuel. This movement from one energy source to another can be explained by Marx’s materialist conception of history relating developments in the means of production, the class interests of new owners and the class struggle between employers and workers.

Marx and Capitalism

In the COMMUNIST MANIFESTO Marx listed the developments under capitalism; machines, replacing hand crafts, the application of chemistry to production, steam, railways, canals and telegraphs.

Marx stated that capitalism had “created more massive and more colossal productive forces than have all preceding generations together” (ESSENTIAL THINKERS LIBRARY p. 27).

Marx was answered by the Idealists. They said that someone has an idea and this develops the means of production. Marx did not discount ideas but he would have asked his critics where the ideas came from.

Two examples support Marx.

The first is the movement of labour. Today, within certain bounds, there is freedom of movement of workers from one part of the country to the other or over the EC or, into the labour market of other countries.

In Feudalism this generally was not the case. Most workers were peasants tied to the Lord’s land or to the Parish. It was in the interest of the capitalist class to have freedom of movement; not as an abstract right, but to enable them to buy the worker’s labour power as when they needed it.

The second example is the development of working class solidarity. This was not the result of an “idea” but came out of working class experience of the class struggle.

At the beginning of capitalism, as Marx explained in the COMMUNIST MANIFESTO, there was not a working class as such but workers scattered over a vast geographical field. However as workers came into contact with each other through being assembled together in factories, being able to contact each other by means of transport, by living near each other and by socialising together as a class, working class solidarity grew; expressed first in the rise of trade unions then politically with the Chartists on up to the establishment of the Socialist Party of Great Britain in 1904.

And the development of the working class within capitalism continued. Salaried workers replaced capitalists within industry and the capitalist class lost their social purpose. Workers now administer capitalist production. The capitalist class are now totally superfluous.

In both examples the motor force of history was not the movement of ideas but the class struggle. A little more should be said of the class struggle. Politicians deny the existence of the class struggle but it is ever present. The class struggle was not the invention of Marx and Engels. But they observed the class struggle taking place and drew revolutionary conclusions from their experiences of seeing the working class resist the capitalists.

Engels wrote:

Certain historical facts occurred which led to a decisive change in the conception of history. In 1831 the first working class rising had taken place in Lyons; between 1838 and 1848 the first national workers’ movement, that of the English Chartists reached its height. The class struggle between proletariat and bourgeoisie came to the front…But the old idealist conception of history …knew nothing of class struggle based on material interests, in fact knew nothing at all of material interests…The new facts made imperative a new examination of all past history” (SOCIALISM: UTOPIAN AND SCIENTIFIC loc cit).

From this new situation, Engels continued, it became clear:

that all past history was the history of class struggles; that these ruling classes are always the product of conditions of production and exchange, in a word, of the economic conditions of their time; that therefore the economic structure of society always forms the real basis from which, in the last analysis, is always to be explained the whole superstructure of legal and political institutions, as well as of the religious, philosophical and other conceptions of each historical period” (loc cit).

When new forms of production appear they are always attended by a group of capitalists with their own interests and looking for political representation of these interests. Groups of capitalists fight each other for markets and profits.

And two to three centuries ago the capitalist class were in bitter conflict with the landed aristocracy particular of the movement of labour and other feudal restrictions negatively affecting the interests of the capitalist class.

Once the capitalist class consolidated their position they were forced to turn their attention towards a growing working class.

There is a common misconception that Marx was opposed to the establishment of Capitalism as a distinct social system. He was not. He recognised that capitalism was a necessary social stage in the development of society with a beginning and end in the class struggle. In the order of social evolution there has to be capitalism before Socialism could be established.

Writing in the COMMUNIST MANIFESTO, Marx said:

The bourgeoisie, historically, has played a most revolutionary part (p.23 loc cit).

And he continued:

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country…All old-established national industries have grown or are daily being destroyed. They are dislodged by new industries…whose products are consumed, not only at home but in every corner of the world

When capitalism first emerged there was not a working class as such to establish Socialism. The capitalists did two things. First; they supplied the technical know-how within the factory and managed the productive process. Second, the capitalists who established capitalism educated, trained and developed the working class as part of the forces of production to the point where capitalism was no longer necessary and became a fetter on production.

Socialists, like Marx do not hold a moral case against capitalism. Capitalists have to exploit the working class in order to survive. The reason why Socialism is necessary is because capitalism now holds back the further development of the forces of production. Its narrow social relations of production are at odds with the needs of the majority. Capitalism has the potential to meet the needs of all society but the profit motive and the anti-social drive of capital accumulation prevents this from occurring.

The Socialist case against capitalism is not a moral one but a materialist one.

Engels explained in SOCIALISM: UTOPIAN AND SCIENTIFIC the way in which workers supplanted employers in the production process rendering the capitalist class socially useless.

He said:

All the social functions of the capitalist are now performed by salaried employees. The capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital” (ESSENTIAL THINKERS p. 441).

Marx and Production.

Productivity is an important subject for Socialists. Socialists will need to know the level of productivity at the establishment of Socialism and how to increase production and productivity by how much under what limits and with what consequences. Productivity will have a marked bearing on Socialism where there is “from each according to ability to each according to need” and where there is free access and enough is produced for everyone.

Productivity might appear to be easy to grasp. This has not proven to be the case. The understanding of productivity has been exceedingly difficult.

We can give three examples of the difficulty productivity presents itself; first with the early Marx, then with Adam Smith and then with the Atlee government of 1945.

Productivity has been difficult to understand. Marx made an error in the beginning of his studies of capitalism. He accepted, without much thought, Proudhon’s erroneous belief that between 1770 and 1840 productivity of the workers had grown 27 times (in fact it had about doubled). Later on, with more experience, Marx came up with a scientific argument for productivity based upon his Labour Theory of Value.

Adam Smith is regarded as someone who understood capitalism. In some areas his views were correct, particularly that the burden of taxation falls upon employers. However, he was totally at sea about the question of productivity. He dealt with the issue in the first chapter of his WEALTH OF NATIONS with an illustration of a pin factory.

Adam Smith was obsessed by the division of labour. He believed that the division of labour is the key to productivity. In a certain sense it is true but not as great as Smith believed.

In Smith’s example of a pin factory he considers workers receiving wire to make pins. He looks at the case of individual workers making pins or the case where they are put into teams of specialists.

Even though Smith actually visited a pin factory he did not have a clue how many pins an individual worker made. Is it one or 24 in a day?

This did not stop Smith concluding that if the division of labour was to take place in the pin factory the output of an individual worker would be increased by 240 times or even 480 times. This nonsense is still being produced uncritically in economic textbooks today. Adam Smith, in his account of the pin factory, dealt only with the last stage of the operation, that of tuning wire into pins, and took no account of the fact that by far the greatest part of the labour required to make pins had already been applied in producing the wire, including the mining of the ore, producing the metal from it, producing the machinery, buildings and so on. The third example is the labour Party. It was during the Attlee government of 1945 that the Foreign Secretary, Ernest Bevin, made an impassioned speech to the TUC. He said that if only the workers could increase productivity by 10% or more how it would help British exports against foreign rivals.

In 1952 the Labour Party published a pamphlet TOWARDS WORLD PLENTY, stating that since the industrial revolution productivity had increased 1000 fold. If this was the case-and it wasn’t-then it did not matter that the working class in 1945 increased or decreased productivity by a mere 10%.

These three examples illustrate a total lack of knowledge about productivity. It was left, as we have previously noted, for Marx to give a real measure of productivity.

Marx stated that under normal working conditions the value of a commodity was calculated by the abstract socially necessary time that went into its production. Marx did not make the mistake, as Adam Smith did, of just looking at the factory where commodities, like pins or cars were being assembled. Marx did not make this mistake.

Marx looked at the production of a commodity from beginning to end; the mining of the raw resources to its delivery to the shops. If we consider the Pin factory example it is probably true to say that 9/10th of the labour which went into producing the pin took place before the pins were actually made. The wire first had to be mined, formed and transported to the pin factory.

It is true to say that most miners do not go down the mines. This can be illustrated by the construction of the mine field at Selby. £100,000 million had been invested in the construction of Selby before a single miner went down the mine to hew coal. Labour time of construction workers, engineers, transport, materials, electricians, computer specialists had all entered into the construction of Selby before one miner was employed. Marx’s labour theory of value takes this process into consideration.

To illustrate this example further, let us look at a car assembly plant. Say it takes 200 hours of socially necessary labour to produce a car of which 20 hours socially necessary labour is spent in putting the car together in an assembly factory. If productivity of 10 hours is saved in the assembly of the car, and all other things remain the same, productivity has not doubled, as economists would claim, but rather productivity has increased by about 5%.

Capitalism: A Fetter on Production.

In THE COMMUNIKST MANIFESTO Marx wrote:

The productive forces at the disposal of society no longer further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered…”( loc cit p28)

While In the Preface to the CONTRIBUTION TO THE CRITIQUE OF POLITICAL ECONOMY he wrote:

“At a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production…From forms of development of the productive forces these relations turn into their fetters” (SW1, pp. 362-4).

These passages call for comment.

We often read about the European Union with its grain and meat mountains and its wine lake. Economists claim that this is a result of overproduction. The impression is given that overproduction takes place under capitalism. Yet this was not Marx’s view. In the COMMUNIST MANIFESTO he said that one of the first tasks of Socialists after establishing Socialism was to increase production: “to increase the total of productive forces as rapidly as possible loc cit p. 47).

And in VOLUME III of CAPITAL he wrote:

There are not too many necessities of life produced, in proportion to the existing population. Quite the reverse. Too little is produced to decently and humanely satisfy the wants of the great mass. There are not too many means of production produced to employ the able-bodied portion of the population. Quite the reverse...

"On the other hand, too many means of labour and necessities of life are produced at times to permit of their serving as means for the exploitation of laborers at a certain rate of profit. Too many commodities are produced to permit of a realization and conversion into new capital of the value and surplus-value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosions.

"Not too much wealth is produced. But at times too much wealth is produced in its capitalistic, self-contradictory forms." (Marx, CAPITAL VOLUME III ch XV, p.257-8)

In fact, Capitalism does not produce enough. The only people capitalists are interested in are buying customers. If millions are starving or die of hunger this does not concern the capitalist. He only produces commodities for a profit.

So what does the capitalist mean by overproduction? In the 1980’s, when there was a boom in trade, Rolls Royce had no difficulty selling cars. There was a report that it was deliberately restricting the manufacture of this luxury car to 8000 a year. During the last depression Rolls Royce could not sell its cars and laid hundreds of workers off. Did this mean that hundreds of workers and capitalists throughout the world who wanted a Rolls Royce had one?

The same applies to housing. In the current depression a large housing site outside Bracknell was “moth-balled” and hundreds of contractors were laid off. The developer said that too many houses had been built and they could not sell the ones already completed. Did this mean that the working class had been adequately housed? Not at all. There is a tremendous unfulfilled need by workers for housing. What the developer meant was that they had no buying customers not that there was overproduction caused by the needs of all society being met.

Overproduction in Marx’s sense is that the productive forces are not used to their full extent by the capitalist class to meet human need and this leads to the contradiction that despite wanting to produce for a profit capitalists periodically curtail production, destroy capital in the form of factories and finished commodities and lay off workers. Between 1979 and 1993 300,000 capitalists went bankrupt and unemployment was over 3 million for a number of years.

And this contradiction can be seen in war where in peacetime houses and factories are built only to be destroyed in capitalism’s war. Capitalists are not particularly blood thirsty and they would rather be selling commodities and making a profit rather than being faced with war and disruption to trade. But capitalism - commodity production and exchange for profit, causes war because of international rivalry and protection of trade routes, competition for raw resources and the need to secure spheres of influence. The First World War cost the capitalist class $196. 5 billion and the Second World War cost them $2,091.3 billion (www.cwc.Isu.edu , figures adjusted for 1990 dollar values). And 55 million lives were lost between 1939 and 1945 which could otherwise have been exploited to realise profits (loc cit).

It is in the sense of Marx’s understanding of production under capitalism that it is a fetter.

Why does capitalism behave like this? Under capitalism production takes place for a profit. Each individual capitalist tries to sell their commodities as high as possible. But they are faced by competition on the market both from capitalist at home and from abroad. Capitalists can not just do as they like. They have no control over trade depressions and they cannot meet the need of all society. Severe limitations are placed on the forces of production by what Marx called the social relations of production. And it is these limitations which give rise to both economic crisis and the class struggle. The world divided into competing capitalist nations gives the world war, death and destruction.

And capitalists face another problem. In The COMMUNIST MANIFESTO, Marx referred to the State as “the executive of the Bourgeoisie”.

In the 19th century the State was largely cheap. There were about 20,000 civil servants compared with 500,000 today. Most of the expense went on maintaining the armed forces necessary to protect the capitalist’s ownership of the means of production from the working class and to protect it from foreign capitalists. Marx pointed out that every capitalist nation is in constant conflict with other capitalist countries.

Up until 1910 the capitalist class paid very little tax. Corporation and inheritance tax did not exist and Income Tax was low. Under the development of capitalism and with the working class getting the vote all forms of reforms were enacted by successive governments to buy the working class off or to ensure workers were in a fit state to exploit. This meant reforms bringing in free education the National Health Service, Old Age Pensions, Social security and so on. And all of this has had to be paid for by the capitalist class. And they cannot do anything about it. Under Thatcher, despite her Samuel Smiles rhetoric of workers standing on their own two feet, a greater percentage of State expenditure went on social services than armaments. The cost of government is now 7-8 times it was 100 years ago and still rising.

And the capitalist class cannot prevent trade unions. They cannot prevent workers organising successfully in times of good trade to gain better pay and working conditions. The trade unions operated illegally and legally to benefit their members. Of course when the capitalist State takes a stand as it did during the General Strike of 1926 and against the Miners in 1984 they will win.

And what can the capitalist class do about crime which is largely against property? They pass laws, they imprison so many criminals that the prisons cannot cope to the point that they cannot afford to build new ones. They have spent billions trying to stem the use of illegal drugs; a major source of crime against property but it has been an utter failure.

Capitalists may live well off their profits but they cannot do anything about the social problems caused by capitalism.

The Problem of Distribution.

In recent years there has been a constant battle in the Labour Party about distribution of income.

There have been many in the Labour Party who believe the rich should be taxed more and this taxation redistributed to the working class.

This line of thinking was common with people like Maxton whom the SPGB debated with. Maxton believed the rich should get less and the workers more.

They believe, quite wrongly, that production is so great under capitalism that by taking money from the capitalist class and giving to the working class there would be a more equal society. This is a fallacy. You cannot have socialist distribution based upon the capitalist ownership of the means of production.

According to the Office of National Statistics in 1993 the total income of the 22 million or so workers amounted to two thirds or 66% of the national income. There are also just over 3 million self employed of which two-thirds do not employ anyone. This would mean that the working class income each year is 80% of the total national income.

So what difference would it make to distribute the 25% from the capitalist class to the working class? Not a great deal.

However, this type of “redistribution” has nothing to do with Socialism. Socialism is not about redistributing wealth from the capitalist class to the working class; from taxing the rich to give to the poor. This is not Socialism though opponents of the SPGB represent it as though it is.

Get this clear. Socialism will be a different social system to capitalism. Socialism will have a different production system where goods and services will take place to meet people’s need. Socialism will also have a different distribution system based upon direct access to what is needed with no markets or buying and selling. Socialism will not be concerned with the redistribution of the total national income.

What Socialists will be interested in doing once Socialism has been established is getting productivity increased to a point where people are adequately housed, fed, clothed and so on. Attention will have to be paid to the problems inherited from capitalism and the health and safety of those producing good and services in a socialist society. That said; Socialism will be a social system which will not have the conflict and contradictions found in capitalism.

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