It may be said from the outset that economics is
truly a concentrate of politics and that consequently economics can be
distinguished from politics only in terms of the time periods or cycles that
the two spheres occupy. Economics is the inner sphere of social reality,
spinning around a hypothetical centre with a different torque or angular
momentum from that of the political sphere which has a faster cycle or torque.
As we shift from this hypothetical centre of the social sphere to its outer
layers, economics grows increasingly political until it turns into policy
and finally, at the outer surface of the social sphere, it finally resolves
itself into strategy and tactics.
Contrary to
what Lenin is said to have quipped, then, politics is not a concentrate of
economics. It is the other way round: economics is a concentrate of politics.
In other words, it is not politics that "boils down" to economics; it
is economics that can be reduced to a bundle of politics. The important thing
is to focus on the meaning of the phrase "a concentrate of" and the
phrase "boils down to". What is it that we mean when we say that
"in the final analysis" politics is economics or the opposite, that
economics really is politics? What kind of "reality"
do we refer to when we speak of the ultimate foundations of economics or
politics? As we all know, necessity is not just "the mother of invention"
- meaning that there are some needs that are so fundamental that they stir up
human imagination and inventiveness. Necessity can also be camouflaged and
disguised or simply be rationalised away as "virtue": this is what we
do when "we make virtue out of necessity". Differently put, we
recognize that there are situations in social relations when we are coerced
into doing things that either we would rather not do or else "concentrate
the mind" to the point of inducing virtue - the acquiescence to necessity as
virtue - or inventiveness, the desperate search for alternative solutions. But
in all these cases, in all these instances, what we call ‘necessity’ is a
function of social relations, not of physical or physiological necessity. If we
accept that our environment offers sufficient resources for human societies to
reproduce themselves, then it is evident that economics - which as "the
dismal science" is often confused with "the sphere of necessity"
- has little to do with physical or physiological necessity but must instead
have everything to do with "coercion". The necessity of economics
intended as a "science" is therefore in reality the necessity of
political coercion. That is why it is correct to insist that
"economics is a concentrate of politics", in the sense that what we
describe or circumscribe as a separate field of human activity - "the
Economic" - is a specific form of coercion imposed by some people on other
people in the sphere of the production of and for human needs and their
satisfaction.
To accept with
Lenin that "politics is a concentrate of economics" would be
tantamount to allowing that economic activity is dictated by a
"necessity" that is independent of "coercion", that is
physical or even physio-bio-logical in nature – and therefore
independent of "the Political". This may make sense in terms of
the economic determinism – indeed, an eschatology or even a “theodicy”
of communism – that Lenin inherited from Marx’s labour theory of value and is implicit
in the conception of human history expounded most explicitly in The
Communist Manifesto and in the “Preface to A Contribution”. It was
this economic determinism that Eduard Bernstein attacked with his Evolutionary
Socialism wherein he sought to reformulate the strategy of the
Social Democratic Party for the conquest of political power in post-Wilhelmine
Germany. To be sure, Bernstein’s attack on the notion of the “general crisis of
capitalism” or Zusammenbruchstheorie had little resemblance to Marx’s
notion of the inevitability of its decline and replacement by “the dictatorship
of the proletariat” – which was certainly consistent with the gradual transition
to communism and even more consistent with a revolutionary overthrow of
bourgeois regimes than with a sudden catastrophic end to capitalism. But what
was more significant than the applicability of the “general crisis” to
capitalism for Bernstein’s attack on Marxist eschatology was the undeniable
determinism of Marx’s theory based on the notion of “socially necessary
labour time” and, consequently, of the validity of the Law of Value. For if,
indeed, the notion of socially necessary labour time were valid, then, given a
fixed working population, there can be little doubt that rising productivity would
push socially necessary labour time to the zero bound, that is, to a point
where workers will receive little or nothing out of the social product whereas
capitalists will be entitled to the near totality of it!
This
tendency of capitalism combined with the anarchy of production dictated by the reality
of market competition necessarily entails the equal necessity of its
supersession by political means to a new and higher form of social production
that Marxists call communism. It was these two pivots of Marxian revolutionary
economic theory – those of (i) the unsustainability of surplus-value extraction
(Marx’s law of the tendential fall of the rate of profit) and (ii) the anarchy
of capitalist market competition – and the obvious implication that they would
lead to inevitable and irremediable crises for capitalist production and
for bourgeois society – that Bernstein attacked, first, by challenging the
“necessity” of the compression of workers’ wages as a proportion of total
income (“the immiseration thesis”). And second, in further evidence of the
erroneity of this Marxian hypothesis, Bernstein proceeded to show that indeed,
far from the progressive immiseration of the working class and the
growing intractability of capitalist crises, the recent emergence of welfare and
interventionist states in Western Europe – the Sozialstaat instead of
the liberal laissez-faire Rechtsstaat or Lassallean “night-watchman
state” - together with their regulation of capitalist industry occasioned in
part by the rapid ascent of social-democratic parties and trade unions – that these
new political realities militated in favour of the ability of the capitalist
system to avoid catastrophic political and economic crises and also – and this
is the crux of Bernstein’s reformist thesis - in favour of the ability
of socialist parties to achieve the gradual and peaceful, non-revolutionary evolution
of capitalist society into a socialist one of freedom and equality. (On the
transformation of the State in the nineteenth century, see the insightful
studies by Franz Neumann collected in his The Democratic and the
Authoritarian State and The Rule of Law, and those co-edited with
Otto Kirchheimer in The Rule of Law under Siege. Bernstein's theses are reviewed in L. Colletti, From Rousseau to Lenin.)
Note that
both these theses which form the essence of Bernstein’s socialist reformism can
be derived directly from Marx’s own economic determinism. For, if indeed it is
possible to calculate “socially necessary labour time” by reason of its
“necessity”, and with it the magnitude of surplus value (the profit or value
added by living labour after the cost of the means of production and real wages
are subtracted from the total value realized from the sale of the products), it
must follow that the Law of Value derived from the Labour Theory of Value is a
calculable material quantity. But in that case the crucial question in the
Marxian critique of capitalism boils down to the distribution of value
in capitalist society and not to its production – because the mode
of production is not called into question. The mode of production – what
is produced when and how, by what means - remains exactly the
same under capitalism as under socialism. All that changes is how the
product – the Labour Value – is distributed between capitalists and
workers.
It is true that Marx had intended “the Law of Value” – that economic value could be measured by labour content, specifically “labour-power” – to apply only to a capitalist economy and not to a socialist one. Indeed, Marx considered his greatest discovery to be undoubtedly the notion of “labour-power” – in other words, the notion that it is not “concrete labour” that measures the value involved in capitalist production but rather “abstract labour” or “labour-power”, the abstraction of human living activity coerced by capitalist employers into a measurable time entity (“man-power”). But here Marx was trying to have his cake and eat it, too. For if the measure of capitalist value is labour-power and labour-power cannot be measured scientifically because it is strictly a measure of political coercion, then it is inconsistent to call Marx’s theory “scientific”! Bernstein’s revision of Marxist economic and political theory starts from this deterministic Marxist premise that all human activity – taken as “labour” in the abstract – can be measured, and that this absolute measurement entitles workers to their rightful share of the social product. It follows that for Bernstein the essence of socialism was the fair distribution of the social product according to the “labour” required for its production. The whole social question then became one of distributive justice, not one over the political control of the entirety of social production including its what, when and how. Furthermore, Bernstein concurred with the prevalent critique of Marx’s “scientific” labour theory of value set forth by Eugen Bohm-Bawerk in Karl Marx andthe 'Close' of His System to the effect that Marx’s theory could not establish a direct verifiable empirical link between “socially necessary labour time” and the market-clearing prices of individual commodities. Following Bohm-Bawerk, Bernstein objected that Marx’s labour theory of value was no theory at all because it pretended “to transform” aggregate value into aggregate prices. But such an equivalence of “aggregates” clearly amounted to sheer metaphysics because any “aggregate” in the world may be said to be equivalent to any other “aggregate”. The difficulty of what became widely known as “the transformation problem” from values to prices that Marx attempted to solve in Volume Three of Capital is that the problem is not open to solution because, even if we accept that there is such a thing as “socially necessary labour time”, this “necessity” must ultimately be validated by “market prices” – which yields the vicious circle that labour values determine market prices and market prices determine labour values!
Ronald Meek,
in his impressive Studies in the Labour Theory of Value, reviews
Bernstein’s objections to Marxian theory and rightly points out that Marx
intended the Law of Value to apply only to capitalism. But he remains
ambivalent over whether Marx’s theory is to be considered “scientific”, in
which case it is clearly a vicious circle, which Meek does not concede, or political, in which case it makes
perfect sense from a practico-historical viewpoint, but Meek considers to be insufficient to qualify as "theory". Whilst he opts for the
political theory that the Law of Value applies only to capitalism, Meek then
gets entangled in the insistence that such a “theory” would be scientifically
indeterminate or unprovable:
But surely there are two salient points which a theory of distribution
appropriate to our own times should concentrate on explaining: First, how is it
that unearned incomes continue to be received in a society in which the prices
of the great majority of commodities are determined on an impersonal market by
the forces of supply and demand, and in which the relation between the direct producer
and his employer is based on contract rather than on status? And second, how
are the respective shares of the main social classes in the national income
determined in such a society? Unless one is content to rely on some sort of
explanation in terms of “force” or “struggle” (in which case again one could
only with difficulty speak of a theory of distribution), it is impossible to
give adequate answers to these questions without basing one's account on a
theory of value.2 (Meek, Studies, p.250.)
Evidently,
like Marx before him, Meek is trying to circle the square, that is, attempt the
impossible, because he is looking for a precise scientific theory of
distribution, how a capitalist economy can co-ordinate itself as a market
economy, without resorting to “force” or “struggle”, when in fact such
co-ordination can only be politically regulated, and certainly not be the
product of “impersonal market forces”! Meek’s retort is that such a “theory” is
not distinguishable from a general theory of exploitation:
A “theory of distribution” which said only that unearned income was the
fruit of the surplus labour of those employed in production would hardly
qualify as a theory at all; and the mere fact that it expressed input and
output in terms of embodied labour would not make it any more likely to qualify
as one. At the best, such a “theory” could be little more than a generalised
description of the appropriation by the owners of the means of production, in
all types of class society, of the product of the surplus labour of the exploited
classes. (ibid.)
Repeatedly,
Meek reverts to the notion that for Marx “socially necessary labour time”
referred to an absolute standard or measure by means of which the
capitalist “transformation” of labour-time values into market prices, and
therefore the calculation of profit as surplus value, was to be determined. (See above all his discussion of Benedetto Croce's critique of Marx's labour theory in Studies.) But
this is simply false, because in Marx the concept of “socially necessary labour
time” refers to “labour-power” not in a theoretical society analysed
scientifically or objectively but specifically to the abstraction of
human concrete labour achieved by means of capitalist political violence
and coercion! Throughout his Studies, Meek overlooks the fact that for
Marx, as for us, capitalism is a specific mode of production operating
according to historically specific modes of exploitation or “social
relations of production”, into which we will inquire presently.The essential point to Marx's critique was not to determine the distribution of value in a capitalistic society on scientific grounds but rather to show that capitalist production was conceivable only through the violence of the reduction of concrete labour to abstract labour or labour-power. It is true that
Marx often deviates from this position in a misguided attempt to give his
critique of capitalism the (Darwinian!) status of a natural science (a science
of history in the Engelsian distortion of historical materialism re-baptized as
dialectical materialism!). Yet, this cannot detract from the essential validity
of Marxian theory when interpreted in its politico-practical,
historico-materialist dimension. No greater claim need be made for the
originality and greatness of Marx’s critique and theory of capitalism than that
it discovered the precise historico-political mode of exploitation specific to
capitalist enterprise! The residual problem then remains of how it is
possible for capitalist enterprise to regulate and calculate values and prices
to ensure at least partially the co-ordination of social production. As we
shall discuss later, this exakte Kalkulation at the heart of capitalist
enterprise will become the political measure or rule of
Weber’s entire theorization of Western capitalist “rationalization”.
To return to
Bernstein’s revisionism, in a nutshell, it can be summarized thus: once
it is established that all Value is created by Labour – through the absolute “scientific”
version of socially necessary labour time -, it becomes clear that the redistribution
of value from capitalists to workers can be achieved by peaceful reformist
social-democratic means through the process of parliamentary representation
which was already spreading throughout Western Europe with the introduction of
ever more “universal” suffrage. The process of production of Value and pricing
of the product becomes thus a “technico-neutral” question – a mere matter of
engineering - that is now removed from the more “ethical” question of the
workers’ claim to the fruit of their own Labour. Thus, Bernstein’s revisionism
and reformism represent a seismic shift in socialist politics not just in tactics
but indeed in strategy – because the fundamental presuppositions
(Voraussetzungen) of Marxist theory have changed. The very title of
Bernstein’s series of essays that kicked off the controversy around the Bernstein-Debatte
and the secession of the Third from the Second International referred to The
Premises (Voraussetzungen) of Socialism. And these premises
had changed in part, as we have seen, because of the crucial ambiguity in
Marx’s own theorization of the evolution of capitalist enterprise. By seeking
to give a scientific foundation to his critique of political
economy, Marx had ended up reducing the political basis of
capitalist industry – the violence of the “exchange” between living and dead
labour, its coercion, in the production and reproduction of human
society – to the economic quantification of the distribution of a
scientifically calculated Value between workers and capitalist “managers”.
This
technical scientization of the production and distribution of Value
according to the calculable amount of Labour represented by them threw open the
question over the integration of working-class parties in the bourgeois
institutions of parliamentary government and representation that was at the
centre of the dramatic split in the workers’ movement between the Second and
Third International, between social-democratic and communist
parties around the Organizationsfrage – the question of the organization
of the workers’ party either into a reformist majoritarian “umbrella”
mass party leading to a broad-based parliamentary democracy or into a minority
revolutionary “vanguard” that would lead the proletarian “masses” to the dictatorship
of the proletariat. It is important to appreciate that both the
social-democratic and the communist variants of the socialist movement agreed
on the “scientific” determination of labour-values in society, whether
capitalist or socialist. They also agreed that in a capitalist society founded
on private property the preponderance of anarchical decisions in capitalism
over the scientifically planned decisions under socialism would result in unnecessary
and oppressive social and economic crises of underemployment and immiseration
and social waste. The difference between the Sozialismus and the Kommunismus
lay precisely on the degree of scientificity, and therefore of steered planned
economic decision-making, that could be achieved. The lesser degree implied by
Bernstein’s critique of Marx meant that greater democratic consensus was
required to avoid the upheavals (and evils) of capitalism; whereas the greater
degree of scientificity claimed by the Kommunismus meant that only the “democratic
centralism” of the dictatorship of the proletariat could steer society to
socialism by wresting the ownership of the means of production from the
oppressive anarchy of the capitalist bourgeoisie.
The change
in strategy that Bernstein proposed and that was adopted
enthusiastically by the German bourgeoisie in its backing of the integration
of the Sozialdemokratische Partei (SPD) with the establishment of the
Weimar Republic in 1919 had already been presaged in Friedrich Engels’s
1895 Introduction to the re-edition of Marx’s The Class Struggles in France.
Written shortly before his death, this Introduction can be regarded as a last
testament on the part of Marx’s lifelong companion, and for that reason alone
it received enormous attention in the workers’ movement leading up to the First
World War. It is an important document for our purposes because it addresses
several analytical themes that are essential to the schematization and
periodization of our own study of the origin, formation and seizure of power of
revolutionary movements in the totalitarian era between the World Wars. To be
sure, Engels had intended his theses to be a mere change of the tactics
to be adopted for the transition to communism; but they were never meant as a
change of strategy because unlike his assistant, Eduard Bernstein whom
he appointed as trustee of his intellectual estate, Engels unflinchingly held
fast to the theoretical premises of the Marxist critique of capitalism.
In this
astoundingly visionary short exposition, Engels owns up to “errors” that he,
together with Marx, had committed in the assessment of the political
preconditions required and the revolutionary tactics to be adopted for the
successful transition to a communist society. Tersely summarized, these errors
referred principally to the ability of a minority vanguard or leadership
of the working population to lead the majority of the proletariat to a
successful revolutionary insurrection, given the spread of capitalist enterprise
and the rise of the bourgeoisie as the hegemonic political force in control of
powerful nation-states with their pervasive bureaucratic apparatus including
sizeable standing armies capable of putting down any uprising with overwhelming
force. In support of his critical revision, Engels could do no more than to
point to the fate of the Paris Commune of 1871 – itself the subject of another
Marxian piece on The Civil War in France where the errors of the earlier
tract written in 1848 were repeated. As a remedy for these “errors”, Engels
proposed a change of tactics toward a more “majoritarian” conquest of power by
socialist workers’ parties given that the spread of parliamentary
representation and of universal suffrage could not but lead to the gradual
political supremacy of the proletariat and its eventual transformation of human
society to socialism by either peaceful or, if compelled, revolutionary means.
The reason
for us recalling this quite remarkable Introduction by Engels is once again
that it presciently referred, with unmatchable perspicacity, to the essential
ingredients of the origin and formation of proto-totalitarian regimes in
accordance with our thesis on “the primacy of economics” in the first phase –
comprising the first two stages – of the historical evolution of these regimes.
To repeat, these ingredients are: - (a) the spread of capitalist enterprise;
(b) the rise of the bourgeoisie as the hegemonic political force within
integrated economic regions; (c) the formation of powerful nation-states with
their pervasive bureaucratic apparatus to govern and administer these economic
regions, including (d) sizeable standing armies capable of putting down any
uprising with overwhelming force.
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