Ken Cole

BY THE COMMUNITY… The evolution of capitalism in times of financial globalization

Ken Cole

Any socialist initiative implies an extension of citizen’s participation in the management and control of social resources. Of course, greater democratic participation is never gifted by enlightened elites. Such an endeavour relies upon local initiatives and cooperative organization, as well as state-driven community development.

A fairer, sustainable, more democratic society can only be sustained with ideological resolve – “The most powerful weapon in the hands of the oppressor is the mind of the oppressed” (Steve Biko).

Here, the concept of ideology has a precise meaning. Human beings are social individuals. People necessarily conform to the vicissitudes of social existence: and, reciprocally, social life moulds and shapes individuals’ potentials and experience, defining the circumstances of persons’ existence.

And as these circumstances change, human beings and human societies evolve ad infinitum …..

On the one hand, rational individuals seek to realize their social potentials to experience life as fully as possible; on the other, as social beings within a division of labour, well-being is contingent on the social circumstances of existence.

The present – reconciling the personal and the social – is a moment in the process of life. In a world of such complex interactions, history becomes of paramount importance.

Individuals share common values, attitudes and beliefs, reflecting their common life experience. Such a working cultural and ideological consensus expresses the ‘naturalness’ – the ‘common sense’ – of existence, and by implication, rationalizes and legitimates the extant political status quo.

Typically, the dominant, everyday ideas of society are nothing more than an ideal expression of the compelling relations between people. But of course, as the circumstances of social existence change, individuals’ social potentials evolve, and the ideology which has hitherto structured their lives and ambitions begins to unfold.

Democratic processes evolve as the circumstances of peoples’ existence change. Typically, in capitalist economies, producers, competing with each other to maintain relative profitability, adjust the relations of employment and the conditions of work through: the introduction of new technology, reduced inventories and just-in-time production, de-skilling labour to minimize costs, etc… And in this process, in the early 21st century, the proletariat is being transformed into a precariat, as the work environment and citizens’ futures, become ever less secure with zero hours work contracts, lack of trades union rights, and the like.

With the advent of financial globalization in the late 20th century, capital, in the words of Marx & Engels (Communist Manifesto, 1848), has finally come to “nestle everywhere, settle everywhere, establish connections everywhere…”: the lives of every person, globally, are ever more interdependent.

Whatever the local, particular, relations of production, globally, the general relation of capitalist production is commodity exchange – and the exploitation of international markets cultivates a “cosmopolitan character to production and consumption in every country” (Marx & Engels). Individual consumers rarely produce what they consume, and producers typically do not consume what they produce. We live within a (globalized) social division of labour, and our lives are continually structured by the vagaries of the world market, as consumers exchange commodities with producers.

In capitalist societies, the social dependency between consumers and producers is experienced by individuals in the market-place, and the relationship of (social) value between globally inter-dependent people, is expressed and experienced (by the individual) as a price.

Everything of value, ultimately, is produced by labour and all producers are socially integrated within a technical division of labour. The value of the fundamental capitalist relationship – the exchange of labour-power between capitalist-employers (the consumers of labour-power) and wage-labour employees (the suppliers of labour-power) – is the wage rate. Any labour time worked over and above the time accounted for by the wage – that is any surplus-value – appears as unearned income (interest on loans, rent on property, and dividends on profit).

Ultimately, the production of surplus-value is the sole purpose of capitalist production and employment. Commodities are produced because it is profitable to do so, not because the commodities satisfy a human need.

Capitalist enterprises attempt to maintain profitability by increasing efficiency (replacing labour with technology), and as the unit value of increased production decreases – less labour time is embodied – there is a downward pressure on market prices. Similarly, as the rate of surplus value declines as production processes become more technically efficient, the average rate of profit falls. And (individual) capitalist enterprises attempt to restore profitability by deepening the exploitation of labour, which, paradoxically, exacerbates the (social) tendency for the rate of profit to fall.

The tendency for the rate of profit to fall implies that the rate of exploitation of labour must continually increase. The fundamental contradiction of capitalist production is that the competitive process between producers to be profitable renders capital too (socially) productive to be (individually) profitable.

The inevitable consequence is financial (and social) crisis.

As citizens seek alternative economic and political avenues to meet their needs and ambitions, communities evolve: sourcing local production as far as possible from local sources; community ownership and control of economic initiatives limiting value (profits and dividends) from leeching into the global financial sector; organizing and providing welfare services (e.g. for the young and old); instituting social utilities and services (local, not for profit, power companies, schools, care homes, and hospitals, under local control); etc…

Events are not simply a consequence of current happenchance: the past imposes contingencies on the present, which presages future possibilities. Life is an evolutionary process, constantly in motion.

People’s perception of themselves is made anew, as individuals take full advantage of the emerging possibilities of human life.

The ideological panoply of capitalist society, emerging with bourgeois society in the seventeenth century, considers human beings as independent individuals biologically endowed with a set of tastes and talents: a perception which implies that the paramount canon of life is the principle of ‘individual liberty’, supposedly allowing persons to realize their particular potentials.

Ideally markets should be as free of social control as possible, and the political organization of society ought to be based on one-person-one-vote: Representative (Parliamentary) Democracy. Although the regulation of markets and government may have to adapt to the global division of labour, free markets and Representative Democracy are inviolate.

Such a common sense interpretation of human existence seemed rational as long as people’s experience could be plausibly represented as a consequence of individuals’ own motivation and activity: the implication being that the rich ought to be wealthy (due to their innate superiority), and the poor, because of their assumed fecklessness, laziness, and lack of intelligence, have only themselves to blame.

However, such ‘common sense’ is becoming less and less credible.

In April 2018 the Guardian newspaper predicted that by 2030 the richest 1% in the world would own two-thirds of global wealth. In March 2019 it was reported that the combined wealth of 2,153 billionaires in the world is $8.7tn (more than 3 times the GDP of Britain). And in Britain, there is an army of lawyers charged with exploiting legal loop-holes in the longest tax-code in the world (21,000 pages, twelve and a half times the number of words as the Bible). After the 2008 global financial crisis, insolvent (private) banks, rather than allowed to go bankrupt and become publicly owned, were bailed-out at public expense; through quantitative easing. In excess of £435 billion was pumped into the (profitable) private financial sector. As the stock of public housing has been deliberately reduced and the planning laws have become complex and onerous, house building has become the preserve of large private corporations and there is a housing shortage. Since 1971the UK money supply has risen 47 times, and 77% of this money has been used to buy property and financial assets leading to runaway house price inflation in recent times/The purchasing power of money has fallen by 99% over the past hundred years, yet wages have not proportionately risen; and, there is no economic rationale for ‘austerity’ (and reduced public spending), it is merely a political strategy to preserve and extend inequality, justified by an individualist ideology.

And the story of elite largesse continues …

Is this a consequence of individuals’ good (or bad) fortune? Is the future a serendipitous lottery? Or is there an underlying logic to social evolution which is amenable to rational, political, change?

Recently, in spite of the tide of right-wing populist movements with racist, sexist and homophobic overtones, ideologically harking back to the idea that the future is in the hands of individuals and promising to ‘drain the political swamp of elite influence’ – in the USA to make ‘America Great Again’, in the UK to ‘wrest back control from the European Union’, echoing similar movements and sentiments across the world – it has become increasingly apparent that globalized financialized capitalism and internationally integrated production and consumption is prone to economic, social and political crisis.

Deepening economic, ecological and migratory crises have undermined the ideological legitimacy of capitalism. And the case for evolving and transforming society to prioritize public need in place of private greed has probably never been stronger. The second decade of the new millennium opened with the ‘Occupy’ movement (UK, USA) challenging international financial intuitions, followed by the anti-austerity emphasis of Syriza (Greece) and Podemos (Spain), and Bernie Sanders’ mobilization of the Democratic Party (USA), and the Labour Party led by Jeremy Corbyn (UK).

The enormous support for Jeremy Corbyn in his bid to become leader the Labour Party in the summer of 2015, to the surprise of many, led to his election. Even more astounding was the electoral achievement of June 2017, helped by the turn-out of young voters (particularly students and working-class voters under 35), when the party achieved the largest increase in its vote since the General Election of 1945. And Corbyn’s advocacy of a socialist transition struck an ideological chord with disillusioned citizens united by their opposition to the politics of economic austerity.

This shift from political protest to political change, demanded profound transformations within the Labour Party itself. The ideological pressure to reform the Party was opposed and confounded by the ‘establishment’ – a coterie of Social Democratic, representative, forces within the Party (both MPs and bureaucratic officials), attempting to blunt the ideological thrust of participative Democratic Socialism.

Already by the early years of the new millennium trade union leaders had become the internal opposition in the labour movement, battling with the Blairite ‘Third Way’, which essentially relied on market forces to realize individuals’ social potentials: a confrontation which highlighted the salience of Tony Benn’s 1970s Campaign for Labour Party Democracy, which then included Jon Lansman, and the relevance of the Socialist Campaign Group of MPs, to which John McDonnell, Diane Abbott and Jeremy Corbyn ascribed.

The emergence of Red Labour, an internet-savvy new generation of activists, laid the foundations for the 2015 leadership campaign directed by Jon Lansman, reborn as the organizer of Momentum, organizing new members and supporters to elect Corbyn (and also to re-elect Jeremy a year later in the face of opposition from most Labour MPs).

But for all the enthusiasm for the get-out-to-vote politics of Momentum and the revitalized dynamism of the Labour Party, there remains the unanswered ideological question, particularly at the constituency level, of creating a political space for members to participate in the conception and design of a radical, participative, political agenda.

The Party needs to become a popular campaigning force: part of the Labour Movement. Considering policy alternatives for government has to be democratized: constituency parties need to transform themselves and experiment with novel forms of organization, becoming embedded in the community.

Social relations between citizens of the world are evolving. And as the (technical) division of labour within globalized capitalism becomes ever more specialized, so people’s dependence on each other grows exponentially. National Representative Democracy and parliamentary government, have become both too large – to organize and ensure individuals’ well-being – and too small – to play a meaningful role in internationally coordinating peoples’ life-styles.

While the deepening and widening of the global division of labour renders the myriad relations between billions of people technically complicated, the fact that each relation is between two people, each of whom behaves according to their own idiosyncratic ambitions and particular commitments means that the world is increasingly complex.

Parliamentary, representative, democracy cannot adjudicate complex political choices by a binary ‘yes/no’ majority. Policy has to sensitively reconcile a plethora of constantly changing, nuanced, alternatives. Indeed democracy has to be a process, a way of life, substantiated by a participative, cooperative, ideology, based on the proposition that humanity is a social species, and not simply a collection of biological entities.

Democratic decision making has to reflect people’s daily experience of living, albeit that, that experience is an interdependent moment in a global pageant. The first step in this political epic is for citizens to learn the participative art of cooperating. Such a transformation began in the Labour Party in the 1970s and into the 1980s, with the struggle around the definition of an Alternative Economic Strategy linked to activists within the Campaign for Labour Party Democracy.

Socialist power is an evolutionary process of political entitlement. For disadvantaged citizens (aka the working class), to displace and challenge the power of privileged elites (aka the bourgeoisie), communal strategies must democratize the State, through Trades Unions, political forms of representation, and their own initiatives supplanting the State itself. A process which crucially relies on ideological research and the dissemination of radical ideas, merging into a new ‘common sense’ for how to relate to other people: a process which is much more than ‘taking control of the State’.

And the first step in this transformative process is members uniting around the institution of Municipal Socialism.

(to be continued…)