Capital & Class. - 1981. - Issue 13

Editorial

In recent discussions on the Editorial Committee we have outlined a number of priorities for future issues of Capital and Class . While continuing to see the journal as providing a place for the range of work currently done within the CSE as a whole, we want to take a more active part in shaping the contents of the journal, including on occasion the commissioning of articles on selected topics . In particular, we are concerned to develop the role of Capital and Class as informing and reflecting socialist work outside as well as inside academic institutions ; we would like to promote analyses-both theoretical and concrete-which can come to grips with the choices facing socialist activists today . The CSE has always in some sense sought to do this . But when the organisation was first formed (in 1970) the most immediate concern was that of developing a socialist or Marxist economics in a context where Marxist economics had been dormant for some time . The problems in relating theoretical work to socialist politics outside the universities were not at that stage central to CSE discussions-partly because the work of challenging orthodox economics and constructing a Marxist alternative seemed clearly political in itself, and partly because the problems of relating theory to practice were supposedly resolved within the various parties or groups to which many CSE activists belonged . In that situation, the CSE provided a forum for discussion between members of different left groupings, and the tasks of transforming the insights from these discussions into political strategy could be dealt with elsewhere . Since then, the left groups have lost much of their political certainty, and the composition of _the CSE has reflected two of the important developments of the 1970s : the increase in the numbers of non-aligned socialist activists, many of them involved in the women's movement or in local politics, and the increase in the numbers of socialists working within the Labour Party . These changes mean that the problems of relating socialist theory and practice have been raised in a different way . And for the past few years it has been one of the strengths of the CSE that the necessity for forging links between socialists in academic institutions and socialists active outside the colleges has been consistently voiced . The work of the (often short-lived) industry groups has provided some basis for co-operation between shop stewards and CSE activists, and CSE work on the state, housing or regionalism has drawn together to some extent those doing theoretical work with those involved in local politics . One of the ironies of course is that this growing concern with the relationship between CSE activities and socialist politics out-



6

CAPITAL AND CLASS side the universities or polytechnics has arisen almost simul, taneously with a minor exodus of economists from the CSE, an, hence with the loss of one of the most obvious ways in which w= could act as a resource for socialist politics in general . So at . time when Keynesianism is in crisis, and monetarist economics i , being used to legitimise a major offensive against workers, the CSE has not been to the forefront in analyses of the politics ecnomy of the current crisis . The work which has most character ised the CSE over recent years-work for example on the labou process, on sexual divisions or on the state-has been that of re , defining the scope of socialist theory and politics . The neutralit; of technology has been more radically challenged than was th ; case in existing Marxist economics ; the inadequacies in analyse, which ignored the family or sexual divisions in waged work hav ; been demonstrated, the ambiguities in demands for the extension of state provision of welfare have been raised . We have becom; associated with wide-ranging criticisms of economism-perhaps ii a way which has polarised feeling against `economics' . In stating certain priorities for future issues of Capital an Class, we are not aiming to reverse this direction of CSE discus sion . But we would like to publish more work which draws on the insights from these discussions and applies them to contemporar, analysis or to the questions of socialist strategy being debate( today . We are relaunching the `Strategy Forum' as one way o, encouraging more explicitly strategic discussions (see page 99 )I and at the same time we are looking for material which falls into the following categories-work which may not be immediately related to issues of socialist strategy, but which could contribut ; both theoretically and empirically to our understanding ii current debates.

An alternative economics for social need

Work which can broaden current discussions of an alternative economics, drawing for example, on the experience of planning le E . Europe, the USSR or China ; on discussions of the nature c technology under capitalism ; on analyses of the division of labou between production and service sectors, and between men an( women workers . Work which takes up specific proposals and r_ lates them to analyses of contemporary developments eg . di , cussion of import controls in the context of the changing inter national division of labour .

Social reproduction and consumption

Analyses which focus on the relationship-and particularl` changes in the relationships-between family, state and privat , capital .

Key aspects of the current crisis

Work on restructuring, for example of the labour process, of the international division of labour . Analyses of the role of multi nationals, the EEC, the political economy of the arms race .



EDITORIAL

7

Jontemporary struggles and -apitalist levelopment )utside Britain

Appraisals of developments in other countries which will be of use to readers with little prior knowledge, and can highlight comparisons with developments in Britain .

Analyses of state strategy

Analyses of current Conservative policies. Analyses of the crisis of social democracy . If you are currently working in any of these areas, and would be interested in preparing something for Capital and Class, please write with suggestions or synopses to : Donald Mackenzie, Department of Sociology, University of Edinburgh, 18 Buccleuch Place, Edinburgh . If you are working on something completely different, please continue to send us articles for publication-our intention is not to impose this list as the only ones for consideration for Capital and Class . We want to continue to support all the areas and forms of debate already opened up within the CSE, but at the same time to build on these debates in analyses of contemporary developments .

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Behind the News POLAND'S NEW WORKING CLASS MOVEMENT

Oliver MacDonald Introduction

On 14 August 1980 a movement began in the Lenin shipyard in Poland's north-eastern port of Gdansk (formerly Danzig) which has changed the face of East European politics . The Gdansk strike had been preceded by 6 weeks of strikes which rolled across the country from one town and industry to another, focussed mainly around economic demands in response to a Government decree on 1 July raising meat prices . The 14 August strike began on largely local demands but on 17 August, after a settlement had been reached between Lech Walesa, the chairperson of the strike committee, and the managament, a mass meeting of shipyard workers threw out the deal and placed national political demands at the forefront of their struggle . This led to an eruption of the working class first in the Gdansk region, followed by the Szczecin region at the western end of the coast ; it then spread all along the Baltic Seaboard, inland down to Wroclaw and, from 27 August, into Silesia, the mining and industrial heartland of Poland . Everywhere the workers demanded government agreement to the 21 demands of Gdansk . Threatened by an imminent national general strike, the Gierek team planned a military thrust against the Lenin yard but were over-ruled within the party leadership and the mass-strike movement was ended through agreements signed between 30 August and 9 September in Gdansk, Szczecin, Jastrzebie and Katowice . At the same time the Gierek group in the party leadership was removed and the new Party First Secretary, Stanislaw Kania, promised to implement the Agreements . The key demand of the strike movement, that the government accept the creation of an independent, self-governing trade union, led to the rapid growth of such an organisation, given the



BEHIND THE NEWS : POLAND

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name `Solidarity' . The workers flooded into the new organisation in extraordinary numbers . According to the union itself the figures were : Mid-September 3 million End of October 6 million 8 million Late November Before Christmas over 10 million This was out of a total workforce in the . nationalised sector of the economy of some 12'/z million . At the end of the year the old official union centre was disbanded . The emergence of this gigantic new working-class movement in Poland has thrown the political system into an almost paralytic crisis and has determined the lines of political development in the three surrounding countries - the USSR, the GDR and Czechoslovakia. The purpose of this article is not to analyse the entire political crisis in Poland but simply to focus on the new workers' movement and its immediate context . In conclusion the movements prospects will be considered .

Solidarity

The Base and Composition of Solidarity The new organisation is overwhelmingly proletarian in character with its foundations in the younger generation of industrial workers in the country's biggest and most modem plants . The core of the movement was bom out of the August strikes of industrial, mining and transport workers . The list of plants out in August and early September reads like a roll-call of the industrial giants of the country's post-war development : the shipyards, ports and engineering plants of the Gdansk-Gdynia-Sopot region ; the 52,000 shipyard and port workers of Szczecin along with that city's 15,000 chemical workers ; the great coal-mining belt from the Walbrzych region's 25,000 miners in Lower Silesia through the Bytom, Sosnowiec, Dabrowa, Katowice and Jastrzebie areas of Upper Silesia ; and the huge steel complexes of Huta Katowicr and Nowa Huta near Cracow . In Warsaw the centre of the movement has been the Ursus Tractor Factory with 18,000 workers along with the FSO Zeran car plant and the Nowotki armaments workers . In Bielsko Biala the Polski FIAT plant has been the centre of the movement . Another prominent centre has been the Mielec aircraft plant, which produces Soviet Tupolev aircraft . This overwhelming preponderance of industrial workers in the largest plants was graphically illustrated during the battle this January over free Saturdays . The key test of strength which led to the government's retreat and a negotiated settlement took place on 24 January . According to the official state news agency PAO, between 75% and 95% of the industrial workers in the largest factories struck . Given that over half the country's industrial work force is concentrated in such large factories with 1,500 workers or more we can appreciate Solidarity's extraordinary industrial muscle .[1]

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CAPITAL AND CLASS During the period under Gierek between 1970 and a couple of years ago there was a great investment boom in Poland involving the building of new plants and this went hand in hand with a large influx of new, young workers into the industrial labour force . These young workers seem to have played a key role in the movement . They tend to staff the factory and regional leaderships of Solidarity . It is also noticeable that the movement's leaders tend to come from the more highly-skilled sections of the workers. A very large number of the movement's activists are also Party members . In the Inter-Factory Strike Committee (MKS) in Gdansk during the August struggle, about 30% of the members were Party members ; the figure was about 45% in Szczecin and as much as 70% in Silesia . By December as many as half of Soliarity's activists are reported to have been members or erstwhile members of the Communist Party .[2] Altogether about 750,000 Party members are reported to be active in Solidarity . The movement excludes Party and state functionaries from its ranks . It also excludes peasants and students . But all salaried employees in the state sector of the economy are eligible for membership . The committee of intellectual `experts' established during the August strike movement as advisors to the strike committees did not have voting rights within the movement . It is interesting to note the way in which the leaders of the MKSs were selected . In both Gdansk and Szczecin the chairpersons were former leaders of the 1970 strike in the Lenin Shipyards - as was Ana Walentynowicz, the current Vice-Chairperson ; Marian Jurczyk was a departmental delegate on the 1970-71 strike committee in the Warski yard in Szczecin . Lacking any possibility of throwing up and testing leaders during the years of the 1970s, the workers turned to the only yardstick available the birthplace of their tradition : the 1970 struggle . Secondly, in Gdansk, in selecting the other members of the Presidium the workers placed their trust in members of the Free Trade Union of the Baltic Coast, formed in the Spring of 1978 and involving such leaders as Andrzej Gwiazda . In Walbrzych the secretary of the inter-factory committee was a worker activist from the paper Robotnik .[3] The trust in the Robotnik activists is very significant : it shows that large sections of the present movement held these activists in high esteem before August and had been listening to and watching their activities in the two preceding years . Some commentators have gone further and suggested that the demands of the workers were strongly influenced by the previous propaganda of Robotnik, but this overlooks the fact that the central demands had already been raised during the 1970-71 struggle . The Social and Political Thrust of the Movement The key demands raised by the new working-class movement can



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be summarised as follows : 1 Guarantees of the movement's own existence and traditions : the right to organise independent, self-managed trade unions ; the right to strike ; an end to censorship and the movement's right of access to the mass media ; no imprisonment or victimisation of anyone for their political opinions ; full restoration of the rights of workers who suffered repression in and as a result of the crises of 1970-71 and 1976, as well as full public homage to the workers killed by the security forces in 1970, and the bringing to justice of those responsible for the massacres ; restoration of the rights of intellectuals victimised in 1968 . 2 Defence of the nationalised, planned economy from bureaucratic corruption, waste, incompetence and disorganisation : workers' control over the planning process ; the accountability of the state's economic policy to the workers ; full, accurate information on the state of the economy ; the firing of incompetent or corrupt plant, city, regional and national Party and state functionaries . 3 Social and political demands to strengthen the unity of the working masses - manual workers, intellectual workers and peasants : lump-sum, across-the-board wage increases ; egalitarian norms in food distribution ; norms of distribution in all fields reflecting need and work rather than political criteria ; the right of peasants and students to have their own independent, selfmanaged organisations ; the right of the Church to have greater access to the mass media for the benefit of Christians . 4 A relaxation of too high production norms in certain fields, for example the hated four brigade system of work organisation in the mines which involved rotating shifts, Sunday working and the disruption of the entire social life of the miners ; and the shortening of the working week . Without going into the debate on the nature of the East European states, it is necessary to underline a key feature of these states in order to grasp the dynamics of the new working-class movement . This is the fact that the nationalisation of the means of industrial production turns the regulating mechanism of the economy from the economic field - the law of value - to the political field . And this in turn requires the central political institutions of the state to reach right down into the productive apparatus itself . In the present form of state in Eastern Europe, the institution which has played this role is of course the monopolistic and monolithic Party . The emergence of Solidarity has entailed the effective severing of the Party summit from the productive base of the society . Solidarity has cut like a hatchet into the thicket of the bureaucratic planning mechanism, and the central thrust of the new workers' movement during the last few months has been towards seeking an alternative mechanism for regulating the economy, a democratic mechanism involving the producers themselves. This thrust has not been given any general expression and form - and indeed the Gdansk Agreements of 31 August,

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CAPITAL AND CLASS by including a clause recognising `the leading role of the Party' in the political field, makes the raising of a general political alternative illegitimate within the terms of the Agreements . But this cannot remove the objective dynamic of the working class movement towards seeking such an alternative . The Role of Solidarity and its Form of Organisation Solidarity calls itself a trade union . But we cannot fully accept this self-definition . In a democratised workers' state in transition to socialism trade unions would be necessary though they would play a different role from Solidarity in Poland today : they would fulfil . the function of expressing the sectional interests of particular groups of workers in this or that occupation discontented with the decisions of the democratic majority of the producers as expressed in the agreed plan . The workers' state is, after all, not the organisation only of Marxists and socialists but the organisation of all the producers, including those who reject Marxism and those who remain attached to sectional loyalties . They must have organisations of a trade-union type that can articulate their grievances . Furthermore, the best, most democratically decided plan will express the knowledge and will of only some of the producers at one particular time and will require continuous modification through a permanent interplay between the government and different sections of the working class expressing their interests through the trade unions as well as through state organisations and political parties . The newly formed trade union Solidarity plays a very much wider role than that of such trade unions . For in Poland today the democratically organised power of the workers is not yet established, as the August crisis and its aftermath demonstrated in an irrefutable fashion . With 10 million members out of some 12'/z million workers, Solidarity and not the PUWP expresses the aspirations of the overwhelming majority of Polish workers and is being used by them not only in the economic, but also in the social and indeed political field . Solidarity, therefore, must be seen as in practice playing a role being more than a trade union it is a quasi-political movement of the workers whose basic tendency is to organise the all-round struggle of the workers for the entire range of their economic, social and political demands . The demands in the programme outlined above confirm this : they go far beyond the scope of a purely trade-unionist defence of employees . The form of organisation of Solidarity also corresponds to this quasi-political function . It is based on largely autonomous regional organisations which unite workers across all trades in each of Solidarity's more than 50 regions. In other words, the class principle overrides the occupational principle . The various industrial branches are organised in regional and national branch commissions -the process of forming these is only in its initial stages - and these branch commissions are subordinate to the



BEHIND THE NEWS : POLAN D

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regional Inter-Factory Union Committees (MKZs) . The fusion of trade union and political roles is a product of the phase of development of the new working-class movement and the current political balance of forces : workers have not yet won the right to form their own independent political groups and parties, and they lack any mass democratic institutions of state power. 'he Evolving Lelationship t Social and lolitical Forces

The Line-Up of Social Forces Outside the Working Class

The August Crisis and subsequent rise of the new workers' movement has forced all other social layers to define their stance in relation to the central struggle between Solidarity and the partystate bureaucracy .[ 4 ] Economic Managers . There was great dissatisfaction among economic managers over the Gierek leadership's handling of the economy, especially in the period since 1976 . Without any clear economic strategy, and with an increasingly demoralised, 'feudalised'[5] and corrupt political apparatus, plant directors found themselves in an organisational jungle . The leadership was improvising, bowing to the strongest immediate pressure groups within the bureaucracy and showing signs of growing paralysis . At the same time, pressure from the workers, hit by the economic crisis, was mounting from below . And these immediate problems were compounded by the more long-term desire of economic managers to gain greater freedom and power for themselves vis-a-vis the local Party apparatus . Pressures from these economic managers found an echo in upper layers of the Party establishment and among some regional Party secretaries . Notable figures here include Olszowski, a former Foreign Minister and Secretary for the Economy who was removed from power in February 1980 because of disagreements over economic policy ; Grabski, a Central Committee member and regional Party secretary removed following his criticism of Party policy in 1979 ; and Zabinski, regional Party secretary from Opole, all of whom were in favour of major economic reforms . There are also technocratic liberals like Rakowski, the editor of Polityka, and Techma, former Minister of Culture . But while all these figures would have favoured far-reaching economic decentralisation enhancing the status of the economic managers, there has been no unity amongst them on the key political issue of the attitude towards Solidarity . Olszowski and Grabski, probably reflecting the views of large numbers of plant managers, have been pushing for a wholesale roll-back of the power of the new workers' organisation . They would also favour attempts to create a pool of unemployment as a means of disciplining the workers . The Catholic Hierarchy . Self-interest has also been uppermost in the activity of Poland's Catholics' spiritual leaders, the clerical hierarchy . The establishment of professional officials in the

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CAPITAL AND CLASS Church consists of some 20,000 priests and about 30,000 monk and nuns, organised in a rigidly authoritarian hierarchy ruled a the summit since 1948 by Cardinal Wyszynski through his episcc pate . This clerical pyramid has been securely established in the People's Republic since the mid-1950s, with its religious functions, its main sources of finance and a capacity to renew i self at every level not called into question by the Party leadership The reactionary world outlook of the Catholic hierarchy shoul . not lead us to accept two frequently encountered, but erroneou assumptions of the Western left about the Church hierarchy : than it is interested in a return to capitalism and that it is engaged i . irreconcilable conflict with the bureaucratic regime . The main source of the hierarchy's funds is the donations o, its domestic congregations (it also gains some revenue from farms that the government has allowed it to keep) . Such is the popula support for the Church that the hierarchy has been able to lead comfortable, not to say opulent life under the People's Republi( since 1956 . The hierarchy has gained this popular financial bas through its ability to present itself as the sole authentic express ion of national consciousness, independent of any associatioi with the Communist Party . In order to carry forward its funds mental task-of expanding the authority and powers of its owi, apparatus-the Catholic hierarchy must seek to maintain an' strengthen its popular base . Its problem can be posed in the following way : how to maintain the hold of an apparatus cemented by a reactionary ideology and a rigidly monolithi, power structure in an increasingly modern, urban, industria society? The episcopate tries to accomplish this along the follow ing lines : by avoiding any open breach with any sector of the population ; by standing against all popular mass movement , reflecting the concrete needs and emancipatory aspirations of the urban population ; by offering itself to the Party leadership as a, ideological apparatus for combatting politically subversive ideo logies and movements in return for an expansion of its apparatu : through concessions from the government ; and by seeking tt maintain its hold in rural areas amongst the private peasantry The rapid rate of social change in the 1970s alarmed the Churc, leadership as it saw its rural base declining and the emergence o, new radical and liberal trends of thought and an increasingl ; secular atmosphere in the cities (although this has been modifier to some extent since 1978 when Cardinal Wojtyla became Pope)l, The leadership responded by both trying to engage in a rhetoric of defence of civil rights to gain support amongst the urban popu lation, while at the same time campaigning against `immorality, and for the virtues of hard work . Since the August crisis the hierarchy's fear of the mass move ment has driven it into a closer relationship with the Party leader ship . When the Gdansk strike began and the workers asked foi mass to be celebrated in the shipyard, Bishop Kaczmarek refuse permission saying the authority of the Gdansk Party secretary, must first be obtained . On 26 August at the height of the strik;



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Cardinal Wyszynski went on television to urge workers back to work .[6] Subsequently the hierarchy established a joint PartyChurch commission for discussing common problems, and gave its recognition to the pro-Government 'Neo-Znak' group of Parliamentary Deputies for the first time . In December Wyszynski's lieutenants staged a take-over of the mass commemoration ceremony for the dead of 1970 in Gdansk, transforming it from a working class event into a religious ceremony for national unity . Simultaneously the hierarchy leant its weight to the Party leadership's drive against KOR [7] by openly attacking the organisation . In short, the Church leadership has thrown its weight behind the Party's attempt to re-stabilise the system, while at all times attempting to avoid any open breach with the Solidarity leadership . The Intelligentsia . In any political crisis in Eastern Europe the cultural and scientific intelligentsia plays a political role that far outweights its social weight . This is a product of the lack of any independent political parties or of significant political groups within the working class itself in at least the first phase of the crisis, as well as the almost complete lack of politically experienced and authoritative leaders within the working class . The stratum we are referring to could be seen as a spectrum running from highly qualified white-collar specialists in industry through the `liberal' professions and artists into the academic staffs of the polytechnics, universities and Academy of Sciences . There is evidence of radical and militant support for Solidarity amongst scientific workers in industry and amongst many of the younger intellectuals in all layers, but the dominant trend within this intelligentsia as a whole has been one of seeking to strengthen its own voice and freedom of operation in society through attempting to mediate between the party-state bureaucracy and the workers, reconciling and conciliating the two . In the late 1970s, the cultural intelligentsia attained a considerable measure of informal freedom from a Party leadership preoccupied with its relations with the working class and fearing any moves that could push the intelligentsia into allying itself closely with the workers . (It should be born in mind here, that although the intelligentsia in Warsaw and Cracow-the main intellectual centres-opposed any attempt to crush the KOR, they did not give the movement active support and did not champion the right of worker activists around Robotnik to work freely .) The predominant form of semi-political activity in intellectual circles before the August crisis was that of drawing up various schemes for reforms in various sectors of social life . At the same time, outside the KOR there was a general consensus that the workers would have to accept a cut in living standards-it is notable that between 1 July and 14 August only the KOR publicly supported the workers' economic struggle against meat price rises .

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CAPITAL AND CLASS During the August crisis and subsequently, the workers have placed enormous value on their links with the intelligentsia, bu it can hardly be said that the leaders of the intelligentsia -agah excluding the KOR-have given unqualified support to the workers' struggle . The Committee of Experts during the Gdansk strike, led by the liberal Catholic editor Mazowiecki, played ar important role in manipulating the strike committee into accept ing the inclusion of `the leading role of the Party' in the Gdansk Agreements . [8] Subsequently Mazowiecki, undoubtedly, reflecting the opinion of the reformist intelligentsia in Warsaw has fairly consistently opposed every mass action undertaken by, Solidarity, whose leadership he advises . In short, the establishes intelligentsia's predominant role could be characterised as one of seeking to act as a channel of pressure on the workers' leadership to moderate their demands and even demobilise their base . The Peasantry . The 1970s have seen a growing differentiation amongst Poland's 31/2 million private peasant farmers, and sincei the 1976 crisis the regime has markedly increased its pressure on the poorer peasants while giving more encouragement to thei richer peasants .[9] The latter very often control the local sources of state aid to the countryside and often also have a strong role in the local apparatus of the United Peasant Party, Unlike in 1956, this party has shown no signs of stirring into life in the current crisis . However, in the battle against a new pension law in 1978-9, independent peasant committees grew up that were based very much on the poor peasantry in the South and South East of the country . Active support for the strike move ment came from such centres and also from the peasantry in the Gdansk region itself. The richer peasants, who in many cases have been doing very well under Gierek, seem to have remained' passive, thus in effect being a positive factor for the regime . The influence of the church hierarchy may also have been a factor in peasant reaction and this will be considered below . Since thei strike Rural Solidarity has emerged, organising some 600,000 peasants out of 3 1/2 million and this again is based largely, though not exclusively, in the poorer agricultural regions .[ 10] The Political Struggle During the first two and a half months after the August Agreements, the party-state bureaucracy was in large measure paralysed' by internal divisions and by differences of opinion within thei bureaucratic regimes in the surrounding countries . These differences could be summed up as being between those who wished to defeat the working class movement through crushing, Solidarity and those who wished to defeat it through integrating, Solidarity while breaking up its militant core . The first options would have required military action by the Soviet armed forces . The second option would not necessarily require such Soviet) military involvement, relying more on political instruments and)



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the police . These issues were fought out through an intense political struggle within the bureaucratic apparatus, involving personnel changes at every level . By late November the balance within the Party leadership had tilted in favour of the second option, championed by the new Party first secretary Stanislaw Kania. Kania's line was given a qualified seal of approval at the summit of Warsaw Pact leaders in Moscow on 5 December after what seems to have been an intense struggle on an international scale that brought Poland to the brink of invasion . The qualification involved in the Moscow summit seems to have been the preservation within the Party leadership of a strong groupapparently led by Olszowski-ready to replace the Kania group and turn to the first option if this appeared necessary . The Kania strategy for destroying the political independence of Solidarity and re-subordinating the working class to the Party apparatus derives its legitimacy from the clause in the Gdansk Agreements guaranteeing the leading role of the Party within the Polish state . This means Solidarity's withdrawal from the `political field' and its concentration on purely `economic matters' . (The border line between the two fields is, in a state rooted in a planned economy, impossible to draw with any objective clarity .) This division between politics and economics applies not only to the substance of workers' demands, but also to the methods of struggle adopted by the workers . After all, Solidarity has had the capacity to mobilise workers in such a way and with such scope as to place the question of general political power on the agenda, even if the issue is in some senses purely economic . The second weapon in Kania's armoury is the economic crisis itself. This presses down heavily on sections of the workers -according to official statistics, one in six of the population was living below the official poverty line last year ; at the same time the crisis enables the government to claim the right to resist the economic and social demands of Solidarity, including `unrealistic' clauses in the August Agreements themselves . Thus, not only should Solidarity keep out of politics, it should keep out of economics as well! In short, its role should be that of a transmission belt for pressure on the workers from the Party leadership . Thirdly, the first two are underwritten by the threat of overwhelming violence being unleashed against the workers by the Warsaw Pact if the Solidarity leaders are `irresponsible' enough to challenge the Party leadership . These, so to speak `negative', principles are combined with more `positive' incentives for various social groups to accept bureaucratic restoration . In the first place, the Party leadership is ready to make sweeping concessions in the ideological field to groups who are ready to accept the re-subordination of the workers : the traditional formula was of 'people-working classparty-international workers' movement' counterposed to `imperialism and counter-revolution' ; in its place is offered a new formula of `the nation, guarded by the Party in co-operation with

18

CAPITAL AND CLASS the Church, the intelligentsia and patriotic workers, involved il realistic relations with its neighbours and in friendly relation with realistic Western governments' which is counterposed t . `irresponsible and disruptive elements at home and abroad' . Withi in this corporatist `nation' all can have their role, with freedom t( operate and recognition : the Church involved with spiritual life the intellectuals responsible for culture, the workers handlin production and the Party guaranteeing that national development takes place smoothly, without offense to neighbours, but withou arbitrary interference in other groups' interests . The only fact that may overturn this corporatist national consensus, is disrupt) ive action by over-excited workers stirred up by irresponsible agitators . This `positive' vision has been given practical form by the party-state apparatus over the last months : the Church hierarch% has been given a formal relationship with the Party through joint commission ; it has been given two new seminaries and, i, addition to increases access to the mass media, it has probabl , been offered less publicised benefits . Groups of reformist intellec tuals hve been given formal status as advisers to the governmen, and have been treated with respect . The neo-Znak group has bee . given a vice-premiership and entry into the press field . Censor ship arrangements in fields of concern to the cultural intelligent' sia have been relaxed, and the Party leadership has not waged war against greater independence for the various cultural organisa tions of writers, artists, journalists etc . Furthermore there havt been changes in the composition of the National Front and a host f other such ceremonial changes giving the beneficiaries mucl sought-after official prestige . As far as Solidarity itself has bee, concerned, the party apparatus has carefully distinguishe( between 'co-operative' and 'unco-operative' leaders . Many largeP informal benefits, such as access to printing presses and trades union buildings, have been offered to the former at a regiona level . This has been especially noticeable in the case of th€ Jastrzebie Solidarity leadership but it also applies more generally At the same time the leaders of the Nationalist PKN, notabl' Leszek Moczulski, have been kept in prison and an unremittin drive has meen mounted to isolate KOR . The Party leadership has been able to gain the support no only of the Church hierarchy, but also of a few Solidarity leader and, more informally, a number of prominent reformist intellect' uals, in drawing a dividing line between a corporatist concensu and its disrupters . The Party leadership's tactical implementation of its strateg' for recuperation has not produced any break-through over th€ last few months . After going all out to win a victory ove Solidarity on the issue of the five-day week it was forced into rei treat . It was forced into a similar retreat over the general strika in Bielsko Biala and in the other regional battle at Jelenia Gora During these confrontations in January and February, thf working class reached new heights of mobilisation and unity ii



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action ; students entered the national political arena for the first time and the peasant movement, organised in Rural Solidarity, showed increased vigour . Despite considerable strains inside Solidarity, the organisation's unity was not broken and its organisational roots in the factories were strengthened . In quantitative terms, the forces lined up behind Solidarity represent the overwhelming majority of the population and the level of political ferment and awareness amongst the mass of workers has grown . But while the corporatist consensus fostered by the Kania leadership is punctured during moments of mass working-class action and while the class, rather than sectional, basis of Solidarity also points in the direction of an alternative definition of the situation to that of the Party leadership, the workers' leadership has not been able to provide its base with any clear positive perspective for the future . The battles of January and February remained defensive struggles for the implementation of the August Agreements : they did not point a way forward beyond the Agreements . In short, the immediate prospect is one of continuing stalemate . We can also predict that the current stalemate will only be broken in a convulsive way, through explosive crises in one camp or the other, or in both .

'rospects for ;he Future

For the bureaucracy a resolution of the crisis entails the demobilisation of a large part of the working class, the splitting of Solidarity and the incorporation of at least a part of its leadership . Whichever of these elements comes first is not important-each element will feed the other two . We can note some of the processes that can foster these elements' coming into play . First, the continuing and deepening economic crisis can produce a differentiation amongst the mass of workers ; between some layers retreating from collective action in search of individual solutions under the tutellage of the bureaucratic apparatus and other sections moving forward in an isolated way into more radical action . Secondly, the bureaucratic apparatus can manipulate the effects of the economic crisis so that it affects different sections of workers differently, hence creating or exacerbating sectional divisions in the working class . Next, the experience of the activists in the regional leaderships of Solidarity can diverge increasingly from the experience of the shop-floor workers, creating suspicions and divisions between them . These can be enormously increased by the still pitiable scale of Solidarity's means of communication, internal dialogue and debate . Again, the Party apparatus can use its near monopoly of information-through not only the mass media but above all the party apparatus itself and the police-to greatly inflame such divisions . Finally, policy divergences and ideological divergences within the Solidarity leadership can grow wider and deeper without any readily available mass democratic framework for resolving them . Here above

20

CAPITAL AND CLASS all the possibilities for bureaucratic intervention are considerable At a certain point the new Jaruzelski government wouh probably wish to take advantage of such processes to presen Solidarity with a new political and social contract which couh effectively hook Solidarity into the `national consensus' in decisive way . Severe sanctions would be threatened in the even of rejection while enough benefits would be offered to attrac some support . In the event of success for such an operation, th . road would be clear for re-establishing discipline among Part ; members within Solidarity and then using this force to re -establish effective political control over the workings of the organisation . Solidarity could become a useful safety valve-and . much more effective one than the old official unions-for th . restored bureaucratic order. In carrying out such an operation the Party leadership could be assured of the support of both the Church hierarchy and the bulk of the reformist intelligentsia . For Solidarity the problem is to project a democratic patl for the society in opposition to the Kania leadership's `nations consensus' . The problem could be posed in another way by sayin it is a question of finding a path towards institutionalising the leading role of the working class in Polish society, as the onl • guarantee of deepening the democratisation process begun il August . Here we can point to some key weak links in the politic of the bureaucracy . First, here is an overwhelming conviction amongst tha workers that no economic policy drawn up by the government establish effective political control over the workings of the the collective wisdom of the workers can make the econom' work . These views are given practical expression by the worker= refusal to have anything to do with participation schemes that involve them in taking responsibility for the government's econc mic plan . The question now is whether the workers' movemeni will come up with its own positive alternative to corporatisi participation such as, for example, the demand for a nation. conference of work-place delegates to debate and decide a ne . national economic plan and to supervise its implementation . Sue' an alternative would have the great merit of being economicall` viable-the workers would work to realise a plan that was then own and whose implementation was controlled by them . And b\ institutionalising such work-place delegate conferences nationall , and regionally in a process which included peasant participatioi the bureaucratic national consensus would be replaced by democratic national decision-making institution in the economi( field . A second weak link in Kania's politics is the de facto trap: ference of working class legitimation from the Party apparatus t( Solidarity itself . This is the most dangerous weakness for thl Party apparatus since it implicitly challenges its right to rule . An : for this reason also, the role of the Church hierarchy can len : authority to the operations of the Party leadership, but als above all because its spreading of religious and quietist-nationalif



BEHIND THE NEWS: POLAND

21

ideologies prevents the workers from articulating their hegemonic class role . This was nowhere more clear than during the commemoration ceremony in Gdansk in December, a crucial, symbolic moment in the whole history of the last months . The basis for finding a means of expressing the class hegemony of Solidarity lies in the large forces at the base of the Communist Party who have oriented themselves towards the new workers' movement . If a socialist political current emerged amongst these forces, linked both to sections of the Solidarity activists and to anti-bureaucratic tendencies at the base of the Party, such a current could quickly throw the whole ideological system of the party leadership into a profound crisis and enormously strengthen the selfconfidence and sense of direction of the politically aware sections of the working class . A third weak link lies in Solidarity's enormous potential reserves of support in the international field from the working class of other countries . Most important here is the concrete relevance of the organisation for the workers in Poland's neighbouring countries. In Czechoslovakia and the USSR, and to a lesser extent in the GDR, the workers find themselves facing growing economic difficulties, widespread bureaucratic corruption and economic disorganisation and the absence of any institutional channels for expressing their grievances . Never before has a working class upsurge in Eastern Europe offered such an obvious example to workers in neighbouring countries . By winning support from workers abroad, Solidarity would completely transform its relations with the Party leadership and could force the Soviet leadership into retreat . Here again the Church hierarchyaided by Western radio stations broadcasting to Eastern Europeplays a crucial role by presenting Solidarity as some type of religiously motivated movement . This greatly diminishes the resonance of the organsiation, particularly amongst workers at the base of the Communist Parties in these countries-a crucial layer to influence in order to deter Moscow from adventures . A classic case of the Church hierarchy's role in this field was their manipulation of the Solidarity delegation's visit to Italy, something which was aided by Lech Walesa and Mazowiecki but which caused considerable controversy within the Solidarity leadership . But one road forward in this field could be alliances with key trade-union centres in the West, including the CGIL, the CGT and the Spanish unions in a campaign for the official unions in Eastern Europe to provide accurate information on the character of Solidarity and its activities . Pressure on these weak points in the political defences of the party apparatus could open the road towards a government in Poland that would base itself not on the old bureaucratic apparatuses but on the new, awakened labour movement . This may not be the most likely variant of political development in Poland . But how many of those who today think it is unrealistic can honestly say that they thought what has happened since last July in Poland was possible?



22

CAPITAL AND CLASS

Footnotes

1

2 3

4

5

6

7

8

Lodz, one of the oldest industrial centres in the country, based on the textile industry, was one of the few major industrial centres that played no major role in the August crisis . Its industry consists of many hundreds of small and medium-sized plants. The city's transport workers did however strike . In Walbrzych, where the first miners strikes took place, no less than one third of the miners were Party members . The Ursus plant in Warsaw did not strike during the August crisis but it had led the way in July against the meat price rises, and its leaders play a central role in the Warsaw section of Solidarity (called the Mazowsze Committee after the name of the region in which Warsaw is situated) . The Ursus plant had also played a central role in the 1976 strike wave that defeated a government attempt to raise food prices by about 60% . The worker militants of 1976 in Ursus maintained activity throughout the subsequent four years and had links with Robotnik . There is a tendency among some socialists in Britain to view the struggle in Poland as a three-cornered conflict between i workers, party leadership and a capitalist counter-revolution headed, no doubt, by Cardinal Wyszynski . This bears no relation to the social and political polarisation actually taking place in Poland today . The active political forces seeking a return to capitalism in Poland are politically insignificant and lacking in any social base amongst the masses . In Opole province, for example, the Party first secretary, Zabinski, forbade plant managers from following the directives of central economic Ministries without the party committee's prior approval . The hostile reaction of the workers on strike the next day prompted the Episcopate to issue a statement saying the Cardinal's speech had been censored . This suggestion was, however, refuted when the Vatican's media carried the full speech : this showed there had been minimal editing and no political censorship . The hierarchy then clumsily suggested that Wyszynski had not known he was being televised-that a trick had been played on him . This carried the unfortunate implication that the Cardinal alters his views to suit the audience of the moment . The Workers Defence Committee (Polish initials KOR) was established in the summer of 1976 to campaign for the release of workers jailed for participating in strikes against proposed price increases in the previous June . The committee comprises individual intellectuals from various currents of opinion and generations . After the release of the last of the imprisoned workers in June 1977 the committee changed its name to the Social Self-Defence Committee, taking up cases of repression and publicising the social crisis in the country . During the strikes of July-August 1980 the committee played a vital role in collecting and circulating information about the movement . For more information on KOR see Labour Focus on Eastern Europe, Spring-Autumn 1980 . One of the experts, the Marxist sociologist Jadwiga Stanizkis, resigned from the committee in opposition to the inclusion of this clause in the agreements . See her extremely important



BEHIND THE NEWS: POLAND

23

series of interviews given to the Austrian socialist journalist Michael Siegert and published in the West Berlin left-wing daily Tagezeitung (17, 21 and 22 October 1980) . Michael Siegert's reports in Tagezeitung have been an invaluable service to the Western left . 9 The most effective, though very rough indicator of divisions amongst the peasantry would be the size of land holdings . Amongst the rich peasants there are employers of farm labour, though on a very small scale . 10 Historically, the peasant movement in the formerly Tsarist part of Poland, which made up over 60% of inter-war Poland, has had a tradition of left-wing radicalism and of links with the urban workers' movement . This tradition was very much alive at the end of the war in the peasant youth movement Wici . 11 The depth of the impact of the Polish crisis on the GDR can be gauged from the extraordinary turn-about made by Honecher in relation to the historical perspectives of the East German state . After almost a decade of polemics against any notion of a re-unification of Germany, Honecher put reunification back on the horizon in a speech to party officials in Berlin in February . This must be seen as an attempt to replace the East German workers' vision of themselves as being irrevokably tied to the fate of their neighbours to the East with a vision of their fate as being ultimately shaped by events among the German people .

Reconstructing Value -Form Analysis

Michael Eldred and Marnie Hanlon A common feature of interpretations of Marx's theory of value is the understanding of value as embodied labour. On this understanding the commodity is a value because it embodies a certain amount of `abstract human labour' which is measured by `socially necessary labour time' .[1] This interpretation, which has a good foundation in Marx's text, has also been the ground on which many attacks on Capital have been launched . Marx's critics-including Schumpeter-have claimed that Marx's value theory is not essentially different from that of Ricardo and other classical labour value theories . Marx's theory, however, constitutes a fundamental advance over classical and other embodied labour value theories in that it is able to grasp the peculiar characteristics of the form of value, namely, the commodity form and, most importantly, to develop money as a form of value . This aspect of Marx's theory has generally been neglected .[2] In order to develop money as a form of value Marx turned first to a consideration of the exchange relations of industrial commodities . Through an analysis of these relations the substance of value could be determined as abstract labour, an abstraction from the different concrete forms of labour embodied in the commodities . The Ricardians, on the other hand, gave little importance to the (commodity) form of value and were thereby unable to explicitly draw this distinction in the character of the labour which pertains to the universal exchange relations of commodities : they simply treated labour-assuch as the substance of value . Emphasis on the specific commodity form of the labour which constitutes the substance of value enabled Marx to make a conceptual link between commodities and money as forms- of value . When this inner connection between commodities and money is neglected, the claim of the theory to have successfully comprehended what money is there-



VALUE-FORM

25

by ignored . For classical and other embodied labour value theories the question of what money is remains : there is still the problem of connecting the commodity as an embodiment of labour to a concept of money which is an adequate foundation for the capital-analysis . As Backhaus has pointed out, when money is omitted as part and parcel of the value theory, the difference between classical and Marx's value theory can scarcely be made (Backhaus, 1969) . Disregard for the value-form is not due merely to the oversight of Marx's interpreters but has a foundation in the fact that the theory of the value-form and the embodied labour concept of value fit ill together . In particular, Marx's determination of magnitude of value as the embodiment of a certain amount of socially necessary labour measured in time (and intensity) lends itself to an understanding of the concept of value in which the conceptual connection between value and money is not adequately made and in which the value-form is lost to a notion of value as embodied labour . With respect to Marx's determination of the concept of magnitude of value, there are good grounds for the claim that his theory constitutes no advance at all over classical labour value theories . The main question in the first part of the paper is : what has magnitude of value got to do with the value-form? The aim is to expose the contradictory nature of the relation between value and magnitude of value as it is developed by Marx and to reconstruct a concept of magnitude of value which is more closely linked to the value-form . Our re-presentation reveals that magnitude of value can be consistently linked to the value-form-in particular, to the price-form-and that it must also be conceptually distinguished from the labour content which is embodied in commodities and measured quantitatively by socially necessary labour . For us the concept of socially necessary labour does not arise with the analysis of value and magnitude of value but is to be developed at a later point in the capital-analysis along with the treatment of relative surplus-value production . A short presentation of both relative and absolute surplus-value production is given which follows up the consequences of the newly developed concept of magnitude of value in this respect . At this later level, the relation between the labour embodied in commodities and their magnitude of value can be properly articulated . Namely, the labour content of commodities has significance for the capitalist process of production only to the extent that it gains practical recognition through sale as an amount of abstract associated labour . The absurdity of the fact that in capitalist society what counts as `social' labour is measured not by the conscious allocation by the members of society of labouring activities but, on the contrary, by a mysterious social thing-money-is more starkly demonstrated in our reconstructed value-form analysis than with Marx . For, despite his careful development of money as a measure of value, Marx treats commodites as endowed with a



26

CAPITAL AND CLASS magnitude of value measurable in terms of duration (and intensity) and, therefore, measurable independently of money . We object that, on the contrary, the labour content of commodities deserves the name of value of a certain magnitude only insofar as it proves itself to be such through being sold . Only then (that is, post facto) can we properly speak of the labour performed in the immediate process of production as valuecreating labour . The format of the paper is as follows . We give a re-presentation of the relevant sections of the capital-analysis which reconstruct the value-form and which follows up in a new argument some of the consequences of the new concept of magnitude of value . During the course of this argument, we point to the differences between our systematic presentation and Capital and,, at various stages, develop our criticism of Marx's argument . In i addition, we comment on other relevant literature and consider commentaries of various authors to the value theory in Capital .

Methodological Here is not the place for an extended discussion of method .[3] Remark Rather, we want to emphasise the special character of material' dialectics as a dialectics of the value-form . The bourgeois form of labour, which obtains its quintessential expression in money, contains the germ of all the contradictions of the capitalist mode of production which are to be unfolded in the total capital-analysis . For us, the key to understanding the relevance of a dialectical ) theory of the bourgeois world lies in grasping the contradictory , nature of the value-form and its consequences . This dialectic of the value-form is only to be realised in a systematic progression of concepts which bit by bit conceptualise elements of everyday consciousness of bourgeois society . One of the essential features of this dialectical thinking is the separation from one another of I elements of everyday conscious, which co-exist in everyday life . An illustration of this is the blending out (das Ausblenden) of the character of commodities as private property from the capitalanalysis . The relations between commodites and their guardians is at first viewed in a purely material way, so that buying and selling, for example, are conceived initially as an exchange of materials between character masks (die Charaktermasken, cf . CI : 89 ; KI 100 n .b . inaccurate English translation : `the characters who appear on the economic stage') . Only at a systematic level beyond the capital-analysis will the categories of property and property-owner be developed (cf. Roth et al ., 1981) . A consequence of this initial blending out of relations of property (and will) is to emphasise the nature of the value-form as a social form in which material things (commodities and money) function as the concentrates of social relations . In particular, the peculiar form of value, money, has the social power of not only buying objectified labour but also of hiring living labourers . This bending back of dead labour onto living labour, that is, the process of capital, signifies the transition of the value-form from the sphere



VALUE-FORM

27

of exchange to its domination of bourgeois production . Only by initially blending out categories of property and will can the value-form be focused upon and the details of the total process of capital be investigated . The former categories can then be developed as forms of appearance which arise necessarily on the basis of the capitalist reproduction process and which mystify and invert the latter in everyday consciousness . The present paper, however, is only concerned with reconstructing that part of the capital-analysis corresponding to Capital, Volume I, Parts I-V . The Commodity form of

Value

This part of the paper will develop the concepts of value and magnitude of value using the first chapter of Capital, Volume I as our point of departure . We seek to lay bare a contradiction in Marx's development of this pair of concepts and to resolve it by presenting an alternative concept of magnitude of value which is truer to the practical relations of capitalist economic life . The concept of value is to be arrived at by considering the exchange relations between industrial commodities that are the products of labour . `The starting point of the argument is a statement of the well-known fact about the commodity economy, the fact that all commodities can be equalised with each other and the fact that a given commodity can be equated with an infinity[?] of other commodities' (Rubin, 1972 : 109) . Rubin here does not mention that this equalisation proceeds via money . This omission has led to many misunderstandings in the marxist discussions, where direct exchange of products is understood, instead of money-mediated exchange . For the first part of the presentation this mediation is blended out and the commodities are considered as exchanging one for the other, i .e . only the end results of sales and purchases are at first considered : Expanded Exchange Schema y1 Commodity 131 x Commodity A

is exchanged for

or y2 Commodity B2 or

y n Commodity B n For a given Commodity A, the rest of the world of commodities for which it can be exchanged are its exchange-values (CI : 44 ; KI ; 51E/R ; 16, SG :4) .[4] The exchange relations always take place with definite quantities of commodities, measured in suitable units (CI : 43 ; KI ; 50) . Thus x Commodity A can be exchanged

28

CAPITAL AND CLASS for yl Commodity Bl or Y2 Commodity B2 or . . . y n Corn modity Bn , where x, y1, Y2 . . . yn are definite quantitie measured in appropriate units such as pounds, yards, kilograms, tons, etc . yl Commodity Bl, Y2 Commodity B2 . . . y n Coin modity B n are the exchange-values of x Commodity A . We have already determined the commodities which stand ii relation to one another in the expanded exchange schema as pro ducts of labour.[5] If we now take labour as a common elemen of these industrial products of labour, the specific character o that labour as a common element within the context of the ex change relations has to be determined . As Marx says of Ricardo who fails to consider this specific character : `But Ricardo does not examine the form-the peculia characteristic of labour that creates exchange-value o , manifests itself in exchange-values-the nature of this labour (Marx, 1975 : II : 164) . This involves a closer consideration of the expanded exchang : schema . We can then articulate the qualitative reduction from on : kind of labour to another which practically takes place in uni versal commodity exchange in our society . To all the different kinds of commodities there correspont various kinds of labouring activity (CI : 46 ; KI : 52) . Just as breas and steel are two qualitatively different industrial commodities so too are the particular concrete labours which produced them breadmaking and steelmaking . Industrial commodities are als(produced by isolated, dissociated labours . (Marx refers to these ii some places as the labour of private independent producer (CI : 49 ; KI : 57) and elsewhere as that of a `private individual' (Marx : 1975 : III : 130, 135) . With regard to the exchange relations of the commodity world, however : firstly, a practica abstraction from every kind of concrete labour is accomplished It makes no difference which kind of commodity, and thus whici kind of concrete labour stands in the place of Commodity A . Noi does it matter which kind of commodity-and thus which kind of concrete labour-stands in an exchange-relation to x Commodity, A . Any kind of commodity (so long as it is there in appropriat : proportions) can stand in exchange-relation to any other kind o' commodity . And, through universal commodity exchange, alE concrete labours are set equivalent to one another . The result of this practical abstraction from every kind of concrete labour objectified in commodities is called abstract labour . Secondly, ii that x Commodity A is in exchange-relations with the totality o' industrial-commodity products of labour, a practical connection of dissociated labours is constituted . The labour embodied in th^_ world of commodities becomes socially synthesised (vergesell-1 schaftet) only as objectified labour through the commodity form,) that is, through exchange of the products of labour . In assuming a social form, the dissociated labours objectified in the commodity represent themselves as their polar opposite, as a part of the total commodity producing labour of society . This practical con-



VALUE-FORM

29

nection of dissociated labours accomplished through universal commodity exchange is called associated labour. In the activity of universal commodity exchange, then, the concrete dissociated labours objectified in the commodities prove themselves to be simultaneously abstract associated labour. As an objectification of abstract associated labour, the commodity is constituted as a value . Abstract associated labour is the substance of value which represents itself in the exchange-values of commodities . To emphasise the value character of the commodity, we refer to it as a product of abstract associated labour, as a universal, as a member of the universe of the industrial commodity-products of labour . By contrast, the commodity as a product of dissociated concrete labour will be referred to as a particularity .[ 61 Marx's determination of the substance of value as `abstract human labour' includes only one of the determinations given here . For Marx, the character of the labour which is manifest in exchange-relations is that of an abstraction from all concrete forms of labour which are objectified in the commodities (CI : 46 ; KI : 52) . Marx claims, in fact, that this abstraction from concrete forms of labour constitutes an abstraction from the useful character of the labour objectified in the commodities; this abstraction, in turn, is said to result from the abstraction from the use-values of commodities . It is true that one kind of commodity is as good as any other when it comes to practical exchange-relations. We have articulated this fact as an equivalence of all forms of concrete labours which, however, does not constitute an abstraction from the commodities' use-values . At a later point we criticise Marx for identifying the commodity's character as a use-value with its character as a product of concrete labour (c .f . below pp. ff.) . This criticism aside, we have retained Marx's determination of the abstraction from all concrete forms of labour as one aspect of the labour which forms the substance of value . It is to be noted, however, that in his determination of this substance as abstract human labour Marx includes a step of argumentation which is, on the one hand, superfluous and, on the other, misleading . Let us consider his argument more closely . Marx points out that x Commodity A (for him, `wheat') `has many exchange-values instead of only one' (CI : 44 ; KI : 51) . The very next step in his derivation of the substance of value, however, consists in a consideration of the exchange-relation of only two commodities in isolation from the totality of exchangerelations of the commodity world . In particular, Marx isolates the equation one quarter of wheat = x Cwt . iron and claims that this equation tells us that : `in two different things, namely, in one quarter of wheat and in x Cwt . of iron, there exists in equal quantities something common to them both . They are, therefore, equal to a third something which in and for itself is neither the one nor the other . Each of them, in so far as it is exchange-value, must therefore be reducible to this third thing' (CI : 45 : modified ; KI : 51) .

30

CAPITAL AND CLASS Marx then determines this `common something' as that of being products of labour . In the process of exchange the concretc labours are reduced to a `third something' which Marx calls `abstract human labour' . The commodities, as crystallisations of this latter substance, are called values . But this consideration ot, the exchange relation between only two commodities is not ai step in the derivation of the substance of value . For, the exchangerelation of two commodities does not suffice in order to be able to articulate the abstraction from all forms of concrete labours . This articulation demands that there be universal exchange relations . It is to be noted, therefore, that the abstraction from i concrete forms of labour which Marx determines as the character of the labour which constitutes the substance of value is an abstraction which practically occurs in our form of society[7] where there exists universal and not isolated exchange-relations . In his derivation of the substance of value in Capital, Chapter 1, Marx does not include the determination of `associated labour' but, nevertheless, emphasises this aspect of the character which labour assumes in exchange : `Useful objects only become commodities because they are products of private labours undertaken independently of one another. The complex of these private labours makes up the total social labour . Since the producers first come into social contact through the exchange of their labour products, the specifically social characters of their private labours also first appear within this exchange . In other words the private labours act in fact as members of the total social labour first through the relations into which exchange sets the products of labour and indirectly, through them, the producers' (CI : 77ff: modified ; KI : 87) .[8] The terminology `dissociated labour' and `associated labour' diverges from Marx's terms `private labour' and `general labour' respectively . The reason for this is threefold . Firstly, we want to avoid the historicist tendency within marxist theory to treat the labour of `private independent producers' as belonging to a mode of production, namely, so-called simple commodity production, which historically precedes capitalist production.[9] Secondly, the term `private labour' carries connotations of `private property' which lead some authors to expand on the meaning of private labour as being labour carried on with the capitalist's private property . At this level of the analysis, however, the concepts of `capital' and `private property' have not yet been developed . In order to articulate capital, it is necessary to first develop money as a form of value . Furthermore, the category of private property has first to be systematically unfolded after the completion of the capital-analysis . It is inconsistent with a program to derive superstructural forms on the basis of an analysis of capital to arbitrarily introduce notions of property at this abstract starting point of the presentation . Moreover, at this early stage, the conceptual structure is not rich enough to articulate a concept of property . Thirdly, the



31

VALUE-FORM

concept of privacy has special relevance in connection with a particular sphere of bourgeois life-the private sphere-and will first be developed in its analysis . The term `dissociated' is chosen because it captures the nature of capitalist commodity production as the unconnected activities of various commodity producers . That these dissociated labouring activities only become associated in the exchange of their result, objectified labour, represents the kernel of the contradiction between production and exchange . Rubin also 'formulates in different language the opposition between dissociated and associated labour : `The labour of individuals does not directly appear as social labour . It becomes social only because it is equalised with some other labour, and this equalisation of labour is carried out by means of exchange' (Rubin, 1972 : 66 ; cf . also p . 70) . The concept of value stands at the most abstract level of the presentation where only a few elements of the totality of everyday knowledge are taken into account and articulated in the analysis . The value concept serves as a foundation for the rest of a reconstructed capital-analysis and also for the argument in this paper . The question which now confronts us is : how does a commodity express itself as value? We can begin by returning to the exchange relations between industrial commodities . Now that the category of value has been developed, the expanded exchange schema can be called the expanded expression of value .[ 10] yl Commodity Bi or Y2 Commodity B2 x Commodity A

is exchanged for

or

yi Commodity Bn The emphasis which we place on the substance of value being constituted only in the context of a single totality of exchange relations is expressed by our insistence on using the expanded exchange schema to determine the substance of value as abstract associated labour . This procedure has significance for the question posed above with respect to the expression of a commodity as value . We do not want to surrender this connection to the totality of universal exchange relations when it comes to the consideration of how a single commodity expresses itself as value . For this reason, we bypass the `elementary or accidental form of `value' (CI : 55ff ; KI : 63ff) and proceed from the expanded exchange schema, where the substance of value is determined, to the expanded expression of value where our task is to investigate how x Commodity A expresses itself as value by practically proving itself to be a member of the total commodity world .



32

CAPITAL AND CLASS With respect to Marx's claim that the exchange-relation between only two commodities constitutes an expression of value, we reply-in the first place-that this claim does not conform to his own concept of value . For, as we have already seen, the derivation of this concept relies on the existence of universal exchange-relations : in an isolated exchange-relation the abstraction from all concrete forms of labour objectified in the commodities cannot be articulated .[11] This claim, then, constitutes a contradiction within the terms of Marx's own presentation . Secondly, and this point also expresses a contradiction within the terms of Marx's theory, we object that the claim has little to do with practical relations in capitalist society . This objection renders Marx's theory contradictory in the following sense . The abstraction from all concrete forms of labour objectified in commodities expresses something true about exchange-relations in our society . In this sense Marx's concept of value cannot be interpreted merely as a thought abstraction but is a practical one . The dimension of `associated labour' which we include in our determination of the substance of value (which makes sense only in the context of a society with universal commodity exchange) adds force to the specificity of value as a form of `social labour' which pertains only to capitalist societies. This point holds even though the `dissociated producers' of the industrial commodities cannot yet be conceptually split into the character masks : capitalist and labourer (cf . p . 30) . In the expanded expression of value the commodity on the left-hand side plays a different role from the commodities on the right-hand side of the expression . The former is the commodity whose value is being expressed and is in the position of the relative value form : Commodity A expresses itself as value relative to the commodity world in commodities different from itself. The commodity in the position of relative value form expresses itself as value in relation to the totality of its exchangevalues on the right hand side of the expression . These commodities, by serving as the material in which that value is expressed, are in the position of the equivalent form of value (of being exchangeable with the commodity whose value is being expressed) .

The Money form of Value and Magnitude of Value

In the universal expression of value Commodity A has to practically prove its value character by being exchangeable against all other commodities ; one other commodity cannot serve in its particularity as the material for the expression of Commodity A's value . If, however, one member of the commodity world is given the additional determination of being immediately exchangeable against all other commodities whereby, as an `excluded commodity',[12] it can act as a mediator of commodity exchange, as a means of circulation, i .e . if practically this peculiar commodity can always be exchanged directly against all other members of the commodity world, then the practical demonstration of this exchangeability is obviated . That is, the excluded commodity would



33

VALUE-FORM

contain all the possible exchange relations and so would be spared the practical demonstration of its value character. Instead of having to express itself as value in universal exchange relations it would be, by virtue of its immediate exchangeability, value in itself. Such a commodity which is i) excluded from the commodity world as immediately exchangeable and ii) medium in which Commodity A expresses itself as a value is money and we have the price expression of value of the commodity or simply, its price : x Commodity A

is sold for

z money

With the concept of money developed, the exchange of commodities via the mediation of money can be referred to as the simple circulation of commodities. Money[13] suffices in itself, as a single material, to express the commodity world as value : `The money-form is merely the reflection thrown upon a single commodity by the relations between all other commodities' (CI : 93 : modified ; KI : 105) . Money however, is not a commodity : it is absolute value in that it represents the universality of value as a particular product of labour, it is a singularity (Einzelheit : Hegel) . Herein it functions as a fixed universal equivalent form of value . At this stage of the analysis there cannot be two moneys for the same reason that there cannot be two universal equivalents . To have two universal equivalents would be to have two `excluded commodities' each of which functions as a separate immediately exchangeable object in which the value of commodities is expressed . We would have two `values' in contradiction to the uniformity of the substance of value as abstract associated labour, labour of the same type constituted by a single totality of exchange relations of commodities . When we turn to everyday knowledge we see that the money systematically developed in the presentation corresponds only to a particular kind of (world) money, namely, to gold, an industrial product of labour which serves as a universal equivalent . Gold, then, is the first kind of money (in distinction from the money form of value) which, as money, is not a commodity . As jewellery, catalyst etc . gold is not simply gold but a commodity in which gold has functioned as a raw material . Gold can only become a commodity in relation to money, which on this level of the analysis is an absurdity, since only gold is money . At a systematically later level, where state paper money is developed, gold becomes describable as a commodity in relation to the various national currencies . Our immediate experience of commodity exchange is that the exchange relations are mediated by paper or credit money . This mediation was blended out above and we have now arrived at a concept of money, gold money, which differs from the money in our everyday practical relations but which, nevertheless, corresponds to one kind of money . Gold money, as the first kind of money, is articulated on the basis of



34

CAPITAL AND CLASS

an analysis of very few features of commodity exchange, considered on a simple material level . The conceptual language oni this level is not yet rich enough for thinking a higher type of, money such as credit money and state paper money . These latteri types may only be articulated on later levels of the analysis . Credit money arises first with the consideration of interestbearing capital ; state paper money requires for its understanding ai concept of state . A main task of conceptualising paper-money will be to analyse the connection between gold-money ands national currencies . Furthermore, the character of money as the material for the value expression of the whole world of commodities requires a concept of money corresponding to a process of commodity exchange not confined to national boundaries . State paper money is only money within a definite country ;, outside the country the paper currency becomes a (higher-order) i commodity in exchange with other paper currencies . Gold, on the other hand, knows no national boundaries and serves as money for the world exchange process . With the transition from the expanded expression of value to the price expression of value we have another divergence from i Marx's presentation, where the `general form of value' is treated) as an expression of the value of the commodity world in a single commodity which is in the position of equivalent form of value, a universal equivalent (CI : 70ff; KI : 79ff) . We, however, reserve the term `universal equivalent' for money . We consider Marx's, argumentation with respect to the `general form of value' false because the complex of exchange relations which he treats under i its heading is, in fact, no expression of value . Marx arrives at the , `General form of Value' by a consideration of the converse of the exchange relations constituting the expanded expression of value : yi Commodity Bl or Y2 Commodity B2 or

can be exchanged for

x Commodity A

y n Commodity B n This converse simply says that any commodity within the world) of commodities can be exchanged for Commodity A, the latter being a commodity excluded from the world of commodities . Ini our view it cannot be regarded as an expression of value because the single Commodity A in itself cannot serve in its particularity as the material for the expression of value . Before the systematic development of money the only expression of value is the practical proof of membership of a commodity in the commodity world . The bypassing of the `General form of Value' does not, however, mean that our presentation fails to conceive of the expression of the commodity world itself as a value totality . Wei



35

VALUE-FORM

have an expression of the commodity world as a value totality in the sum of price expressions of single commodities . Whatever the units are in which money is standardised and counted, it is clear that within itself money shows only quantitative differentiations . It is something qualitative which exists as pure quantity, thus qualitative quantity or quantum .[14] Although qualitatively speaking, the expression of value of x Commodity A can be represented by : Commodity A

is sold for

money

this expression has also a unique quantitative aspect, in that x Commodity A is sold for z units of money . Thus not only does money serve as the medium in which commodities express their value qualitatively, but definite units of the commodity express also their value quantitatively in a definite amount of money . Just as the substance of value is abstract associated labour, the magnitude of value is the amount of abstract associated labour . Money serves as the measure of magnitude of value, i .e . it measures amounts of abstract associated labour . This derivation of the concepts of magnitude of value and its measure is accomplished by considering the practical relations in which commodities express themselves as values thereby also unearthing the practical measure of magnitude of value lying within universal exchange relations .

Problems with Marx's Concept of Magnitude of Value

We have seen that a consideration of the concept of magnitude of value and its measure only arises once the concepts of money and price have been developed . Abstract associated labour is the character given to the labour in commodities by universal commodity exchange in our form of society . The character of this labour and also the character of a commodity as a value is only manifested in exchange relations with all other commodities . The measure of magnitude of value which practically exists in capitalist societies must also be sought in exchange relations : it cannot be arbitrarily defined for theoretical convenience, as some authors propose .[15] Just as the value of a commodity is only expressed in exchange relations, so can the magnitude of value only be expressed in these relations. The expression of quantity, however, is achieved through its measure ; thus the measure of magnitude of value is to be sought in exchange relations . It is only with the transition to the money expression of value, however, where gold assumes the position of universal equivalent, that we gain a single measure of value valid for the whole world of commodities (CI : 74 ; KI : 84, E/R : 18, 20f, SG : 15) . Gold's exclusion from the world of commodities is signified by it becoming (systematically) money, a social object to be conceptualised only on the basis of commodities, but also as different from commodities . The measure of magnitude of value is thus gold, which is invariably quantified as some convenient

36

CAPITAL AND CLASS

unit of weight such as ounce, sovereign etc . (CI : 102f ; KI : 115) . The expression of value of commodities now only occurs, systematically speaking, in the price expression of value . Marx's development of the concept of magnitude of value is quite different from the one given here . While we reserve the measure of magnitude of value to money, Marx discusses it immediately following his derivation of the substance of value . It is important to note the statement with which Marx initiates this discussion, namely : `The course of our investigation will lead us back to exchange-value as the necessary mode of expression or form of appearance of value, which at first, however, has to be considered independently of this form' (CI : 46 : modified ; KI : 53) . Although Marx states that he is about to consider `value' independently of its expression, what he in fact discusses is the measure of magnitude of value . He continues : `A use-value or good therefore only has value because abstract human labour is objectified or materialised in it . How, then, is the magnitude of its value to be measured? By the quantum of 'value-creating substance', labour, contained in it . The quantity of labour, however, is measured by its duration and labour-time in turn has its standard in definite portions of time such as the hour, the day etc' (CI : 46 : modified ; KI : 53) . In this passage Marx equates 'value-creating substance' with `labour' (in the ordinary aconceptual usage of the term `labour'), even though his presentation has already determined the substance of value as abstract labour . Once this identity of abstract labour and labour is asserted, it is clear that labour has its measure in time (and intensity) of labour . But here the point is not to quarrel with Marx's omission of intensity as a determinant of the quantity of labour objectified .[16] Rather, the point is that, after Marx has painstakingly clarified the value-creating substance as abstract labour, he surrenders it once again in the determination of the concept of magnitude of value, and therefore, with respect to the latter, falls back to the level of the Ricardians who simply treated labour as the substance of value . Through this procedure the specificity of the form of `social labour' is lost . Marx puts forward no argument for why abstract labour, at least as far as its quantitative measurement is concerned, can be regarded simply as labour, even though he has taken care to i develop the abstractness of abstract labour as an abstraction from i the objectified concrete forms of labour achieved only in i universal exchange relations . We can only conclude that in the moment of this identification of abstract labour with labour-assuch (with the consequence that both have the same measure)„ the abstraction is to be treated as merely something in thought .



VALUE-FORM

37

We are simply meant to think of amounts of labour as measured by duration independently of specific concrete forms of its expenditure . In separating the measurement of amounts of abstract labour from the mode in which this character of labour comes to be expressed (namely, in universal commodity exchange, and ultimately, in money), the commodity product of labour ceases to be the object of analysis . An incongruity between value form and value magnitude is thereby introduced .[17] This is not to deny the possibility of talking about concrete dissociated labour processes as value-creating processes . This must be treated when it comes to considering how the industrial commodities analysed in the first part of the analysis are produced . But this need not involve a separation of the expression of the substance of value and its quantitative measure and can be done only on the basis that the concrete dissociated labours embodied in the commodities have proved themselves to be also amounts of abstract associated labour by being sold for a certain price . It is only, therefore, post facto that value-creation can be considered conceptually mediated with the mode in which value comes to be expressed and measured . Thus, for us, paradoxically, Marx's question to the Ricardians `why this content assumes this form' (cf. Backhaus, 1969 : 131) is quite misleading ;[18] it implies, and the following quote from Marx confirms the implication, that the content (value) is separable and distinguishable from the commodity form, or in other words, that the products of labour have an intrinsic value before they hit the market : `The process of exchange does not give the commodity which it transforms into money its value, but its specific value form' (CI : 93 : modified ; KI : 105) . A symptom of this view is Marx's claim that magnitude of value is measured independently of the exchange-relations (in duration) : `We see plainly [in the expanded expression of value] that exchange does not determine the magnitude of the value of a commodity ; but that, conversely, the magnitude of value of a commodity determines its exchange relations' (CI : 69 : modified ; KI : 78) . It can be noted here briefly that Marx's concept of magnitude of value gives rise to three well-known problems of the value theory which do not arise with the concept of magnitude of value which we have developed . The first, and perhaps fundamental, is the problem of the lack of conceptual connection between magnitude of value and exchange-value (price) . Because Marx appeals to an obviousness[19] in concluding that (labour-) time is the measure for the magnitude of value, he immediately has to qualify what counts as value-creating labour. For the purpose of determining magnitude, the only labour that counts, according to Marx, is `socially necessary labour time', the `labour time required . . . to produce a use-value under the normal social conditions of production and with the socially average degree of skill and intensity

38

CAPITAL AND CLASS of labour prevalent at the time' (CI : 47 : modified ; KI : 53) . The magnitude of value, therefore, in Marx's more exact formulation, finds its measure in units of `socially necessary' labour time and not in the practical exchange against money . The term `socially necessary labour time' is introduced here by Marx for the first time in a way that leaves its connection to abstract labour and exchange-relations entirely unexplained . Indeed, symptomatically, in the above passage Marx talks about the labour time required to i produce a 'use-value', not a value . Earlier, in deriving the substance of value he identified the labour required to produce a i use-value with concrete labouring activity and it is true that time is the obvious measure (along with intensity) for the concrete (and dissociated) labours as they are performed in productive activity . The lack of inner conceptual connection between magnitude of value and exchange-value (price) in Marx's presentation i leads him to make the connection by way of an assumption of presentation . The prices of commodities, as Marx repeatedly states throughout Volumes 1 and 2, are assumed to be proportional to the socially necessary labour-time which they represent . Marx asserts that in simple commodity circulation : `the two extremes of the circuit have the same economic form . They are both commodities . They are also commodities of the same magnitude of value' (CI : 148 : modified ; KI : 164) . And elsewhere : `Gold becomes the measure of value because the exchangevalue of all commodities is measured in gold, is expressed in the relation of a definite quantity of gold and a definite quantity of commodity containing equal amounts of labourtime' (Marx, 1971 : 65f ; latter emphasis by E/H) . This assertion can be compared with Marx's explicit denial of the necessity of a relation between socially necessary labour-time and price : `The possibility, therefore, of quantitative incongruity between price and magnitude of value [socially necessary labour time] or, the deviation of the former from the latter is inherent in the price-form itself' (CI : 104 : KI : 117) . This contradictoriness expresses the dubiousness of Marx's assertion that in simple commodity circulation equal magnitudes of value (in his sense) are exchanged . It also has significance for assessing the dubiousness of Marx's earlier assertion that `equal quantities' of labour are exchanged in the exchange-relation between two commodities (CI : 45 ; KI : 51) . There are no grounds in experience for this assertion nor for the assertion that equal magnitudes of value are exchanged in simple commodity circulation . Our reconstructed presentation reveals that there is no such identity between the amount of (concrete dissociated) labour



VALUE-FORM

39

embodied in a commodity and its magnitude of value . This is because the measure of the former (duration and intensity) is incommensurable with the measure of the latter (money) . As a consequence of this incommensurability, the relation between these two characters of the labour objectified in commodities is a mediated one in which the labour performed in the production process has no direct one-to-one relation to its acknowledgement as value-creating labour (cf. below p . 37f) . The prices of the various commodities are their expressions quantitatively as a portion of the total commodity-embodied abstract associated labour of society . The commodity price expresses the extent to which the particular concrete dissociated labours embodied in the commodity are acknowledged as universality . It is price, therefore, and not duration which measures with final validity the extent to which the labour performed in the immediate process of production of a commodity is recognised within the totality of industrial commodities as value of a definite magnitude . For this reason, and in contrast to Marx, fluctuations in price are to be regarded as fluctuations in the commodity's magnitude of value . Attempts have been made to overcome the anomaly in Marx's presentation whereby at one level of the analysis prices represent magnitude of value and at another level prices of production by interpreting simple commodity circulation as something which occurs in a simple commodity production economy . The latter is an economy which idealises a stage historically preceding capitalism . But this means that we have left the object of our analysis, namely, those societies `in which the capitalist mode of production dominates' (CI : 43 : modified ; KI : 49) . Other attempts[20] at resolving the anomaly centre on trying to show that equilibrium prices are proportional to embodied socially necessary labour time when competition between capitals is abstracted from and otherwise `perfect competition' of independent producers is assumed. Here, the real object of analysis is departed from in order to make a model whose logic remains unclear . Why should perfect competition between independent producers ideally result in prices proportional to socially necessary labour times? (cf. Marx's description of this CIII : 175ff ; KIII : 184ff) . A third way of resolving the anomaly-Marx's solutionis to separate the levels of the systematic analysis and to make an assumption of presentation that prices are equal to magnitude of value (proportional to socially necessary labour time) until the level of profit and prices of production is reached . Our criticism of this procedure is represented by the above argument against Marx's concept of magnitude of value, whose conclusion is that such an assumption of presentation is superfluous .[21] Secondly, and following on from the first problem, the reduction problem emerges : the problem of whether `complicated' or skilled labour creates more value in equal socially necessary times than simple labour (cf. CI : 51f; KI : 59f) . This dilemma arises because Marx identifies abstract labour with simple labour .

40

CAPITAL AND CLASS

All other types of labour then have to be `reduced' to this simple labour and Marx turns to the practical reduction in exchange : `That this reduction continually takes place is shown by experience . A commodity may be the product of the most complicated labour, its value sets it equal to the product of simple labour and therefore represents itself as only a definite quantum of simple labour' (CI : 51 : modified ; KI : 59) . Marx is quite correct in pointing out that simple labour and complicated labour are made equivalent to one another in exchange as value-creating labour . He overlooks, however, that both simple and complicated labours, as general classifications of particular kinds of concrete labours, are reduced to value-creating labour and that their respective amounts, as measured by time and intensity, are reduced to a common measure in amounts of money, or price . Boehm-Bawerk has already criticised Marx for the circularity of his reduction procedure (Boehm-Bawerk, 1975 : 81ff) .[22] With our concept of magnitude of value, this dilemma of reduction does not arise . Our view is that the differences between `complicated labour' and `simple labour' have to be considered on the level of competition, after the capital-analysis proper, although even at this early abstract level of the analysis, the reduction of complicated and simple labours to abstract associated labour is accomplished practically in exchange . Thirdly, there is Marx's problematic identification of abstract labour with the physiological expenditure of `human brains, nerves and muscles' (CI : 51 ; KI : 58 ; cf . also Marx, Cont ., 1971 : 31 ; MEW13 : 18) : `All labour is the expenditure of human labour-power in the physiological sense and in this characteristic of equal human or abstract human labour it forms commodity-value' CI : 53 ; KI : 61) . This determination of abstract labour as a physiological expenditure of labour-power leads to the crudest understanding of value and the loss of the socially specific character of value-creating labour (cf . Rubin, 1972 : 132ff) . The abstractness of valuecreating labour is determined by the exchange process which accomplishes the abstraction from the multifarious concrete labours objectified in commodities . This abstractness does not (contrary to Marx) `exist in the form of average labour which, in a given society, the average person can perform' (Marx, Cont ., 1971 : 31 ; MEW13 : 18) .[23] Despite the tendency in Marx's presentation to treat value as embodied labour, he continually underlines the importance of the form of value-creating labour : [24] 'Exchange-value creating labour is, on the other hand, a specific social form of labour . Tailoring, e .g . in its material determinacy as a particular productive activity, produces the coat but not the coat's exchange-value . It produces the latter



VALUE-FORM

41

not as tailoring labour but as abstract, general labour, and this belongs to a social connection which the tailor has not devised' (Marx, Cont., 1971 : 36 : modified ; MEW13 : 24) . What our argument rests on is simply a consistent pursuit of Marx's development of the character of value-creating labour with regard to the quantitative side of the value concept . `The commodity' Marx says : 'is use-value . . . and `value' . It presents itself as this doubled thing, which it is, as soon as its value possesses its own form of appearance different from its natural form, that of exchange-value . It possesses this form never viewed in isolation but always only in a value- or exchange-relation to a second commodity[?] of a different kind' (CI : 66 : modified ; KI : 75) . What is said here with regard to the form of appearance of value holds also with regard to the measurement of magnitude of value . The commodity represents itself as magnitude of value as soon as its `magnitude of value' possessses its own form of appearance, and it possesses this form never in isolation but only in price . And price represents the social connection-the value relationsbetween the whole commodity world . The contradictoriness of capitalism has its germ in the form assumed by `social labour' in our society, the commodity form . No less a contradiction is to be unearthed in the absurdity of amounts of `social labour' being measured by a thing, money, rather than labouring activities being allocated consciously by the members of society . Even though it is quite unambiguous that Marx regards (socially necessary) labour time (and intensity) as the measure of magnitude of value, he gives formulations which express that the measure of magnitude of value lies in money . These formulations are symptoms of the contradiction hidden in Marx's presentation between the value-form and the form-less determination of magnitude of value . In the following passage Marx expresses something which does not conform to his own determination of magnitude of value but which, nevertheless, makes the connection between magnitude of value and value-form which we have pursued : `Thus it was only the analysis of the prices of commodities which led to the determination of the magnitude of value, it was only the collective (gemeinschaftliche) money expression of commodities which led to the fixation of their value character' (CI : 49 : modified ; KI : 90) . In another place Marx writes : `For example, if all commodities express their value in gold, then this expression in gold, their gold price, their equation with gold is an equation on the basis of which it is possible to elucidate and compute their value relation to one another, for they are now expressed as different quantities of gold and

42

CAPITAL AND CLASS

in this way the commodities are represented in their price as comparable magnitudes of the same common demonom= tion' (Marx, 1975 : III : 134 ; 131f) . And elsewhere he says : 'When we speak of the commodity as a materialisation o labour-in the sense of its exchange-value-this itself is onlF an imaginary, that is to say a purely social, mode of existenc of the commodity which has nothing to do with its corporea reality ; it is conceived as a definite quantity of social labou in money' (Marx, 1975 : I : 171 quoted in Rosdolsky, 19771 519f; cf . also 123) . and 'It is in its immediate materiality, as the weight of preciou metal, that it [money] is magnitude of value' (Grundrisse Urtext S .880 our emphasis E/H) . Himmelweit and Mohun (1978) also have formulations which ar : near to what is being said by us without, however, drawing out the implications for a criticism of Marx's concept of magnitude o, value . Thus they write, for example : 'Only market processes realise the quantative expression o abstract labour, and this quantitative expression only has price-form' (H&M, 1978 : 84) ; and : 'Price is the sole expression of value (and exchange-value[?] ) There is no manifestation of value in terms of its substance ; abstract labour, nor of its measure, socially necessary labour time . The only form in which value appears, and the only, way it can appear, is in terms of the money commodity, (gold, for example) and its quantitative measure (weight, fol example)' (H&M, 1978 : 74) . Himmelweit (1979) writes : 'But within Marxist theory, the measure of value is sociallyi necessary labour time, something which cannot be calculated a priori, because it is the sale of the commodity which bothi certifies and measures the labour employed in its productions as socially necessary' (Himmelweit, 1979 : 142f) . By emphasising that socially necessary labour time is only, measured in the sale of the commodity, Himmelweit here is already diverging from Marx's concept of socially necessary labours time, which is defined independently of exchange . Rubin briefly entertains the idea that the magnitude of value is to be measured by exchange-relations, only to quickly dismiss it : 'At first glance it might seem that if abstract labour is the result of social equalisation of labour through the equalisation of the products of labour, the only criterion of equality ;



VALUE-FORM

43

or inequality of two labour expenditures is the fact of equality (or inequality) in the process of exchange . From this standpoint we cannot speak of equality or inequality of two labour expenditures before the moment of their social equalisation through the process of exchange . On the other hand, if in the process of exchange these labour expenditures are socially equalised, we must consider them equal even though they are not equal (for example, with respect to the number of hours of labour) in the process of direct production' (Rubin, 1972 : 154) . For us, this passage contains the truth not only at first glance but also on closer consideration . Rubin raises only two objections to this `false impression' which we will answer in turn . Firstly, he continues : `Such an assumption leads to false conclusions . It deprives us of the right to say that in the process of exchange equal quantities of labour, and sometimes very unequal quantities . . . are socially equalised' (Rubin, 1972 : 154) . To maintain that abstract associated labour is only measured quantitatively in price does not preclude a comparison of the labour contents of various commodities on the market . In the analysis of relative and absolute surplus-value production it becomes not only possible, but necessary to treat the relationship between the concrete dissociated labours embodied in commodities (as measured by duration and intensity of the labour processes which produced them) and their magnitudes of value . Rubin's second objection follows on from the first : `We would have to admit that the social equalisation of labour in the process of exchange is carried out in isolation of dependence on quantitative aspects which characterise labour in the process of direct production (for example, the length, intensity, length of training for a given level of qualification, and so on), and thus, the social equalisation would lack any regularity since it would be exclusively determined by market spontaneity' (Rubin, 1972 : 154) . To leave the determination of magnitude of value to exchangerelations seems to cut the nexus between productive activity and exchange-relations . The prices of commodities would then be completely capricious, arbitrary measurements of the magnitude of value, wholly divorced from conditions of production . But the measure of magnitude of value in money does not deny the mediations existing between conditions of production and exchange . Rather, our alternative formulation insists that the relationship is a mediated one in which the labour performed in the production process has no direct relation to its acknowledgement as value-creating labour and in which, conversely, the production process reacts to the conditions of the market . It is the task of the concepts of absolute and relative surplus-value pro-



44

CAPITAL AND CLASS duction to articulate the mediated relationship between productive activity in a capitalist production process and price (cf. below p . 37f) .

The Concept of Under this heading we give a formulation of the essential process Ground-Form of capitalist economy, the valorisation of value, in terms of the Capital value-form analytic concept of magnitude of value . In doing so, we do not continue a detailed comparison with Marx's presentation . Most of our divergences from Marx in the following section i are the consequence of our arguments against him in the preceding section of this paper. The development of the presentation i beyond the level of simple commodity circulation is initiated by the question as to how the industrial commodities, which were analysed in the first part of the presentation, were produced . With the concepts of value and money developed, the specifically capitalist social form of productive activity can now be articulated . Money, as absolute existence of value, has the power to relate to things other than values (industrial commodities) so that now value as money subsumes objects which are not values under its power ; for now, a thematisation of the charactermask, the labourer, becomes necessary . A new piece of everyday knowledge is thereby picked up : that labourers are hired by capitalists, who set the formers' labour-power into motion in the production of new commodities . The figure of the `producer' who stands behind the commodities in the first part of the analysis thereby splits into the capitalist and the labourer . In return for the expenditure of the labourer's capacity to labour, that is, the expenditure of labourpower, over a definite period of time (this period is initially taken as the time for production and sale of the commodity (cf . below p . 31), the labourer receives a wage . Here again there is a divergence from Marx, who, instead of formulating the relation between capitalist and labourer as one of hiring (or, more generally, as a loan), simply treats labour-power as another commodity, albeit a commodity with special characteristics . The concept of exchange, however, is not adequate to the relation between capitalist and labourer . The exchange of commodity for money is the reciprocal and total surrender of commodity for money and money for commodity ; a monetary relation in which the buyer and seller come into momentary contact . With the hiring of labourers, however, the relation is not simply the surrender of something for money . Rather, the capitalist gains the temporary possession of the labourer, a human bearer of labour-power, who he can now employ in a labourprocess producing industrial commodities . The bearer of the labour-power is not bought but only hired . In the period of the loan, the capitalist directs only the expenditure of labour-power, which is thereby realised as labour ('labour-power in use is labour itself' (CI : 173 ; KI : 192)) .



VALUE-FORM

45

Neither the labourers themselves nor their labour-power are values, since the latter can only be industrial commodities, objectifications of abstract associated labour . Whereas money is a form of value because it is only developed on the basis of being an immediately exchangeable `excluded' commodity, labourpower is a qualitatively new type of entity which draws money as a hiring charge for the labourer . The wages so gained are spent by the labourers on industrial commodities, which constitute the labourers' articles of (individual) consumption . The latter are values, and in this mediated way, the labourers' labour-power is brought into equivalence with a portion of the totality of abstract associated labour . At this level of the analysis, and throughout the capitalanalysis, the labourers are to be characterised in this abstract reified way as mere living bearers of labour-power who buy articles of consumption with their wages as an essential component of the maintenance of their lives . The subjectivity of the labourers receives its first determinations on the level of competition in the treatment of the individuals of competition . Furthermore, the availability of labourers on the market is assumed until the level of competition . Thus, our view is that topics dealt with in Capital which turn upon the finiteness of the availability of labourers, such as the industrial reserve army and over-accumulation, are more appropriately treated in the competition-analysis . Similarly, the analysis of how and the social form of life in which the labourers maintain themselves is reserved to a systematically later level : the private sphere . After the period of hire, the labourers receive wages from the proceeds of the sale of the commodities they have produced . (This counter-factual assumption of presentation will be relaxed with the treatment of turnover ; cf. also CI : 170 ; KI : 188: `In every country . . .') . Money is advanced by the capitalist to buy industrial commodities, the means of production required for the particular kind of labour-process under consideration . (The incorporation of the natural conditions of production into the presentation is achieved only on the level of ground-rent.) In the production process, P, the use-value of the means of production is realised in producing C" . The process of ground-form capital can now be depicted as : M -MP . . . P . . . C" M"--)M'(= M + M) ILP where M is the money advanced to buy means of production MP, labour-power LP is drawn into a production process P, producing commodities C" . The money, M", from the sale of C" is used to pay the labourers' wages, W, leaving M' in the hands of the capitalist . Only whenLM = M' - M is positive can this process be regarded as the process of ground-form capital, a process of LM is negative, that is, where value fails to reproduce itself,

46

CAPITAL AND CLASS belongs to a later stage of the analysis . In individual and productive consumption a commodity' character as a use-value is realised . Just as value has no manifestl ation apart from the social practice of exchange, it is only withi' the social practice of consumption that a commodity expresses itself as a useful object, as a use-value (cf . CI : 44 ; KI : 50) . Insofa as it has a material body, a commodity's use-value can be said tt reside in its bodily form, because it is the latter which is eithe , individually or productively consumed . The possession of . bodily form, however, is not necessarily one of the commodity' characteristics but this in no way prevents it having a use-value . I( may have no material body but rather only appear as a use-valu-. simultaneously with its consumption, i .e . there is no potentia use-value residing in a material `envelope' of the commodity, bui only the actualisation of the use-value in consumption, e .g. trans portation (cf. CII : 152ff; KII : 150ff) and electricity (this can b . stored, but not as a palpable material object) . In a reconstructed value-form analytic presentation of thF capital-analysis the concept of use-value is restricted to the character of the commodity in consumption . The only kind o~ consumption that the capital-analysis deals with in detail is pro ductive consumption and this is first treated at the level of the capitalist process of production . Productive consumption is the use of means of production by capital in the production process to produce surplus-value . Individual consumption remains simply a black box into which industrial commodities are fed and out o' which labourers emerge . Analysis of this cannot be given here ; w can only indicate that in our extension of a systematic presenta tion of bourgeois society beyond the capital-analysis, the privat_ sphere is to be conceptualised after the competition-analysis it made . Productive consumption is by no means directed toward the satisfaction of human need, even indirectly . Far from it ; thc latter can be shown to be subordinate to the valorisation o1 capital and conditioned by the reproduction of total social' capital . The concept of use-value is not connected, at this level of the analysis, to the satisfaction of human need because such connection requires that the private sphere, within which human needs come to be satisfied, becomes the object of analysis . Still another determination of the concept of use-value igiven in that Marx sets up an opposition between a commodity'character as a use-value on the one hand and its character as a value on the other (cf . CI : 48f, 62 ; KI : 56f, 71) . Subsumed under this opposition, he postulates the twofold nature of the labour in-i sofar as it creates use-values to be concrete labour (spinning,, weaving etc .) and insofar as it is a creator of value to be abstract) labour (CI : 64 ; KI : 72) . This introduces a new meaning for thei concept of use-value i .e . as the product of concrete labouring) activity . The relation between use-value as realised in consumption and the commodity as a product of concrete labour,

VALUE-FORM

47

however, is not straightforward . From the very beginning of the analysis, an industrial commodity is implicitly a use-value in that we are dealing with products of labour . For labour itself is human activity exercised with a definite aim for a definite useful result that is to be realised in use, in consumption . The character of a commodity as a use-value, therefore, is a consequence of its character as a product of labour, not especially as a product of concrete labour . Concrete labour accounts only for the particular kind of commodity produced and thereby for the commodity's particular use-value(s) . Moreover, the correspondence between concrete labour and particularity of the use-value is not one to one . For, a given kind of commodity, the product of a particular type of concrete labour (say, steelmaking labour), can be realised as a use-value in many different kinds of (productive and individual) consumption practices (say, shipbuilding, making screws, making wire etc . etc.) . Instead of having just one usevalue, many commodities have several . Furthermore, the two-fold opposition between concrete dissociated labouring activity on the one hand and abstract associated labour on the other is one that is situated in the sphere of exchange . Concrete dissociated labours have to represent themselves as their opposite, abstract associated labour, in money . Marx's formulation of an opposition between use-value and value, however, does not capture this practical doubling that occurs in the sphere of exchange . We have formulated this opposition in the sphere of exchange not as one between value and use- value, but as one between the universal character of the commodity as a value and its character as particularity (cf. p . 7) . Our formulation encapsulates the abovementioned double opposition in the characteristics of the labour objectified in commodities ; for, in exchange, the commodity doubles itself into particularity and universality . The opposition between universality and particularity, however, is quite different from the distinction between value and use-value . The latter opposition expresses the separation between consumption and exchange . Besides production, the commodity has a phase of its existence in two other spheres and it realises a different character in each of these spheres . Its character asa value is expressed in exchange (or, now that money has been systematically developed, in simple commodity circulation) . Use-value is the characteristic of the commodity manifested in consumption . This opposition between the spheres of exchange (circulation) and consumption becomes crucial in the capital-analysis when the process of circulation becomes the specific object of investigation and especially when the reproduction of the total social capital is considered : the totality of commodities as a universality of values has to mesh with the totality of commodities considered as the totality of consumption processes in the society (cf. CII : 397, 500 ; KII : 392, 491 ; E/R : 39ff; Rosdolsky, 1977 : 319f) .



48

CAPITAL AND CLASS The formula' M

NIP . . .P . . .C"

I:P

M''

) MI ,

W

needs to be more closely examined to discover from where tha increase in M arises . The commodities C" are the product of twt lots of labour: firstly, they embody the concrete, dissociate labour performed in the process P currently under consideration and secondly, they embody the old concrete, dissociated labou which formerly had the shape of means of production but whici now reappears as a component part of the concrete dissociate labour taken to produce C" . These two lots of labour objectifie, in C" gain acknowledgement as abstract associated labour in th-. sale for an amount of money M" . M" thus measures both the ex tent to which the old concrete dissociated labour, and the extens to which the new concrete dissociated labour count as valu_creating labour, and so splits into two parts, old value[25] (MA and new-value MN) . Hence M" = MA + MN (written MA+N), where the two money sums, MA and MN have to be furthe defined. MN is the magnitude of value created by the labourer : employed in the production process P . The labourers receive portion of this new-value as wages, W . What remains is calle, surplus-value (s) . Thus MN = W + s . The labourers' wages, W, are paid out of new-value, MN an, hence they are produced as value by the labourers themselves i1 the course of the production process P . If the capitalist is to haw enough money to pay the labourers' wages, then new-value aP least to the extent of W must be created . W is thus called also the necessary-value and new-value is composed of two components necessary-value and surplus-value . Since in a consistent value-form analytic presentatior surplus-value etc . cannot be conceptualised independently of the value-form, i .e . money, the normal marxist terminology o1 necessary labour-time and surplus labour-time cannot be employed without caution . The simple picture of a working-days divided into two parts, in the first of which the labourers produces their wages, and in the second of which they produce surplusvalue for the capitalist, cannot be employed without further ado .i A division of the working-day into two parts can only be per= formed post facto using the money quantities, W and s, and bye making certain simplifying assumptions such as that value isi created uniformly over the whole working period of the production process . The working day, for example, is then divided) into the proportion W :s, corresponding to the ratio necessary labour-time : surplus-labour time .



VALUE-FORM

49

What is the relation between s and the profit retained by the capitalist, p =A M = M' - M . We have p=M'-M=M"-W-M =(MN-W)+(MA-M) s + (M A - M), so p = s if and only if MA = M. We therefore need to study the relation between M A and M further. As we have seen, M A is the magnitude of value of the MP, now reappearing in transformed form as a component part of the new product C". The concrete dissociated labour objectified in MP has thus been subjected to the process of gaining acknowledgement as abstract associated labour twice ; the first time when the capitalist purchased them as MP and the second time as a component part of the labour objectified in C" . The first time it was acknowledged as M and the second time as M A . As valuecreating labour, i .e . as abstract associated labour, the concrete dissociated labour in the original MP is the same as the concrete dissociated labour objectified in new MP of the same kind currently offered for sale on the market . This does not imply that there are equal amounts of concrete dissociated labour in the old and the new MP, but only that the concrete dissociated labour objectified in the consumed MP gains an equal acknowledgement as value-creating labour as that contained in MP of the same sort currently available on the market . MA is thus the current replacement price (magnitude of value) of the MP consumed in the production of C" . If the price of the same sort of MP has altered from the time of purchase of the original MP, then M = MA ; otherwise MA= M . From this it follows that p = s if and only if there are no changes in the price of means of production of the same sort . In the analysis of ground-form capital such fluctuations in magnitude of value of MP (of the same sort) are set equal to zero by an assumption of presentation .

tbsolute and telative ;urplus-Value 'roduction

C13-D

The following paragraphs are devoted to an account of absolute and relative surplus-value production, in order to demonstrate how a reconstructed concept of magnitude of value necessitates a reconceptualisation of these categories . The underlying intention is to investigate the limitations to surplus-value production lying in the production process itself, and to discover the adequate means for ameliorating these limitations . The comparison will be made between capitals operating in the same branch but producing different amounts of surplus-value . At this stage no consideration of competition between capitals enters the analysis, but rather simply the grounds for the difference in surplus-value production are investigated . Consider two capitals, K 1 and K 2 , each producing the same kind of commodity and paying the same amount, W, to labourers, L1, L2 for the same number of labourers . (The wage per labourer



50

CAPITAL AND CLASS is thus the same for each capital .) Suppose that K2's labourer produce more surplus-value than K1's. Then we can depict thei° activities as follows : Ki:

M l MP1 . . . P i . . C i

, M 1 N+A -- ) M

L1 K2:

W

M 2 -MP 2 . . . P 2 . . C2-M2N+ * M 2 T i

L2 We have s 2

>s

W

N i , so M2N_W>M 1 -W and M 2 N>M 1 N ,

i .e ., the labourers in P2 have created more new-value than those in P1 . Since we assume that K1 and K2 are active at the same time, and sell their commodity products on the same market, tha price per unit commodity sold is the same for both capitals . The masses of products produced by K1 and K2 have been sold foi N+A M1

and M2 N+A

respectively . Each mass can be divided into two components, the first of which is a mass which was sold for M 1 A , M 2 A respectively and the second of which was sold for M 1 N , M 2 N respectively . Since M 2 N>M 1 N , and price per unit is the same, it follows that the mass of coma modities sold for M2N is greater than the mass of commodities sold for M1N The labourers in P2, therefore, have created a new-value embodied in a mass of commodities greater than the correspon ding mass produced by L1 . If Kl and K2 use the same method o, production, then the greater mass of commodities produced bS L2 can only be accounted for by a greater duration or intensity of labour on their part . Otherwise, the greater mass of commo dities representing the new-value component of the respective selling-prices can only be accounted for by a more productive



VALUE-FORM

51

method of production in P2, whereby the same amount of concrete dissociated labour (as measured by duration and intensity) is expended in P1 and P2, but nevertheless, more commodities are produced in P2 . If the first alternative holds we say that K2 produces absolute surplus-value relative to K1 . Or, in other words, K2 produces more surplus-value than K1 by working its labourers longer or harder or both . A capital which wrings more labour out of its labourers than another in the same branch of production gets more surplus-value . The increasing of surplus-value production over time is not as straightforward since attempts to increase surplus-value production by heightening the duration or intensity of labour may be obviated by changed prices, for example, through a drop in unit selling price of the produced commodities . Nevertheless, relative to other capitals in the same branch, it is always advantageous to have and to strive for a higher intensity and/or duration of labour in the production process . If the second alternative holds, we say K2 produces relative surplus-value relative to K1 . Any capital with an advantage in productivity over other capitals in the same industry also produces more surplus-value, other circumstances being equal . Once again (cf . p . 39), increases in productivity over time do not lead with certainty to greater surplus-value production compared to the earlier point in time but only to more surplus-value relative to other capitals in the same branch . Moreover, it is here on the level of relative-surplus value production that the concept of socially necessary labour arises . We have seen that of all capitals producing the same type of commodity, the ones with the most productive method of production achieve the greatest production of surplus-value, other circumstances being equal . Those capitals which introduce a more productive method of production create for themselves relative surplus-value with respect to other capitals in the branch for a time until the rest of the branch follows suit . Then capitals operating with the prev a ling method of production in the branch create the maximum possible surplus-value, other circumstances being equal . If we define socially-necessary labour in a commodity to be the amount of (concrete dissociated) labour taken to produce it under the prevailing most labourproductive method of production (measured by duration and intensity of labour per unit commodity) then only commodities produced with the socially necessary labour allow the capital concerned to maximise surplus-value production . Rather than simply defining socially-necessary labour to be the labour content of commodities produced "under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time" (CI : 47 ; KI : 53) and asserting this to be the measure of magnitude of value, as Marx does, here we see that the concept arises naturally along with a consideration of relative surplus-value production . The level of relative surplus-value production is the first systematic level on which the application of science enters the



52

CAPITAL AND CLASS presentation . We have seen in the preceding paragraph that increases in productivity relative to other capitals results in i relative surplus-value production . Increases in productivity arise from modifications either to the objective conditions of production (the means of production) or to the subjective conditions of production (co-operation, i .e . the organisation of the collective worker, including division of labour) . The first kind of improvements depends on the state of the natural sciences and technology . The latter kind of improvements is aided by `management I science' . With both kinds of means for increasing productivity„ and especially with management science, it is to be noted that I improvements in productivity go hand in hand with the attempt I by capital to increase the intensity of labour and thus to produce absolute surplus-value relative to other capitals . The employment of improved technology in the production i process implies as a rule the purchase of more expensive means of production, i .e . a greater outlay M2 than K1's outlay M1 . Thus„ although K2 produces relative surplus-value relative to K1 (i .e . s27 si), the rate of profit for K2 may be less than Ki's profit-rate i .e .

P2 _ s 2 ~ s l = P M2

i

M 2 M2 M l

Further consideration of this contradiction between the rate of profit and the mass of surplus-value is reserved for a later paper .

Conclusion

With the treatment of relative surplus-value production and its related phenomena, the analysis of the immediate process oft capitalist production comes to an end . The sixth (Wages) and) seventh (The Accumulation Process of Capital) Parts of Capital,, Volume I do not correspond to immediately following parts of ai value-form analytic presentation . Rather, the treatment of the , wage as a deceptive form of appearance of value belongs with the , consideration of revenues and their sources . Moreover, essential) points of the accumulation section, such as the growing demands for labour-power by accumulating capital, the industrial reserve army and the relative increase in organic composition of capital ins the course of accumulation, find their systematic treatment oni the level of competition, where the process of capital seeks toi realise itself in conditions of finite availability of labour-power The next level of the presentation begins an analysis of the circulation of capital, where the themes of turnover, fixed and circulating capital and division of capital will be developed . Thei question of the extent to which the quantitatively coloured re production schemata of Volume 2 can be taken over into a qualitatively conceived presentation of the total social reproductions process of capital is reserved to a later paper . The numeral I hasi been used in the title of this paper to indicate that the reconstruc tion of Marx's capital-analysis has to be performed also with) respect to the subject matter of Volumes 2 and 3 of Capital . Wei



VALUE-FORM

53

refrain from giving further, more extended hints on this following reconstruction out of the conviction that nothing less than the presentation itself will enable the reader to assess our efforts at re-construction . Similarly, the elucidation of hints we have given about the further analysis of bourgeois society has to be postponed until the drafts written by us and others in the framework of our common research program have taken a publishable shape .

Footnotes

The authors work in the General Philosophy Department, Sydney University and the Konstanz-Sydney Research Program . The kernel ideas presented here have been developed over the last couple of years in discussions with Lucia Kleiber and Mike Roth . In this final version of the paper we have taken into account detailed objections levelled by Herbert Ruenzi and objections and proposals for improvement made by Chris Arthur, George Markus and by the Capital & Class editorial committee and referees. 1 cf . eg . Mandel, 1979 : 45f, The Law of Value . Backhaus' (1969) early paper 'Zur Dialektik der Wertform' 2 has been influential in Germany in drawing attention to the value-form in the last decade . Some general considerations of the dialogue conception of 3 systematic capital-analysis are contained in Eldred/Roth, 1978 : 10-13 . 4 'CI' ('KI') is used as an abbreviation for Capital, (Das Kapital) Volume 1 . 'SG' refers to the systematic glossary of terms in Eldred/Roth, 1978) . 5 The following development applies only to industrial commodity products of labour . Commodities that are not the products of labour, such as virgin land, are treated at a later stage of the capital-analysis . Cf. Rosdolsky, 1977 : 111 (fn . 9) . 6 We are not the first to emphasise the practical nature of the 7 relations in which the products of labour are determined as values (cf . eg . Sohn-Rethel ; Himmelweit & Mohun, 1978 : 73 ; Rubin, 1972) . 8 cf . CI : 49, 64, KI : 56, 72f ; Marx, 1975 : III : 130, 135 . 9 Mandel exemplifies the 'logical-historical' form of presentation in the most startling way by completely historicising the development of categories in Part I of Capital, Vol . 1 . In his recently published German Introduction to Marxism (Einfuehrung in den Marxismus, 1979 : ISP-Verlag Frankfurt a .M .), Mandel includes a chapter on the transition 'from simple commodity production to the capitalist mode of production' (Chapter 4) . Simple commodity production for him is no theoretical abstraction which forms a prelude to the analysis of capitalist production but rather a form of production which 'experienced its most significant expansion in north and middle Italy and in the north and south of the Netherlands between the 14th and 16th Centuries' (S .44) . In this form of production, according to Mandel, 'commodities

54

CAPITAL AND CLASS are exchanged according to the quantity of labour required i to produce them . . . the exchange can only be based on such i a basis of equality . Otherwise a less well compensated activity , would quickly disappear . In this way a deficiency would arise in this area which would lead to a raising of the prices so that I the producers considered again obtain a higher counter-value" (S .45) . The products in these `simple commodity production" economies are not exchanged directly for one another but I are sold for money ; otherwise they could have no 'prices' Mandel's reasoning presupposes that in these imagined or preceding historical conditions the producers are oriented I towards gaining the maximum price for their commodities, and that they will alter their productive activity according to i where they can maximise their income from the sale of commodities. Otherwise, how could the fluctuations in supply to i which Mandel alludes, come about? Furthermore, his reasoning assumes that the producers measure the time they expend I in producing their commodities against the money they 'get I for them on sale and that they know and can compare the various ratios between, production time and price of the various commodities in the economy . In other words, his i argument for an historical existence of the 'law of value' rests on a mythological conception of a preceding kind of production in which the bourgeois economic rationality of the striving for maximisation of profit by capital is projected I back onto a situation in which such a rationality had no i grounds for existence . 10 The term 'form of value' is used by Marx to refer both to an expression of value (for example, the expanded and money expressions of value) and also to the various positions i assumed by commodities within the expression (relative and I equivalent forms of value) . We reserve the term 'form of l value' for the latter and use 'expression of value' for the former . 11 Marx is aware of the inadequacies of .the 'elementary or accidental form of value' and turns to the 'total or expanded I form of value' (what we call 'the expanded expression of value')' in order to consider exchange-relations which are more adequate to the expression of commodity A ('linen' for i Marx) as value : 'Thus (in the expanded expression of value) this value itself first truly appears as a jelly of undifferentiated I labour . For, the value creating labour is now expressly represented as labour which is equally valid as any other human labour no matter which natural form it possesses i and no matter, therefore, whether it is objectified in coat I or wheat or iron or gold etc . The linen, therefore, through i its value-form stands now also in a social relation no i longer only to a single other kind of commodity but to i the world of commodities . As a commodity it is a citizen i of this world' (CI : 68f ; KI : 77) . 12 'The social action of all other commodities excludes, therefore, a determinate commodity in which they commonly represent their values . . Thereby the natural form of this commodity becomes the socially valid equivalent form . To be universal equivalent becomes, through the social process, the



VALUE-FORM

55

specific social function of the excluded commodity . Thus, it becomes-money' (CI : 90 : modified : KI : 101) . 13 Our development so far has aimed at a concept of money on the basis of a concept of value . To our knowledge the significance of value theory has not been sufficiently brought out in recent critiques of the Sraffian theory . Steedman (1978), for example, is perfectly happy to talk in detail about profit, prices etc . and, at the same time, to polemicise against value theory : ' . . . the relationship between surplus labour and the existence of profits can be established quite independently of Marx's concept of value' (Steedman, 1977 : 15) . without realising that to talk of profits etc . presupposes, at the very least, a concept of money . Steedman simply assumes (op . cit . : 16) the 'existence' of money, thus rendering his argument incoherent to the extent that the word 'money' remains in his text a conceptless term . This animosity of the Sraffians towards conceptual development needs to be challenged in detail on the grounds that, firstly, any theory of profits presupposes a theory of money ; and secondly, an adequate value theory is simultaneously a theory of money . 14 Hegel develops a concept of value which, instead of being determined by abstraction from the particularity of concrete labour, as with Marx, is determined as an abstraction from the particularity of the thing's ability to satisfy a particular need : `This [the thing's] universality, whose simple determinacy is the consequence of the thing's particularity, so that this specific quality is abstracted from, is the value of the thing, in which its true substantialness is determined and is the object of consciousness' (Hegel, Rechtsphilosophie : Para . 63) . The 'thing's' value is related immediately to money : 'what money is can only be understood when one knows what value is . . . value-expressed in money-represented for itself' (Hegel's handwritten note to Para . , 63) . The conceptualisation of money, however, is not achieved through an analysis of the practical relations in the universality of commodities but rather through a 'progress of thought' (Para . 63 : addition) in which 'the qualitative disappears . . . in the form of the quantitative' (Para . 63 : addition) . Hegel thus harks back to categories out of the Logic to conceptualise the transition to money : 'The qualitative gives here the quantum for the quantity and is as such maintained as well as sublated [aufgehoben]' (para . 63 : addition) . Nevertheless, with Hegel, the qualitative connection between value and money is brought out in an unmistakeable way, in contrast to Marx where the 'labour theory of value' aspect of his presentation opens up the danger of the relation between value and money being misunderstood : 'The value of a thing can be of many different kinds in relation to need ; when one, however, wants to express not the specific but the abstract in value, then this is money . Money represents all things . . .' (Para . 63 : addition) . Since Hegel's concept of value is related to 'need' rather than

56

CAPITAL AND CLASS to labour, however, he is unable to conceive of money as a social representation of objectified labour . Even modern commentaries to Hegel, which recognise the connection between Hegel's treatment of value and the first chapter of Capital, do not probe the differences between the two theories . Thus, for example, one of the most authoritative Hegel scholars in Frankfurt, Liebrucks, mentions Marx's name but simply paraphrases uncritically Hegel's treatment of value (cf . Liebrucks, 1966 : Bd . 3 S .522f) . The lack of connection between value and labour leads to money being conceived as a mere sign of value rather than as a material expression of it : 'In money I have the precipitated [geronnene ] universality . In money the quality of the things is sublated [aufgehoben] . They become fixed to signs which are not on them, but only on metal or certificates which have pure number as their reality, not however in the gold or the paper' (S .523) . Compare this with the striking sentence out of the first chapter of the first edition of Capital where Marx emphasises metaphorically the materiality of the universal equivalent, and thus also of gold-money : 'It is as if besides lions, tigers, hares and all other real animals . . . also the animal existed, the individual incarnation of the entire realm of animals' (Studienausgabe II : S .234) . This materiality of the value-form can be said to .distinguish material dialectics from Hegelian dialectics . The materiality of money and the constitution of value-by exchange relations among things stands in stark contrast to Hegel's attempt to conceptualise money on the first level of realisation of the free will, abstract right . The domination of the modern world by money thus becomes interpreted as a one-sidedness of the will, rather than as a result of practical relations which are regulated by the compulsion of things : 'It [money] is not a qualitative sign for the quality of things but a quantitative sign for the quality which has been reduced to the quantity of numbers, the commodity character of humans and things . In this denial of the immediacy of quality consists the growth of will within its first abstract level . The making absolute of this side has assumed proportions today which Hegel could not see' (Liebrucks, 1966 : 523) . 15 Cf . Morishima & Catephores, 1978 . 16 In other places Marx includes intensity in the determination of the measure of magnitude of value (cf . CI : Chapter 17, Section II, Chapter 15, Section 3c `Intensification of Labour') . 17 cf . Elson, 1979 : 'In other words, the labour-time that can be directly measured in capitalist economies in terms of hours, quite independent of price, is the particular labour-time of particular individuals : labour-time in its private and concrete aspect . This is not the aspect objectified as value, which is its social and abstract aspect' (p . 136) . A consistent conclusion from this passage would be that



VALUE-FORM

57

time is not a suitable measure for this `social and abstract aspect' of the commodity, that is, for value . Indeed, Elson concludes that 'labour-time cannot be the medium of measurement [of value]' : `The only way that labour-time can be posed as the medium of measurement is by making the arbitrary assumption that there is no qualitative difference between different kinds of labour, an assumption that Marx precisely refuses to make with his insistence on the importance of the form of labour' (p . 138) . Elson, however, does not draw out the contradiction in Marx's presentation . Rather, she converts this contradiction into a distinction between `immanent' and `external' measures . 18 Marx's question was directed against the classical political theorists insofar as they paid so little heed to the specific form of value (cf . CI : 85 ; KI : 95) ; it was a sensible question to pose in this context because it drew attention to this lack . Like Marx, we, too, place emphasis on the commodity form of value . At the same time, we criticise Marx for formulating the question in this way because it already separates the content from the form in which it comes to appear . Hence the paradox . 19 The `obviousness' of labour-time as a measure of value taken over by Marx is here seized upon by Engels in the shape of historical myths about the consciousness of the participants in a `peasant natural economy' and also about `exchange between peasant products and those of the town craftworkers' (CIII : 898 ; KIII : 907) . Instead of taking market place haggling for what it is, namely, as the attempt on both sides to get as much as possible for as little as possible, Engels interprets it as the attempt `to squeeze out . . . the full compensation for their labour-time expended on a product' (CIII : 899 ; KIII : 908) . These historical speculations, far from providing evidence in accordance with an 'historical-logical' mode of presentation, only serve to imaginatively interpret preceding epochs through the prism of a quantitative labour theory of value . According to Engels, the conscious measure for exchange proportionalities in product-exchange remained labour-time `until the transition to metallic money, which however had the consequence that the determination of value by labour-time no longer visibly appeared on the surface of commodity-exchange' (CIII : 899 : modified ; KIII : 909) . With a money economy, where the products of labour, properly speaking, first assume the commodity-form, Engels maintains that labour-time persists in being the measure of value beneath `the surface of commodity-exchange', even though `money became the decisive measure of value from the practical point of view' (CIII : 899 : modified ; KIII : 909) . In his one-sided concentration on a theory of exchangeproportionalities, Engels overlooks that, qualitatively speaking, money is `the decisive measure of value' within the practical relations of commodity exchange . This qualitative point-that money is the measure of value-is not reconcilable with a theory whose aim is to explain exchange proportionalities in terms of an `immanent', hidden, measure of value .

58

CAPITAL AND CLASS 20 Cf . Rubin, 1972 : 64, 78, 104 . 21 This separation of systematic levels was proposed in Eldred/, Roth, 1978 : 55, SG : 120 . 22 It is instructive to look at Boehm-Bawerk's argument an' Rosdolsky's reply to it in Rosdolsky, 1977 : 506-520' Boehm-Bawerk accuses Marx of circularity because the facto of reduction of skilled to simple labour is only established by exchange . Marx determines the magnitude of value as th= amount of socially necessary labour time objectified in the commodity and therefore has to consider why it is that pro ducts of skilled labour containing equal amounts of socially necessary labour as products of unskilled labour nevertheleshave a higher price . (Boehm-Bawerk's objection therefor= cannot be made against us, for the magnitude of value is not defined in terms of socially necessary labour-time .' Rosdolsky replies firstly (and correctly), that this problem o! reduction applies not only for the differences between skilletand unskilled labour, but also for the differences betweer concrete kinds of unskilled labour . So the reduction problerr, becomes more general : why should different concrete kindof labour, performed at the average intensity and in norms conditions of production create equal amounts of value it the same time? Rosdolsky answers by saying that all thesvarious kinds of labour can only be regarded as equally value creating after their reduction to `human labour in th . abstract' (p . 511), an abstraction which `exists in the form o' average labour which in a given society, the average persoi can perform, productive expenditure of a certain amount o' human muscles, nerves, brains etc .' (p . 511 quoting Marx Cont., 1971 : 30f) . And he further adds as proof, agaii quoting Marx, that the fact that average labour exists ii capitalist society is provided . by the circumstance thai `individuals can with ease transfer from one labour to an other . . .' (p . 512 quoting Marx, Grund . : 1973 : 104f) . Thu , for Marx and Rosdolsky, in these passages, the reduction which practically constitutes abstract, value-creating labour is not the equivalence of all the various products of labour ix commodity exchange, but rather the purported existence o, average labour in our society (referred to by Krause (1979 121f) as `the dogma of homogeneous labour') . The reduction performed by exchange is thereby confused with the 'ab straction' of simple average labour . Rosdolsky thus finall ; concedes that `the laws governing this reduction' (Rosdolsky 1977 : 515 quoting Marx, Cont. : 1971 : 31) of concretlabour to simple average labour, and, in particular of skillet labour to simple average labour, have to be be given and st turns to `Marx's Probable Solution' (p . 515ff.) of how thes : factors of reduction are to be defined . According to Rosdolsky the solution lies, again followin' Marx, in the differing values of labour-power of various kindf of labour, and he quotes Capital : `All labour of a higher or more complicated character thaw average labour is expenditure of labour-power of a more costly kind, labour-power whose production has cosy more time and labour than unskilled or simple labour power, and which therefore has a higher value . This powe ,



VALUE-FORM

59

being of higher value, it expresses itself in labour of a higher sort, and therefore becomes objectified, during an equal amount of time in proportionately higher values' (Rosdolsky, 1977 : 518f quoting CI : 191f ; KI : 211f) . The focus of attention thus shifts from the magnitude of value of commodities produced by skilled and unskilled labourers to the value of labour-power of skilled and unskilled labourers . This shift, however, provides no solution, for it does not escape circularity . The value of labour-power, as Marx determines it (we do not agree, however, (cf . Eldred/ Roth, 1978 : 69ff .)),'resolves itself into the value of a definite quantity of the means of life' (CI : 169 ; KI : 186) . Means of life (we refer to these as 'articles of (individual) consumption' (cf . p . 31)), however, are industrial commodities with magnitudes of value determined by the amount of abstract, associated labour objectified in them . According to Marx's concept of magnitude of value, these magnitudes of value can only be known once the coefficients reducing concrete, individual labours to abstract, associated labour are determined . In this way, we come back to the beginning of the problem without having solved it . 23 The abstractness of abstract labour does not depend on the mobility of labourers between branches of production, which makes abstract labour into 'average labour' . The way lies open to conflate the abstractness of abstract labour as accomplished by universal exchange relations, wherein all the various industrial products of concrete labour are made, equivalent, with this other meaning of 'abstract' labour, which is also to be found in some passages in Marx, for example, in the Grundrisse (1973 : 104f ; cf . above fn . 22) . The argument for the reduction of concrete labours to abstract labour depends on the existence of universal exchange relations in our society and not on the levelling of all kinds of labour in capitalism to average labour . An analysis of the capitalist production process reveals that, far from levelling labours to average labour, a developed division of labour gives rise to many specialised, non-interchangeable kinds of labour . 24 Cf . CIII : 638f ; KIII : 651f ; Rosdolsky, 1977 : 125f ; Rubin, 1972 : 62, 96f. 25 On closer reflection, we have discovered that the concept of old-value developed here is still too close to Marx's corresponding concept . The criticism of Marx and presentation of an alternative, however, would have sprung the architecture of the present paper. We leave the alternative, therefore, to our forthcoming book (Roth et al ., 1981), when the reader will be able to make a critical comparison .

Bibliography

BACKHAUS H-G ., 1969 'Zur Dialektik der Wertform' in A. Schmidt (ed .) . Beitraege zur marxistischen Erkenntnistheorie Frankfurt a .M . An English translation appears in Thesis Eleven, No . 1, Melbourne 1980 .

CAPITAL AND CLASS

BACKHAUS, H-G ., 1974, 1975, 1978 'Materialien zur Rekonstruktion der Marxschen Werttheorie' 1, 2, 3 in : Gesellschaft Beitraege zur Marxschen Theorie 1, 3, 11 respectively, Frank furt a .M . BACKHAUS H-G ., 'Materialien zur Rekonstruktion der Marxschen Werttheorie' 4, mimeo Frankfurt University . BACKHAUS H-G ., forthcoming 1981, Marx and die marxistische Orthodoxie, Suhrkamp, Frankfurt a .M . BOEHM-BAWERK, E ., 1975 (ed . Sweezy) Karl Marx and the , Close of his System, London . ELDRED, M . and ROTH, M ., 1978 A Guide to Marx's 'Capital" London . ELSON, D . (ed .) 1979 Value . The Representation of Labour ini Capitalism London . HEGEL, G . W . F ., 1967, Hegel's Philosophy of Right trans Knox, Oxford . HEGEL, G . W . F ., 1970, Grundlinien der Philosophie des Rechts„ Werke Bd . 7, Suhrkamp, Fraknfurt a .M . HIMMELWEIT, S . and MOHUN, S ., 1978, 'The Anomalies of I Capital' in Capital & Class 6, London . HIMMELWEIT, S ., 1979 Review of 'Value, Exploitation and) Growth' in : Capital & Class 9, London . KRAUSE, U ., 1979 Geld and abstrakte Arbeit. Ueber die analytischen Grundlagen der Politschen Oekonomie Frankfurt a .M . LIEBRUCKS, B ., 1966 Sprache and Bewusstsein Bd . 3 Wege zum i Bewusstsein im Raum von Kant, Hegel and Marx Frankfurt) a.M . MANDEL, E ., 1979 Einfuehrung in den Marxism us Frankfurt a.M MARK, K., Capital Progress Publishers, Moscow : 1954 Volume II 1974 Printing ; 1956 Volume 2 1974 Printing ; 1959 Volume 3 1974 Printing . MARX, K ., 1966 Studienausgabe II, Frankfurt a .M . MARX, K ., Das Kapital in : Marx-Engels Werke (MEW) Dietzi Verlag, Berlin Bd . 23 Buch I, Bd . 24 Buch II, Bd . 25 Buch III . MARX, K ., 1971 Contribution to the Critique of Political Economy Moscow . MARX, K., Zur Kritik der politischen Oekonomie in : MEW 13 . MARX, K., 1973 Grundrisse trans . Nicolaus, London . MARX, K ., 1953 Grundrisse der Kritik der politischen Oekonomie (Rohentwurf) 1857-1858 Berlin . MARX, K ., Theories of Surplus Value Moscow : 1975 Part I„ 1975 Part II . 1975 Part III . MARX, K ., Theorien Ueber den Mehrwert MEW 26 .1, MEW 26 .2„ MEW 26 .3 . MORISHIMA, M ., and CATEPHORES, C ., 1978 Value, Exploitation and Growth Maidenhead, Berks . ROSDOLSKY, R ., 1977 The Making of Marx's 'Capital' London . ROTH, M ., KLEIBER, L ., HANLON, M . and ELDRED, M ., forthcoming 1981 Die gedoppelte Verdopplung: Zum i Ausbau des Marxschen System fragments Campus Verlag, Frankfurt a .M . RUBIN, I . I., 1972 Essays on Marx's Theory of Value Detroit . SOHN-RETHEL, A ., 1978 Intellectual and Manual Labour-a i Critique of Epistemology London . STEEDMAN, I ., 1977 Marx after Sraffa London .

Some Characteristics of Japanese-type Multinational Enterprises Today Toshikazu Nakase 3ackground

In an earlier paper [1] it was argued that the main characteristics of the postwar overseas expansion of Japanese capital could be summarised in the following seven points : i) The overseas expansion of Japanese monopoly capital was developed in close contact with the world strategy and policies towards Asia of the United States . For the prewar period it has been shown that Japanese capital displayed a significant degree of dependence on foreign capital in the form of financial subordination .[2] After 1945 the world capitalist system was reorganised under the leadership of the US . Japanese monopoly capital was resurrected but in a subordinate relationship to US capital, and the overseas expansion of Japanese capital, which really got under way in the latter part of the 1960s was dependent on the strategy and designs of US imperialism . Japanese monopoly capital utilised to the full the advantages that derived from its subordinate status . This is not to deny the `competition' between enterprises, their rivalry and contradictions . This should however be seen in the context of a fundamental co-operation between Japanese multinational enterprises (hereafter MEs), and US MEs and financial capital cliques, a co-operation which continues to this day . ii) In the postwar period Japanese state capital export has continued to play a role that it had performed before the war, not only in stimulating the export of merchandise and private capital, but also in initiating the development of both national and private capitals in neighbouring host countries . Although it was impossible after the war to develop aggressive overseas state corporations such as the South Manchuria Railway Company, Japanese state capital export has been carried out under the com-

62

CAPITAL AND CLASS pulsion that derives from the contradictions of monopoly capita by means of various schemes of `economic co-operation' .[3 These have sometimes taken the form of `reparations' when expansion into Asian countries would otherwise have been diffi' cult because of the numerous misdeeds previously committed b ; Japanese imperialism via the `Zaibatsu' concerns (this point is dis cussed further below) . iii) The 'sogo-shosha' (the so-called Japanese-type general trading, companies)[4] were closely linked with Japanese state capita and their overseas expansion made maximum use of this stat; capital . These companies played a major part in Japanese oversea , expansion ; as well as making the initial overseas penetration, the ; performed the functions of market research, market develop ment, organisation, information monopolist and financier within the financial capital concerns. We consider below the new rol : being played by these companies in the restructuring of the worlt division of labour within the financial capital concerns .[5] iv) It has been observed that Japanese capital has expande, mostly into developing countries, especially Asian developing countries . This is particularly true in manufacturing industries Thus of the total number of employees in Japanese overseas sub sidiaries (770,000 at end March 1978) 416,000 were employed in Asian countries, 126,000 in North America, 37,000 in Africa 29,000 in Europe, 28,000 in Oceana and 14,000 in the Middlc East . While this pattern contrasts with the fact that the overseas expansion of American and West German capital was mostly intoi developed capitalist countries, a similar tendency to that of Japai is shown in the cases of the UK and France (see Chart 1) .i However in contrast to the prewar, Asia-centred pattern of overseas expansion, Japanese capital has in the postwar period madei significant inroads into new areas . Investment in developed) capitalist countries has in particular shown a sharp upward trend) in the 1970s, and we can detect here an important shift awayi from the Asia-centred strategy, with Japanese monopoly capital) taking a world view in the search for profitable locations for itsi investments . [ 6 ]

According to recent data Japan has overtaken the US toi become the largest direct investor in the following countries South Korea (Japan's accumulated direct investment valued atl $664 million at end-1977) ; Thailand (accumulated direct investment valued at 1,321 million bahts) ; Malaysia (M$240 million) ;, Indonesia (US$2,080 million) ; and Iran (accumulated total) valued at US$153 million in March 1977) .



63

JAPANESE MULTINATIONALS

hart 1 : Overseas investment by Japan, the USA, West Germany by sector and region 'the percen tage distribution of the amount outstanding) USA (at end of 1976)

Japan (at end of March West Germany (at end 1977) of 1977)

Canada (North America) (24 .7)

North America (25 .2)

North America (19 .7)

Europe (40 .7)

Europe (13 .9)

Europe (55 .3)

(by region) Oceana (5 .5) Asia (27 .4) Japan (2 .8) Oceana (4 .3) Central & South America (17 .6)

(Oceania (0 .6) Japan (0 .6)

Other Developing

Middle East (6 .1)

Central & South America (14 .1) Africa (5 .9)

Others (5 .1) Mining & Refining (5 .1)

Africa (4 .3) Agriculture, forestry & fisheries (2 .6)

Oil products (21 .6)

Mining (21 .5)

Central & South America (17 .1)

Other Developing Regions (3 .8) Agriculture (0 .7) Oil Products & Oil Refining (6 .5) Chemicals (18 .0)

Textile (5 .8)

Food Products (3 .7) _ Chemicals (8 .8)

Iron-Steel (7 .8) Chemicals (6 .7) Machinery (7 .8)

(by sector)

Metal & Metal Products (2 .8)

Iron & Non-Ferrous Metals (5 .2)

Machinery (12 .4)

Electric machinery (4 .2) Other Manufacturing Industries (11 .9)

Transport Machinery (7 .1) Other Manufacturing Industries (9 .7) Commerce Public Service, Finance & Insurance etc . (28 .8)

i Commerce, Public Service, Finance & Insurance etc . (41 .2)

Electric & Electronic Machinery (10 .8)

Transport Machinery (6 .4) Other Manufacturing Industries (19 .3) Commerce, Public Service, Finance & Insurance etc . (22 .7)



64

CAPITAL AND CLASS Japan is the second largest direct investor in Hong Kong, th Philippines, Singapore and El Salvador .[ 71 The ten countries wits the largest accumulation of Japanese direct investment are shows in the Table below .

Table 1 . Accumulated Japanese direct investment in ten countries [8] At end-March 1978 US S million

At end-March 1979 US S million

At end-March 1981 US S million

United States

4,770

6,049

7,394

Indonesia

3,130

3,739

3,888

Brazil

2,070

2,329

2,738

United Kingdom

1,690

1,756

1,823

Australia

960

1,168

1,734

South Korea

790

1,007

1,102

Saudi Arabia and Kuwait

880

926

1,068

Iran

470

855

931

Hong Kong

560

715

939

Canada

630

715

808

v) If we look at investment by industry, we find, interestingly„ that investment in mining to secure raw materials is consistently) at the top, while investment in commerce, finance and insurance also surpasses that in manufacturing . Exact comparisons with the pre-war period are impossible given the unavailability of exacts data on the pre-war period (not to mention the postwar period) . However, to take the example of the textile industry which hasi the oldest tradition in capital export, its current ranking among, manufacturing industries varies from country to country . In i aggregate and measured on an approval basis we find it has second place behind investment in chemicals, which has shown a sharp i rise in recent years, especially in basic chemical feedstocks . The ratio of direct overseas investment in manufacturing industries to i the total (accumulated) direct investment was, at 34% (end-March i 1978) lower for Japan than for West Germany (70% at end-1977) and the US (44% at end 1977) . Despite the structural change in i Japan's overseas investment in manufacturing, it is still concentrated mainly in labour-intensive industries, or industries with a i standard technology, while US and West German overseas investment is centred around such capital intensive or high technology industries as chemicals, automobiles and computers (see Chart 1) . vi) A significant feature of the overseas expansion of Japanese capital has been the . role played by small and medium-sized enterprises . In this the Japanese experience is of course unique . Among the small or medium-sized enterprises some are `independent',



JAPANESE MULTINATIONALS

65

but many are organised by 'sogo shosha', or are literally subordinate to the huge manufacturing enterprises, forming part of an `overseas expansion set' . These small or medium-sized firms may find themselves in competition with local companies in the host country, but may also use native companies as sub-contractors, complementing their activities . In this way both native companies and the small and medium-sized Japanese companies become integrated as the basic overseas production operations of the huge multinational enterprises, constituent elements in an internationalised, multi-layer structure . `In the case of Japanese concerns whose vertically integrated structure centres around bank trusts with industrial trusts and commercial trusts, those small and medium enterprises under the umbrella of commercial and industrial trusts are forced to take a path to their multinationalisation according to the movement of the trusts and concerns involved', and `their multinationalisation tends to take a vertical, "integrated-group-oriented" form, rather than one based on an individual trust'. [ 9 ] vii) It should in particular be noted that overseas subsidiaries of Japanese MEs show some characteristics which are different from those of American or European MEs and these Japanese subsidiaries have many disadvantages and problems relating to management strategies and personnel administration . he Guiding and in ifrastructureirganising Role f State Capital xport

this section we examine one of the outstanding characteristics of Japan's postwar overseas expansion, Japan's subordinate relationship with the United States ; and another significant characteristic inseparable from the former, the pervasive infrastructure-organising role played by the export of Japanese state capital subordinate to American foreign assistance policy . The first phase

Japan's postwar `economic co-operation' has been closely linked with US aid to Japan, Mutual Security Agency (MSA) aid, and the US-Japan Security Treaty . It began with the establishment of the Export-Import Bank of Japan and the Overseas Economic and Technology Cooperation Budget by the Japanese government during the Korean War and the conclusion of the separate peace . [10] In fact, when American imperialists began their war of aggression in Korea, rushing deep into the northern half (Korean Democratic People's Republic) of the peninsular, `thrusting their way to the vicinity of the Korean-Manchuria border, Yutaka Kubota was summoned by the GHQ', for he had constructed the facilities for electricity generation on the River Bujenkan, the River Ghang-jingkan, and so forth before the war . He was told to investigate those facilities for reconstruction and repairs . Immediately, Nippon Koei Co . Ltd . despatched an investigation &C 13 - E

66

CAPITAL AND CLASS

committee to North Korea where the battles were raging . This is regarded as the starting point of the investments in electric power development by Japanese postwar monopoly capital, intertwined with state capital exports, such as 'reparations' .[11] Japan's iron mining investment was undertaken in Goa, following `the concept of US-Japan Economic Cooperation' founded by Charles Edward Wilson (then Director of Defence Mobilisation) in July, 1951 . `Through the GHQ, negotiation was begun' .[12] and this investment is considered to be the first attempt to invest in mining in the South East Asian area to satisfy the increasing demand for key industrial raw materials . The investment in Goa was the result of a government policy decision under the umbrella of American Imperialism, and was financed by a loan from the Export-Import Bank of Japan . It was therefore a state capital export, taking the form of a loan . The second phase

Free and tied state capital exports were promoted from 1955„ taking the form of `reparations', `economic cooperation with reparations' and `offers of government credit' in order to develops the basic infrastructure in South East Asia and facilitate the , overseas expansion of Japanese monopoly capital . It would be , useful to mention at this point some of the characteristics ofl Japan's `reparations' programmes . i) Japan's `reparations' were never designed and carried out in the sense of a duty whereby the Japanese government was apologising, and making amends for its invasion to various countries and itsi responsibility for having started the `15-year war of aggression i (1931-45)', i .e . the Pacific War . Instead, the `reparations' were designed as a link in the chain of 'US-Japan Economic Cooperation' and were effected by purchasing and exporting the overproduction of domestic monopoly capitals with the money appropriated in the Budget for reparations (Y356,600 million for reparations, Y245,300 million for semi-reparations) and donating, these surplus products to the countries concerned . Thus theyi were in reality a form of state capital export, taking the form ofl merchandise export, namely plant and equipment . ii) Thus the `reparations' served to sweep away overstocked domestic inventories (e .g . arms, galvanised iron, ceramics, rayon,, canned goods) and to promote substantial exports of heavy industrial products and equipment (e .g . automobiles, electrical machinery) . They caused an enormous increase in profits of Japanese monopoly capital by helping create a sellers' market . iii) `To attain a favourable change in attitude towards Japan ins the feelings of the reparations-receiving countries' people' the reparations funds were made use of. They were directed towardsi the establishment of basic infrastructure, and also gave Japanesei big construction companies their first chance to expand overseas . (e .g . the Baruuchan electric power station in Burma, the Danimi hydro-electric power station in South Vietnam, the Marikinai



JAPANESE MULTINATIONALS

67

Dam in the Philippines, the Pluntas River development in Indonesia, etc .) . iv) Reparations were in particular used to counter aid to developing countries from the socialist nations, and served to build up an , anti-communist breakwater', protecting South East Asia from the influence of the victories of the Chinese and Vietnamese peoples . They were designed to help the developing countries, to some extent, to achieve `modernisation' and `industrialisation', i .e . to establish in those countries a subordinate relationship based on neo-colonialism . Reparations formed a large share of these countries' capital expenditure . For example, in Burma their share was `some 20 to 34%' before 1962 .113] They were meant to influence these countries' foreign stance, to encourage declarations of neutrality (such as Indonesia and Burma) and then `to make a gradual right turn and to win them finally over to the camp of American Imperialism' .[141 A process was set in motion, which started with an expansion of Japanese exports through the lever of `economic cooperation', leading the recipient countries subsequently into balance of payments deficits with Japan, an upsurge in complaints against Japan followed by further `economic cooperation' to appease the discontent . [15] In 1956, `after the suggestion and with the cooperation of the US Far East Forces' Japan sent an economic cooperation delegation, led by Kojiro Uemura, consisting mainly of the Defence Production Committee of Keidanren (Federation of Economic Organisations, Japan), to South Vietnam, Laos, Cambodia, Burma and Pakistan, which symbolised the establishment on a large scale of export munition plant and technical accessories . After 1957, when the 'Uemura Plan' was publicised and the Overseas Investment Profit Insurance System was established, `Japan's overseas economic cooperation policy rapidly accelerated on the developing countries scene' .[16] In 1958 Japan began `Yen loans' to India, which were described as `Japan's first full-size economic cooperation' and `the starting point of overseas direct loans', promoting exports of heavy chemical plant . The third phase

After the revision of the 'US-Japan Security Treaty' in 1960, the AID (the American Agency for International Development), the APO (Asian Productivity Organisation) and the Overseas Economic Cooperation Fund were launched (1961) . This phase was `regarded as the preparatory period for Japan's full-scale overseas economic cooperation' .[ 171 (see Table 2 .) After 1964 Japan's `Free Aids' mushroomed following the urgent aid to the South Vietnamese puppet government and in 1965 Japan's `economic cooperation' entered its full-scale development phase . This was marked by Toshiwo Doko's visit to South Korea [18] and the visit of a delegation from Mitsubishi concern to Taiwan . It was following the latter that `Yen loans'



Table 2 Japan's `economic cooperation' (1965-1978) (Net ; millions US dollars) ITEM

1965

Official Development Assistance Bilateral Grants 82 .2 of which, reparation (76 .2) etc . of which, technical cooperation (6 .0) 144 .1 Direct Loans Total 226 .3 Capital subscriptions, contributions & loans 17 .5 to multinational agencies Total

243 .8

Other official flows Export credits (over one year) Direct investment financing Transactions with multinational agencies at market terms

Total Total official & private flows The previous year's mark (percent)

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

104 .7

138 .4

117 .0

123 .4

121 .2

125 .4

170 .6

220 .1

198 .6

201 .7

181 .9

236 .7

383 .4

(99 .6)

(97 .7) (135 .0) (162 .9) (135 .1) (114 .5)

(76 .8)

(88 .8) (162 .2)

(97 .1) (127 .4) (103 .3) (104 .5) (7 .6) 130 .0 234 .7

(11 .0) 202 .2 340 .6

(13 .7) 190 .5 307 .4

(19 .0) 216 .2 339 .6

(21 .6) 250 .3 371 .5

(27 .7) 306 .7 432 .0

(35 .6) 307 .2 477 .8

(57 .2) 545 .1 765 .2

(63 .5) 681 .8 880 .4

(87 .2) (108 .1) (147 .8) (221 .2) 648 .7 568 .1 662 .6 1,147 .6 850 .4 750 .0 899 .3 1,531 .0

50 .6

44 .7

48 .8

95 .9

285 .3

385 .3

356 .2

435 .6

86 .5 458 .0

78 .8 510 .7

133 .3 245 .8 245 .8 297 .3 352 .0 525 .2 684 .4 611 .1 1,011 .0 1,126 .2 1,147 .7 1,102 .0 1,424 .4 2,215 .4

202 .2

223 .7

290 .3

309 .9

349 .5

271 .7

266 .3

254 .0

28 .6

35 .7

31 .8

55 .9

143 .1

136 .3

264 .7

569 .8

798 .5 1,015 .5

355 .1

--17 .9

8 .3

339 .0

776 .8

417 .4

703 .8

85 .6

123 .6

162 .4

-

-

-

10 .0

201 .0

243 .1

325 .4

259 .4

322 .1

375 .8

693 .6

651 .1

856 .4 1,178 .9

516 .2

644 .7

678 .3

811 .4 1,151 .6 1,161 .8 1,467 .5 2,189 .9 1,915 .1 2,517 .1 2,435 .3 3,047 .0 4,368 .0

84 .7 68 .5

161 .7 48 .9

280 .2 90 .8

299 .6 144 .1

386 .9 265 .0

494 .0 356 .2

190 .6 440 .1 844 .3 3,072 .1

-0 .4

-0 .1

8 .0

17 .5

125 .4

217 .4

135 .3

15 .1

3 .1

5 .6

6 .8

8 .7

242 .1

152 .8

210 .6

451 .7

672 .3

485 .9

669 .0

855 .3 1,049 .3 1,263 .1 1,824 .0 2,140 .5 2,725 .4 5,844 .3 2,962 .3 2,890 .1 3,999 .6 5,534 .9 10,703 .5

154 .7 87 .4

-

2 .9

111 .4 ' 127 .8

371 .0

122 .7

120 .4

144 .4

788 .9 1,369 .4 1,333 .4 1,622 .6 2,152 .6

148 .7 874 .8

978 .9 1,257 .9 3,654 .3 1,047 .2

117 .4

127 .3

214 .4

14 .9

471 .0 1,081 .6 1,286 .5

230 .9

Total Total official flows Private flows Export credits (over one year) Direct investments Bonds, loans & participation of multinational agencies Grants by voluntary agencies

1966

50 .7

82 .7 319 .0 913 .8 412 .1 273 .3 1,184 .1 1,223 .6 5,014 .5 6 .9

45 .0

332 .2

890 .1

10 .1

16 .2

18 .3

18 .9

372 .9 1,564 .3 2,487 .9 6,335 .5

97 .6

138 .5

138 .3

193 .4

Sources : Ministry of International Trade & Industry, Keizai-Kyoryoku No Ganjo To Mondaiten (The Present Situation & Problems of Japan's Economic Cooperation), (1978), and others



JAPANESE MULTINATIONALS

69

were offered to Taiwan under the `Buy Japanese' method (i .e . tied to Japanese exports) . This was `the first cooperation done on Japanese initiative' and it became `the model for Japan's subsequent economic aid to South East Asian countries' while strengthening the backbone of Taiwan's economy' .[19] Following the conclusion of the 'Japan-South Korea Treaty' (chief delegate Shin-ichi Takasugi of Mitsubishi) economic cooperation (capital export) to South Korea was agreed, amounting to $300 million of free aid, $200 million of tied aid and over $300 million of private export credit . This aid was designed to prop up the Park Chung-hee military regime . Full scale penetration into South Korea by Japanese monopoly capital commenced in 1978 .[20] In 1967 the Japan Petroleum Development Corporation (JPDC) was formed with 100% government financing . This was to support private enterprises in the most risky stage of crude oil development, that is to say, prospecting . In the event of failure, repayment obligations would be waived . Taking advantage of such `conveniences' a number of petroleum development projects were set in motion . Then in 1969 the Mitsubishi financial capital concern sent Shin-ichi Takasugi to the Overseas Economic Cooperation Fund as President . Meanwhile, the overseas expansion of Nippon Telegraph and Telephone Public Corporation, as state capital export, progressed considerably, promoting its technological cooperation with Thailand, Cambodia, Canada and so forth, and improving communication networks with South Korea, the Okinawa bases, Taiwan and other South East Asian countries . As the Pacific submarine cable and the American transcontinental underground cables were connected, 'Nippon Telegraph and Telephone Public Corporation became a key link in the world military communication network of American Imperialism' .[21] The fourth phase

In the 1970s Japan's `economic cooperation' became varied . After 1973 `General Free Cooperation' (with South Vietnam, Laos, Cambodia, Thailand, etc .) and `KR Food Aid' (to Laos, Cambodia, Bangladesh, Sri Lanka, etc .) were instituted and in 1974 `Yen Loans' to the Soviet Union were started (South Yakut Coal Development, Far East Forestry Development, etc .) . The Japan International Cooperation Agency was established in the same year, becoming the third major aid organisation, together with the Export-Import Bank of Japan and the International Economic Cooperation Fund . Thus the annual amount of Japan's economic cooperation expenditure (i .e . including private capital export) increased under the guidance of the export of state capital, rising from the $100m p .a . level of the latter half of the 1950s and the $200m to $300m of the early 1960s, to some $500m in 1965 and in excess of $1,000m in 1968 . It continued to rise, exceeding $2,000m in 1971/2 to $5,844m in 1973 . Between 1965 and 1970 it had grown by a factor of 3 .7, and between 1970 and 1973 by a factor of 3 .2 .



70

CAPITAL AND CLASS The fifth phase

In the slump of 1974-75 economic cooperation expenditure was halved, but by 1976-77 it had recovered and in 1978 it doubled I again, to reach $10,704m (see Table 2) . It is expected to growl further in the 1980s, with the emphasis on `economic security expenditure' (consisting of armaments, economic cooperation i and technology development expditures) . The following targets for bi-lateral government aid (a form of state capital export) have been set for the 1980s : i) Japan's bi-lateral governmental development aid, which i increased from $226m in fiscal year 1965 to $899m in fiscal years 1977 is expected to reach 31,385,000m in fiscal 1982, 2 .5 timesi the amount in 1977 . ii) The average conditions for loans should be improved; the interest rate is expected to fall from 3 .3% to 1 .8% and the terms of repayment to rise from 26 to 50 years, with the deferment) period being extended from 7 .7 to 10 years . iii) Free aid should be increased from Y31,200m in 1977 toi Y149,500m in 1982 .[22] Throughout the postwar period Asian countries have been i the major recipients of Japanese economic cooperation expenditure (in 1975 they received 60% of the total and 75% of governmental development aid) . However the share of the total going toi Asian countries has fallen sharply, reaching only 28% (S1,270m)I in 1977 . On the other hand expenditure in the Middle East quadrupled in that year to reach $630m, or 13 .8% of the total, and) expenditure in Europe trebled, to reach S440m or 9 .7%, and ins Africa doubled, to reach S1,040m or 22 .9% of the total . Considering governmental development aid alone, the Asian share hasi fallen to 60% while there have been sharp rises in the shares going, to Africa (17 .1%) and the Middle East (12 .4%) and to Central and) South America (8 .8%) . We can summarise these trends as follows : The Asia-centred) structure of Japan's overseas economic cooperation expenditure remains, but has been modified in recent years . The modificationsi stem mainly from regional fluctuations in direct investment and) expenditures associated with the necessity to secure crude o f supplies . But the trends should be understood too as the reflection of the fact that Japanese monopoly capital is positively part icipating in, and subordinate to, the world strategies of Americana Imperialism as a junior partner, like West Germany . This isi illustrated too in the recent attitudes of Japan and the US towards Iran and Afghanistan, and their ludicrous demand fore massive increases in arms expenditure . The Multinationalisation of the `Sogo Shosha'

Studies of the efforts of Japanese enterprises towards multinationalisation have usually taken their American and Europeans counterparts as the model . Mr . Iwao Kubo has however argued) that `the theories of world enterprises and multinational enter



JAPANESE MULTINATIONALS

71

prises that are often published and discussed do not bear much significance when directly applied to the Japanese sogo shosha since they have been developed chiefly by reference to American and European-type large enterprises of production capital' . He then suggests the following classification of MEs : (a) MEs of American and European-type production capitals (including MEs of Japanese-type production capitals) ; (b) MEs of financial capital ; and (c) MEs of Japanese-type commercial capital (including MEs of American and European-type commercial capital) . [23] Though this is a very interesting classification it is not appropriate to describe 'sogo shosha' as simply commercial capital, trading or general merchant companies, since their overseas investments in manufacturing and in mining greatly exceed their investment in retail activities, as Mr . Kubo has pointed out . On closer examination we should describe the sogo shosha as a `huge conglomerate-type union of commercial and industrial capitals, having mainly grown up from the trading companies of the former Zaibatsu concerns', backed up by bank capital, and it is on the basis of this definition that a discussion of their multinationalisation is seriously needed . This is my most recent opinion concerning the multinationalisation of sogo shosha, and I hope the present contribution will stimulate an international discussion on the matter . As a Soviet economist has noted, the unification of commercial, industrial and banking trusts, typical of Japanese MEs, `with such power and influence on the whole national economy and foreign economic relations, does not exist in any capitalist country except for Japan . Therefore, in that sense, sogo shosha may be classified as a purely Japanese phenomenon' .[ 24] Professor Tasaku Noguchi also indicates : `By the medium of multi-nationalisation of sogo shosha the bloc-type multinationalisation of small and medium enterprises along with the multinationalisation of the trusts have been done in a phased and compound manner and those multinationalisation efforts will lead eventually to the vertical integration of the concerns . In this respect, we should understand that the sogo shosha is being multinationalised as a component part of the financial concern to which it belongs and Japanese MEs are models of multinationalisation in the context of their being a section of Japanese-type concerns' . He also argues that `it is one of the characteristics of Japanese city banks' multinationalisation that they correspond to the multinationalisation of Japanese small and medium enterprises and of Japanese trusts, and that it is systematising them as a whole' and that `the multinationalisation of Japan's enterprises should be understood as taking place under the umbrella of bloctype concerns consisting of multinational trading companies, manufacturing enterprises, banks and so forth .[25] During the 1970s the multinationalisation of the sogo shosha was carried out along with the multinationalisation of

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CAPITAL AND CLASS bank capital . Using the data of Keizai Chosa Kyokai (the Economic Research Association) the number of cases of overseas investment and loans effected through the three big financial capital concerns is shown in Appendix Table A-2 . While the data is not as complete as we would wish it nevertheless shows us that the Mitsubishi financial capital concern was responsible for 916 cases of overseas investment or loans, Mitsui for 817 cases and Sumimoto for 514 cases . It also shows that multinationalisation and the `total systematisation' of enterprises under the financial capital concerns are promoted with the sogo shosha in the lead . Their role has become more important than before or during the war, and the scale of their overseas expansion has become worldwide . They are investing not only in raw materials development but also in commerce, finance and insurance, warehousing, real estate, transport, services, and all sectors of manufacturing (electricity, shipbuilding, steel, cars, petrochemicals, cotton and synthetic textiles, foods and others) reflecting the trend towards a global division of labour within the financial capital concerns .

Some Aspects of Business Management in Japanese Overseas Subsidiary Companies

In general the profitability of Japanese overseas subsidiaries, and their ratio of net worth to total capital, are low when compared with American and European subsidiaries . According to a recent source (Overseas Investment Institute, The Export-Import of Japan, `Business Management of Japanese Overseas Operations', 1978), for several years before the `oil crisis' Japanese overseas subsidiaries had steadily increased their profitability to reach a peak in fiscal year 1973, when sales increased by 44% over the previous year, net profits increased by 36% and the ratio of net profits to sales reached 12 .8% (compared to 5 .6% for domestic manufacturing industry) and the ratio of profits to total liabilities plus net worth was 8 .7% (compared to 7 .1% for domestic manufacturing) . During the world slump of 1974-76 conditions worsened, and in fiscal 1975 the sales of Japanese overseas subsidiaries increased by only 10 .6% and went into the red to the extent of Y40m p.a . The ratio of net profit to sales fell to - 1 .0% (Domestic manufacturing : 1 .2%) and the ratio of profits to total liabilities plus net worth was 0 .6% (domestic manufacturing : 1 .4%), showing that the overseas sector suffered worse than the domestic sector. Furthermore, it was said that these companies `continued to pay dividends from internal reserves, causing them to become quite frail' . The rise in costs, the rise in non-operating expenses, the rise in interest charges caused by the tight money policy, and the rise in the share of fixed costs because of the low rate of operation are all signs of their weakness in this period . Sales per employee of Japanese overseas subsidiaries have been less than half those of domestic manufacturing industry, and it has been said that ' they are not making the best of their



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position as labour-intensive industries .' The average sales per company were Y3,270m, but there were considerable differences by region : the average for N . America was Y13,610m, for Central and South America was Y6 .190m ; for Asia, Y1,370m . Finally, we also find that the ratio of fixed to total assets was high, the ratio of fixed liabilities to total liabilities plus net worth was high, and the turnover of trade, receivable and inventory periods were extremely long .[26] A second characteristic that we should mention is that in many cases there has yet to be developed an adequate system of managament to integrate the overseas subsidiaries within the framework of the Japanese mother company . There has been a tendency for many enterprises to form Overseas Administrative Divisions . The survey referred to above has analysed the development of Overseas Administrative Divisions as follows : (i) The position of Overseas Administrative Divisions varies from company to company, in some cases functioning simply as a coordinator of overseas subsidiaries ; (ii) only a few Overseas Administrative Divisions have their own staff ; (iii) in many cases the Overseas Administrative Division does not have the authority to select personnel for overseas operations but this lies with the factory department or the sales division ; (iv) experts in international matters are distributed to various divisions at home according to their special interests, rather than being assembled in the Overseas Administrative Divisions ; and so on . The survey however classifies 'sogo shosha' as a company with a developed administrative organisation of MEs reaching the Phase 3 Level (the level at which they aim at the establishment of a structure which deals with overseas matters, such as variations in production, global planning, and strengthening of control, through the Overseas Administrative Divisions) as mentioned by J . M . Stopford and L . T . Wels. The survey also notes the tendency of the `logo shosha' to strengthen their structures for managing their overseas subsidiaries .[ 271 There is another aspect peculiar to Japanese MEs and which concerns the way their overseas subsidiaries are owned . American MEs aim in principal to control 100% of the shares of subsidiaries or at least to retain majority shareholdings .[28] The American form of ownership is closely connected with the following policies : (i) the use of a marketing strategy based on product differentiation ; (ii) rationalisation of productive capacity to cut production costs ; (iii) control of raw materials ; (iv) the development of new products in advance of competitor companies . By contrast, in the case of Japanese subsidiaries, over 80% are joint ventures (owned, generally, by a Japanese 'sogo shosha', a manufacturer and a local enterprise) and the Japanese MEs are in many cases not the main financier (100% financing account for merely 17% of cases, and majority financing 40% of cases ; 50% financing, 14% of cases, and in 46% of cases, the Japanese ME is a minority source of finance .) As a result, `it is often the case that after

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CAPITAL AND CLASS starting a joint venture, Japanese MEs cause friction with their joint partners .' So Japanese MEs seek to monopolise management) by employing a complicated strategy of dividing management) from capital, combining management with technology, and) bringing together different functions such as fund-raising and) managing export networks . Their objectives are to expand salesi by keeping to standardised products ; to cut production costs by close control of production rather than the introduction of I highly advanced equipment and facilities ; and to develop and I improve products which meet the needs of local markets rather i than to develop new products . According to an opinion survey conducted in Thailand by the Labour Problem Research Institute of the Kinki University, Japan, the reason why local companies and local people rate Japanese subsidiaries highly is because of their sales methods and marketing techniques, their product development and market research, and their production control (including research and development) . In comparison with American subsidiaries, it was said that, `Japanese companies are obviously at an advantage in i standardised products' and that `in many cases American i companies are not in competition with them' . While American i subsidiaries seek to secure their competitive position through the introduction of highly advanced equipment and technology, Japanese subsidiaries bring in equipment and technology that is suited to the technology and productivity level of the receiving country, concentrating on rationalisation efficiently to increase production and reduce costs, as well as to improve and standardise quality .[29] We should note a number of problems that derive from the forms of business administration and personnel management peculiar to Japan . In the case of American subsidiairies, the absolute control by the parent company is ensured through ownership, while they adopt an indirect method of administration in which a few Americans control the system through the medium of native employees . The organisation is mostly made up of native staff, who are attracted by the high pay and the policy of using material incentives to encourage efficiency . By contrast, Japanese subsidiaries are often only partly owned and because of this the parent company seeks to place Japanese personnel in various important parts of the subsidiary organisation . Thus the ratio of Japanese employees among administrators of Japanese subsidiaries stands at 22 .5% while the ratio for full-time executives is 41 .5%. The higher the rank, the larger the proportion of Japanese nationals . Local people may only get the chance of being responsible for personnel management or other middlemanagement functions . Along with Japanese capital, the MEs often bring in the `Japanese style of management' consisting of factors such as the life-long employment system, promotion based on seniority, group loyalty, the collective responsibility system, the procedure of reaching consensus by the 'ringi' method (i .e . the process of



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obtaining the sanction for a plan by circulating a rough draft in advance prepared by the person in charge of the matter), the agreement-building method of 'nemawashi' (i .e . manoeuvring behind the scenes, e .g . on the telephone, while playing mah-jong or golf or drinking), entertaining the firm's guests on the firm's expense account, the restriction of trade union activities to the affairs of the company, the management ideology based on the sense of a community bound together by a common fate, and finally the six-day work-week and the shorter amount of annual vacation when compared to Western industrialised countries . The `Japanese style of management' is also often intertwined with pre-modern aspects of the local society . Overall the Japanese management system has provoked strong public discussion .[30] Chart 2 Average wages of employees in mother companies in Japan and in their subsidiary companies overseas and their comparison

Mother L companies 100 (288) Subsidiary Companies Overseas All Regions 34 (98)

Africa 13 (38)

Asia 18 (51)

Central & SAmerica 42 (121)

Oceania 56 (160)

Note : The average wage of employees in mother companies is standardised at 100, with parenthasised figures showing yen value (in thousands of yen) . Source : Ministry of International Trad and Industry, Wagakuni Kigyo no Kaigaijigyo Katsudo, (1978) .

Table 3 Comparison between Japanese and other foreign subsidiary companies in Thailand concerning business management.

omz

a :az

f%D y

~~

z

~ y

fD

OR N

`3

N.~~

M

a Aspects compared :

0

0 :3

(D

N t4

b

a o r a

Raw // %

o

Raw // %

Raw // %

Raw // %

19 .8 13 .2 5 .5

36 37 54

39 .6 40 .7 59 .3

14 13 2

15 .4 14 .3 2 .2

23 29 30

25 .3 31 .9 33 .0

6 .6

46

50 .5

15

16 .5

24

26 .4

8 .8 7 .7 18 .7 1 .1

40 45 18 55

44 .0 49 .5 19 .8 60 .4

15 5 11 7

16 .5 5 .5 12 .1 7 .7

28 34 45 28

30 .8 37 .4 49 .5 26 .4

18 .7 18 .7 28 .6

30 19 8

33 .0 20 .9

19 23 21

20 .9 25,3 23 .1

25 32 36

27 .5 35 .2 39 .6

Promotion chances and education training opportunities for local workers Positive about educating employees 18 Positive about educating and training managing staff 12 Promoting local employees to staff level 5 Interested in transmitting business management tactics to Thailanders 6 Personnel management and salary Excellent personnel management Overtime/bonus payment High ratio of retention of trained workers High salary

'v ° o 00 o0

8 7 17 1

Considerate of the local circumstances Considerate of the local customs Meeting the requirements of the local society Discriminating against Thailanders

0 5 a

cr `~ x a

17 17 26

a 00

Source : The Overseas Investment Research Centre of the Export-Import Bank of Japan, Wagakuni Kaigaijigyo no Keieikanri, ( 1978) .



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There are some further aspects of personnel management in Japanese overseas subsidiaries that may be compared with nonJapanese subsidiaries (see Table 3 and Chart 2) . In Japanese subsidiaries there is generally greater racial discrimination against local people, as well as their receiving lower pay . Many Japanese subsidiaries are not interested in promoting local people or in instructing them in management techniques ; they are also narrowminded towards the education and training of local staff and employees . Some Japanese employees assigned to overseas subsidiaries have the following characteristics, designed to trigger off local antagonism : a lack of understanding of local culture, manners, customs, religion, language and the situation of labour' unions . They also possess a narrow outlook concerned only with the development of their business, a group-cohesion among themselves, a strong identification with their parent company in Japan, and may also be condescending in speech and behaviour .[31] Whereas European and American companies, with their long tradition of overseas operations, have responded to criticism from local society and shown a cooperative attitude towards local social and cultural activities, Japanese companies have been `concentrating their efforts on the improvement of their workers' welfare inside enterprises and neglecting the local social activities .' The combination of the growth of overseas activity by Japanese capital and the Japanese style of business and personnel management has inevitably caused in countries such as Thailand, Taiwan, Indonesia and South Korea `the tendency to gang up on a region if there is potential, regardless of the local competition circumstances .'[32] We can thus see that at this time Japan's monopoly capitals are seeking to develop and `improve' their overseas management methods in order to further their worldwide strategies . In this we can also clearly see the dangerous path towards a neo-fascism involving increases in arms spending, the overseas deployment of troops, the revision of the Constitution and the introduction of conscription . The responsibities now placed on the people of Japan are greater and more urgent .[33]

ootnotes

Nakase, T ., `The Postwar Overseas Expansion of Japanese Monopoly Capitals and their Multinationalizing Development', Journal of Osaka Industrial University, Social Sciences, No . 53, July 1980, Osaka Japan . This paper and the present one were originally written for Nihon Takokuseki kigyo No Shiteki Tenkai (Formation and Historical Developments of Japanese Multinational Enterprises), (I : 1868-1945, II : 1945-1978), (Otsuki Shoten, 1979), which I co-authored . As proved in the first volume of this book, Japanese enterprises had already developed their overseas business on a huge scale during the prewar phase, and the defeat of Imperialist Japan in World War II brought its withdrawal from the

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2

3

4 5

colonies and occupied territories, and caused the monopoly, capitals to lose their overseas assets . However, now after more than 30 years, it can be said that Capitalist Japan based on rapid growth, i .e . a strong steamroller accumulations of capital, has become an `economic giant', i .e . an `export) _giant', and it is even becoming an `investment giant' . Fog instance, Japan's accumulated total amount of direct overseas investments on the approval basis reached $22,200m, as of end-March 1978 ($26,800m at end-March 1979, $31,800m at end-March 1980) . Though it is far less than the! $148,800m of the balance of direct investments of the! United States as of the end of 1977 ($168,100m at the end) of 1978), it has come close to the $35,000m of United Kingdom investments in 1977 and the $26,000m of West Germane investments at the end of 1978) . Thus, not a few Japanese monopoly capitals have become multinational enterprises . The number of non-Japanese employees in Japanese overseasi subsidiary companies increased rapidly to 654,000 as of the , end of March 1976 (about 770,000 at the end of March! 1978 and 1,011,000, including 18,980 Japanese, at the end) of May 1979), and a higher value is put on overseas operations than before . It is well known that these overseasi operations of Japanese multinational enterprises are causing ; small and medium enterprises to go bankrupt and are creating serious unemployment problems at home, because of thei reimports, i .e . boomerang phenomena, as well as having, various influences on investment-receiving countries . This paper is concerned to analyse the historical processi and some characteristics of the postwar overseas expansion of Japanese monopoly capitals, though the data contributed! by the government and enterprises are extremely restricted! and studies on Japanese multinational enterprises are fare behind those on their European and American counterparts . Professor Ryuzo Yamazaki ed ., Ryo Taisenkanki No Nihoni Shihonshugi [Japanese Capitalism Between Two World Wars],, (Otsuki Shoten, 1978), I & II . Professor Yoshio Ando ed ., Ryo Taisenkan No Nihon Shihonshugi [Japanese Capitalism Between Two World Wars], (Tokyo Daigaku Shuppankai,, 1979) . As for the historical transformation of America's policies! towards foreign countries and the transformation of Japan's overseas economic cooperation policy united with US policies, see the article by Toshikazu Nakase, 'Sengo Nippon No Kokkashihon Yushutsu To Sono Yakuwari' [Japan's Postwar State Capital Export and Its Roles], Journal of Osaka Industrial University, Social Science, LXI . For further information, refer to Toru Yano, 'Nanshin' No Keifu [The History of 'Southward Advance'], (Chuo Koron Sha, 1975), and Takeshi Yamamoto, Nippon No Keizai Enjo [Japan's Economic Cooperation], (Sanseido, 1978) . See Appendix . The new term 'international division of labour' applied here and below indicates not merely the international division of labour as the classical term indicates . But it signifies the global administration and integration of both the internat-



JAPANESE MULTINATIONALS

6

7

8 9 10 11 12 13

79

ional division of labour consisting of production and sales, and the international distribution and utilisation of capital, technology, information and natural resources . Since this term most probably symbolises the characteristics of multinational enterprises today and its study must be one of the cruxes of the world economy, I certainly hope to release my expanded study on this specific area in the near future . According to Mr Kanki Okano, Japan's overseas assets as of August 1945 are assumed to have been S26,600m or $21,800m ($8,630m, 42%, in Manchuria, $5,250m, 23%, in Korea, $2,880m, 13%, in North China, $1,890m, 7% in Taiwan, $1,850m, 9%, in Middle China and so forth). Nippon Baisho Ron [A Study on Reparation of Japan], (The Oriental Economist, 1958), pp . 70-71 . Further study on this is still necessary and very important . Before and during the war, the ratio of investments in Asia was overwhelming but investments in other regions had also reached certain appreciable amounts . According to the investigation by Administration Bureau of Ministry of Finance, Nipponjin No Kaigai Katsudo Ni Kansuru Rekishiteki Chosa [The Historical Investigation on Overseas Activities of the Japanese], XXXV on America and Europe, pp . 20-29, as of August 15 1945, the number of major enterprises having overseas subsidiary companies and other overseas activities and the presumed amount of their overseas assets are as follows : (1) in Central and South America 100 companies and Y469 .69m ; (2) Middle East and Africa, 39 companies, Y273 .39m ; (3) America, 35 companies, Y2,029 .45m ; (4) Europe, 31 companies, Y374 .74m ; (5) Austrialia, 31 companies, Y48 .03m ; (6) India, 19 companies, Y58 .92m ; (7) Canada, 2 companies, Y13 .71m ; (8) Soviet Asia, 1 company, Y235 .62m ; total 258 companies, Y3,503 .55m . According to other volumes of the same investigation, the presumed amount of overseas assets is Y10,400m in Korea, Y11,700m in `Manchuria', Y4,000m in `the South Seas area' and so forth . And the number of employees assigned overseas by major Japanese companies and banks in 1938 were as follows : the USA and Canada, 5,374 ; Central and South America, 2,455 ; Europe, Africa and South East, 292 ; Austrialia, 3,892 ; India, 4 .585 ; Soviet Asia, 274 ; total, 16,872 . Prewar overseas investments still exist in various forms and continue to perform their postwar roles of great importance, which I would like to discuss some time later . Refer to the data reported by Ministry of Finance on July 14 1978 and The Oriental Economist, Multinational Facts and Figures, (1980) . Tasuku Noguchi et al ., Nippon No-6 Dai Kontsuerun [6 Major Japanese Concerns], (Shin Hyoron, 1979), p . 622 . Yoshitsugu Kotani, Kokkashihon Yushutsh Ron [The Study on State Capital Export], (The Oriental Economist, 1959) . Riichi Nagatsuka, Yutaka Kubota, (Denki Johosha, 1966), and Nihon Koei, The History of Nihon Koei, Co ., (Diamond Sha, 1971) . Nippon Yushutsunyu Ginko, 20 Nen No Ayumi [The 20 Year History of the Export-Import Bank of Japan], p . 29 . Baisho Mondai Kenkykai, Nippon No Baisho [Japan's Repar-

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CAPITAL AND CLASS

ations], (Sekai Journal Sha, 1963), pp . 22-55 . 14 "Nippon Dokusenshihon No Saikin No Kaigai Shinshutsu' [Recent Overseas Expansion of Japanese Monopoly Capitals] Zenei, (Novembers, 1967) . 15 Takeshi Yamamoto, op . cit ., p . 30 . 16 Nippon Yushutsunyu Ginko, op . cit ., p . 65 . 17 Ibid ., p . 103 . 18 Toshiwo Doko is typical of monopoly capitalists in postwak economy and deepening anxiety in the lives of the peopl= and the working class . It has therefore become an important task for the peoples in these countries to carry out demo cratic anti-monopoly-capitalist or anti-imperialist and anti monopoly capitalist changes, and reconstruct the economy in the direction of socialism, overthrowing the old international' economic order and establishing the new international econo mic order directed toward establishing economic sovereignty justice and equality to free themselves from the present economic crisis . 19 Noboru Shirota et al ., Mitsubishi Gunju Sho -Nippon NG Sangun-Fukogotai To Kaigai Shinshutsu [Mitsubishi Ministry of Munitions - Japan's Military Industrial Complex an, Overseas Expansion], (Gendai Hyoron Sha, 1971), pp 190-207 . 20 Toshikazu Nakase, 'Sengo Nippon No Tai-Kan Shihoi Yushutsu' [Postwar Japanese Capital Export to Souti Korea] , Kokka Shihon No Riron [The Theory of Stat= Capital], Yoshitsugu Kotani, ed ., (Otsuki Shoten, 1974) . 21 Dokusen Bunseki Kenkyukai, 'Nippon Denshin Denw . Kosha' [Nippon Telegraph & Telephone Public Corpor ation], I & II, Keizai [Economics], (May & June, 1966) . 22 Ministry of Foreign Affairs, Keizai Kyoryoku No Genkyo Tc Tenbo [The Present Situation and Overview of Economi . Cooperation], (1977) . 23 Iwao Kubo, Sogo-Shosha To Sekai Zaibatsu gun [The Sogo Shosha and World Financial Cliques], (Tokyo Nuno' Shuppan, 1975), p . 54 . 24 D . Borigin, 'Nippon No Shihon Yushutsu, Sono Tokushitsu Keiko, Tenbo' [Japan's Capital Export and its Character istics, Trends, and A General Overview], Sekai Keizai Tc Kokusai Kankei [World Economy and International Relat ions], XXIX, p . 114 . Ju Stolyarov, 'Nippon No Kokusai-tek Dokusentai No Taigai Bocho' [Japan's International Mono polistic Organisations and Their Overseas Expansion], Ibid. XXVIII, p . 96 . 25 Tasuku Noguchi, op . cit., pp . 620-621 . 26 Nippon Yushutsunyu Ginko Kaigai Toshi Kenyusho, Waga kuni Kaigai Jigyo No Keiei Kanri [Business Management of Japanese Overseas Operations], (1978), pp . 19-28 . 27

Ibid ., p . 31 .

28 As for the comparative studies on American and Japanesc multinational enterprises, see the book by Hideki Yoshihara Takokuseki Keieiron [The Study on Multinational Admin istration], (Hakuot Shobo, 1979) and Iwao Hirosumi, ed .,, Takokuseki Kigyo Kaieiron [The Study on Multinational Enterprises Administration], (Nihon-hyoron Sha, 1979) . 29 Nippon Yushutsunyu Ginko Kaigai Toshi Kenkyusho .



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op . cit ., pp . 32-35 . For details, refer to Kinki University Rodo Mondai Kenkyusho, Rodo Mondai Kenkyu [The Study on Labor Problems], II . 30 Shin Tanaka, 'Nippon Kigyo No Kaigai Shinshutsu Wa Naze Umaku Ikanai Ka' [Why the Overseas Expansion of Japanese Enterprises Does Not Work Well], ShukanToyokeizai [Oriental Economist Weekly], (March 31 1979) . 31 'Dai 3 Sekai Ni Taizuru "Arikata" 0 Toi Naosu' [Reconsiderations on the `Attitude' Toward the Third World], Asahi Journal, (January 5-12 1979) . 32 Nobuaki Takakura, 'Nippon No Kaigai Toshi No Genjo To Genchi-ka Eno Kadai' [The Present Situation and Problems for Localisation of Japan's Overseas Investment], Multinationals Facts and Figures, (The Oriental Economist, 1975), p . 12 . 33 At the International Theoretical Symposium held in July 1979, Mr Akira Kudo reported the problems of the establishment of 'A New International Economic Order in the 1980s', Zenei, (October 1979), p . 161-162, as follows : Under the present international economic order, the imperialist system as reconstructed after World War II, operating to serve the interests of the monopoly capitalist countries, led by the US, the north-south problem has become an issue of world proportions, and developing countries struggling for economic independence have begun to unite in a bit-scale struggle to change the old order into a new international economic order . This struggle embraces some key objectives : (i) To establish national sovereignty, which means opposition to the rule of old and new colonialism, and to racial discrimination, and to all kinds of intervention in the internal affairs of a country ; insistence on the right of a nation to choose its own economic system and establish permanent sovereignty over its natural resources ; the guarantee of the right to exercise national sovereignty by controlling the operations of multinational corporations, the nationalisation of foreign businesses, and so on . (ii) To oppose international exploitation and plunder . (iii) The participation of every state in the management of the international economy, and on principles of equality . (iv) Economic and technical cooperation to help build the economic independence of each nation . (v) International redistribution of incomes to eliminate starvation and poverty . These objectives bear the characteristics of anti-imperialism . It means the world-scale democratic transformation of the relationship of states under the flag of equal justice and rights . It means change in the progressive direction . In the economic crisis of the world capitalist system in the 1970s, the old international economic order has been under reconstruction by the strategy of the big power alliance, led by the US . The circumstances even have led, in some advanced capitalist countries, to the violation of lC 13 - F

82

CAPITAL AND CLASS economic sovereignty by the US and the other multinational corporations, and the limping progress of the economy of deepening anxiety in the lives and living of the people and the working class . It has therefore become an important task for the peoples in these countries to carry out democratic anti-monopoly-capitalist or antiimperialist and anti-monopoly capitalist changes, and reconstruct the economy in the direction of socialism, overthrowing the old international economic order and establishing the new international economic order directed toward establishing economic sovereignty, justice and equality to free themselves from the present economic crisis . It can be said that a new international economic order for the sake of the people of developing countries, and a new international economic order for the sake of the peoples of advanced capitalist countries can and must be unified .

ACKNOWLEDGEMENTS This paper was originally written for Nihon Takokuseki Kigyo No Shiteki Tenkai [Formation and Historical Development of Japanese Multinational Enterprises], (I : 1868-1945, II : 19451978), which I co-authored and is translated into English here with the latest data . There are a number of people whom I would like to acknowledge for their help in commenting on and encouraging thei research which is in this paper . These include Professor Mitsuoi Fujii, Ph .D ., and Professor Keiya Maruyama, co-editors of thei book, Mr Kensaku Kawauchi, editorial staff member of Otsukii Shoten, Professor Yoshiji Kotani, Ph .D ., Professor Soichiro Giga„ Ph .D ., Professor Hidefumi Ichinose, Ph .D ., Professor J . A Pevzner, Ph .D ., Professor M . V . Sutiagina, Professor Jurgeni Berndt, Ph .D ., Professor Karl-Heinz Horn, Ph .D ., and many other scholars concerned . I am also grateful to Mr Koji Igawa, Ms Taekc Fumoto, and Mr Peter Vincent for their help in translation . And' finally I would like to thank Professor Sidney Pollard, Ph .D ., whc was, as well as myself, one of the reporters at the 4th Inter national Conference on Business History, and who was kind enough to invite me to Sheffield University as an honorary, professor .

APPENDIX Hitherto the Japanese 'sogo shosha' has been translated into English as `general trading company' or `general merchant" However, I think these terms are not only incorrect, but also mis leading in many cases . First of all, it should be noted that sogo shosha themselve : are becoming aware of the difference between what they really do and what their names represent . In 1971 Mitsubishi Tradin,



JAPANESE MULTINATIONALS

83

Company changed its official English name to Mitsubishi Corporation . And Sumitomo Shoji Kaisha, Ltd ., in 1978, also changed its name to Sumitomo Corporation to better represent abroad the wide-ranging nature of their current operation . Mitsubishi Corporation (1980), the annual English pamphlet by Mitsubishi Corporation, remarks that `the best way to describe the functions and capabilities of the sogo shosha is as a marketing, development and organising company .' (p . 1) Professor C . D . Sheldon, University of Cambridge, personally suggested to me that the best way to translate the term into English is as an all purpose corporation . Yet, according to my close examination of the various characteristics of the sogo shosha, it should be defined in English as follows : The sogo shosha is a huge conglomerate-type union of commerce and industrial trusts, having mainly grown up from a trading company of -a former zaibatsu, backed up by a bank trust within a finance capital concern . At present the Japanese big nine trading companies are worthy of the definition of sogo shosha : Mitsui & Co ., Ltd (of Mitsui concern), Mitsubishi Corp . (of Mitsubishi concern), Sumitomo Corp . (of Sumitomo concern), Marubeni Corp . (of Fuyo concern, i .e . Fuji Bank concern), Nissho-Iwai Co ., Ltd . and Nichimen Co ., Ltd . (of Sanwa Bank concern), C . Itoh & Co ., Ltd . and Kanematsu-Gosho Ltd . (of Dai-ichi Kangyo Bank concern), and Toyo Menka Kaisha Ltd . (under the umbrella of Tokai Bank) . It must be noted that all of the sogo shosha listed here, except for Toyo Menka Kaisha Ltd ., are under the umbrella of the big six finance capital concerns of Japan) . The sogo shosha is a uniquely Japanese organisation established on a global scale, with its activities extending to all corners of the world . It is perhaps the only type of integrated business organisation that was set up primarily for the purpose of promoting trade and development . One of the most important differences between sogo shosha and other types of enterprises is the variety of industries with which sogo shosha have day-to-day business transactions . Unlike most companies which operate within the dimensions of the life cyclc of particular products and services, sogo shosha operate within much broader dimensions of international trade and investment, concerning virtually any and all commodities and services . That is to say, the sogo shosha is not an ordinary trading company or commercial trader, but an integrated organisation on an international scale, which participates in the activities of the global economy . Furthermore, the fact that sogo shosha have recently extended their business into socialist countries shows that they have grown into 'monsters' influencing the whole world . Business Review of Boston University describes the activities of sogo shosha as follows : 'Buy it, sell it, represent it, store it, forward it, transport it, do it economically .' ('Mitsubishi Corporation, 1980', p . 2) . However the activities of sogo shosha can be listed in detail as follows : 1.

International and domestic trade (the scale of their business is greater, the variety of goods they handle wider, and the areas of their activities much broader than have been presumed .)

84

CAPITAL AND CLASS 2

3 4 5 6 7 8 9 10 11

Marketing, distribution, warehousing and insurance services (they reduce transaction costs by taking advantage of economies of scale, and by mobilising and making efficient use oft capital, labour, technology, information and natural resources .) Financing (credit sales, loans and advances for purchase .) Import and export of technology . Capital investment and joint ventures . Resource development . The development of local economics and industries . The formation of a world-wide network for gathering information . Maximising profits by minimising risks involved in fluctuations in the exchange rate . Organising international projects . Strengthening and adjusting a close relationship with the other member-companies of the finance capital concern .

The sogo shosha has now, through its activities above mentioned, the following functions, domestic and international : To perform the role of leader of the overseas expansion of I 1 Japanese capitals. To serve as a junior partners of the US MEs and finance 2 capital cliques . To work as financier or holding company of the subsidiary, 3 companies at home and overseas. To organise and systematise Japanese trusts, and small and l 4 medium enterprises in their multinationalisation . To serve as acting headquarters within the financial capital) 5 concern . To perform the roles of information monopolist and (pro6 fessional) speculator . Also, 7 To often organise a rise in consumer prices . 8 To promote the rationalisation of management and cause bankruptcy of small and medium enterprises . 9 To manipulate Japanese Ministries . 10 To control mass-communication so as to make the Japanese people turn to the right . 11 To promote in Japan the expansion of armaments, while helping the rise of militarism and neo-fascism . 12 To patronise puppet-governments in developing countries,, while helping overthrow some progressive governments . In 1977 the big nine sogo shosha, among the thousands oft trading companies in Japan, handled 47% of Japan's exports and) 55% of its imports . Their aggregate turnover equals more than ai third of the nation's GNP . Offshore trading constitutes approximately 10 per cent of their total sales . Since the prewar period, Mitsui & Co . Ltd . and Mitsubishis Corporation, Japan's two largest sogo shosha, have played the role of organisers and leaders of the Mitsui and the Mitsubishis Zaibatsu . If the subsidiaries of the key companies of these con cerns are included, the number of companies within the concern rises to several hundred and the variety of business fields nearly, covers the full spectrum of all business activity . The concerninclude the leading banking institutions of Japan as well as th= largest insurance companies . The manufacturing industrie-



JAPANESE MULTINATIONALS

85

covered range from basic materials such as steel and chemicals, to foodstuffs and machinery . Before and during the Second World War the main companies within those concerns were closely held by the Zaobatsu Honsha (holding companies) . After the defeat of Japanese imperialism, their stocks came to be sold publicly due to the dissolution of the Zaibatsu directed by the GHQ, and each of the enterprises became independent in terms of its capital ownership . Business decisions were to be made by each company independently . However, those enterprises which were regarded as bing most closely affiliated within the financial capital concerns before long formed Shacho-kai (conferences whose members consist of the presidents of those enterprises) . The purpose of the conference has been to deliberate and decide upon the overall policies of the group . The companies that form the group cooperated on ventures of mutual interest, and provided each other with various forms of assistance . The group spnsored a number of joint business undertakings, and the financial interrelationship among the enterprises that form the group was remarkably strengthened . Thus, the financial capital concerns have returned . The ratio of shares held mutually by the enterprises within the financial capital concerns increased : in the case of Mitsui from 11 .6 per cent in 1967 to 18 .4 per cent in 1978, in the case of Mitsubishi from 16 .9 per cent to 26 .7 per cent in the same 10 years, and in the case of Sumitomo from 19 per cent to 26 .3 per cent within the 10 years . The ratio of funds financed by the banking institutions within the same concern in 1978 was as follows : as for the enterprises within the Mitsui concern, 19 .4 per cent on the average, Mitsubishi, 26 per cent, and Sumitomo, 24 .8 per cent . Sumitomo Corporation of the Sumitomo concern bought 33 .5 per cent of all the commodities produced by the main manufacturing and mining enterprises within the concern in 1973 (in the cases of Mitsubishi Corp . and Mitsui & Co . Ltd ., some 30 per cent and 18 .4 per cent respectively) . However, Sumitomo Corp . bought 68 .2 per cent of the total products of Sumitomo Metal Industries Ltd ., and bought only 7 .1 per cent of the total products of Nippon Electric Industry Co ., Ltd . Mitsui & Co ., Ltd . bought 100 per cent of the total products of Mitsui Aluminium Co ., Ltd, and 65 per cent of the total products of Mitsui Tatsu Chemicals, Inc. and only a little over 19 per cent of the total products of Tokyo Shibaura Electric Co ., Ltd . Mitsubishi Corp . handles 25,000 different categories of products . With its annual trading transactions on the order of $51 billion (as of March 31 1980), the business scale of Mitsubishi Corp . is comparable to the sales volume of the world's largest corporations such as the Royal Dutch/Shell Group . The total length of its communication network lines, its central nerve system, reaches 450,000 kilometres, more than the distance between the earth and the moon . Through this network, some messages, or 4,500,000 words, are transmitted to and from its Tokyo headquarters daily . The headquarters sends domestic reports regularly to its overseas offices . Furthermore, communication between any two points of the world, regardless of distance, can be accomplished in less than five minutes . That is to say, the sogo shosha's success as organiser, international investor and professional speculator, is due in great part to their capability to gather and monopolise information .





86 Table A-1

CAPITAL AND CLASS

Industrial Groupings vs Multinationals The total turnovers of the leading six Japanese financial capital concerns are compared with those of some leading multinationals as follows : Country

1976 1978 Turnover Turnover ( $million) ( $million)

Index (Mitsubishi Group=100)

Mitsubishi Group

Japan

75,000

106,400

DKB Group

Japan

54,500

79,300

Sumitomo Group

Japan

51,200

78,100

73

Mitsui Group

Japan

48,800

76,500

72

Fuyo Group

Japan

54,000

71,200

Sanwa Group

Japan

46,100

64,500

.M G .

U .S .A .

47,200

63,200

Exxon

U .S .A .

48,600

60,300

Royal Dutch-Shell

Neth ./U .K .

36,100

44,000

41

Ford

U .S .A .

28,800

42,800

40

100 75

67 61 59 57

I .B .M .

U .S .A .

16,300

21,100

G. E.

U .S .A .

15,700

19,700

19

Unilever

U .K ./Neth .

15,800

18,900

8

I .T .T .

U .S .A .

11,800

15,300

Philips

Netherlands

11,500

15,100

Hoechst

W . Germany

9,300

12,100

U .S . Steel

U .S .A .

8,600

11,100

Nestle

Switzerland

7,600

11,000

E .I . du Pont

U .S .A .

8,400

10,600

Thyssen

W . Germany

7,900

9,200

I .C .I .

U .K .

7,500

8,700

British Steel

U .K .

5,000

5,700

20

F1

114

10

E

10 10 9

8 5

Note : The above group turnover is an aggregated turnover cover ing all the companies listed in Part II except banks an . insurance companies . Source : ibid . p . 41



JAPANESE MULTINATIONALS

Table A-2

87

Number of cases of Overseas Investment by Major Companies under the Umbrella of Japan's Top Three Financial Capital Concerns

(A) Mitsubishi Financial Capital Concern Rank

Name

Total

1950-64

1965-69

1970-75

Uncertain

1 2 3 4 5 6 7 8 9 10

Mitsubishi Corporation Mitsubishi Electric Corporation Mitsubishi Heavy .Iridustries Ltd . Mitsubishi Bahk Ltd ., The Mitsubishi Metal Corporation Mitsubishi Rayon Co ., Ltd . Toyobo Co ., Ltd . Ajinomoto Co., Inc . Mitsubishi Chemical Industries, Ltd . Honda Motor Co ., Ltd .

259 49 43 43 42 37 36 35 34 30

39 11 9 2 4 6 8 15 3 6

55 8 14 1 7 9 7 6 8 9

154 29 18 40 28 22 19 10 23 15

11 1 2

11 12 13 14 15 16 17 18 19 20

Asahi Glass Co ., Ltd . Dainippon Ink & Chemicals Inc . Mitsubishi Gas Chemical Co ., Inc . Noritake Co . Ltd . Nikko Securities Co . Ltd . Mitsubishi Petrochemical Co ., Ltd . Nichiro Gyogyo Kaisha Ltd . Kinsho-Mataichi Corporation Fuji Spinning Co . Ltd . NGK Insulators Ltd .

28 28 25 21 18 17 16 14 13 13

2 4 5 7 1 1 1 4 2 3

12 6 9 3 1 3 3

11 17 10 10 16 13 12 9 10 2

3 1 1 1

21

Chiyoda Chemical Engineering & Construction Co . Ltd . Sintokogio Ltd . Nippon Yusen K .K. Konishiroku Photo Industry Co . Ltd . Nippon Kogaku K .K. Mitsubishi Mining & Cement Co . Ltd . Tokio Marine and Fire Insurance Ltd . Daimaru Inc ., The Dai Nippon Toryo Co . Ltd . Mitsubishi Trust & Banking Corp .

10 10 10 10 10 7 7 7 7 6

2

1 2 5 2 3

22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41'

Japan Storage Battery Co . Ltd . Shimadzu Corp . Mitsubishi Plastics Industries Ltd . Mitsubishi Estate Co . Ltd . Mitsubishi Warehouse & Transportation Co . Ltd . Nippon Kasei Chemical Co ., Ltd . Nisshin Flour Milling Co ., Ltd . Mitsubishi Kako Kaisha Ltd . Mitsubishi Oil Co ., Ltd . Mitsubishi Paper Mills Ltd . Kirin Brewery Co ., Ltd . Total (Ratio, %)

5 5 4 4 3 3 2 2 1 1 1 916 (100)

2 3 1

1 7

3 3 1

1

2 3 1

1 1 1

146 (16)

194 (21)

7 8 4 6 2 5 4 4 4 6

3 2 4

1

1 2 1

2

3 2 2 4 2 2 1 2 1 1 1 539 (59)

37 (4)



88

CAPITAL AND CLASS (B) Mitsui Financial Capital Concern

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Name Total Mitsui & Co . Ltd . 298 Toray Industries, Inc . 85 Toshiba Corporation 79 Mitsui Toatsu Chemicals Inc . 41 Sony Corporation 39 Mitsui Mining & Smelting Co ., Ltd . 38 Kanebo Ltd . 31 Mitsui Bank, Ltd . 31 Toyota Motor Sales Co ., Ltd . 24 Mitsui O .S.K . Lines Ltd . 18 Toyota Motor Co ., Ltd . 17 Mitsui Petrochemical Industries, Ltd . 15 Oji Paper Co ., Ltd . 14 Toshoku, Ltd . 11 Fukikura Cable Works, Ltd ., The 9 Yuasa Battery Co ., Ltd . 9 Mitsui Engineering & Shipbuilding Co ., Ltd . 8 Mitsui Real Estate Development 8 Onoda Cement Co ., Ltd . 8 7 Hino Motors, Ltd . Mitsui Sugar Co ., Ltd . 6 Taisho Marine & Fire Insurance 6 ., The Mitsui Trust & Banking Co ., Ltd 4 Mitsui Mining Co ., Ltd . 3 Mitsukoshi, Ltd . 3 Mitsui Construction Co ., Ltd . 2 Toshiba Ceramics Co ., Ltd . 2 Mitsui Warehouse Co ., Ltd ., The 1 Total 817 (Ratio, %) (100)

1950-64 70 11 14 8 7 7 6 1 4 2 5

2

1965-69 58 21 34 18 11 11 6 1 3 6 3 3 3 2 4 4

142 (17)

195 (24)

8 7 5 2 1 3 4 2 3 1 2 1 413 (51)

3 2

4 1 2

Uncertain 38 5 1 1 4 3 1

1970-75 132 48 30 14 17 17 18 29 16 10 9 11 9 6 5 3

1 2 1

1 1 2 1 1 1

67 (8)

(C) Sumitomo Financial Capital Concern Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Name

Total

1950-64

1965-69

1970-75 Uncertain

Sumitomo Corporation Matsushita Electric Industrial Co., Ltd. Sumitomo Chemical Co ., Ltd . Nippon Electric Co ., Ltd . Sumitomo Bank Ltd ., The Sumitomo Metal Mining Co ., Ltd . Toyo Kogyo Co ., Ltd . Matsushita Electric Trading Co . Ltd . Bridgestone Tire Co ., Ltd . Sumitomo Metal Industries, Ltd . Sumitomo Electric Industries, Ltd . Nippon Sheet Glass Co ., Ltd . Nippon Trust & Banking Co ., Ltd . Sumitomo Heavy Indsutries, Ltd . Sumitomo Realty & Development Co ., Ltd . Matsushita Electric Works, Ltd . Sumitomo Construction Co ., Ltd . Sumitomo Bakelite Co ., Ltd . Sumitomo Marine & Fire Insurance Co ., Ltd .

131

14

26

78

13

61 53 46 44 29 22 21 21 20 17 12 11 8

16 12 12 6 3

1

2

26 20 24 37 17 15 13 7 15 7 8 11 5

1

1 2 2 4 1

18 21 9 1 8 7 5 11 3 3 2

6 5 4 3

2

1

Total (Ratio %)

2 2

3 5 2 1

121 (24)

1 295 (57)

1 514 3 (100)

76 (20)

1 1 2

3 1

22 (4)



89

JAPANESE MULTINATIONALS

Source : Keizai Chosa Kyokai, Overseas Investment by Sector : Listed Companies, VI, 1976 . Notes : Figures including the cases done by the end of March, 1975 . 1 The cases of joint venture are repeated . 2 As for Sumitomo Financial Capital Concern, the total number will be 573 3 if Ataka & Co ., Ltd . is included . 'At the end of the Second World War, the top 4 Japanese zaibatsu (Mitsui, 4 Mitsubishi, Sumitomo and Usuda) ruled, rdirectly or indirectly, 544 companies at home, the total amount of capital of which had a 24 .5% share of all the industries .' Fair Trade Commission, Dainikai Chosahokoku . After the war, by 1974, the top 6 Japanese financial concerns (Mitsubishi, Mitsui, Sumitomo, Fuyo, Daiichikangin and Sanwa), indicating their remarkable postwar survival, had a little less than a 22% share of capital and a little less than a 23% share of total assets, among the 175 member companies of the Shachokai group . The number of their subsidiary companies rose to 8,476, in which those 6 groups had more than a 10% stock share, and their share of the total capital, among all the companies in Japan, is 41% and that of the total assets, 31% . Their power to rule their affiliated companies should be estimated at far larger than at the end of the war .

Table A-3

Transition of Current Balance, Gold and Foreign Exchange Reserves, and Approved Overseas Direct Investments (S million)

Source :

Fiscal Year

Current Balance

1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964

564 94 -313 344 535 38 -297 549 409 -69 -1,015 -16 -1,071 29

Gold & Foreign Exchange Reserves 930 913 639 738 839 738 629 974 1,361 1,997 1,561 1,863 1,996 2,053

Approved Fiscal Overseas Year Investment 2 .9 1 .9 2 .1 4 .9 9 .5 21 .1 33 .1 64 .6 50 .1 94 .5 164 .2 98 .3 125 .7 118 .5

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Current Balance

Gold & Foreign Exchange Reserves

Approved Overseas Investment

1 .049 996 -311 1,473 2,044 2,349 6,321 6,160 -3,918 -2,330 134 4,682 13,996 11,852 -13,931

2,109 2,077 1,963 3,213 3,868 5,458 16,663 18,125 12,426 14,152 14,182 16,997 29,208 28,813 18,543

159 .4 229 .1 274 .5 556 .7 665 .0 904 .2 858 .3 2,337 .9 3,496 .9 2,396 .0 3,280 .2 3,462 .0 2,806 .0 4,598 .0 4,995 .0

Ministry of International Trade & Industry, Wagakuni No Kaigai Toshi Katsudo, 198), p . 102 and others .



90

CAPITAL AND CLASS

Table A-4

Overseas Expansion and Multinationalisation of Japanese Major Enterprises

Rank

Company

A Balance of Overseas Investment & Loans

B)

(C)

Overseas Ratio Related Companies

(Y100m) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Mitsui & Co ., Ltd . (sogo shosha) Mitsubishi Corporation (sogo shosha) Marubeni Corporation (sogo shosha) C . Itoh & Co ., Ltd . (sogo shosha) Sumitomo Corporation (sogo shosha) Matsushita Electric Industrial Co ., Ltd . Toray Industries Inc . Kawasaki Steel Corporation Teijin Limited Toyo Menka Kaisha Ltd . (sogo shosha) Nissho-Iwai Co ., Ltd . (sogo shosha) Nippon Steel Corporation Honda Motor-Co ., Ltd Mitsubishi Heavy Industries Ltd . Nissan Motor Co ., Ltd . Sony Corporation Nihon Usiminas Ishikawajima-Harima Heavy Industries Co ., Ltd . Kanematsu-Gosho Ltd . (sogo shosha) Toshiba Corporation

Source :

(D) Number of Overseas Employees

Number of Trade

(E) Number o Employee Number o Employee

(%)

2,468

228

49 .6

3,342

30 .6

1,443

227

53 .7

3,695

37 .0

1,253 1,094

229 210

55 .9 49.8

3,296 2,487

41 .2 31 .2

590

129

40.8

2,135

35 .1

524 505 408 405

56 52 27 33

28.0 33 .2 35 .4 29 .2

21,000 30,300 1,505 16,500

62 .6 206.2 4 .1 214 .9

394 385 374 347 344 326 317 297

84 122 26 26 22 16 22 1

59 .9 50 .9 32 .8 67 .3 38 .3 45 .9 60 .9 -

1,480 2,173 1,050 4,378 4,895

46 .4 33 .0 1 .4 20 .3 6 .6

5,500 13,821

56 .0 431 .9

253

18

56 .3

7,850

23 .5

249 216

83 45

50 .5 23 .4

1,288 11,600

44 .4 18 .5

The figures in (A) and (B) are the presumed amounts in 19781 from Multinationals Facts and Figures 1979, The Oriental Economist . For (C) : The figures of the trading companies indicate they ratio of export, import and intermediary trade to total sales . The Trading Firms Yearbook, 1978 and 1979 . For the manufacturing, companies, the figures show the export ratio . President (May„ 1978) . For (D) : the data are from the same sources as (C) . The , numbers of domestic employees of (E) are from Japanese Company Handbook, (Spring, 1979), The Oriental Economist .





JAPANESE MULTINATIONALS

Table A-5

91

Overseas Affiliates of Mitsui & Co ., Ltd. Company Name

Location CANADA

( 6 companies)

U .S .A.

(37 companies)

Establishment

Apr . MITSUI & CO . (CANADA), LTD . Titan Steel & Wire Co ., Ltd . Sept . Canadian Motor Industries Holdings Ltd . Sept. Frazer Wharves Ltd . May Weld-Loc Systems of Canada, Limited May Ventures West Capital Ltd . Jan. Apr . MITSUI & CO . (U .S .A .), INC. Juki Industries of America, Inc . Jan. Pacific Grain Co. Mar . Sea-Port Steel Company May NTN Bearing Corp . of America Mar . Morpac, Inc. Oct . Mar . Durakut International Corp .

1956 1963 1964 1971 1972 1973 1966 1942 1961 1962 1963 1968 1969 United Grain Corporation Jun . 1969 Weisner Steel Products Inc. Sept. 1969 Weld-loc Systems Inc . Nov. 1969 Red & White Valve Corp . Jan. 1971 Astral International Corporation May 1971 Channel Terminal Corporation Feb . 1972 Apr . 1972 National Plywood, Inc . May 1972 Mitsui Export Corp . SSC International, Inc. Oct . 1972 Kioritz Corporation of America Dec . 1972 Dec . 1972 Kodiak Lumber Mills, Inc . Jan. 1973 Hamilton Brothers-MBK J .V . Ltd . Van Brunt Port Jersey Warehouse Inc . Mar . 1973 Jul . 1973 Neptune Packing Corp . Aug. 1973 Kahuku Agricultural Co ., (Hawaii) Inc. Sept . East West Development Corp . Oct . Alumax Inc . Nov. IPSCO America, Inc. Nov. Men's Wear International, Inc . Jan . Harborland Corp . Jan . M2 Urban Renewal Corp . Jan. M3 Urban Renewal Corp . May MB-Palomar .Inc . May MB-Carson, Inc . May King Neptune Sales Corp . Shofer's World of Wheels of Maryland, Inc . Jul . Aug. World of Wheels, Inc. Aug. TAMCO ORALCO Inc. Apr . Jul . Pacific Resources Inc .

MEXICO

( 3 companies)

EL SALVADOR ( I company) NICARAGUA ( I company) PANAMA

( 6 companies)

DOMINICA

( 2 companies)

MITSUI DE MEXICO, S .A . DE C .V . Fundidora Monterry SA . Kioritz de Mexico, S .A . de C.V. Industrias Sinteticas de Centro America S .A . Atlantic Coast Chemical Co ., S .A . (ATCHEMCO) MITSUI & CO. (PANAMA) . S .A . Casamar S .A. Maxitanks Shipping Corp . Triumph Shipping S.A . Perennial Motors Transport, Inc . Excelship Navigation S.A . Tuberias y Materiales Plasticos, C. por A. Productos Diversos, C. por A.

1973 1973 1973 1973 1974 1974 1974 1974 1974 1974 1974 1974 1974 1975 1975

Apr . 1956 May 1900 Aug. Jul . Apr .

1962 1966 1968

Jun . 1972 Jul . 1961 Feb . 1970 Jul . 1972 Jan. 1973 Jun. 1975 May 1965 Jul. 1968





92

CAPITAL AND CLASS

TRINIDAD and TOBAGO ( 2 companies) VENEZUELA ( 2 companies) COLOMBIA

( 2 companies)

PERU

( 4 companies)

CHILE BRAZIL

( 1 company) (18 companies)

Century Eslon Ltd . Iron & Steel Company of Trinidad and Tobago Ltd . MITSUI DE VENEZUELA, C .A . Tornillos Venezolanos C .A . (TORVENCA) MITSUI DE COLOMBIA S.A . Ceramics del Valle Ltda. MITSUI DEL PERU S .A . Compania Miners Santa Luisa S .A . Toyota del Peru S .A . Quimica Sol . S .A . MITSUI CHILENA COMERCIAL LTDA . MITSUI BRASILEIRA IMPORTAGAO E EXPORTACAO LTDA . Kalil Sehbe S/A-Industria do Vestuario Companhia Siderurgica Lanari Furukawa Industrial S .A . Produtos Eletricos Nagaoka do Brasil Industria e Comercio Ltda .

ARGENTINA

( 1 company)

ENGLAND

( 5 companies)

NORWAY ( I company) SWEDEN ( I company) DENMARK ( 1 company) W . GERMANY ( 5 companies)

NETHERLANDS ( 2 companies) BELGIUM

( 4 companies)

LUXEMBOURG (1 company) FRANCE ( 1 company) ( 2 companies) IRELAND ITALY

( 3 companies)

Pacific Consultant do Brasil Usinas Siderurgicas de Minas Gerais S .A . Fcrtilizantes Mitsui S .A . Industria e Comercio Usiminas Mecanica (USIMEC) S .A . Nortres Industria a Comercio de Madeiras Ltda . Empreendimentos Brasileiros de Mineraclo Daruma Telecomunicaci cs do Brasil Industria a Comercio Ltda . Mitsui Imobiliaria Desenvolvimento e Materiais de Construclo l.tda . Fosca Industria c Comercio S .A . Tendo Brasileira Industria e Comercio de Moveis Ltda . Gesso Paulista Ltda . Mitsui Yoshioka do Brasil S/A, Agro Industrial Exportadora Daido Quimica do Brasil Ltda . MITSUI ARGENTINA S.A .C.I .F. MITSUI & CO . EUROPE LTD . Mitsui Machinery Sales (UK) Ltd . Anglo Chemical Metals Ltd . Three Wells, Ltd . Cohen & Wilks International Ltd . MITSUI & CO. EUROPE (NORWAY) A .S . MITSUI & CO. EUROPE (SWEDEN) AB Bridgestone Tire Co . A/S MITSUI & CO . EUROPE G.m .b .H . Deutsche Roosevelt Trading Co ., G .m .b .H . NTN Wilzlager (Europe) G .m .b .H . Mitsui Maschinen G .m .b .H . Bridgestone Reifen G .m.b .H. MITSUI & CO . EUROPE (NETHERLANDS) B .V . Krehalon Industrie B .V. . N .V. MITSUI & CO . EUROPE (BENELUX) S .A. Kaneka Belgium N . V . Nitto Belgium S .A . N .V . Misuca Europe S.A . International Procurement & Service Corp . MITSUI & CO . EUROPE S .A . Donegal Dairy Products Ltd . Mitsui Denman (Ireland) Ltd . MITSUI & CO . EUROPE (ITALIA) S .P.A . Tessitura Tintoria Stamperia Achille Pinto S .P .A . Mitliq, S .P.A .

Jun. Jul . May Feb . Jul . May Aug. Aug. Jan . Mar . Sept . Oct .

1965 1975 1965 1958 1970 1963 1970 1964 1966 1969 1960 1956

Apr . Apr . Dec . Jul . Mar . Apr . Oct . Dec . Apr . Apr .

1927 1945 1951 1956 1958 1958 1966 1970 1970 1971 1971

Jul .

1972

Jan . Feb .

1974 1974

Aug. Sept .

1974 1974

Jun . Oct .

1974 1957

Aug . Apr. Aug . Jul . Jan . Apr . Apr.

1974 1971 1972 1974 1975 1973 1973 1972 1954 1958 1962 1972 1976 1973

May Aug. Sept . Jan . Apr. Mar. Apr. Oct. Jan . Dec . Feb . Mar . Nov . Dec. Apr . Aug . Oct . Oct .

1973 1971 1970 1974 1974 1972 1964 1971 1973 1971 1933 1973



93 Location

Company Name

PORTUGAL

( 3 companies)

SPAIN

( 2 companies)

NIGERIA LIBERIA ZAIRE

( 2 companies)

KENYA IRAN

( 1 company) ( 3 companies)

U .A .E . BERMUDA

( I company) ( 2'companies)

KUWAIT

MITSUI & CO . EUROPE (PORTUGAL) LDA . Nov. Companhia Industrial de Resinas Sinteticas S .A .R .L . Sept . Textil Lopes da Costa S .A .R.L. Jul. MITSUI & CO . EUROPE (ESPANA) S .A. Oct . Zonum, S .A . Jul.

1968 1960 1966 1971 1972

( I company)

Nigerian Wire Industries Ltd .

( 2 companies)

Lepta Shipping Co ., Ltd . Fortuna Maritime Corp . Societe Internationale dcs Mines du Zaire S .A .R .L . Societe Miniere de Tenke-Fungurume Kenya Toray Mills Ltd. MITSUI & CO ., IRAN LTD . International Agrobusiness Corp . of Iran Iran-Japan Petrochemical Company Ltd. Arab-Heavy Industries Ltd ., S .A . Abu Dhabi Gas Liquefaction Company Limited

May Apr . Jul. Jan . Jan . Oct . Nov . Jan. Apr. Jun . Mar .

1973 1974

Liquefied Gas Shipping Company Limited International Marine Construction Co .

Mar . Apr .

1973 1975

Ceylon Glass Co ., Ltd . Ceylon Bulbs & Electricals Ltd . Associated Rubber Industries Ltd. Ceylon Synthetic Textile Mills Ltd . Singapore Cement Industrial Co ., (Pte .) Ltd . Singapore Cement Mfg . Co., (Pte .) Ltd . United Industrial Paper Products Co ., Ltd . Singapore Adhesives & Chemicals Ltd . Trade & Industrial Development Pte. Ltd . Eastern Wire Mfg . Co ., Ltd . Mazda Plastic Factory (Pte .) Ltd .

May Oct . Jan . Aug . Jun. May Jul . Dec . Jun . Feb . Nov.

( I company)

SRI LANKA ( 4 companies)

SINGAPORE (14 companies)

International Wood Products Ltd . Toppan Printing Co., (S'pore) Pte. Ltd . Southern Cross Chemicals (Ptc .) Ltd .

MALAYSIA( 9 companies)

Engineering Services (Asia) Pte . Ltd . Nippon Asbestos Southeast Asia Pre. Ltd . Fujitsu (Singapore) Pte . Ltd. San Chuan Marine (Pte .) Ltd. Malayan Sugar Mfg . Co ., Bhd . Textile Corp . of Malaya, Bhd . Malayawata Steel, Bhd . United Industrial Paper Products Mfg . Co., (Malaysia) Sdn . Bhd .

INDONESIA

Establishment

Malayan Adhesive & Chemicals Sdn . Bhd. Yanmar (Malaysia) Sdn . Bhd . Bulk Chemicals Terminal Sdn . Bhd. Kanebo Malaysia Spinning Mills Sdn . Bhd . Felda Oil Products Sdn . Bhd . P .T . International Nickel Indonesia P .T . Mitsugoro P .T . Fumira P .T . Wisma Nusantara International P .T . Djaya Beverages Bottling Co . P .T . Indonesia Synthetic Textile Mills P.T . Nusantara Fishery P .T . Indonesia Toray Synthetics P .T . Yanmar Diesel Indonesia P .T . Mogcs Shipping Co., Ltd . P.T . Bina Satwa P .T . Bridgestone Tire Indonesia

1974 1971 1971 1964 1967 1973 1973 1975 1973

1955 1957 1959 1962 1958 1961 1963 1965 1966 1967 1967 Sept . 1968 Jul . 1969 Oct . 1970 Nov. 1970 Aug. 1972 May 1973 Feb . 1975 Oct . 1959 Mar. 1961 Oct . 1961 Dec. 1965 Dec. Sept. Nov . Jan. Oct . Jul . Apr. Aug . Feb . May

1965 1967 1973 1974 1975 1968 1969 1969 1970 1970

Aug. Sept. Oct . Nov. Dec . Sept . Sept .

1970 1970 1971 1972 1972 1973 1973





94

THAILAND

CAPITAL AND CLASS

(24 companies)

P .T . Prominantor Construction Co ., Ltd . P .T . Promits Engineering & Construction P .T . Aica Indonesia P .T . Acryl Textile Mills P .T . Gaya Persaki Synthetics P .T . Tiga Manunggal Synthetic Industries P .T . Semen Nusantara P .T . Indonesia Nikka Chemicals Co ., Ltd . P.T. Standard Toyo Polymer P.T. Vuasa Battery Indonesia P.T . Arjuna Utama Kimia P .T . Indonesia Asahan Aluminium P .T . Pro-Intercontinental Terminals Indonesia MITSUI & CO . (THAILAND), LTD . Thailand Iron Works Co ., Ltd. The Sang Kasi Thai Co ., Ltd . Bangkok Drying & Silo Co ., Ltd. Thai Tinplate Manufacturing Co ., Ltd . The Kumphawapi Sugar Co ., Ltd . . Toray Nylon Thai Co ., Ltd . Sinthani Industry Co ., Ltd. Thai Hino Industry Co ., Ltd.

PHILIPPINES

( 6 companies)

HONG KONG

( 8 companies)

TAIWAN

( 7 companies)

KOREA

(12 companies)

The Bangkok Nylon Co ., Ltd . Thai Plastic and Chemical Co ., Ltd . Siam Electric Industries Co ., Ltd. Inoue Rubber (Thailand) Co., Ltd . Winner Textile Co ., Ltd . Thai Suiting Mills Co ., Ltd . Nippondenso Thailand Company Ltd . Cocksec Chemical Industry Co., Ltd . Boonmitr Building Co ., Ltd . Nippondenso Thailand Sales Co ., Ltd . Thai Special Steel Co ., Ltd . Siam Resin & Chemical Co ., Ltd . Siam Textile Chemicals Co ., Ltd . Mitsiam International Ltd . Inter-Asian Tobacco Exporters Co ., Ltd . Manila Electric Company Elizalde Steel Consolidated Inc . Philippine Petrochemical Products, Inc . International Agro-Forestry Development Corp . Philippine Hoteliers Inc . Riophil Incorporated MITSUI & CO., (HONG KONG) LTD . Trilon Company, Ltd . Mantile Co ., Ltd . Fuji Marden & Co., Ltd . Sapporo Beer (11K) Ltd . General Appliance Co ., Ltd. Eastern Sea Development Co., Ltd . Good Earth Dyestuffs Corp ., Ltd . China First Steel Ropes Mfg . Co ., Ltd . Hung Lung Industrial Co ., Ltd . Shin Taiwan Agricultural Machinery Co ., Ltd . Taiwan Kagome Co ., Ltd . Far Eastern Textile Ltd . Hsu Tai Rubber Co ., Ltd. China Metal & Chemical Co ., Ltd . Jetl Synthetic Fibers Co ., Ltd . Gyeong Bug Livestock Co ., Ltd. Korea Polyester Inc . Korea Fine Chemicals Co ., Ltd . Korea Synthetic Rubber Industry Co ., Ltd .

Sept . 1973 Nov . 1973 Mar . 1974 Apr. 1974 Jun . 1974 Jul, 1974 Dec . 1974 Jan . 1975 May 1975 May 1975 Dec . 1975 Jan. 1976 Apr . 1976 Aug. 1959 Mar. 1958 Apr. 1960 Oct . 1962 Jul . 1963 Dec . 1963 Dec . 1963 Feb . 1964 Jul . 1964 Feb . 1965 Dec . 1966 Feb. 1969 Dec. 1969 May 1970 Sept . Jul . Oct . Feb . Sept . Nov . Jan . Jan . Nov. Nov.

1970 1972

1972 1973 1973 1973 1974 1974 1974 1975 1919 Apr . 1961 Jan . 1969 May 1974 Nov . 1974 Jul . 1975 Apr . 1976 Jul . 1955 Jul . 1958 Sept . 1961 Nov . 1965 May Jul . Oct . Dec. May Dec . Oct . Jan. Dec . May Sept . May Jun . May Oct .

1969 1972 1973 1954 1957 1960 1967 1967 1970 1971 1966 1970 1970 1971 1971



JAPANESE MULTINATIONALS Company Name

Location

AUSTRALIA

(14 companies)

NEW ZEALAND( I company) NEW (HEBRIDES( I company)

95 Establishment

Meiko Metal (Korea) Co., Ltd . Hanil Textile Co ., Ltd. Cheil Synthetic Textile Co ., Ltd . Jong Wha Wool Textile Co ., Ltd . Chong Ju Synthetic Co., Ltd . Dong Bang Masan Packing Co., Ltd . Honam Petrochemical Corp .

Dec . Dec . Jul . 'Dec . Jul . Oct. Mar .

MITSUI & CO . (AUSTRALIA) LTD . Thiess Peabody Mitsui Coal Pty. Ltd . Mitsui-C. Itoh Iron Pty . Ltd. Handley-Chugai Pty . Ltd. Kianga Coal Co ., Ltd. Consolidated Fertilizers Ltd . Mitsui Iron Ore Development Pty . Ltd . Central Queensland Construction & Engineering Pty .

Apr . 1956 Feb . 1963 Mar . 1967 Jul . 1968 Sept . 1970 Nov . 1970 Apr . 1971 Oct. 1971

Ltd . Mitsui Salt Pty ., Ltd . Igctalloy-Kirby Pty . Ltd . Mitsui Gas Development (Aus .) Pty . Ltd . Clarendale Pry . Ltd. MCA Textiles Pty . Ltd . Bedout Gas Development (Australia) Pty . Ltd . MITSUI & CO . (N .Z .) LIMITED South Pacific Fishing Co . (New Hebrides) Pry . Ltd .

Jan . Jul . Sept . Feb . Aug. Jan . Jun. Nov .

From "The 100-year History of Mitsui & Co ., Ltd .-1876-1976" pp . 24-29 .

1971 1971 1972 1972 1974 1974 1976

1973 1973 1973 1974 1974 1975 1969 1957





96

CAPITAL AND CLASS

Chart A-1

Mitsubishi Concern

Paper Mitsubishi Paper Mills

Foodstuffs

Petroleum

Real Estate & Construction

Mitsubishi OJ

Mitsubishi Estate

Kiri Brewery

+Mitsuhishi Const . Rokko Butte, Top 3 Leaders

Glass

Mitsubishi Petrochemical

Asahi (;lass

Chukyo Coca-Cola Boating Nitto Flour Milling

Mitsubishi I

Mitsubishi Chemical Inds . Mitsubishi Plastics Inds.

Snto Tire fnyo Sanso limo San-

I

Corp .

Mitsubishi

stitsubishi Light Metal Inds.

Mitsubishi M,,n ant,, Chemical

Bank Kodensha

Toro Carbon ttippun Synthetic Chemical

Mitsubishi Steel Mfg.

Sippon Kasei Chemical

Kanagawa Electric

Mitsubishi Heavy

Steel & Metal,

Inds .

Mitsubishi Metal Fibre & Textile famagawa Metal & Machinery

Mitsubishi Aluminum

Mitsubishi Rayon

I tinichi-Nippon Cables I'rhoku Hiryo

Transportation & Warehousing

'akai Chemical Finance& Insurance

Mining & Cement

Mitsubishi Trust & Banking Mitsubt hi Mining & Cement

+Meiji Mutual Life Insur . Tokyo M . & F. Insur .

Nippon Yus n

Tokyo Senpaku

Mitsubishi Warehouse & Transp .

Taiheiyo Kaiun Shinwa Kaiun

I Joint

I

Developments in New Industries

Mitsubishi Petroleum Den .

+Mitsubishi Atomic Power Inds.

'Mitsubishi Development M itsubishi Research Institute

+Diamond Lease

Zenith Ryoko Concrete P.S. Concrete

+Ryowa Ocean Engineering

Subsidiaries or affiliates

Parent Co. I

1

Kinyo-Kai members Top 3leaders

Source : `Industrial groupings in JAPAN, revised edition 19801981' by Dodwell Marketing Consultants, Tokyo, p . 69 .

97

chart A-2 Mitsui Concern

Fibre & Textile

Foodstuffs

Construction

+Mitsui Consultants

Department Store

Mitsui Construction To Industries

Nippon Flour Mills Sanki Engineering

Mitsukoshi, Ltd .

Toshoku Ltd . DenkiKagaku Kogyo

General Sekiyu

Nimoku-Kai

(Tnyo Menkh) Chemicals

Finance & Insurance

Mitsui Toatsu Chemicals Mitsui Trust & Banking

+Togo Engineering

Mitsui Bank Mitsui Petrochem . Inds .

M itsui Mutual Life Ins-,

Mitsui Setter Kogyo

Taisho M . & F . Insur .

Mitsui Sugar Tailo Co . Paper & Pulp

+Mitsui Harbor & Urban Coast .

Oil Paper M itsui Alum-

+Mitsui Milks Machinery

--Milsi Al-in . Mining

steel & Metals

Mitsui Mining

Mitsui Mining & Smelting

+Hokkaido Colliery & Steamship

Japan Steel Works

Transportation & Warehousing

Mitsui O .S.K. Lines Mils. . Warehouse

Joint Developments in Now Industries Onoda Cement

+Mitsui Oil Exploration +Mitsui Development +Mitsui Knowledge Industry +Mitsui Ocean Den . & Eng'g. +Mitsui Air & Sea Service +Milsui Leasing & Dev.

Electric & Machinery Mitsui Eng'g. & S'bldg. (Toshiba C ., P.) (Toyota Motor Co .)

Shows Aircraft Ind .

98 Chart A-3 Sumitomo Concern

a, Real Estate & Warehousing

Construction

Trading

Sumitumu C'unstruttiuo

Sumitnnu,

Sumitomo Really & Dev . Sumitnmn ll'arehnuse

Hakusui-Kai inky', Tungsten

Fin Electric

Sum turns, Trust & Ranking Sumitomo M. & F. Insur . S umitomo Mutual Life Insur .

Top 3 Leaders

steel & Metals

Finance & Insurance

Sumitumu Aluminium Smelting

Inebala & Co . Seitelsu Kagaku Shinto Paint

Sumitomo l-lectric lnds .

Chemicals

fukai Rubber Inds .

Sumitnmn Bakelite

Sunutumu ]lining

Sumitomo Bank

Sumitomo R ubber Inds .

Machinery

Sumitomo light Metal Inds .

Nlhn I Spindle Mfg

%umltomn Ileuvy Ind. . Sumitomo Prrtiainn Products Nippon Pipe Mfg .

Nlppnn Electric Ind .

Glass & Cement

Nllaukn sumih„no special Metals Nippon Stainless S nel

Nippon Sheet Glass

Sumitumu ('rment

Mining

Forestry

Electric Electronics

Sumitnmn ('oat Mining

sun,itu o1o F ores[ n'

Nippon Flollric

Ilaikin Kogyo

Anrite Flovirlc 1'nyo fnmnmmica' kin Falulp, Fuhoku . Mold Inds

Joint Developments in New Industrie +Sumitumu Urban lie, . oSumnomn l)ceao lie, . S Fne'e . oSumnumo Petroleum D-S-u-, Atnnuc Fn _) 11 .1 . +I,pan Information-nice G eneral Lease

strategy

1100001~400

EDITORIAL INTRODUCTION

Political relevance has always been an important criterion governing the choice of articles for Capital and Class . Admittedly you might have had to work hard on some articles to find it, but it has always been there - hidden beneath the algebra! We now want to encourage the writing of more articles which deal directly with strategic questions . The purpose of Capital and Class has been to provide a nonsectarian forum through which to improve the analyses, especially of political economy, with which, in our different organisations and movements, we determine what is to be done . But we have not often published, or for that matter received, articles which directly address this question of strategy . A `strategy section' of Capital and Class was started in Summer 1978 but since then only two articles have appeared under this heading . (Though to be fair there have been articles like Mick Carpenter's on the NHS and the London CSE group on the Alternate Economic Strategy) . It is urgent to give the strategic discussions within the CSE a boost . For the forum that CSE provides could be very valuable in helping to formulate a popularly based socialist alternative to both Thatcherism and Labourism . Such an alternative, heterogeneous and uneven as it will be, must be based on the grass roots resistance which is developing against the present government and its allies . But for such resistance to be sustained and for it to grow politically so that it brings about more than just another conservative Labour government, there needs to be a tremendous imaginative leap in the kind of positive policies put forward by socialists in the next few years . Some of the areas where this leap is necessary - and where there are signs of a build-up in this direction - could constitute a suggested agenda for a strategy forum in Capital and Class .



100

CAPITAL AND CLASS

An Alternative Traditionally the labour movement has limited its challenge toy Economics : capitalist economics to a selective challenge to private ownershipi an Economics and again selectively to the capitalist market as a means ofl for Social Need allocating resources to basic services . The direction of techno logical change and design of machine tools has gone unchallenged) beyond a concern over the terms on which new technologies area introduced ; the division of labour both in production and in service work also tends to be taken for granted, as technically neutral . In other words the labour movement at virtually every 1 level does not have an adequate alternative economics with which i to back-up its traditional defensive demands in the face of rec cession . The result at the national trade union level is, for instance, trade union participation - with virtually no protest in NEDO and its sector working parties as if competitive success,, and the restructuring of industry to that end, will bring pros perity to working class people . At the shop floor level the result) is weakness and defeat in the face of rationalisations justified by management in terms of competitive pressures . Socialist economists have done much in their discussion of crisis theory, the structure of British capitalism, the nature of capitalist technology, the causes of inflation, the state, the labours process and other related themes, to provide the ground work„ the basic tools, for developing such an economics for social need . ) More of course will always need to be done at this level, as we i have suggested in our editorial . But at the same time it should) now be possible for strategic writing to draw on this work to i develop socialist economics of direct practical relevance to i movements making specific demands for basic social need like the women's movement, parts of the environmental, anti-nuclear power movement, the disarmament movement, the tenants' movement, and to trade unionists formulating arguments and demands relating to the wider economic environment of their workplace in order to win even their most basic struggles . This area of discussion implies two types of question :

Popular Political Power

a)

Questions about what an economics of social need woula mean for particular sectors o f industry -taking internationa' as well as domestic social needs into account. This would not mean C&C drawing up workers'plans! Rather it would mean C&C sketching out some of the possibilities from which) workers in those industries or groups organising around social needs related to those industries/sectors, could draw .

b)

Questions concerning policies we should be demanding ot, future governments, which would facilitate and strengthens the initiatives of workers and other oppressed groups fighting, on the basis of social needs.

Criticisms of the capitalist state are coming from all quarters ofl the left - both the extra-parliamentary left (e .g . In and Against) the State, State Research) ; and the parliamentary left (e .g . Tony I



STRATEGY

101

Benn) . The Civil Service, the armed forces and police, parliament and local councils are all being challenged in one way or another . There is a need now for strategic discussion to draw on all this empirical and theoretical analysis of the state to develop a clearer idea of how alternative forms of political power could develop . Three kinds of question arise :

Socialist Practice and Tactics

a)

What forms of popular power are developing out of, and beyond the traditional institutions of the labour movement? Could these in any way be the basis of a new form of political power and democracy? E .g . some forms of shop stewards' organisations in both local authorities and the private public industrial sectors ; developments within trades councils ; international contact between shop floor level trade unionists; the women's movement, militant tenants' organisations and other community based organisations . In what direction are they developing? In what directions could they develop?

b)

What are the problems in developing a form of popular political power ; that is, forms of democratic planning, co-ordination and legality based on the work-place and locality, rather than on parliament and the civil service? What can socialists fight for within the existing political institutions, to strengthen the growth of a more democratic form of political power?

c)

What is the relation of these varied forms of extraparliamentary movements and organisations to existing political institutions? (viz : local councils, Parliament, various quangos via the Labour Party and the trade unions) . How do they make use of these institutions? What contradictions are there in the relations between these relatively new sources of political power and pressure, and the established political institutions?

Clearly many issues under this heading will depend partly on circumstances we cannot predict in advance but the following are some suggestions of the more general questions which need to be considered : -

Is it possible to organise against capitalism in ways which prefigure socialism ; if so, how?

- What are the limits and possibilities now of socialist organising within the Labour Party ; are regional variations variations important? -

Is it desirable and possible to create a political base outside the Labour Party without at this stage creating a new party in opposition to the L .P.? If so, how?

-

What sort of links/alliances are possible between socialists involved in different movements and organisation? For what purpose and on what basis?

102

CAPITAL AND CLASS -

What, under different conditions are the connections between, and the relative priority of, national organisations and' movements and locally based initiatives . We would like to hear from anyone interested in writing on these and related issues of strategy, and from anyone willing to inter view people involved in struggles and projects which illustrates or help to answer some of the problems we have just outlined .) Please contact us at 23 Mayford Road, London SW 12 .

THE ECLIPSE OF POLITICS : THE ALTERNATIVE ECONOMIC STRATEGY AS SOCIALIST STRATEGY Donald Swartz The resurgence of intea-party conflict following Labour's 1978 electoral defeat, along with the deepening economic crisis, has intensified the debate among serious socialists -in Britain over what has come to be known as the Alternative Economic Strategy (AES) . An important contribution to this debate was made recently in Capital and Class by the London CSE and together with those by Bob Rowthorn and Geoff Hodgson can be viewed as the principal statements by socialists in support of the AES .[1] The purpose of this article is to offer a critical examination of their arguments . Underlying and infusing most of the debate to date has been a much broader one : that between `orthodox' Marxism-Leninism and 'Eurocommunism', with critics of the AES (such as the SWP) upholding an `orthodox' position, and its supporters adhering to a 'Eurocommunist' one . Consequently, criticism of the AES has tended to take the form of polemical broadsides against `reformism' with the AES demand for import controls subject to particular attention . Such criticisms, along with their presuppositions and implied alternative strategy, are of dubious merit .[2] What has been lacking in the debate is an examination of the arguments in support of the AES within the terms of its exponents' own general position . It is in this context that the ensuing discussion is framed . Like the AES proponents whose arguments are examined, I, too,, reject the view that the strategic developments referred to asp 'Eurocommunism' should be written off as having reformism in-i scribed in them `like original sin' as the London CSE, quoting) Poulantzas' graphic phrase puts it . However, the rejection of such I



STRATEGY : AES

103

an equation only operates at the most abstract level of analysis, comparable to `the abstract antithesis of "reformist" and "insurrectionary" positions' (London CSE p .74) . Insofar as the analysis moves beyond this level of abstraction, the issue of reformism must be taken up . If this necessity is recognised by all these authors, the cogency and thoroughness of their efforts to do so seem seriously wanting, which is disappointing to say the least given the quality of their more `academic' work . The AES

The emergence of the AES must be regarded as an important accomplishment by British socialists . It reflects a serious and sophisticated attempt to articulate in the current context `an analysis of the alternative (economic) policies open to a socialist Britain', to quote the Cambridge Political Economy Group whose research was so integral to the development of the AES .[3] This work subsequently took on a life of its own, so to speak, finding expression in several `alternative' economic programmes which are by no means identical, a point to which I shall return. For the moment, however, for reasons of exposition, I will assume there is an AES, the key elements of which are outlined by the London CSE . The advocates of support for the AES advance two general and related arguments for their position . One is that the AES has mobilising potential ; it speaks to the immediate needs of workers, it can partially meet those needs, it can help unify the labour movement, and it enjoys a base of support within the labour movement . The other is that the AES is a set of real reforms which collectively comprise in Rowthorn's words "a powerful attack on the rights of capital' (p . 86) . The reformist conception of many left Labour supporters of the AES notwithstanding, its implementation would meet real resistance from capital, generating not social harmony but social conflict . Thus, summarising their exposition of these arguments the London CSE people assert that the AES constitutes `a transitional strategy capable of mobilising working class struggle around immediate issues within an overall and coherent framework of advance towards socialism' (p . 75) . It is precisely this claim, made also (only less explicitly) by Hodgson and Rowthorn, that I wish to dispute . The flaw in this claim would seem obvious ; it involves, on the one hand, an unacceptable reification of `programme', and, on the other, a reduction of political strategy to an economic strategy . As a consequence at least three crucial issues are inadequately dealt with : a) the problem of reformism ; b) the role of party/organisation ; and c) the tension between the AES's economic and political objectives .

Reification and A primary objective of the arguments in support of the AES is to Reformism refute the charge that the AES is a reformist strategy . They con-

104

CAPITAL AND CLASS cede that the predominant conception of the AES held by the Labour left (i .e . Tribune) is reformist . By this they mean that the AES is seen as a parliamentary affair ; a set of reforms achievable without widespread popular mobilisation and struggle . These authors reject such a view and, further, assert that it is misconceived . To advance this argument these authors invoke a distinction between means and ends, distinguishing between the AES economic measures per se and their implementation, and arguing that the proposals themselves contain a revolutionary `essence'. As Hodgson puts it, the AES `is packaged as reformist but it contains implicit and unspelt revolutionary implications' (p . 27) . This line of argument has much more in common with Hegel than Marx . On the one hand it dismisses the possibility that the AES measures are divisible and hence amenable to piecemeal implementation/gradualism, as well as capable of taking varying practical forms which could alter their meaning drastically . On the other hand, it results in insufficient attention being paid to the extent and significance of different formulations of the AES demands. This latter issue is at least raised by the London CSE, to their credit (and by Hodgson in a different context which will be discussed below) . They attempt to examine the various formulations of the AES within the labour movement in terms of two criteria, the first and critical one being the extent to which they `provide solutions to the crisis within the constraints of existing political and economic relations' (p . 77) . Three elements of the AES are examined : reflation, the industrial strategy, and the international aspect, omitting, as they acknowledge, important demands such as price controls and control of financial institutions . Their conclusions are oblique to say the least . While, 'in general the AES is not only sophisticated economics (that) rests on an advanced political understanding of economic policy as a process of class struggle', (p . 88), problems do exist . `Certainly some formulations are weakened by social democratic conceptions' (p . 88) and differ `often on essentials' (p . 89) . As well, there is `the frequent subordination of key parts of the strategy to sectional interests, the frequent failure to spell out the measures . . . in convincing detail' (p . 89) . A more sceptical inspection of the evidence offered for these equivocations might suggest the problem is even more serious . Thus, no evidence that any formulation of the reflation demand that meets their first criterion is actually provided . As regards the industrial strategy, the unions' position is described as 'ambivalent' and as for the international strategy, even the `radical and progressive' view of the TUC is `in fact unable to reject the law of value as the fundamental basis upon which international trade should be conducted' (p . 86) . Extending this sort of analysis to the obvious key issue of controlling the financial institutions, leads to similar results .



STRATEGY: AES

105

Thus, after the 1976 Labour Party Conference passed a motion calling for the takeover of these institutions, the nine unions in this sector demanded further consultations . These revealed all of these unions to be `to varying degrees hostile to the proposals on nationalisation', and both USDAW and ASTMS, while conceding the need for reforms, `questioned the conclusion that ownership was the best means of exercising control' .[4] The purpose of the preceding considerations was not to suggest that these authors harbour illusions about the present level of political consciousness of British workers . They do not. Nor do they believe that the existing level of political consciousness is unrelated to the prospects for a socialist Britain . My purpose was rather to set in stark relief the contrast between this political reality and the virtual absence of any considerations by these AES proponents of the political practice involved in changing it . Their perfunctory statements about the need to combine support for the AES with `criticism' and `discussion' of certain (social democrats') formulations of it are idealist and wholly inadequate to the task of substantially broadening the socialist segment of the working class . After all, socialist criticism of social democrats has occurred before . This, it should be said, does not apply quite so much to Hodgson who proposes linking support for the AES to the recent struggles within the labour movement around `alternative plans' such as those formulated by the Lucas and Vickers combine committees . This view, however, is not shared by all the AES proponents, particularly the CPGB . Nor, unfortunately, does Hodgson offer any rationale to justify distinguishing these particular struggles . Underlying this `silence' in the framework surrounding the AES, at least with respect to the London CSE, is a disturbing narrow view of the dilemmas inherent in the 'Euro-Communist' project . They write : `the key question to be asked of EuroCommunism . . . is the popular mobilisation envisioned to enforce the social transformations enacted within the constitutional structure' (p . 74) . This is certainly a key question, but not the only one . Another, surely, is whether such parties will succumb to the temptation to moderate both programme and extra-parliamentary struggle in order to achieve a parliamentary majority . In sum, the AES per se is no more than an economic programme . For it to be part of `an overall and coherent framework of advance towards socialism', to again quote the London CSE, that framework must be built . As yet this framework is not in sight . Indeed, I would suggest that in the absence of such a framework, the effect of support for the AES may well serve to reinforce the reformist framework into which the Labour left has placed it .



1 06

CAPITAL AND CLASS

Party/ Organisation

An integral part of any socialist framework with or without the AES must be the place of the revolutionary party . The capacit3 of the AES proponents to avoid tackling this question directl3 is impressive, to say the least . To put it bluntly, one cannot invoke the abstract formulations comprising Eurocommunism tc talk in a meaningful way of convergences in political strategy between people such as Milliband and Hodgson who differ or whether the Labour Party can serve as a vehicle for a revolution ary transformation, not least because the scenario created b3 these AES proponents is clearly one which envisions a Labour government . The plausibility of this scenario is no greater than the anal ysis advanced in support of it . Rather than attempting ye another general argument against the view that revolutionising thi Labour Party is impossible,[5] I will instead examine Hodgson', defence of the AES, he being a prominent exponent of changinj the Labour Party from within . Hodgson enquires into the AE ; scenario more deeply than the others . In doing so the analysis hi provides suggests anything but a `coherent framework of advance towards socialism' . Hodgson begins with a sketch of Britain's economic crisi and the failure of Keynesianism, following which he warns u that there are both capitalist and socialist solutions for this crisis the capitalist one being coporatism . A frequently used term o' late, corporatism has been given a variety of definitions an( connotations . As understood by most Marxists, corporatisn refers to a capitalist political structure tendentially developin ; within liberal democratic capitalist societies .[6] As such it in volves the voluntary integration of representatives of the principa producer groups (capital and labour) within the state . Since historically, representatives of capital have been an integral par' of the state, corporatist structures are essentially about the in tegration of labour into the capitalist state . To Hodgson, however, corporatism is not a political structur, within capitalism but is `a form of capitalism' (state capitalism? ; already semi-established in Sweden and West Germany, which i`marked by state coercion and eventually state compulsion o' private capitalist investment' as well as `prices, wages and salaries (p . 20-21) . Not only is no evidence of such state coercion offered' it should be noted as well that Hodgson himself claims (on pagc 20) that `as yet they (governments) cannot make capitalistinvest' . Nevertheless he goes on - much more sensibly - tc emphasise that while corporatism may evince a number of political forms including fascism, `in any case, under corporatism the trade union movement will lose most of its present indep endence and autonomy' (p . 22) . The theoretical basis for thi view of corporatism would seem to be somewhat eclectic and' informed by an instrumental conception of the state ; one which it might be noted, has little in common with the approach of Poulantzas whose • work is so critical to the Eurocommunisi position .



STRATEGY: AES

107

Hodgson then turns to the Labour Party's programme . Referring specifically to the AES measures embodied in Labour's programme, he points out that : `on face value, many features of the economic programme of the Labour Party, as set out in the programmes for 1973 and 1976 are in line with a corporate transformation . . . could be accomodated under corporate capitalism . . . there is a corporatist danger in Labour's programme' (p . 22) and a few pages later he asserts that the conception of the AES `predominant within the Tribune Group' is `classically reformist' being seen as `an alternative set of policies to be adopted within the existing structures of power . . . with the working class as a subordinate class in political, social and economic terms . (p . 26) . Manifestly, this would seem to suggest that our AES enthusiasts have a real problem ; save for a few Tribunites, the Labour Left is pursuing a corporatist project and understands the AES in these terms . Hodgson's efforts to resolve this problem are ingenious to say the least . He begings by asserting that rejecting policies out of hand on the grounds that they are corporatist-tinged is unworkable . If this were based upon the argument that in the abstract almost any policy, taken individually, can be given a corporatist tinge, I would concur. But this is not among Hodgson's two clearly related arguments . These centre upon the view that corporatism is politically unstable . If some traditional rights of the ruling class are undermined, so corporatism `may be forced to enhance the political and social position of the working class . . . The degree of state intervention inherent in corporatism may set in motion a set of economic and political events which will lead to the total transformation of society . . . there is a corporatist road to socialism' (p . 22) . Such a road, he adds, is neither a necessary stage in the struggle for socialism nor one we should choose . But in it `the opportunities will exist for the socialist movement to seize that initiative and use the partly-implemented measures to change course for socialism' (p . 23) . This last statement is critical to understanding the confusion of this whole argument. It reflects Hodgson's crudely instrumental conception of the state, which in turn is the foundation for his erroneous view of corporatism as `a form of capitalism' rather than a capitalist political structure . Corporatism is not something neutral, involving coercion of capital as well as control over labour . It is above all control over labour through the medium of its own institutions - the trade unions . No less mistaken, therefore, is Hodgson's suggestion that the working class can develop socialist consciousness and unify itself within a (non-fascist presumably) corporatist political structure (i .e . within the state itself) when it is precisely the absence of such consciousness and unity which underlies their preparedness to snap at the corporatist bait . Finally there is the suggestion here, as earlier, that a socialist transition can be launched without a revolutionary party - that

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CAPITAL AND CLASS the requisite socialist consciousness can be achieved without such a party . To make these points is not to adopt a `Leninist' view of the revolutionary party, which sees the party carrying socialism in bag to workers . It is to point to the relationship between organ isation, struggle, and political consciousness ; to recognise thei limitations on the form of struggles which unions themselves can conduct, and to recognise that for such struggles to occur, the working class's vehicles for struggle must retain their autonomy from the state . Corporatism, in other words, is not on thei `road to socialism'. It is another road, and the errors in Hodgson's analysis obscures the two . Why Hodgson found this disquisition on corporatism at all necessary is somewhat of a mystery because in the next sections of his pamphlet he argues that a reformist conception of the AES is quite misconceived : `It is misconceived because the main pro posals of that strategy are incompatible with reformism, even if, the majority of the Tribune Group may not be aware of that) point' because `even if Parliament adopted them as legislative enactments they could not be put into practice within the framework of the existing structures of power . . . (and) would face at least sabotage and `black market' evasion . . . by the civil service and the capitalist class combined . . . To some degree the working class would have to be called upon to implement and defend the legislation passed by Parliament' (p . 27) . Is this believable? Firstly, the possibility of a parliamentary defeat of the Labour Left, occasioned by a defection of the Labour Right (whose party loyalty has never approached that of the Left) to the Opposition is simply discounted . More fundamentally, with a stroke of the pen the reformist conceptions of the AES held by most Tribunites have vanished . Moreover, they've magically shed their classically reformist parliamentary I illusions to call upon the working class to exercise state power in i defence of a conception of the AES which they never held . Finally, given Hodgson's conception of corporatism and argument I that this conception has some material existence, why would the i AES measures provoke such hostility on the part of capital and state bureaucrats in Britain . The problem here I would suggest is not Hodgson's lack of intellectual ability, which he has elsewhere amply displayed, but the impossibility of rendering an incoherent political strategy or rather a non-strategy into its opposite . In sum, apart from abstractions or the necessity of mobilisation and struggle, Hodgson's analysis of the road to socialism is ill-marked to say the least . Wholly unjustified, indeed inexplicable, changes in the ideology of the Labour Left are simply asserted to defend the idea that the Labour Party can navigate the route . No more convincing is his claim that the working class can reach its socialist destination even if its leaders veer into a corporatist cul de sac .



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Much of the criticism of the AES as noted at the outset has involved an outright rejection of the economic measures it involves, with its proposal for import controls bearing the brunt of the attack . The issue that I wish to address is somewhat different, namely the compatibility of the economic and political claims made by these AES proponents . A useful point of departure is Rowthorn's article written in response to the criticisms by Bearman of the SWP, particularly his charge that being a national programme the AES is doomed to failure, given the world capitalist crisis, and that it would indeed be catastrophic for the working class . [ 7 ] Rowthorn begins by pointing out that the AES `rests on the assumption that Britain is a declining industrial power whose problems are primarily due to structural weaknesses in the domestic economy, although . . . exacerbated by the present world crisis. It concludes that by tackling these structural weaknesses, Britain's situation could be greatly improved, even during the present world crisis, and the material base could be created for higher wages and improved social services' (p . 89) . If Rowthorn is ambiguous as to whether immediate economic improvements are possible (but see below), the claim that the AES speaks to and can partially meet workers' immediate demands is integral to the rationale advanced by the London CSE (and also Hodgson) on its behalf . To support his argument Rowthorn provides data on the relatively low growth rate of the British economy over the last 30 years, and Bearman is chided for ignoring such well-known facts . To emphasise the gravity of the economic situation, Rowthorn then adds : 'If the alternative strategy could only raise Britain's long term growth rate up to the level recently achieved by other capitalist countries during the recession, this would be a significant achievement . . .' (p . 90) . If only, indeed . To begin with, even if we concede that these `facts' -which merely describe the British economic decline sustain the assumption which underlies the AES, they tell us nothing about the validity of the conclusion ultimately drawn . More importantly, it would seem that what is fundamentally a political problem (and seen as such elsewhere by Rowthorn) is being portrayed here as a technical one (by Bearman no less than Rowthorn, notwithstanding their different solutions) . What seems to have been lost from view is the claim that AES is a `transitional strategy', that it constitutes `a fundamental attack on the rights of capital' ; that it is intended to bring about a 'fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families' - although Britain will still be a capitalist country . The question, simply put, is whether these economic and political objectives are compatible? If in fact the AES is not reformist politically, can it succeed economically? This question is taken up directly by both the London CSE

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CAPITAL AND CLASS and Hodgson, and so the basis of their affirmative answers can b, examined . Both deny (quite correctly, I believe) any mechanistic model of capitalist development . `A recession' the London CSI argues, `represents primarily a reorganisation of the relation between capital and labour' and it cannot be assumed `that thl resolution of a crisis through recession is determined in advance (p . 70) .[8] If the ambiguity of the meaning of `reorganisation in this formulation is a bit disconcerting, the real problem i revealed in the premise underlying their whole argument . Thi premise is that `the resolution of crises may occur in differen ways, more or less favourable to the working class by blocking of resolutions (i .e . recessions) favourable to capital .' (p . 69 emphasis added) . That the working class can sometimes bloc] resolutions to crisis favourable to capital is not at issue . Tha doing so will resolve a crisis is . Is it not precisely the power of the British working class ti block resolutions favourable to capital that is integral to th present crisis? Profit, and more crucially capital's expected p rofit. as the basis of production and investment decisions, seems tb have disappeared from view as the key to resolving crises . Wit! respect to capital-labour relations, is it not the case that a reces, sion serves capital by weakening labour and thus increasing the production of surplus value -actual or expected? If the workim class were able to block resolutions favourable to capital wouldn' this deepen as opposed to resolve a crisis? Hodgson's solution is even more ingenious : `a socialise government within capitalism is not necessarily forced to attac'_ living standards. It could, for example, get higher growth and outl put through increases in productivity from general worker control of industry . . .' (p . 14) . Here, not only is the `structural weaknes° causing low productivity' argument dropped, but also capital' inevitable resistance to the AES, which spawned all the rhetoric about the necessity of extra-parliamentary struggle, is overcom : by merely turning on the workers' control tap . That simply will not do . The reality of capital's power mean, that those who wish to take a chunk of it will pay a substantia price .[9] This can perhaps be made more concrete by considerin the AES demand to nationalise the finance sector and severa major corporations . Interestingly, (indeed amazingly) none o, these authors raise the issue of compensation - no trifling issu: in either economic or political terms . If compensation wa, deemed to be necessary (say to prevent a virtual economic blockade by the `West') where would the money come from the IMF? And where would the money needed to modernis : British industry come from? The foreign assets of British capita that the AES envisions selling off at best will find buyers aP bargain basement prices, if these assets are not frozen by `host governments pending political clarification (the US action vis-a-viIran is instructive here) . Expropriation may reduce the cash requirements of the AES but then there would be the economic



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consequences of capital's response internationally to consider . This would involve not only the loss of markets but also the loss of sources of supply (including components and replacement parts for machinery) against which a turn to the `East', save for certain raw materials, would be largely ineffectual for many years at least . Another example of a facile treatment of the dilemma between economic and political objectives can be found in the London CSE's defence of the AES proposals for coercive planning agreements alongside selective nationalisations . What is problematic here is not the issue of limited as opposed to `wholesale' nationalisations per se . Rather it is the grounds of their defence of coercive planning agreements as against legal title or ownership . These grounds are that this will minimise intra-state resistance and will not burden a `workers' administration with a thousand detailed problems . The problem with this is twofold . On the one hand, what provokes resistance by capital and the state is not changes in title but changes in control - who determines the purposes and organisation of production and investment . Secondly, unless the thousand detailed problems are taken in hand, there is no public planning - only private evasion . One could go on . The point, however, is inescapable : a price must be paid by the working class as a whole for political power (not necessarily by its most impoverished parts, however) . To fail to recognise this is to sow illusions which will provide a fertile breeding-ground for working class opposition to a socialist government which right-wing forces will mercilessly exploit . If, as Richard Hyman has argued, trade union economism is not so easily accomodated within capitalism as Lenin implied,[10] it is no less a problem for a government pursuing a transitional strategy . But rather than addressing the problem of economism, Left proponents of the AES have somewhat opportunistically transformed it into a virtue . Here it should also be noted that critics of the AES such as SWP with their reflexive rank-and-filism tend to raise economism to the level of principle . A case in point is Sue Cockerill's use of the opposition of the Allende Government to the strike by Chilean copper miners for higher pay as an example of reformist perfidy in her rhetorical attack on the AES .[11] Such a position simply fails to grasp the essential point of Lenin's analysis of economism : `however much we may try to "lend the economic struggle a political character", we shall never be able to develop the political consciousness of the workers . . . by keeping within the framework of the economic struggle, for that framework is too narrow .'[12] The Chilean workers' willingness to engage in economic struggle at that juncture says more about their political consciousness than Allende's opposition to them says about his.



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CAPITAL AND CLASS There is a certain irony in the position advanced by then proponents of the AES . For when one looks at recent Britihi history one is struck by the repeated willingness of Britisi workers to respond to the Labour Party's calls for sacrifices . Tht cynicism and distrust regarding political parties spawned within the working class by the meaninglessness of these sacrifices is perhaps the real problem to be confronted . (This will not b: solved by a left victory within the Labour Party) . Could it b: overcome even if sacrifices were called for as part of an AES transitional programme, given that workers were mobilised ii support of the AES on the assumption that it offered then immediate material benefits?

Conclusion

The intent of this paper has been to question the view expresses most clearly by the London CSE, that the AES is a transitions strategy set within `an overall and coherent framework of advance towards socialism' . In addition to disputing the compatibility, of the economic and political objectives held achievable by the AES, the paper has pointed to the `silences' in the framework itself, particularly regarding the institutions/organisations through' which the rhetoric of mass mobilisation and struggle will be trans lated into political practice . Moreover, even this rhetoric is inad' equate because it is primarily employed only in relation to en forcing constitutionally enacted measures . As a result the difficul' task of building socialist consciousness on the way to a legis lative majority - so integral to the 'Eurocommunist' project is largely ignored or trivialised . This latter feature of the arguments examined is somewhat surprising for their proponents are under no illusions about the present political consciousness of the British working class . Be that as it may, what must command the attention of socialists is changing this consciousness . Central among the organisations fok doing so, for marxists of a 'Eurocommunist' persuasion no lesn than others, is the revolutionary party . Can such a party be built through reforming the Laboui Party, as Hodgson implies when he asserts that : `we are forced to use the tattered banners and slogans that are already established' (p . 47) . Such a position rests in large measure on the dubious view that the banner was originally made of whole cloth, that i tradition must be reclaimed rather than left behind . Can winning, the party, not only to the AES but to a coherent socialist pro-i gramme [13] and to the task of bringing the working class toi power, be accomplished without ripping the banner? If not, as I suspect, would the Left's time and effort have been more prod-I uctively spent than by starting afresh? Is the CP's banner anyl more suitable, or is it so tattered by its history as to be unrecog-I nisable? In any event, it is only in the context of such a party that talk of a 'transitional strategy' is more than wishful thinking.



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AC 13-H

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The author teaches in the School of Public Administration, Carleton University, Canada . He wishes to express his appreciation to Richard Hyman, Leo Panitch and the Capital and Class Editorial Committee for their thoughtful comments on an earlier draft of this paper . 1 Hodgson, G., Socialist Economic Strategy Labour Party Discussion Series No . 2, Leeds, I .L .P . Square One 1979 . London CSE 'Crisis, the Labour Movement and the Alternative Economic Strategy', Capital and Class No . 8 1979, pp . 68-93 . Rowthorn, B ., 'The Alternative Economic Strategy' International Socialism No . 8, 1980 pp .385-94 . 2 2 An excellent reply to such criticisms is provided by The Cambridge Political Economy Group, Britain's Economic Crisis, Bertrand Russell Peace Foundation 1974 . 3 The Cambridge Political Economy Group ; op . cit . 4 LPACR 1978 Appendix II, p . 453 ; quoted in L . Panitch 'Socialists and the Labour Party : A reappraisal' The Socialist Register 1979 pp . 51-74 . Register 1979 pp . 51-74 . 5 This has been done recently and convincingly by Leo Panitch ; ibid . 6 The leading marxist theorist of corporatism is Leo Panitch . See his 'The Development of Corporatism in Liberal Democracies' Comparative Political Studies April 1977 ; and 'Recent Theorizations of Corporatism : Reflections on a Growth Industry' British Journal of Sociology June 1980 . It is worth noting that while Hodgson describes Panitch's former article as a 'sophisticated study', his own approach primarily follows two non-marxists, Pahl and Winkler, who treat corporatism as a distinct mode of production and are characterised as offering an 'influential prediction' . 7 Bearman, J ., 'An Anatomy of the Bennite Left' International Socialism No . 6, 1979 . 8 Hodgson's less precise formulation of the same argument is 'The problem for capitalism when it faces a period of crisis is one of restructuring the economy' (p . 14) 9 An extended and challenging elaboration of this point is made by Adam Przworski 'Material Bases of Consent : Economics and Politics in a Hegemonic System' Political Power and Social Theory i, 1979 . 10 Hyman, R., Marxism and the Sociology of Trade Unionism Pluto Press 1971 . 11 Cockerill, S ., 'Reply to Left Reformism' International Socialism No . 8, 1980 . One should add that Cockerill simply ignores the evidence that this strike was sparked by agent provocateurs . The SWP's rank and filism, and economism are treated incisively by Richard Hyman 'British Trade Unionism : Post War Trends and Future Prospects', International Socialism No . 8, 1980 . 12 Lenin, V . I ., What Is To Be Done? Progress Publishers 1964, p . 78 . 13 The authors under examination are all agreed that the AES is less than a socialist programme .

LOCAL POLITICS AND LOCAL GOVERNMENT

Tosh Flynn Socialists involved in the politics of the locality keep coming into i contact with local government . At the same time there are many I socialists who work in local government . Part of the current l attack on the living standards of the working class is being carried) on by reducing working class consumption of housing, education and other services which are produced through local government . This part of the attack can only be carried through by reducingi the autonomy of local authorities which might wish to resist the i lowering of standards in the services for which they are responsible . For these reasons socialists have recently become morel interested in local government, and CSE has produced variousi publications on the subject . This article looks at some of thei problems of politics centred on local government . It first takesi the main thrust of central government's attack on what was left) of local autonomy and looks at the responses which have been made to that attack . Then it looks at some of the structural constraints on the conduct of socialist politics around local government . These constraints are mainly the existing institutional forms which need to be contested . It ends with a call for socialists to participate in an offensive defence of services against the attacks from the Right . It argues that a mere defence is not enough and that a clear commitment to socialist principles is, necessary to counter the material and ideological onslaught byl the ruling class . The Tory Government and Local Authorities

The two main aspects of the Tory Government's own explanation i of its policies towards local government are `rolling back the i boundaries of the state' and introducing more individual freedom i and choice through the market . As ideology these elementsi underlay many of the measures the Government took in the first I Parliament, e .g . the Housing Act, Education Act, Local Govern-i ment Planning and Land Act . These measures can neither be! described as Thatcherite or monetarist, except as loose labels Many of the measures had been prepared in similar form by thei previous, Labour administration and involved greater central) control over local authority spending and decisions . The controls) on expenditure cannot necessarily be described as monetarist simply because they are designed to reduce the scale of public sector activity however that activity is financed . A reduction oz tax-borne expenditure or the transfer of production from the public to the private sector is not strictly monetarist intervention, but rather part of a wider commitment to `redress the imbalance between the public and private sectors . Such a commitment is not limited either to this government or this country . It is a part



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of the IMF's standard loan package . The EEC is committed to breaking down state monopolies in e .g . postal and telecommunication services . It is part of a general reaction to the growth of the state sector throughout the capitalist world since the second world war . .

Controls on Expenditure

Responses

Local government capital expenditure was reduced from £3,289 million in 1975/6 to £2,245 million in 1978/9 .[1] Despite this apparent success in controlling capital expenditure the present government has introduced new capital expenditure controls . Until now capital expenditure by local authorities was controlled by a system of loan sanction . Approval from central government was required before money could be borrowed and there was no restriction on the funding of schemes by methods other than borrowing e .g . through the rates . Because of this lack of control an increasing proportion of capital spending has been financed by methods other than borrowing. However, as the total capital expenditure figures show, there has been a severe cutback on capital schemes . The new system, introduced in the Local Government Planning and Land Act, places controls on capital expenditure and not on borrowing . Controls are now on all net capital expenditure, however financed, and there will be a block authorisation for each authority each year . The Government has also introduced, in the face of opposition from the local authority associations, new controls on revenue expenditure . Under the previous Rate Support Grant system authorities which received `resources element' subsidy had their expenditure matched by a subsidy from central government . In other words the more an authority spent the more it received in subsidy . Under the new Rate Support Grant system this will no longer be the case . Each authority will be given a figure of `Grant Related Expenditure' by th .u;. Government . They will receive subsidy on all expenditure up to and including that figure . When the authority exceeds that amount the subsidy it receives on its extra expenditure will decrease as the amount of excess spending increases . The major implication of these changes in expenditure control is that those local authorities which want to oppose the Government's public expenditure strategy will have less scope to do so . There will be virtually no scope for deviation from the capital spending authorisations . Revenue expenditure above the Grant Related Expenditure will have to be financed out of rates or other revenue sources .

The simplest response, which has been adopted by various left groups in previous rounds of local authority spending cuts, is the slogan : `No cuts - no rate rises' . This slogan is based on an analysis which among other things highlights the high proportion of

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CAPITAL AND CLASS local government expenditure which goes on debt charges . The slogan implies that such interest charges should be withheld . The working class should not have to pay to capital interest on borrowing which local authorities have had to incur to provide basic services for the working class . Now that there is a crisis, the working class should refuse to `pay for the crisis' . The consequence of such a stance, if it were followed through, would be that loans to the authority would be called in, councillors would be surcharged personally on debts the authority would be unwilling to pay, and the councillors would then eventually go to prison . The affairs of the authority would be taken over by some sort of appointed commissioners until such time as `responsible' local government could be restored after new elections . The Left would presumably fight these elections on a platform of resistance to the government and to capitalist financing of local authority expenditure . This resistance, highlighted by councillors being jailed, would be expected to develop mass resistance to government policies . The slogan `No cuts - no rate rises' is a classic non-reformist position that is impossible to implement without provoking a confrontation . It is therefore not open to incorporation . An alternative approach which has been adopted by authorities such as Camden in previous rounds of cuts has been to continue to increase expenditure and to finance that expenditure from the rates . Camden councillors argue that in their area the main rate burden falls on the commercial and industrial sectors and that the poorer domestic rate-payers are protected by rate rebates and social security payments . It is therefore justifiable to maintain and improve services at the cost of rate increases . This form of resistance requires mass support only at each election, where the electorate (but not all the rate-payers) have the chance to decline high rates . A third response has been to seek alternative forms of revenue to offset rate increases and reduction in grant . Increased charges for home helps, school meals, car parks have been sought mainly, but not exclusively, by Tory authorities . In its manifesto for the last District Council elections Birmingham Communist Party advocated seeking alternative sources of revenue : 'e .g . charge commercial rents on council land used by private schools . . . municipal enterprises and raising cash on recycling paper,, glass, bottles and metals .'[2] The first of these three options is clearly acceptable as an `oppositional strategy' .[3] It involves confrontation and raises material issues in a way that means that the struggle cannot be bought off . But is it also clear that a strategy of maintaining services by increasing the rates or other forms of revenue is necessarily reformist and managerial and therefore unworthy of a left opposition? The stance adopted will depend on the attitude to the possibility and value of capturing parts of the state apparatus . If a social group can take control of a local authority and can sig-



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nificantly affect the standards, level and form of service to working class people, is this `permissible' as part of the socialist strategy? A slogan of `No cuts-no rate rises' would, if adopted by an authority lead to the appointment of some form of nonelected body, such as the group of bankers who took over New York City when the local authority defaulted on debts . This would put the left opposition in the luxurious position of being in permanent opposition with all the freedom to learn lessons and point out contradictions which that involves . It is at least questionable whether this would form a better starting point for building a mass organisation for socialism . The Expansion A second element of central government's strategy towards local of Market government is spreading market relations to an increasing range of Relations local government services . The ideological basis for this has been expressed in the 'Bacon-Eltis thesis'[4] and in the long campaign by the Institute of Economic Affairs .[5] A major strand of the 'Bacon-Eltis thesis' is that the growth of the public sector has not only taken the production of many commodities out of the `private sector' but has also taken areas of commodity production out of the market sector . This distorts the formation of market relations throughout the economy . The IEA has conducted a campaign for the introduction of market processes into the provision of goods and services in the sphere of state production . The argument is that there would be more `responsible' production of housing, health, education, social services, if the `consumers' of those services were to express their preferences through a market process . These campaigns are gaining some success, e .g . in the introduction of `fair rents' for housing, the proposals for a voucher system in education (Kent County Council), legislation to introduce balance sheets and a duty to make a rate of return on capital in Direct Labour Organisations, increased charges for home helps, school meals and public transport, the removal of subsidy for non-statutory school bus services (West Yorkshire County Council) . Opposition to the campaign has been slight . Changes in school meal provision have been opposed mainly in terms of defending the jobs of those providing the meals . There has been as yet little opposition to the idea of a school voucher system, except by teachers fearing closure of unpopular schools . Only in the case of the proposed changes in the way Direct Labour Organisations carry out work has there been sustained opposition to the principle of introducing market criteria . The allocation of housing and other services by a bureaucracy is oppressive and involves hierarchical relationships . But allocation by the market is more oppressive, unequal and more finely hierarchical . As socialists we should defend the production and allocation of use values according to need, rather than ability to pay . Allocation according to need does not necess-



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CAPITAL AND CLASS arily imply no individual choice . We should devise mechanisms of choice in the production and distribution of use values which arei genuinely democratic . Production of goods and services underi nominally accountable elected control is an important starting) point and should be defended against attack by the ideologues of the market . A school voucher system could be such a form, as i long as the vouchers could not be topped up with cash . A housing) allocation procedure where tenants "buy" housing using pointsi based on need (e .g . as in Manchester) might also be a useful) starting point . It is surely the lack of choice and control and poor qualityi of the state services which make people dislike and distrust state provision, rather than the fact that it is state provision . `Struggle over the State' makes much of the unpopularity of council hous ing : `The publicity given to the social problem associated with) council housing has been a potent ideological device for making) collective forms of housing provision unpopular . . . helping toi stem the tide of demand from the homeless and inadequately l housed' .[6] But no evidence is cited to support the claim that thei homeless are discouraged from applying for council housing byl the ideological presentation of `subsidised council tenants' in the i media . What socialists should be striving for is the democratisationi and collectivisation of the production of use values . Many use, values are currently produced and distributed in the state sector. Unless socialists can produce such a strategy and build popular support for it the Right will win the ideological struggle . This will) lead to privatisation of the production of certain goods and ser-i vices or the introduction of price and market criteria as substit utes for the present bureaucratic rules and procedures . The following paragraphs look at some of the relationshipsi in the bureaucratic machinery which make the process of democratisation difficult within the present electoral /bureaucratici machines .

Management and Politics in Local Government

The collection of functions within local government in Britaini appears to be quite arbitrary . The transfer of the health service tc non-elected bodies financed nationally, the shift of gas and elec tricity to corporations, the inclusion of water as a local authority I function in Scotland but not in England and Wales, the inclusion of Polytechnics but exclusion of Universities all seem to demon-i strate an inconsistency in the distribution of functions . Add toi that the problematic distribution of functions between the diff-I erent tiers, with such apparent anomalies as divided responsibility I for town planning, the separation into different organisations ofl waste collection and waste disposal, the existence of parallel) local authority road maintenance organisations - and it seems such a confusing system that it is surprising that any democratic involvement in decision making is possible . It is tempting for socialists to refuse to recognise the arbitrary distinctions between



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different parts of the state apparatus and to treat the whole of the state machine as an entity . Local politics could then genuinely become the politics of the locality and not a reflection of the arbitrary and meaningless organisational structure set up by the state . Local authority boundaries and the division of functions between central and local government or between the tiers of local government are in this view of no importance in building socialism . It follows from this that the important question for socialists is not how to capture and control parts of the apparatus but how to challenge and contest the relations embodied in the apparatus, to break down the arbitrary division of the class into rate-payers, tenants, social services `clients', tax-payers, local authority workers and so on ; to reject and replace the hierarchies embodied in the bureaucratic machines . What follows does not attempt to reject that position . It simply presumes that local government as much as manufacturing industry, as much as sexual politics is a legitimate arena for struggle . Struggle within that arena makes no concession to the existing structures ; the purpose of the struggle is to transform them . Working within the arena of local government does not exclude other work in the development of locality based politics . It does, however, demand the development of some fairly detailed understanding of the relationships and processes which operate within local government . Hierarchies and Structures

As in almost all work places local government structures are very hierarchical . Salary scales range from about £2,000 a year on the bottom of the clerical scales to over £18,000 at the top of the chief officer scales . Between those extremes of pay there is a finely graded hierarchy of power and influence . There are divisions between `professionals' and the rest, between administrative and clerical people and among the `professionals' according to the degree of development of the particular occupation as a 'profession' . Among elected members there is a distinct division between those who chair committees and those who do not, and even between those who chair important committees and those who do not . There are strictly defined lines of communication which control, for example, the amount of contact between a committee chairperson and a junior paid official . In most authorities there are protocols about the chief officer of any department signing all letters (if only through a rubber stamp) so that all replies pass through his/her hands . Many of these practices may appear to be trivial anachronisms. In fact they preserve in the form of the organisation an elitist control over resources . They represent and embody the structures which would have to be overturned before any approach could be made towards socialist forms of organisation . To contest these hierarchies it is worth first looking at some of the particular relationships and then asking what might be done to change them .



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CAPITAL AND CLASS

Councillors and the Leadership

The rituals and procedures of local government can be a severe block to the involvement of back-bench members and junior officers in the formulation of policy and in taking major decisions . Many back-benchers feel that in the procedures of committee and council meetings they are simply there to vote with the party . They become disenchanted with this and with the separation of the leadership from the base among councillors and party members outside . In many cases councillors concentrate their energies on `surgery' and advice work with their constituents . Much of this work could be effectively carried out by a social work service . Although it is useful for keeping the councillor in touch with the base, the relationships become ones of dependency on the councillor to `fix things' at the town hall or worse, ones of patronage . The leadership maintains its control through the allocation of people to chair committees and the threat of removal of the whip . In one extreme case the leader of the authority sits on every committee to ensure that the correct line is followed . Control by the leadership is exercised not only over which decisions are taken, but also over the matters which are taken to committee for decision . When agendas are constructed there is close liaison between the chairperson, the chief officer(s) involved and the committee clerk . Meetings between the chairperson and vice-chairperson and the relevant officers are normally held before the committee meeting . The back-bencher is thus presented with an agenda and a set of papers, and with an indication of how he or she is expected to vote . This causes frustration and the feeling that the important issues are not being discussed . There is a machine, controlled by an alliance of the senior officers and the party leadership, which the back-bencher simply has to service with attendance and votes . Such central direction and control may be the best way to get a manifesto implemented, but it militates against a wider political involvement by councillors and party members outside the authority in shaping the manifesto as it progresses and in learning from the conflicts which inevitably arise, e .g . with central government . What strategy should back-benchers adopt in dealing with the political leadership and the alliance between the leadership and the chief officers? This is an important part of the development of a more open and accessible set of processes . The working party on the constitution of the Labour Party recommended to the NEC that the leader of the Labour Group in each local authority should be elected by, and accountable to, the local party and not the elected members . This proposal was referred back by the NEC . It would not necessarily have helped the back-benchers, because an autocratic style of leadership could still have been adopted after the election . In any case the candidates for local elections are already selected by the local parties . Recent experience of nominations for the 1981 GLC elections has shown that it is not necessarily 'easy for the old



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leadership to gain a nomination . But the problem of building socialist forms is not only a question of involving more elected members in the policy process, but also of developing a broader base for the discussion of strategy . This would be made easier if ward parties had more influence on the choice of leadership and on the strategies to be adopted . This broader (or mass, even?) involvement would create a more genuine political involvement than, say, participation in discussions with neighbourhood councils with no powers or resources . The other approach is to develop closer contacts between councillors and members of staff more junior than chief officers . Chief officers normally resist such contact because it undermines their authority . In many cases contact is established informally, on the basis of particular cases which a member has picked up . In others more formal devices have been used . One example is the `ward seminar' where the members for each ward meet with the local officers (such as social workers, housing officers, planners) to discuss the problems of the area . This sort of access to the machine gives back-benchers some leverage and reduces their isolation from the bureaucracy of which, in principle, they are in charge . In other cases area committees have been set up which have delegated powers (or are advisory) over decisions affecting the area. The problem is that councillors need to maintain their contact with the working class which they represent, but spend enough time and energy to take that experience to transform the political and bureaucratic machine into something which is actually working for the class . The hierarchical organisation of local government is not only oppressive in terms of the control and allocation of work, it also prevents contacts between local authority workers and the people for whom they should ultimately be working . Jfficers and jouncillors

Many professions operating in local government have an ideology of technical rationality and neutrality . This normally has a very narrow focus and is directed towards maintaining a narrow conservatism in the provision of particular services . It serves to maintain existing relationships between `producers' and `consumers' and insists on the application of `professional judgement' when decisions are made . `Political whim' is a phrase often used to decry the basis of choices made by councillors . Being more permanent than the councillors these professional officers become adept at manipulating committees through a control of the agenda and the judicious presentation of information, precedent, arguments and `professional' judgement . They have developed tactics of delay, reporting disguised as action, excuses and all kinds of polite sabotage in defence of their professional judgement against political whim . Of course many councillors have developed equally effective tactics . The process becomes a game whose rules are implicit and are certainly far



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CAPITAL AND CLASS removed from anything like mass democracy . Occasionally a leadership will reject the game . This has happened recently in Walsall . Walsall Metropolitan District Council is now under the control of a Labour Party dominated) by Tribune Group members . The Party has recently made news with its plans to make political appointments to key positions ins the housing department . This move was described by Mrs Thatcher as `disgraceful' . Why did the Party take the step ot, publicly declaring that it was going to make political appoint=' ments to enable it to carry through its policies? The main reasons was the common frustration felt by a new administration taking) office . The paid officials seemed to be unwilling to change . They) do not (as civil servants do) prepare alternative plans based on the' manifestos of the main parties before the election . In the case on Walsall it was felt that this conservatism would obstruct the party) in its attempts to implement the manifesto, and that it was' necessary in some way to get around many of the existing chief officers, either by the creation of an alternative series of advisers, ' or by appointing more sympathetic people to do existing keys jobs . These are not new ideas . They are standard practice in the' USA and Germany where many of the paid officials are elected .' The surprising thing is that up to now such appointments have been made covertly and few people have openly raised the prob-i lem of implementing a political programme at local authority) level through a set of hostile officials . Discussion about the conservative nature of `technical ration-i ality' and the ideological role of the `neutrality' of workers in the' public sector only helps to explain how bureaucratic resistance toi radical change arises . It doesn't explain how the resistance isi carried out, or what are the best ways of overcoming it, short of sacking all the key people and replacing them with people of the' right politics . Astute officers present themselves as neutral because their careers may depend on such a stance . There are many ways in which career progression can be blocked for an officer who is seen to take a strong partisan position . Changes in political control are now very common in local government elections, and an ambitious officer has to work closely with the party in control while maintaining links and credibility with the opposition . One way of dealing with the problem of an officer structure which is hostile to the politics of the newly elected party is toi present the officers with a detailed manifesto . This contains pro-i posals which have been worked out without going through the' rituals of the bureaucracy . It has also, to a degree, been presented) to the electorate and been approved .

Manifestos and Slogans

The publication of a detailed political manifesto for local govemment elections has been fairly rare . It is happening more frequent-I ly now : examples include the 1978 Social Services manifesto ins Sheffield, the Walsall `Labour Party Policy 1980' and the recent'



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Greater London Labour Party policy document for the forthcoming GLC elections . The production of manifestos reflects the uncertainty within the Labour Party about what its political philosophy is and about the relationship between elected members and the Party as a whole . It is an attempt to reduce the uncertainty by going through a more or less broadly based process of working out policies and then in some sense holding the leadership and the elected members accountable for pursuing these policies . It is an optimistic attempt, given the Party's history at national level of Conference decisions being betrayed by Labour governments . At local level it is very common for Labour councils to completely reverse the policies on which they were elected . For example both the West Midlands County and Greater London Councils have been controlled by Labour groups elected on policies of reducing public transport fares . In both cases fares have been increased by those Labour groups without reference back to the Party . However, the production of a manifesto may be a useful forum for debate on policy . Such debate may take place outside the normal relationships embodied in the bureaucratic machinery of the Party or local authority . The existence of a manifesto could provide a basis for accountability of a leadership which controls a local authority . A vigilant Party might demand an explanation for deviations from the policy set down in the manifesto . At the same time the manifesto could be used as a guide within the authority so that officials would know the direction in which the leadership would like to see the policy move . But the manifesto is a fairly blunt instrument to achieve those aims . The need to produce a manifesto may be the product of a structure of relationships which has failed to evolve a set of policies acceptable to the Party as a whole . It could be the product of a structure in which the leadership has managed to avoid accountability . The existence of a manifesto itself will not change these relationships . Inevitably circumstances will change after the production of a manifesto document . The leadership will easily be able to claim the right to be selective about the speed of implementation of different items in the document and about the priorities adopted . The production of a manifesto before an election freezes in one moment the dynamic relationships in the Party . Having democratised the process of producing the manifesto the leadership can quite easily revert to undemocratic forms of organisation and operation for the rest of its term of office . A manifesto, however good, is no substitute for a democratic political process . If this is true of a manifesto it is even more true of the vague slogans commonly contained in an election address . Accountability for a specific set of policies must be a more satisfactory basis for a democratic party than accountability for a set of slogans .



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Control of The Agenda

Committee chairpeople and chief officers have a very tight control over what matters are raised in committee . The format of the committee meetings is such that a .political debate on items of major importance is virtually impossible . Such discussions take place, if at all, in group meetings of all the party members on the committee before committees . But even then the group meetings tend to go through item by item the matters to be considered at the committee . Other forms for discussion are the meetings of all the members of the party on the council and meetings of the whole party . What is missing from most of these discussions is consideration of the principles on which the party wants to run the authority . The business of running the authority is fragmented into individual issues, and those issues are largely chosen by the alliance between the leadership and the chief officers . The formal structuring of meetings and the fragmentation of politics into individual issues and decisions prevents radical thought and creative discussion . It also prevents issues and positions which members feel important to their constituents from becoming the main issues discussed in the authority . What councillors and party members need to do is to break out of the rigid and formal structures and procedures which limit discussion of fundamental issues . They can do this by pressing for changes in the format of meetings, or by setting up alternative forums where important things can be discussed before being raised in the formal committee/council system . If one of the purposes of standing for election and taking control of an authority is to point to the contradictions of a capitalist welfare system, then taking decisions about resource allocation behind closed doors is the least effective way of doing that . 'Oppositional' tactics must include letting people know what the resource limitations are and why they exist . But at the same time resource allocation decisions are made (if only by default) and should be open to public political debate .

Towards Socialism?

Socialist forms of organisation are fundamental, but so is debate about the formulation of a socialist programme for local government operating in a capitalist system . The identification of constraints and the abandonment of politics in favour of making minor gains for the working class are not going to develop a mass base for socialism . Can a socialist programme be developed in the present circumstances? If you adopt a strong structural/functionalist approach, the answer is no . Most local authority functions are concerned with the reproduction of labour power, legitimation and the avoidance of civil disorder . Any changes which improve the ways local authorities do this will necessarily be good for capital . Any improvements which seem to be good for the working class, even if carried out at the expense of a reduction in surplus value, are also good for capital because they demonstrate that the social democratic state can deliver gains to the working



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class through constitutional means . Add to that position a defeatist line and all you need is a list of demands which are impossible to deliver in the present circumstances, a mobilisation in support of those demands and you get a familiar sound of consciousness raising speeches about the contradictions of capitalism . There is a dishonesty and cynicism in that position which makes the building of a self-conscious and confident movement very difficult . What is possible is not given . It is in part the strength and form of the struggle which creates the possible . It could be argued, a priori, that South Yorkshire County Council's continuing stance on public transport was not possible because of the national government policy, the structure of transport grants etc . But because the councillors have developed popular support they are more likely to be able to continue the policy . The confrontation with the constraints cannot be done in secret . If the confrontation is to have any political value it must involve large numbers of people . Consider the issue of the sale of council houses . About 15 NALGO branches have, at the time of writing, decided not to implement the Housing Act provisions on the sale of council houses . Many local authorities are discussing ways of delaying the sales and finding bureaucratic ways of avoiding implementation . This appears to be a laudable defence of a sector of welfare provision against a Tory attack . It is a defence of a form of collective provision of an important commodity . Allocation is currently done on criteria which have to do with some notion of `need' rather than a market mechanism . Production is carried out in many cases by direct labour and not capitalist construction companies . Maintenance, too, is largely carried out by direct labour . But the form which this resistance to the government is taking is not one of a principled stand . Labour councillors are advising tenants that mortgage repayments and maintenance charges are likely to be prohibitive . Bureaucratic delay is being used as a weapon against tenants wishing to buy, not against the government . NALGO Branches' stance would be more impressive had they previously adopted positions in support of extended democratic control by tenants of their own housing estates, and the genuine collectivisation of housing production and allocation . Only a mass campaign on the principles involved can provide political opposition to the attractive Tory offer of owner occupation at massive discounts to council tenants . Bureaucratic manipulation of the rules to the immediate disadvantage of the tenants is what they have always been used to . Further bureaucratic interference by a group of white collar workers whose jobs are threatened by the privatisation of the housing stock is going to surprise no one, nor is it going to win tenants over to the principles of collective provision . But how can a group of councillors who have adopted an oppositional stance develop mass support? Local newspapers and radio are entirely hostile to socialist local authorities . Even the

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CAPITAL AND CLASS relatively mild suggestion by Walsall Metropolitan Distri Council that it did not want to have Tory employees was m with indignant howls in Parliament and the media . Clearly alter, ative forms of communications are needed . Not forms to cart information and propaganda but which will allow politic debate . The correspondence columns of local papers are the onli (feeble and manipulated) forum currently open outside tY formal local authority committee and council procedures . Co, sciousness is not developed by socialists interpreting events ani telling people what to think . A socialist strategy at local level ca only be developed through people actively engaging in politic . debate . That is the way to expose and confront contradictions . Local politics, within and outside the Labour Party, is fra! mented into a series of single issues . Campaigns are organise around particular demands . The easiest way to formulate a pr( gramme in these circumstances is to write a list of the currer demands . This list can then be amalgamated into a manifest and immediately disaggregated back to individual committees any departments . (This process parallels the development of th `Alternative Economic Strategy' which reads somewhat like shopping list) . What gets lost in the process is the development c a political strategy or a political movement . It is this fragment ation which is at the root of the problem raised in one of the coi versations in `In and Against the State' : `Whatever we are doin at the moment is within the capitalist framework, anything yoi do will contain reformist and perhaps reactionary elements . N( matter what . Therefore you get into the debate about what "most progressive", or something lake that . It is a debate wort having, but it is not desperately fundamental somehow' . The Right has developed a coherent strategy which it uses t define policy stances and to guide implementation . It consists c the restoration of markets wherever possible, rolling back the boundaries of the state in favour of the private sector and sel . help, hierarchical forms of organisation and reward of effort wit material incentives . The victories which the Right is winning ar eroding many liberal social-democratic gains won by the workin class . A defence of these gains is necessary in the present circun stances. If such a defence is not made then universal free educa& ion, health care, fire protection etc will be lost. But defence of the existing levels and forms of provision is no basis for coherent socialist alternative . Throughout the individual struggles in which we engage socialists must press for forms of popula decision making and control, production and distribution of us values for need not profit, workers' control of the labour procesthe transformation of social relations and all the other thing ; which socialists demand . The struggle for these demands mus7 take place in all kinds of arenas . Struggle in particular arena-such as an office, a factory, a local authority, a school, a famil' does not imply acquiescence with the structures prevalent i' those arenas . Nor does it imply acceptance of the definitions o' their boundaries. What it does recognise is that we are being con



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sistently and very successfully attacked . Resistance to the onslaught by both Tory and Labour governments has been feeble, and if it is to develop socialists must treat local government more seriously as an arena of struggle . It will be disastrous if this arena is left uncontested .

Footnotes

1

2 3

4 5

6

The Local Government Planning and Land Bill (No.2), An Appraisal, by Society of Local Authority Chief Executives in

collaboration with Institute of Local Government Studies, 1980 . Hands Off Our City, Birmingham Communist Party, 1980 . London-Edinburgh Weekend Return Group, In and Against the State, London, Pluto Press, 1980 . Britain's Economic Problem : Too Few Producers, R . Bacon and W . Eltis, 1976 . See, as one example of many, Over-ruled on Welfare, Ralph Harris and Arthur Seldon, Institute of Economic Affairs, 1979 . CSE State Group, Struggle Over the State, London, CSE Books, 1979 .



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Andrew Friend and Andy Metcalf SLUMP CITY The Politics of Mass Unemployment

AA

Recession and the return of mass unemployment are causing a growing army of people to live on the margins of society : unemployed youth, single parents, . sections of the black community and many unskilled workers . 'Slump City' is about the division between these groups and the more prosperous layers of the working class in Britain. The authors explore the relationship between the state and the different working class groups . They show how community and family life are being eroded and how this process is being intensified by the break-up of the welfare state . Above all, they show how the split within the working class is being used to foster a new authoritarianism .

o 86104 342 1

93.95

pbk

Pluto Press, Unit 10 Spencer Court, 7 Chalcot Road, London NW1 8LH

Theoretical and discussion journal of the Communist Party 6o pence . Published monthly

Some current and forthcoming articles: Jean Gardiner

Women and the Recession Fred Steward The Politics of Technology Pietro Ingrao Eurocommunism in Difficulties Tony Bunyan The Armed Forces and Civil Life From bookshops, some newsagents, selected branches of W H Smith or by subscription from Central Books, 14 Leathermarket, London SEI 3ER . (Inland I year£7.20, institutions £9.60).

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4)4)

INTERVIEW WITH TONI NEGRI . NOVEMBER 1980 . Hilary Partridge We publish the following interview with Tony Negri, one of the Italian Autonomists imprisoned without trial since April 7th 1979, so that he can speak from his prison cell about the present process of state criminalisation of Autonomist politics, and about the political developments within Autonomia as they have been assessed by the imprisoned activists . In this interview he provides a blunt but clear characterisation of these issues. His method of argument, for instance his summary characterisation of the PCI which he does not here substantiate, is a break from the traditions of Capital and Class . Nevertheless we believe that these issues need to be debated. For a further discussion of the politics of Autonomia see the article by Bob Lumley in Capital and Class 12.

ilary Partridge You have now been in jail since April 1979, and since . this date objective evidence has cleared you of what one might call the black or white criminal charges against you, such as involvement in the Moro assassination . The charges which still remain are precisely those which cannot be answered with fingerprints or alibis . These accusations reside in a realm in which the legal system is badly adapted to intervene : the realm of ideas, and the theoretical and historical continuity and compatibility between various groups. Can you say something about these charges and the legal situation you and the other comrades in jail find yourselves in? mny Negri

C13-I

The basic charge which my comrades and I will probably face at our trial (which will take place in another couple of years or so : Italian law allows a period of `preventative imprisonment' of up to 5 years and 4 months before the first trial and 10 years and 8



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CAPITAL AND CLASS months before the final trial) is `armed insurrection against th powers of the state' . This charge carries a sentence of life im prisonment . This is the first time this charge has been brought in Italy since the fall of fascism . Under fascism the sentence was the firing squad ; we are therefore happy fascism has been over thrown . It is, however, the only reason for us to feel any pleasure in the fall of fascism . In all other respects the law is unchanged ; in fact, repressive laws have since been increased enormously in number and carry far heavier sentences . Legal procedures have taken on the characteristics of war-time rights ; you can be arrested and interrogated without legal assistance and held fog long periods of time . But as I said above it is the periods of pre ventative imprisonment, enacted on the sole basis of the judge'opinion, which have reached quite incredible levels . Anyway, let'go back to the charges levelled against us . We stand accused of having attempted to incite an armed insurrection . The state accuses us because it recognises in our actions of proletarian and' working class [1] agitation throughout the sixties characteristics which posed a real danger to the system. Now, I and all the com rades working for the development of working class and prole tarian autonomy in the sixties would have been very happy if we had really placed the institutional reproductions of capital it extreme peril . Unfortunately our action, despite its undeniable importance, was never this significant : even the bourgeoisie neve . seems to have felt there was a real danger of insurrection . But or the 7th April 1979 this accusation was nevertheless broughi against us . Why? Who made this accusation? It was made by a few judges whose alignment with the PCI is by now notorious . It wabrought because the actions of Autonomia had effectively im peded, through mass action, the PCI's chance of entering intc government through an alliance with Christian Democracy . Thivery serious charge of insurrection was therefore brought becaus :_ we struggled on class terrain ; on mass terrain, against this betraya of the class struggle perpetrated by the PCI in its strategy of th . historical compromise .

Hilary Partridge

Tony Negri

The `trial of Autonomia', as has been remarked by many, appear, as a step in the attempt at criminalisation of this movement . You as I remember reading in an article, were shocked by the projec tion of yourself in the daily press as a `monster' . What were the processes called into play in this projection of Autonomia as criminal organisation and its theoreticians as monsters? And dc you think this project of criminalisation is now failing with the failure of the 'hard evidence' against the accused? The accusation cannot fail because it is not based on objective evidence against the individuals accused . The truth is that Auto nomia has never been an organisation, but rather an often fluctu ; ating ensemble of organisations ; at the organisational level it wa , non-existent . Autonomia was a movement . The judges, thougi well aware of this, have pretended that Autonomia was somethin!



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other than a movement and that those responsible for certain papers, free radios [2] and organisational fractions which lived within the movement were politically responsible for the whole . The judges themselves have constructed central committees where only spontaneous initiatives existed, and criteria of objective responsibility where there were only individual initiatives . The great social phenomena of the workers' pickets, the goods blocking,[3] the self reduction of prices,[4] the occupations of housing and so on have been linked artificially to an operational and strategic centre which commanded and assumed responsibility for all these actions . This is pure fantasy . Through a lunatic journalistic campaign of mystification, figures (such as my own) were created, who were capable of directing these impressive social phenomena through orders, communications from little secret committees, special agents and so on . A huge movement which has assailed Italian society throughout this decade was in this way reduced to the pittance of the experiences, however interesting, of a few individuals, to the ideas and writings, however important, of a few persons . Social and mass class autonomy and the organisations living within it have in this hypothetical accusation been unified to an organisational centre at whose head presides Tony Negri the `monster' . A monster, why? Because this gentleman, while lecturing in Paris, sent off orders which on the one hand set into motion hundreds of thousands of young people through Italy, in the factories, in the schools, on the streets . On the other, this gentleman organised all of the military and clandestine struggles which were going on in Italy in the same period : that is he was the head of the Red Brigades, of Front Line and of all the other clandestine groups . There's no doubt that if I'd really been all this I must have been an excellent manager . But I was not. In reality the stance taken by myself and my friends against terrorist action has always been amply evident . The writings in which we detach ourselves from terrorism are innumerable . The judges continue to maintain this to be a falsity ; an attempt at a cover-up . At this point the figure of the `monster' is complete . All that I wrote and said must be considered to be a cover-up for my real position as a terrorist . In effect, the only real interest which those in power have in us consists in the criminalisation, through our poor persons, of an entire movement of social opposition . This operation is entirely political and has very little to do with the law . The trials, when they come about, will be political trials . The important thing that those in power aim to achieve with our arrests and with those of thousands of comrades after us is the addition of state terrorism to the criminalisation of the movement . Hilary Partridge

A personal question . What has your experience of prison been like?

Tony Negri

My life in prison isn't bad . There are about 3,000 comrades in the `special' prisons (for terrorists) . There is therefore a very rich



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political discussion . Our strength, even in prison, is indubitable : the conditions of imprisonment are thus not of the worst . They are without any doubt better than those common prisoners had to undergo before the influx of comrades into the prisons . The truth is that the wardens and directors are afraid . Furthermore,, everyone knows that the comrades inside represent the best of a~ whole generation of communist militants . Some wardens are communists, some directors are on the left . Life in prison, however, is not improved all that much even by these conditions . But communist life within the prisons is not only strong, but also rich i in vital initiatives . The worst of prison, or rather of this sort of concentration camp where we have been gathered, is above all the lack of information, and the impossibility of joining in the struggle . Over the last few months, during the struggle at FIAT„ [5] the comrades looked forward with enormous excitement to the television news services . And this was true not only for the four or five FIAT workers who are here in my camp : it was true for us all, it was central to all our discussions-it was fundamental in increasing our feeling of anger and desire for freedom to return to struggle alongside our comrades in the working class and proletariat outside . Hilary Partridge

It seems to me that the Moro assassination provided the lever which the Italian ruling classes needed : it has served to `justify" heavy intellectual repression and the strangling of political space on the pretext of stamping out terrorism in Italy . Do you agree with this? Are your hopes high for a speedy recovery of the Italian left?

Tony Negri

The assassination of Moro was the most senseless and absurd initiative the armed groups could have possibly undertaken . In i 1977 the proletarian movement had reached an extremely high pitch of mobilisation in all the big Italian cities, bringing to a climax the process of reformulation of the homogeneity of aims of struggle which had begun in 1974 . But the movement, exactly because of its extensive nature, exactly because of the diffuse and diffusive characteristics of its existence, was extremely weak . Its problem was to develop an organisational form springing from its roots in the city, in the factories, in all the various places of work . We were all involved in working towards this development . In September 1977 there was a mass assembly in Bologna which saw the participation of about 30,000 activists : everyone had understood that the principal and fundamental problem was to find roots and an organisational form . It was still necessary to press ahead with the extension of the movement . And it was possible . Onto this `tissue' the Red Brigades (a group holding a Marxist/ Leninist ideology) grafted its theory of the taking over of the leadership of the entire movement by the armed vanguard . The murder of Moro after a month of imprisonment was supposed to demonstrate the BR to be the leading force, the hegemony, the `Bolshevik leadership' of the movement . In reality the result was



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the opposite to what the BR expected . The movement was fully engaged, in all its weakness and all its strength, in the project of rooting itself and finding its organisational form . The BR were shown up for what they were : a wild variable . But on this basis, the basis the Moro assassination determined in the bourgeoisie, the most terrifying campaign of repression we have ever known was set into motion . 3,000 comrades have been thrown into jail in these last two years . The repressive forces of the bourgeoisie with the co-operation of those of the trade unions and the PCI, have made a clean sweep of an entire generation of militants . The movement's political space has been enormously restricted . Practically all of its papers and journals have been prohibited . The space held by the comrades of Autonomia inside the universities and factories has been closed . In the name of stamping out terrorism a great proletarian movement of an entirely new sort, developing on the left of the PCI, a movement of young workers and metropolitan proletarians, a movement of resistance to work has 'been struck a severely weakening blow . I don't know if the recovery will come about quickly . I rather doubt it . What is, however, certain is that the movement still exists, that it has not yet been beaten . Today the problem is the revival of mass struggle together with the reconquest of political space and the release of the comrades from prison . Hilary Partridge

Calogero (the public accuser) has a theorem : Potere Operaio = Autonomia = Red Brigades . The left has another: Calogero = PCI = historical compromise = the solidification of political/hegemonic control by the ruling block in Italy . Can you comment on the role the PCI has played in recent years?

Tony Negri

The equation in which the PCI consolidates its own hegemony in the repressive operation mounted against the class left has already been thrown into crisis . The PCI has helped the bourgeoisie to emerge from the deepest crisis it has ever had to undergo, and now it has been unceremoniously shown the door . Despite this, the PCI has not gone back on the question of repression . Its Stalinist soul has the better even over political and opportunistic considerations . The enemy to the left must be fought in every way . It has no importance that this repressive work serves as an apprenticeship which may, tomorrow, be used by the bourgeoisie against the PCI itself : the revisionist hatred of the left is blind . The masochistic behaviour of the PCI, however, is not only apparent on the terrain of repression . The last decade has seen a development in the class struggle in Italy which has been able to find in the PCI the element of mediation with the bourgeoisie . In this context the PCI attempted to win back its hegemony over the more active class layers it had lost in '68-'69 . When it realised this recuperation was impossible, it unleashed the repression . But without a left wing capable of acting within the factories and the cities, the mediatory action of the PCI proved to be useless to the bourgeoisie . The PCI has therefore been thrown back into oppos-



134

CAPITAL AND CLASS ition . At this point, gripped by a last tremor of resistance, the PCI placed itself at the head of the struggle . But it was not to last . The unions, by now used to its transformism and opportunism, abandoned it forthwith, while the class left correctly regarded with great suspicion any initiative on class terrain led by the PCI . Thus came the defeat of all the struggles to which the PCI had offered I its protection . Today within the PCI a series of political theses of autonomy have begun to develop . But nobody deludes themselves that the Stalinist sectarianism of the PCI can be overcome .

Hilary Partridge

In your view what were the major contributions of Potere Operaio to working class thought and struggle which lead to its leadership being singled out for particular attack in the `case against Autonomia'?

Tony Negri

This is a difficult question to answer. Potop was a complex phenomenon . Its most significant organisational characteristic wasi without any doubt the fact of being able to unify organically the working class vanguard in certain of the big factories in the northi and the leaders of the students' movement in the big Italian universities . This organic link produced a very specific political personnel, capable of both mass action and theoretical analysis . Potop was perhaps the only group amongst those arising from '68' able to maintain an incredible homogeneity of political positionsi after its dissolution . This fact has caused the magistrates mistakenly to believe in an entrist operation conducted by Potopi throughout the entire movement through its dissolution . Further more, Potop was for a long period-both in its group constitutions and in the successive phase of dispersion-firstly the carrier of the , debate on the refusal of work and second the initiator of the' debate on the new metropolitcan proletarian subject . Autonomic' was really born, from the point of view of theory, as a product ot, the concepts developed by the Potop cadres who continued to work politically after the dissolution either individually or in small groups within the movement . Potop was dissolved at the' Roselina convention in 1973 . But in 1977 at the Bologna convention of Autonomia, nearly all the speakers on the Italian situa tion were ex-Potop comrades . Despite the many different approaches the central argument which emerged-that which saw, the working class tendency towards refusal of work emerging, within the social constitution of the metropolitan proletariatwas brought to the centre of the debate through the theoretical' and agitational contribution of the ex-Potop comrades . Today thei prisons are full of these comrades . I've never tried to work our how many there are, but there are many, many . The institutions of power have thus singled out the leadership of Potop because of their evaluation of both the centrality of their theoretical argu ments and the continuity of their political action . Personally I'm very happy this has happened : it's the proof that in the moment that some comrades and I, a minority but a far-seeing one, realising the enormous intellectual wealth Potop had accumulated and'



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convinced of the poverty of the experience of the group, imposed its dissolution, we had taken a historic and fundamental step . Hilary Partridge

Tony Negri

What happened in 1977 which makes this year such a radical `break' for working class struggle and culture in Italy?

What happened in 1977 was that which we did not have the strength to determine in 1969 : the mass break of the proletariat from the reformist organisations . In 1969 we had built up a radical and democratic class behaviour in the factories . The PCI and the unions ably disposed themselves of this transformation of political behaviour through the creation of the factory councils . [6] We knew this to be an opportunistic operation by the trade unions, but we, too, were imprisoned by the ambiguity of this operation . On the other hand the relationship which emerged in 1969 between the new class layers and the old vanguard of the `mass worker' was very external, essentially founded on agitation . Furthermore, the relationship between working class antagonism in direct production and proletarian antagonism on the social terrain was very unclear : `reclaim the city', a slogan of those years, was a slogan based completely on the extension of the action of the factory proletariat rather than on the revelation of a complex social subject . Between 1969 and 1977 there lived, in a formidable way, a formidable women's movement . It was in the confrontation, often bitter, always important, with the women's movement that the debate was pushed ahead . Without wanting to exaggerate (because there's often been a certain bashfulness in the admission) I believe that the reasons which lay behind the dissolution of Potop in 1974 essentially came from developments in the women's movement, from the positive transformation the frustrations of the women wrought on many Potop cadres . In the meantime, between 1969 and 1977, the initial ambiguity of the trade union debate on the councils was clarified for all, workers and proletarians alike . The unions, from 1969 on, were making a concerted effort to weaken the authority of the councils . Above all they tried to bend them to the politics of austerity which was the battle horse of the PCI in its march towards government . In these years we not only managed, continuously and implacably, to demystify the PCI line, but also to live and to promote a new social experience : the experience of the community of the movement, promoted directly through a mass experience of expropriation and counter power . Right : at this point in time 1977 `broke out' . First in Bologna, where the clashes of the new student proletariat (students forced to work in the `black economy' exploited by the communist administrations of the big cities) raised enormously the level of revolutionary spirit, then in Rome, where the PCI's attempt at the recuperation of the movement ended in the physical expulsion of Lama (the PCI's trade union leader) from the university . Once again we had anticipated and accelerated the rhythm : it would be 1980 before Lama would be expelled from the gates of FIAT too .[7] But the transformation set into



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Hilary Partridge

The movement of Autonomia claims to speak as part of a `new social majority of the proletariat, a majority which includes all those sectors of the working class thrown to the margins of society by the present world-wide crisis racking the capitalist economy . This clearly raises some major question marks for traditional Marxist class analysis . How far do you see your own ideas and those of other comrades inside and outside of jail as a radical departure in Marxist theory?

Tony Negri

My comrades and I do not believe our analysis is other than a Marxist analysis . It's a completion, a development, of it . We believe the proletarian subject is formed in the conjunction between work time and life time,,that society is subsumed in capital forming a homogenous tissue of exploitation . The crucial problem is this : capital has become really `social capital' and capitalist society has become really, not by analogy, a `social factory' . Education, welfare, family life, transport, culture, etc ., are all implicated in capitalist accumulation . The conflict between human desires and capital is direct . The mechanism of the production and reproduction of the labour force is wholly internal to capital . This is the fundamental point . If all this is true, if in consequence the proletarian subject develops within all of these life conditions, then the true barrier to the valorisation of capital consists in the relationship between production and reproduction . Our subject is not so much an extreme fruit of the crisis of capitalism as a product of its restructuring . I don't believe that anything I am saying is less than orthodox Marxism . It is, anyway, the truth, even were it not orthodox; orthodoxy is of very little importance to me . I am a Marxist solely because Marx's analysis is in agreement with the phenomena and behaviour that I perceive . As for the fact that our subjectivism is not in agreement with the consolidated currents of Marxist tradition ; this means only that other authors are in error . We are thus not the inventors of anything, we are just readers of Marx and political revolutionary agitators in our time .

Hilary Partridge

Reading Capitalist Domination and Working Class Sabotage (translated in Working Class Autonomy and the Crisis, Red Notes/CSE Books, 1979), I was struck particularly by your discussion of public spending and the wage, parts of which I quote : Public spending and the wage are themes to which analysis, the theory and the practice of revolutionaries will continually have to return, because in a situation of discontinuity in the cyclicity of the class struggle, the problem of public spending will, in the



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coming years, assume the same importance as the wage, narrowly defined, has had in years past . 'And later: `The privileged place of the wage in the continuity of proletarian struggles must, today, be extended to the struggle over public spending cuts . Only this struggle can enable the full self-recognition of the proletariat ; can fix the bases of self-valorisation; can attack directly the theory and practice of income-as-revenue .' This seems to me a very important concept for the strategy and tactics of working class struggle today. The mass vanguard of the proletarian movement is no longer to be found at the point of production, on the broad and largely masculine shoulders of the factory worker 'guaranteed' by powerful trade unions, but amongst traditionally weaker sectors of the proletariat-women, the unemployed, immigrants and so on-as the major consumers and providers of welfare services . The nurses in struggle for improved wages and conditions and thus improved nursing facilities in the hospitals, women demanding the provision of refuges and nursery facilities, groups forming to fight cuts in education and health services, youths demanding more cultural and social facilities, now move from the back pages of the annals of socialist historiography to take on capital as major protagonists of the class struggle. Can you enlarge on this question?

'ony Negri

It is evident that I'm in agreement with your reflections on the theme of class struggle-struggle over public spending, and with your consequent identification of the subjects . You ask me to enlarge on this theme . Well then, I believe that today, in Italy at least, the problem is to understand the limits of this argument . Here, the separate leadership of this programme has often led the various groups and layers of the class into the hands of capital : the acceptance of particular demands meant the incorporation of these particular forces, and the split, the division, of the general revolutionary action. Since there are no ideologies which can link diverse class interests at an abstract level, a reflection which can thread right through the various different realities is of the first importance . The unification of the struggle of one layer with another cannot be imposed through ideologies and value systems ; this is the road taken by the right . We must find within the immediacy of the interests of particular groups the political mediation of the common interest, the desire for communism . The comrades in jail, we 3,000 revolutionary militants shut away inside the special prisons of the democratic Italian state, are sure that this desire lives within the masses . Above all we must press forward a mediation rooted in reflection on the interests of the individual layers : class unity is to be found deep within the process of class self-valorisation . Not in ideology, but in concrete action and revolutionary thought .



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Footnotes

1

2

3 4

5

6

7

Tony Negri uses the two terms `proletarian' and 'workint class' throughout to emphasise that today's proletariat is no only to be found within the factory, but lives and works h every area of society ;fromthsewkingth yboied and workshops thrown up in the process of the decentralis ation of capital, to the ever more numerous people active it the `black economy', to those forced to take in work a~ home, to perform casual or seasonal labour to maintair themselves while studying at university or to supplemew other small incomes . In Italy there are numerous private local stations . In certair large cities sections of the movement have set up such radio, broadcasting programmes of music, political debate, informa tion services etc . Certain of these, such as Radio Citta Future and Radio Alice became notorious in 1977 for the role they, were able to play in the diffusion of information during demonstrations . Including forms of so-called secondary picketing such as the occupation of railway lines, roads, depots . The 'self reduction' movement was one in which a 'political' price' was determined collectively by rent payers, gas and) electricity consumers, bus users and so on, and this price and) this price only was paid . Through September and October of this year (1980) a mass struggle has been in progress at FIAT against the mass redundancies proposed by the company . The councils of 'delegati' (or shop stewards) sprang up fromi the struggles of the 'hot Autumn' of 1969 as an 'organic" leadership of the working class initiative . Later they were legalised in various company agreements and subsumed into the trade union structure . At the mass meetings called to ratify the agreement reached) with FIAT over the question of the redundancies, variousi trade union leaders including Lama were greeted with vocal„ if not in some cases physical violence . The agreement had) failed to secure so much as a minimum guarantee against the , unilateral power of the company .



MI

Review Article

THE BRITISH ECONOMIC DISASTER By Andrew Glyn and John Harrison, Pluto Press, 1980, £2 .95 paperback

Ben Fine This book has been written for popular consumption `by socialists for trade union militants and activists (although we hope students will also find it useful)' (p . 2) . The focus is on economic matters because of their political importance but the book clearly has a political purpose and message beyond informing the labour movement about what is going on in the economy . It is to warn against the dangers of reformism associated with support for an alternative economic strategy that falls short of full-scale nationalisation and socialist planning . Accordingly I have set myself the task in this review of assessing the book's contribution as an economic analysis, as a political analysis and lastly as an intervention into the debate over the British economy at a non-specialist level . Economic Analysis

Because the book is to be `made easily available to the worker's movement . The use of economic and Marxist terminology has been kept to a minimum .' In addition `the priority accorded to readability also accounts for our omitting detailed discussion of alternative explanations' (p . 2) . The result is that the theoretical underpinnings of the analysis are barely presented and are not brought coherently together . This makes an assessment of the validity of its argument, sometimes its very nature, that much more difficult . I will attempt to extract the authors' theoretical position and will begin to do so by comparing it with that put forward by Andrew Glyn and Bob Sutcliffe (1972) . British Capitalism, Workers and the Profit Squeeze has been a most influential book. On an empirical level it charted a decline in the rate of profit and profit shares . Although the figures concerned are still under scrutiny and revision (see Bank of England, 1980), a challenge was presented to explain the facts and their

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significance and this challenge has been taken up by Marxists ands non-Marxists. Glyn and Sutcliffe (G&S) also offered their own theoretical explanation . It involved seeing profitability as being ; squeezed between the two faces of a vice, rising wages resulting from trade union militancy and falling (or insufficiently rising) i prices and from increasing international competition . Whatever the merits of these empirical and theoretical arguments, there can be little doubt that they have received a widespread airing and have to a great extent governed and stimulated the revival of Marxist political economy in the seventies even if, in many instances, through criticism and rejection . Distinguishing Surplus Value and Profit

Andrew Glyn and John Harrison substantially reject the theoretical propositions of G&S . We will examine how in a minute . First, it is essential to emphasise a method that the two books have in common . It is most clearly stated in G&H . It is that `Several factors determine how much surplus value is produced . A worker's output over any given time affects the outcome . Efficient intensive production methods mean higher labour productivity than sloppy, slow ones . The proportion of the product paid out in wages influences the size of the surplus too' (p . 6) . Here G&H confuse the amount of surplus value produced with the way in which it is distributed . If workers can get a share of' the surplus in the form of wages then the surplus value is reduced . By the same token, if capitalists can get a share of wages, surplus value is increased . Accordingly, for G&H, the process of production itself, involving levels of productivity and working hours, is of equal status and comparable to changes in wages as far as the production of surplus value is concerned . This actually makes surplus value a redundant concept since it is being identified directly with the much more complex category of profit . Before surplus value becomes profit, capitalists encounter a number of problems such as those associated with distributional struggle and realisation . That they do so may enable them individually or as a class to enhance profitability but it does not expand the production of surplus value directly . To maintain the position I put forward here it is necessary to draw the distinction between the value of labour power and the value of wages . The latter fluctuates around the former according to the conditions of competition between the classes . Whilst the value of labour power may be transformed historically, at any moment it is the basis on which surplus value is produced . Profits are based upon this surplus value production but may vary in addition according to the level of wages and other factors . It is not my intention to justify this theoretical position here, only to point out that G&H diverge from it . What they utilise is a residual theory of profits, the left-ovens after wages are paid, for which a distinction between the value of labour-power and of wages is unnecessary . It is not at all clear why the concept of surplus value



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(the coercion of labourers to work beyond necessary labourtime rather than to consume less than net output) is necessary for G&H . Profit can quite easily take its place with no theoretical loss. Perhaps the distinction between profit and surplus value is made to distinguish between the production of surplus value and its realisation . `Even if conditions for producing surplus value are favourable, capitalists do not actually pocket profits unless they sell their produce . The amount of profit . . . depends not only on the conditions for producing surplus value, but also on those for selling products, or realising surplus value' (p . 6) .-In other words, surplus value and profit are distinguished in order to be able to make the distinction between production (with distribution) and sale, between aggregate supply and demand . The majority of orthodox macroeconomics distinguishes supply and demand without reference to the distinction between surplus value and profit . Of course, G&H do make the distinction between supply and demand in a way which tends to break with orthodox economics, by their reliance upon class relations . But the Sraffians have discussed distributional relations arld the Left Keynesians and others (Kaldor, Pasinetti, Kalecki and underconsumptionists) have discussed demand without surplus value as a concept necessary to incorporate this particular way of understanding class relations . Indeed, at times value relations are explicitly rejected for these purposes . International Competition and the Profit Squeeze Nevertheless, it is important to recognise that G&H remain committed to a value theory based on labour-time . As I have tried to show elsewhere (Fine, 1980), it truly makes them neoRicardian in contrast to the Sraffians who reject value theory altogether. Although their own justification for this (Armstrong, Glyn and Harrison, 1978) is conceptually unsatisfactory, rendering value theory a sociology of exploitation but otherwise analytically redundant, it does raise significant problems for their theory . These concern the way in which the relations between capital and labour as classes in production are conflated with competitive relations between and within classes in exchange and distribution . Consider first G&S . Their thesis that international competition is one of the faces of the vice that can squeeze profits by holding price increases in abeyance is an unacceptable argument for capital as a whole . Capital as a whole also benefits when prices are held down since inputs can be purchased at lower costs . Thus, G&S are wrong to argue that `it would be wrong to think that in international competition one capital's loss of profits is another capital's gain. On the whole, the opposite is true : international competition harms everyone's profits, though at a rate which will depend on the competitive strength of the country' (p . 93) . This is the theoretical support for one half of the G&S position and it is a main thrust in their book . Nevertheless, it is

14 2 still contradicted, even on the same page, with the opposite view, `At the level of an individual country, international competitio, is a cause of a squeeze of profits : at the level of the capitalise system as a whole it is an effect ." Of course it could be argue . that price competition by cheapening wage goods has the effec of raising real wages and cutting profitability . But valid or not this argument reduces to that face of the vice which is alreadrising real wages and this face cannot move towards itself . The G&S thesis can only be interpreted as a profit squeeze througi rising real wages alone, although it is possible to see these a arising either from trade union militancy or a weakening of the capitalist class as a whole through intensified competition . Wages and the Scrapping Mechanism G&H reject the view that the intensification of international corn petition has caused the rate of profit for world capitalism to dec line, although they continue to flirt with the idea that it could, s . that their assessment may be an empirical rather than a theorei ical one (see p . 180) . G&H also reject the view that wage milit ancy is necessary for falling profitability so that both faces of the G&S vice have been scrapped . In its place, G&H have constructe, a theory which is different from that of G&S but which is les coherently represented . As a result, it is difficult to distinguisl between what are inconsistencies in the presentation of their vie. and what are the inconsistencies of that view itself . For G&H the capitalist economy is seen as being governe • by the production and realisation of `surplus value' . The prod' uction of surplus value is seen to depend upon the level of wage and productivity both of which govern potential profitability The realisation of surplus value depends upon the levels of wage and credit both of which govern demand . The authors can b . considered to have excluded investment from those condition, governing the production and realisation of surplus value evel though they do recognise that investment or other expenditur expands both . But for them the causal relation appears to run ih the opposite direction . Wages become the key variable since they are a major facto' for both the production and realisation of surplus value . Wages play an ambiguous as well as a dual role . As they increase, the : eat into profitability but promote realisation . As they decrease they increase profitability at the expense of demand . (Here tha absence of a compensating increase in investment is crucial It would be very attractice to be able to say that there is no leve of wages for which capital accumulation can continue and this i , indeed the conclusion that is drawn by those who crudely corn bine distributional with underconsumptionist theories of crisis' Glyn and Harrison are more sophisticated . They argue that then: is a band of wages outside of which accumulation become: impossible, This immediately raises two further problems . One is to ex,



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plain what are the limits of the bands . The other is to examine what determines whether wages do lie outside the bands or not . The first problem is solved tautologously within the theory either by reference to the needs of producing and realising surplus value or by reference to empirical movements in the economy, a matter to which we return below . The second problem is considered in relation to secular and cyclical movements of the economy . As accumulation proceeds real wages rise, threatening the production of surplus value and thereby squeezing profitability . As mentioned above, the rise in real wages is not, as in G&S, contingent upon wage militancy . Indeed rising wages are seen as the necessary accompaniment of the workings of the labour market, in its pure competitive form (whatever this is), to transfer workers from old to new capital in the conditions of labour shortage created by accumulation . Trade union pressure to raise wages serves merely to reinforce the otherwise pure workings of the labour market . The theoretical innovation here that displaces wages struggle from pride of place is `scrapping' . When a new investment is made in the context of labour shortage it must bid away from old machines at a higher wage . Hence the rate of profit falls . But does it? Clearly it falls for old capital and it may fall for new capital if the wage increase is higher than the productivity increase . The overall level of the rate of profit depends upon the combination of three factors, the productivity of new capital, the survival and also capacity utilisation of old capital and the extent of wage increases . There is certainly no necessity for the rate of profit to fall and for it to do so within this theory suggests very shortsighted capitalists who underestimate either wage increases or the competition for sales from existing old capitals . I am not about to argue that the restructuring of capital, of which 'scrapping' is one element, takes place smoothly, but G&H have not explained why it should not . Whilst they claim to have based their theory on the overaccumulation of capital relative to labour supply, it seems more appropriate to describe it as a theory of under- or over-scrapping . Moreover, there is a strict parallel between G&H's theory and that of orthodox growth theory based on vintage models . These models are more complicated than those with malleable capital but they reproduce essentially the same results : the possibility of balanced and stable growth through the allocation of labour by the market mechanism . Thus, it is not clear from where G&H's falling profit comes nor why there should be a crisis . To put this technical argument in simpler terms, Marxists have long argued that the market mechanism is anarchic and yields expansion only at the expense of interruptions by crisis and recession . Neoclassical economists emphasise the spontaneity but harmony of the market place whilst Keynesians suggest the possibility of this harmony being achieved through demand regulation . To introduce scrapping as one function that the market mechanism must perform cannot of itself

1 44

CAPITAL AND CLASS add support to any of these positions . It can only appear to do s by incomplete or erroneous analysis .

Cyclical Movements I have tried to bring to the fore what is crucial in G&H's explan ation of why a phase of accumulation would sow the seeds of it own destruction . Overaccumulation relative to the supply o' labour brings rising wages through the market mechanism and falling rate of profit . To some extent, this position has beet criticised on its own terms . It is also open to other criticism, ignored by G&H, particularly those concerning the way in whici capital creates its own reserve army of labour through the dis placement of living labour . `Reservoirs' of labour can encourag : accumulation but they need not be essential for it . G&H's analysis of recession sees it as serving the function o reducing wages and restoring profitability . However, this require the working class to be defeated, something that is encourage but not guaranteed by rising unemployment . In the recessioi wages tend to be driven down below the lower limit of the bandl so that accumulation stagnates because of realisation problem even if conditions for producing surplus value are favourable tt capital . If the above theory explains cyclical movements in the cap italist economy for. G&H, their explanation of the post-war boon and of the stagnation of the seventies rests on the conditions o labour supply . It is argued that the post-war period has witnesse' an absorption of reservoirs of labour from the unemployed married women and agriculture . This reservoir and access to it isocially determined and it has simply run dry in the period lead' up to the seventies . The previous paragraphs have attempted to present what could be extracted to represent G&H's view of the movementof capital-in-general . This may be an unfair procedure, since it iunclear whether they would accept such a concept and in add' ition, even if they did, it is necessary to extrapolate their analysiof it from its presentation in the form of the movement of many, capitals in compeition . For example, this is particularly true o' the way in which `scrapping' is presented . It is used as if it applie-without differentiation to British capital, to world capital, to a particular firm, or to a particular sector . Yet there are crucial' differences of mechanisms involved depending on whether the restructuring of capital takes place within a firm or between sectors, within a country or across national boundaries . A modell of the pure labour market augmented by wage militancy wherei and when it occurs is simply inappropriate to the realities of this multinational conglomerate capitalist world . This is to raise the issue of the role played by competition . In G&H's theory competition plays a very important but highly problematical explanatory role . This is because it is seen as pot entially having, time and again, either one result or the opposite



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of that result . Consider the coercive force of competitive accumulation . This can either lead to intensive accumulation or to bankruptcy and disincentives to investment . If competitive pressures are weak, capital can expand easily and may do so but has no necessary incentive . Thus, whether competition is strong or weak (and G&H correctly do not identify competition with the number of firms) accumulation may or may not proceed . Consider next the level of the rate of profit . If it is high, the ability and incentive to invest is also high but the coercion is low and conversely if the rate of profit is low . Consider as a final example of this ambivalence, the central concept of scrapping . When accumulation is proceeding, wages are forced up, the rate of scrapping is high and profitability can rise with the productivity increase associated with new machines . On the other hand, fast growth could maintain old machines in use through the expanding demand for output . Old machines are displaced by new ones since the latter are best able to compete in shrunken markets . Yet the very lack of markets discourages new investment and encourages the continued existence of old machines . Explanation or Classification My initial reaction to these ambiguities was to see them as an example of theoretical incoherence and inconsistency . On second thoughts, I came to the conclusion that the theory is best seen as a classification of the way in which economic movements take place . As such it has certain strengths and weaknesses which are intimately inter-related . It seems to be able to explain empirical movements in the economy since wages are either too high or too low, scrapping to fast or too slow, competition too fierce or too slack, etc . What it does not explain is which of these effects or causes are produced and why, even if certain structural relations are posited between them . It suggests that an explanation lies elsewhere and that the system of classification will break down unless it becomes flexible in response to the actual movements in the economy which are in fact free of a superimposed classification . These remarks are perhaps best illustrated by moving on to consider G&H's theory of the decline of the UK economy . The UK economy is best `classified' by G&H simply as one in which, over the past one hundred years, the various economic variables have invariably lain in the disastrous quadrant . In the immediate post-war period (and earlier) for example, insufficient competition through the reliance on imperial preference led to high profitability and no coercion to invest . In the last fifteen years, intensive international competition and low profitability have led to little inducement to invest . Opposite conditions produce the same results, suggesting that these conditions are not causative . G&H, however, emphasise the specificity of the British trade union movement, its strength in resisting the reorganisation of work practices and its immunity from crushing

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CAPITAL AND CLASS defeat around the second world war . How important G&H con sider these factors to be is not clear since the trade union move ment at most modifies the pure workings of the labour market . P does so in a way which illustrates an important aspect of G&H'concept of capitalism . It is one in which class struggle whethe . over wages or work practices necessarily has the effect of obstructing the development of the productive forces, a remark able conclusion for Marxist theory but one that is inevitable wheiwages are taken as theoretically primary . The result of tradh union militancy is to challenge capitalist expansion earlier that would be the case with the pure workings of the labour marker and to prolong a recession . Consequently, the working class unde capitalism necessarily exhibits a collective Luddism in it , economic struggles unless those struggles establish socialism itself It is a paradox that the most Luddite workforce of all, the British, should nevertheless end up with low wages . It suggest: that it might have done better to be more docile and to havw allowed the British to emulate the German economy . Instea' all that militancy has done is to lower productivity growth and tt precipitate crises . Above, I have attempted to present the core of G&H' arguments concerning the world and the British economy . Ii many ways, the major part of the first two chapters, which ar ., concerned with these subjects, are devoted to an examination o, many other factors such as the oil crisis, or monetary crises . Ii general, these are treated as symptomatic or exacerbating charac teristics of the more fundamental system of classification . For the British economy, this means that foreign investment, the availl ability of finance, defence and welfare expenditure, the role o, sterling etc . etc . can be considered to play a secondary role an, each is afforded at most a couple of pages of assertive comment : ary . Yet surely it is these characteristics and others that constit ute the totality of conditions that define the British economy uniquely and in which are to be found the elusive determinins role played by competition . As each characteristic is related ti the predetermined system of classification each is necessarily reduced to a position of relative insignificance . To conclude this section, it can be observed that GO represent a considerable change from G&S but their work ha , drawn little from theoretical debates that have taken place in thl intervening years . The most important exception is the introduc tion of the concept of `scrapping' which perhaps represents concession to the interest that has developed in the theory o, restructuring capital . A more significant stimulus to their chang ing theory has probably been empirical developments and broader range of country studies over time which has rendereo the G&S classification by wage struggle and international compel ition too narrow . More generally, it seems that a consensus i~ Marxist political economy is emerging in which G&H occup , something like a middle position . They are flanked on one side b,



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Sraffians as represented by Steedman (1977), for example, and on the other side by those such as Rowthorn (1980) . The intermediate positions represent, to a greater or lesser extent, a reliance upon value theory but never exclusively so . It is a consensus that has a tradition, possibly an ancestry, as established through the work of Maurice Dobb . It constitutes a powerful paradigm with all the virtues and vices that this entails, allowing controversy but within narrow limits . But to my mind it is also the source of a theoretical cul de sac . Capitalism is going through a period of substantial transformation . Our theory must not remain immune to these changes, it must incorporate an historical content rather than tail upon that history with an increasingly archaic conceptual framework . Perhaps the most significant example of this is provided by Marxist theories of inflation which are dominated by a mixture of elements combining distributional conflict and crowding out, with the state providing or withholding the finance as it mediates these elements and provides for or stimulates inflation . The distinction between money as money and money as capital, quite apart from the analysis of the significance of the state as the predominant agency intervening in the credit system, remains at a facile level . Yet it is these very questions which are being left unposed by the emerging synthesis .

Political Analysis

After the first two chapters on the world and British economy, G&H analyse the Tory government of 1970-74, the Labour government of 1974-79 and the prospects for the eighties in the remaining three chapters . From all of these chapters a particular notion of the relationship between politics (and the state) and economics implicitly emerges . It is very much like the relationships within the economy . Everything is reduced to the effect that it has upon either the production or the realisation of surplus value, This understanding of the relationship between the state and capital has been the subject of considerable criticism within the CSE and elsewhere but G&H seem oblivious to it . Here there is even a regression from the position taken by G&S who stressed the irreducible intimacy between politics and economics even if the miners' strike of 1974 contradicts their outrageous conclusions : `Strikes about wages are becoming equally political . Given that the Tory government's wages policy is part of a programme to rescue British capitalism, a strike against the wages policy is a strike against capitalism, and hence is really political' (p . 197) . The result of G&H's analysis is that they see the state as acting to manipulate the economy to the advantage of the bourgeoisie in response to the labour movement's perverse attempts to further its own interests . But this all takes place around the path represented by the pure workings of the labour market . What is absent is the role played by the state and politics as an economic force rather than as an economic response . The specif-

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CAPITAL AND CLASS icity of the British economy is itself bound up with the political and social transformations that it has (or has not) undergone and these are of as much if not more importance than the `economic' mechanisms in the competitive process of uneven development . Here I have in mind the very nature of the relationship between state and economy over the whole range of economic and social interventions. The chapters on the Tory and Labour governments are narratives . Heath is seen as having first led an unsuccessful assault on labour to impose the conditions for producing surplus value, prior to the U-turn and Barber boom designed to improve realisation conditions . Both of these phases are seen as having been i unsuccessful both by economic indicators and by passing on a i situation in which `the British working class has seldom, if ever, been in a stronger position' . In opposition the Labour Party is seen as having moved to the left in principle, but not ultimately in practice in its ensuing government . After a period of concessions to diffuse the working class strength built up under the Tories, the Labour `policies in government attacked jobs and) living standards more effectively than those of its Tory predecessors .' The left wing of the party failed to mobilise resistance toi these policies particularly at a grass roots level . The overall results was to disillusion both capital and labour with right-wing social' democracy and to usher in `the way for Thatcher's policiesi which could never have been implemented in the context of the' relation of class forces existing in 1974 .' The final chapter deals with the current Tory policies, the alternative economic strategy (AES) and a fully-fledged plan of socialism as potential responses to Britain's plight, the authorsi favouring the last . I will attempt to show that the first two ot, these are examined in a way that suffers from profound mis= representation and confusion . The last arises from an unrealistici assessment of the current political situation and of the problem= and struggles facing the labour movement . G&H's definition of Tory policies and objectives falls little short of the one that is propagated by Tory ideology itself . 'Thei core of Thatcherism is a coherent set of policies aimed at en enabling market forces to restore adequate conditions for produc ing surplus value . All other considerations are subordinated toi this aim' (p . 138) . But it is crucial to reject this ideology as representing the reality of Tory policy in practice . Far from relying, upon market forces, Thatcherism involves a consolidation and extension of state economic and political intervention, a further integration with market forces and not a withdrawal from them . Monetarism as an economic theory has a long history of relating changes in the price level to changes in the money supply . As am economic policy in modern times, it represents state intervention to regulate the economy through mechanisms described acontrolling the money supply which can be more or less extens ive . A casual acquaintance with Tory policy reveals that the



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control of the money supply has become in part a regulation of expenditure through cash limits, a financial but also a political mechanism . Central government intervention is increasing and being consolidated over a whole range of activities, and this is a consequence of, and not despite, monetarism . The Tories are attempting to push through a transformation of the way in which the British economy and society are organised . We can agree with G&H that it can only do so by smashing the Labour movement and much of capital besides . But this is not Thatcher as a stronger version of the Selsdon Heath opportunistically launching herself against a Labour movement weakened by the experience of a failing right-wing Labour government . It is a strategy to transform the nature, not simply the strength of capital's power in Britain and one to which all other considerations including adequate conditions for producing surplus value are to be subordinated . That G&H fail to ackowledge this is a result of their economic reductionism . We can also agree with G&H that Thatcher's plans will be `scotched by the trade union movement' but we must recognise that these plans have already made considerable headway often on the basis of policies adopted by the preceding Labour government . In British politics since the war it has never been a question of whether a Tory would be replaced by a Labour government (and vice-versa) but always in what circumstances . This means that an accurate assessment of Tory policy and the tasks facing the Labour movement is absolutely essential . Yet G&H write as if the seventies are in the past and the eighties in the future . They seem extremely optimistic about the ground that the left has made within the Labour Party so this together with the defeat of the Tories is almost presented as a foregone conclusion . Certainly the relationship between these two points and a strategy for labour now is notable only for its absence from their discussion, with the exception of the demand for a campaign for immediate nationalisation and socialist planning . It leads to the failure to recognise that a new social contract between the Labour Party and the trade union movement is a real possibility as the basis for an electoral manifesto, since it is simply asserted that `the labour movement would not be satisfied with a re-run of 1974-79 Labour government policies" (p . 147) . The vacuum in G&H's political analysis can be seen to be derived from their theoretical presuppositions . The strength and organisation of the labour movement can at most be a lengthening of the rope around its own neck until it establishes socialism, for otherwise it merely worsens its conditions under capitalism by struggling . How this is presented is best seen in terms of G&H's discussion of the alternative economic strategy (AES) . For G&H, "Thatcherism and the AES . . . are based on the conviction that it is possible to regenerate the economy on a capitalist basis' (p .137 ) . Now, G&H recognise that support for the AES covers a multitude of sinners . There are as many different notions of what it consti-

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CAPITAL AND CLASS tutes as there are notions of socialist strategy . Yet G&H treat it as if it were necessarily a social democratic programme for socialism within capitalism . There are undoubtedly supporters for this position but it is an easy one to criticise and condemn (if not to abolish as the labour movement exemplifies) . What G&H do is to treat all views of the AES as if they were conceived of as strategies for socialism within capitalism . For some, this is so . For others, to whom G&H presumably address themselves, the AES is a strategy for political and economic advance under current conditions with the ultimate objective of destroyiing capitalism rather than lying beside it . G&H do believe that the AES is necessarily a journey up the garden path to defeat for the working class, both in the short term of immediate interests and in abolishing capitalism . This is something that they fail to demonstrate . What G&H tend to do is in fact to demonstrate the opposite : `It may not be a viable strategy for socialism [of course, BF] but it is anti-capitalist . Its redistributional proposals are quite inimical to the interests of capital . Its proposals for increased state and trade union control over profitable manufacturing industry are a direct threat to the economic power of the capitalist class . If fully and successfully implemented, the strategy would severely curtail capital's control of economic activity' (p . 96, emphasis added) . They quote with approval William Roger's suggestion that if Benn had had his way over the 1976 IMF loan `the whole system would have begun to come apart . God knows what Italy might have done ; then France might have taken a radical change in the same direction . It would not only have had consequences for the economic recovery, it would have had great political consequences" (p . 97) . Finally, in this glowing glossary' of virtues `Many AESI policies do have a place in a programme to build mass workers" organisations' (p . 163) . So the AES is anti-capitalist both in i interest and power,, encourages radical politicisation abroad and I helps to build the labour movement . With enemies like this, does the AES need friends?! But G&H are enemies to the AES . Their greatest fear seems to be that it will attract support and ultimately lead us down the Chilean road . The way they argue against the AES is, however, unacceptable . They recognise that it is `a programme for the labour movement. We treat the policies as component parts of an i overall strategy rather than as a mixed bag of proposals, and ask whether the strategy is capable of achieving economic recovery while protecting workers' immediate interests' (P . 150) . In i general, their emphasised proviso is invoked to reject the AES . They argue that the more the AES is implemented the weaker is capital . This in turn leads to a worsening of the working class" economic conditions since 'capital is presumed to remain fully in i control and to collapse unless its interests prevail over and against



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workers . But the AES is a strategy to wrest control from capital through economic and political mechanisms by struggles which will surely intensify as it is implemented . Such an intensification of class struggle and its possibly violent resolution has to be recognised for any `viable' strategy for socialism . Against it the objectives of economic recovery and workers' immediate (vulgar materialist?) interests pale into insignificance . Power and politics have always taken precedence but only through the attempt of any one class to assert its economic interests . G&H also reject the AES by failing to treat it as an overall strategy rather than as a mixed bag of proposals, despite their claim to the contrary . They take each proposal and show that its implementation requires the other proposals but use this to reject each proposal separately . Expansion would lead to a wage-price spiral . Price controls would lead to a fall in profitability and employment, etc . Ultimately they contradict themselves by suggesting that the AES would increase the production of surplus value but only at the expense of resistance from capital : `the strategy is fatally flawed because it could surmount problems in the production of surplus value only by measures unacceptable to capital' (p . 162) . When an AES as a programme for socialism becomes characterised as a means of expanding the production of surplus value but then is seen to fail because of capitalist resistance, the time has come to look for socialism through the looking-glass! G&H's own proposals for nationalisation are best seen as a blue-print for a future socialist Britain . As such they recognise what could be achieved by full employment but their socialism is an economy not a society . It also suffers from having little to suggest how it might be achieved, in particular ignoring the labour movement's experience of nationalisation in Britain . Their suggestion that the necessary campaign for `nationalisation must be presented in the context of a coherent socialist programme' is to be welcomed . But it is neither too radical for nor exclusive of the campaign for the AES . Indeed it is through the AES that G&H can argue against those 'AES supporters who oppose putting forward an extensive nationalisation programme on the grounds that it sounds too much like socialism' .

Economics for In the previous pages, there has been presented a heavy weight of Politics criticism against G&H, but I nevertheless welcome the appearance of their book . It will not have the popularity nor the significance of G&S but it is already, by all accounts, selling like hot-cakes . That it is doing so demonstrates in part the continuing influence of G&S but it also reflects the demand for economic texts about contemporary events written in an accessible style . We must deplore the inability of the left to produce texts which analyse current events let alone at a readable level . G&H are to be congratulated for making the attempt . Nevertheless, G&H have not been entirely successful in their

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CAPITAL AND CLASS project and this can be said quite apart from the points of view that they express . It is worth considering why this is, so that we can learn from and build upon this most crucial body of literature as rapidly as possible . G&H have a definite audience in mind and they do address it, but not necessarily on the economic and political questions that that audience will think are most crucial . G&H suggest that `the greatest difficulty we found in writing the book was that of devising a suitable structure' since they wished to present the broad sweep of developments as logically prior to the rough and tumble of class struggle in the seventies. This has left them with too many objects of analysis. They seem to wish to write a history of world and British capitalism over the last one hundred years, an account of the last decade in some detail, and about the prospects for the future in less than two hundred pages . On average, there are less than two pages per sub-heading topic for subjects as important as the EEC . In short the book is too ambitious in what it wishes to cover and here it contrasts with G&S which is two perhaps three times as long and which presents a main thesis around which other material can be organised at some length . G&H's ultimate objective is quite clearly to convince the reader to support their programme of nationalisation . Yet the book has other objectives too, as an economic text, as a narrative, as a political analysis, and these again are too many for its length and other themes . Here again there is a contrast with G&S where the political objective is less apparent and is aimed more at a stance of anti-capitalism (and its representatives) than at a sectarian dispute within the left of the labour movement . This not only weakens the book but can only be deplored in circumstances in which we both face Thatcherism and experience a revival of the Labour left . Finally, G&H refrain from discussing their views of alternative explanations at greater length in the supposed interest of readability . This is a mistake . If their own view can be made readable, so can their opponents' and their differences with them . Nothing makes for lively reading like controversy and presumably G&H's opponents wll in any case be their readers in many instances . G&S had a ready-made opponent, the conventional wisdom that profitability had remained steady and it is this which gave the book its enormous impact . In short, such books as these seem to require careful answers to simple questions . For and against whom are they intended? For what reason and over what subject are they to be written? Then, in the writing, the level of theoretical and empirical complexity to be presented should follow, although there may well be a trade-off between simplicity and principle that can nevertheless be exaggerated . This is all more easily said than done .



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Armstrong, P ., Glyn, A . and Harrison, J ., (1978), `In Defence of Value', Capital and Class, No . 5 . Bank of England Quarterly Bulletin (1980), `Profitability and Company Finance : A Supplementary Note', June . Fine, B ., (1980), Economic Theory and Ideology, Edward Arnold . Glyn, A . and Sutcliffe B . (1972), British Capitalism, Workers and the Profit Squeeze, Penguin . Rowthorn, B . (1980), Capitalism, Conflict and Inflation, Lawrence and Wishart . Steedman, I . (1977), Marx after Sraffa, New Left Books .

Richard Nixon was educated at Whittier College . Subscription (three issues) Individual £2.50/$6,Library £5/$10 . Outside Europe copies will be sent by accelerated surface post . News from Neasden, 12 Fleet Road, London NW3 2QS, UK

Reviews HOUSING AND RESIDENTIAL STRUCTURE : ALTERNATIVE APPROACHES by Keith Bassett and John Short Routledge and Kegan Paul (London 1980, pp . 254, £4.95 pb .)

HOUSING FOR PEOPLE OR FOR PROFIT? by John Cowley, Stage 1 (London 1979, pp . 158, £2 .50 pb .)

STATE HOUSING IN BRITAIN by Stephen Merrett Routledge and Kegan Paul (London 1979, pp . 376, £6 .95 pb .)

Reviewed by Michael Ball For years analysis of housing issues in Britain has been hampereby the lack of books that outline the issues and summarise the main areas of debate on the Left . The books being reviewed her are to be welcomed as they all, in various ways, try to fill tha gap . None of them provide major innovations in the way in whici housing issues are analysed but each has its own distinctiv( approach . So these three books are complementary rather than alternatives . In many ways it is not surprising that these books cove separate housing subject areas as there are a host of empirica issues surrounding housing. Each author takes up a particula empirical theme : Merrett considers the tenure of council housing Bassett and Short concentrate on the spatial distribution o housing, and Cowley examines the determinants of the physics provision of the overall stock and its costs to households . Isola* ing one empirical housing issue, however, is not sufficient fo analysis because it does not necessarily constitute a feasible theoretical object . Neither a physical characteristic of housin : nor a juridical form in which housing is consumed (i .e . its tenure are sufficient for an adequate conception of a housing problems By themselves they do not enable a specification of the socia relations involved in a particular form of housing provision . Ye without that specification there is a danger that analysis cap degenerate into a meander through a mass of empirical materia (be it official statistics or other people's books and articles) . Onh Cowley's book manages to avoid this weakness .



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Perhaps it is unfair to criticise in this way books that are only trying to summarise the current state of knowledge since the problem of adequate theoretical specification has bedevilled housing analysis over the past decade . Considerable progress has been made by the Left in dismantling the ideological dominance achieved in the mid-sixties by the Fabian `spot and subsidise the poor' approach to housing . Class and contradiction are now a standard part of the discourse on housing and the CSE Housing Workshop has been an important forum in aiding this change . Many insights into housing issues have been achieved, but the limits of just digging out the empirical data are becoming increasingly felt . This problem has generated important political difficulties as it tends to lead only to a defensive support of particular existing tenures, especially council housing . (Cowley's book is very good at explaining why all current tenures must change) . The confusion on the Left over what to do about owner occupation is a good example of these political effects . A defence of the existing structure of council housing provision, moreover, has become increasingly more difficult as successive recent governments have gradually succeeded in dismantling many of that tenure's more progressive aspects . The present limits of housing analysis have also tended to aid disunity among the Left . The problem of creating programmes that can generate united action between building workers and the working class as housing consumers still remains . The traditional split between community activists and housing analysts has not been resolved . If all the latter can do is to say `organise and defend' it seems a justifiable criticism to say `why don't we just do that then, rather than write about it . However, despite all the gloom and despondency above, the books by Merrett and Bassett and Short succeed admirably in their objects of summarising current research on particular aspects of housing . State Housing in Britain is a mine of detailed empirical information on council housing from its origins to the present day . There is no other source of information like it and it will doubtless be a major reference text for years to come . Three chapters provide a history of central government policy towards the council sector (although disappointingly there is little reference to the policies of the councils themselves) . Three chapters deal with land acquisition, the housebuilding industry and new building versus rehabilitation . Local authority finance follows, with chapters on how councils borrow and pay for their housing stock, rent levels and state subsidies . Fred Gray provides an interesting chapter on council house management, and the finale of the book is a suggested political programme ofr a `British Road to Socialism' style left Labour government . It is impossible just to present empirical material and Merrett's book abounds with little pieces of analysis of the data . Much of it is informative and enlightening . I particularly liked the continual emphasis on housing standards and the discussion of rent rebates . Inevitably, given so much material, everyone will disagree with parts of the analysis . To mention three aspects I objected to : I did not like the technical determinism in the explanation of the nature of the building industry, the concept of real rate of interest, and the long discussion of cost-benefit

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CAPITAL AND CLASS analysis with regard to the Needlehman rehabilitation/redevelopment formula (especially as benefits were never an issue in that debate) . The major weakness of Merrett's book, however, is the lack of any sustained relating of council to the wider social formation . Class struggle tends to disappear after the first two historical chapters and there is only a very short chapter on the determinants of housing policy (at the end of the book) . The impact of economic crises on public expenditure, housing subsidies and housing output is empirically documented meticulously . But the class relations in council housing provision and how they relate to the dynamic of wider class struggle are never specified . To identify, as the book does, the fact that council housing has always and increasingly played the role of the residual 'safety-net' tenure in both Labour and Tory political ideologies is not to explain why . The explanation has to be found in the class relations involved in the structure of provision of council housing (private capital financing and building a commodity which is subsidised and sold by the state) and the increasingly untenable nature of that structure (the housing conditions and lifestyles imposed on tenants and the sheer cost of that form of provision) . Given the current state of research mentioned earlier, this criticism is perhaps asking the impossible but the political programme of the book's last chapter can only be evaluated within that wider context . And the programme fails the test as it does not fundamentally alter the existing structure of provision . There is no suggestion of a democratisation of provision giving any form of direct working class control over housing : the setting of housing needs, output levels, financial arrangements and management procedures are all commandist (i .e . determined by a central state apparatus, albeit `benevolent') . Regarding the agencies involved in housing provision, the building industry is not to be nationalised, loan finance will still prevail and direct labour will not be taken out of the shackles of commodity production . Even the financiers' dream of national rent pooling is argued to be progressive . It is unfortunate that Merrett did not consider (and perhaps criticise) one of the few recent proposals for genuine structural change, that made by the Direct Labour Collective, preferring instead to consider only the jaded arguments of the Labour Party document Building Britain's Future . The title of tBassett and Short's book states what the book does perfectly . It surveys the vast literature on the spatial aspects of housing provision extremely well in a clear, readable, concise way . The whole range of theories is covered from the Chicago ecological tradition, through neo-classical economics, behaviourism and managerialism to Marxist perspectives, with emphasis on the work of Castells and Harvey . Sandwiched in the middle is a lengthy evaluation of institutions and their impact on spatial housing markets . The book is well laid out so that it makes an easy reference work for quick summaries of those long forgotten or never read articles and books . (The subject index is lousy, however, which somewhat weakens this role) . There is, unfortunately, even less consideration of the wider context than in Merrett's book . Having summarised all the literature, shown sympathy to Marxist concepts, had a `go' at a number of basic Marxist concepts (value, rent, definitions of class



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with a hint of influence from the I1indess and Hirst school), the book suddenly stops . Expecting more, I even turned over the page thinking there was a Capital and Class style misprint . The absence of any positive statement about how they themselves would analyse the issues is a pity, especially as the authors had major reservations about many attempts made by earlier Marxist writers. This is not to ask for a `political position' statement but simply to remove a theoretical . void that remains at the end of the book . The role of the critical surveyor might be safe and cosy but with such a comprehensive knowledge of the debates the authors must have some more positive ideas . Housing for People or for Profit? by John Cowley is not in the academic tradition of the two previous books . It is a fairly short, highly readable introduction to housing struggles and the reasons for their existence . It brings together the national level features of class relations in housing with the impact of those features on local communities ; illustrating the interrelation with a study of gentrification in north London . I particularly liked Chapter 2 where he studies state policies and ideologies towards women and the family and those towards housing . The book is one of the best introductions to housing issues I have read . But on two crucial questions I think the book dodges the issue . First, the problem that any book on housing faces is differences between housing tenures . Cowley tries to avoid this by arguing that most housing is in effect `owned' by finance capital, via local authority housing debt and mortgage finance . This, however, ignores real differences betweem tenants and owner occupiers. Owners do gain from house price inflation and inflationary falls in the ratio of mortgage payments to money incomes . It is just not empirically true that all owner occupiers (even working class ones) are saddled with impossible mortgaged (even working class ones) are saddled with impossible mortgage debt. Over a third own their houses outright, and `second time' buyers now on average finance less than half their house purchases with mortgages. Such financial benefits create real political differences between households in different tenures, ones that cannot be ignored . The other problem is also a political one . Cowley does not like the Labour Party and thinks that only locally based struggles are likely to be successful, even if current organisations are extremely weak . Yet he is also aware that only national level policies can produce fundamental changes such as particular forms of nationalisation of land, the building industry and financial institutions . Here we have the classic dilemma of Community Action . How can local level struggles produce national level' change? How can you avoid reformist incorporation? No answer is provided . The relation between national and local level struggles is obviously a key issue for the development of adequate housing strategies ; so is the need to unite the different social groups involved in struggles over housing . As the absences in these three books make clear there is no easy answer . As part of a wider political process, more theoretical work will have to be done if there is to be any hope of developing adequate strategies . In particular, the links of housing to the wider social formation

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CAPITAL AND CLASS will have to be elaborated in greater detail . These three books however, all show that progress can be made . Go and read the text books of the sixties if you need convincing .

New from Verso & NLB Verso in association with Marxism Today

Forward March of Labour Halted? E J Hobsbawm, Raymond Williams, Hilary Wainwright, Jack Jones, Tony Benn and many others Labour MPs and Marxist writers, trade union officials and shop-floor activists come together here in a searching discussion of Eric Hobsbawm's provocative thesis that after a century of advance the labour movement is now approaching an impasse . £2 .50 paper : £6.00 cloth June

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The 'Crisis and the Crash' Soviet Studies of the West (1917-1939) Day's book advances into territory hitherto largely neglected by Soviet scholarship : the debates among scholars and politicians there about the course and fate of capitalism . The 'Crisis' and the 'Crash' is a notable event for student of the Soviet Union and of the history of Marxist political economy . £9 .50 cloth already published



159 CSE publishes three times a year the journal CAPITAL AND CLASS which is distributed to members and also sold in shops . The contents of the journal are wide, including theoretical debates, concrete analyses, discussions on socialist strategy, an archive section, translations and reviews . Articles increasingly draw on the work of CSE groups . Recent editions have included : No . 11 Industrial Democracy and the Control of Labour Nationalism and Class Struggle in Zimbabwe Finance Capital and the Crisis in Britain The State and the Future of Socialism . No . 10 The Value of Value : Rereading Capital Education for Emancipation : The movement for Indpendent Working Class Education 1908-1892 A Short History of the CSE Women and the Reserve Army of Labour On Amin's Model of Autocentric Accumulation A Critique of Brazilian Political Economy Word Processing and Patriarchy in the Office . The Economic Policy of the New Chinese Leadership Patrick Tissier No . 9 Labour Time, Work Measurement and the Commensuration of Labour P . S . Taylor Debate : Theory of the Capitalist State M. Williams Strategy : Which Way Out of the Ghetto D. Elson Theory and Politics of Michel Foucault Bob Fine The Politics of Workplace Trade Unionism R . Hyman No . 8 Crisis, The Labour Movement and The Alternative Econ Crisis, The Labour Movement and The Alternative Economic Strategy London CSE Group The Unhappy Marriage of Marxism and Feminism Heidi Hartman State and Capital in Brazil R . Munch Critique of Soviet Economics D . Sayer No . 7 Valorisation and `Deskilling' : Critique of Braverman T. Elger Social Fascism : Workers and Political Parties in the Frankfurt Area 19291930 J. Wickham Health Policy and the Cuts T. Manson On the Theoretical Consistency of Sraffa's Economics S . Savran No . 6 Trade Unionism and the Struggle for Liberation in South Africa D . Hemson The Anomalies of Capital S. Himmelweit and S . Mohun Regionalism : Some Current Issues D. Massey Intellectual and Manual Labour : An Introduction to Alfred Sohn-Rethel M. Reinfelder and P. Slater. In Defence of Value : A Reply to Ian Steedman P . Armstrong, A . Glyn No . 5 and J. Harrison Capital, Fractions of Capital and the State : Neo-Marxist Analyses of the South African State S. Clarke The Soviet Economy in the 1920s and 1930s M. Harrison Debate : Trade Union Internationalism and the Supra-National State J. Baker . No . 4 The Inflational Crisis of Capitalism Makoto Itoh Value and the Theory of Rent R . Murray Ideology, Crisis and the Cuts K. McDonnell British Housing Policy and the Housebuilding Industry M. Ball Archive : The Value Form K. Marx .



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