RSP DA forum May 2011
By Doug Lorimer

In Sept 2010 UN General Assembly was devoted to a discussion on ending global poverty, to the fulfilment of the socalled Millennium Goals first adopted in the year 2000. A decade after the adoption of these goals, UN agencies reported that while 830 million people lived on the brink of starvation when the goals were adopted a decade ago, this number had soared to over 1 billion and that  in 2010 almost the same number were forced to live on less than a dollar a day.

In 2006, report from the UN’s World Institute for Development Economics documented the staggering levels of global inequality in household wealth. According to the WIDER report, richest 1% of the world’s population owned 40% of global assets, the richest 2% owned half of and the richest 10% owned 85%, while the poorest 50% owned just 1% per cent of global wealth.

What WIDER confirms what Branko Milanovic at the World Bank carefully documented in his book, Worlds Apart, back in 2005 and updated in 2007. Milanovic showed that inequality of income and even more important, of wealth, was 20:80 (i.e. that 80% of world’s 6.6+bn population could be classed as poor) and the situation was getting worse, not better.

Every year, Merrill Lynch, the now demolished global investment bank, published a world wealth report.  It regularly showed the increasing inequality of wealth, with the super-rich, representing just 0.13% of the world’s population, owning 25% of all financial assets (stocks, bonds and cash in banks)!  Most of these people did not get their wealth by clever deals or investments, or by hard work but mainly by inheriting it.  They just make more money and own more wealth because their parents had  it in the first place.

By contrast, 8 million people die from lack of food and nutrition every year, and 1.1 billion people lack access to safe drinking water.

According to the WIDER report the United States has a mean wealth of $144,000 per person, the highest in the world, while India has a mean wealth of only $6,500 (the poorest of those for which data was available). However, in the US, wealth concentration is among the highest of those countries with sufficient data to make these calculations.

According to the report, the top 1% of the population in the US owns 32.7% of the wealth, trailing only Switzerland, where the top one percent owns 34.8%. However, the US figure excludes the very richest families that are included in the list of Forbes billionaires. If these were included, the share owned by the top one percent would rise to 34.7%.

However, it would be a mistake to conclude from these disparities that wealth distribution the bulk of the population in the United States and other developed countries are financially secure. The level of inequality in the United States was highlighted in a November 2006 New York Times article, based on data collected by the Internal Revenue Service. Looking at income figures, the Times noted that the poorest 60 million Americans reported average incomes of less than $7 a day in 2004. The richest one-tenth of 1% of the population, or about 300,000 Americans, reported significantly higher combined pretax income in 2004 than the poorest 120 million.

During the Millenium Goals review, US President Barack Obama made it clear that US foreign aid efforts were subordinate to Washington’s “national security strategy”. He proclaimed that his administration was “changing the way we do business” in relation to international aid. “For too long we’ve measured our efforts by the amount of money we’ve spent,” he said. Such assistance, he stressed, bred “dependence,” insisting that this was “a cycle we need to break.” Obama cynically urged the UN delegates to “move beyond the old narrow debate about how much money we're spending.”

The purportedly new approach proclaimed by the US president consists in directing aid to impoverished countries that submit unreservedly to the proftt-making drive of US big business. He stressed that such nations would have to “create business environments that are attractive to investment” and “encourage entrepreneurs” in order to “unleash transformational change.” In other words, Obama’s prescription for ending global poverty is more of the same toxin that caused it in the first place: unfettered capitalist exploitation.

Such policies are hardly surprising. Obama, Merkel and leaders of other major capitalist countries are imposing brutal austerity measures against working people at home. The logical extension of these policies towards the most oppressed nations of the planet is the acceptance of mass starvation as an unavoidable cost of doing business.

Behind their arrogant demands that the impoverished countries “take responsibility” for their own fate and fight “corruption,” the major capitalist powers continue to loot the historically oppressed regions of the globe. Sub-Saharan Africa, for example, receives some $10 billion dollars in aid per year, while paying more than $14 billion in debt payments to the banks of the rich counties.

Capitalism's abject failure to provide the vast bulk of humanity with the material means for a dignified existence is not only due to the greed of individual billionaires or the failure of politicians. 

If it were, changing society would be a far simpler question of reforming the excesses of capitalism and dealing with the bad apples. But inequality and poverty are part of the fundamental nature of capitalist society.

Over 150 years ago Karl Marx and Friedrich Engels wrote the Communist Manifesto. It has become the most influential political pamphlet of all time. In 1999 a new edition entered the bestsellers list. Marx and Engels were the founders of scientific socialism. In the Communist Manifesto, and later works such as Marx’s Capital, they were the first to give a thorough and scientific analysis of the laws and workings of capitalist society: why it results in the polarisation of wealth and, vitally, how it can be overthrown.

In the last few years their ideas have been regaining popularity. At the end of 1999 Marx was voted the ‘greatest thinker of the millennium’ in a BBC online poll. Even some capitalist commentators and Wall Street traders have reread Marx and realised how clearly he described capitalism as it is today.

However, the underlying reasons for crisis are the fundamental contradictions of capitalism as first described by Marx. These include the antagonism between the social, collective nature of production on the one hand, and private ownership of the means of production on the other; and the antagonism between the world market and the limitations of the nation state. 

As Marx explained, capitalism is based on production for profit and not for social need. The working class creates new value but receives only a portion of that new value back as wages. The capitalists take the rest – the surplus. As a result, the working class collectively cannot afford to buy back all the goods it produces. 

The capitalists partially solve this by ploughing a proportion of the surplus back into industry, but this results in the production of more goods which, at a certain point, actually intensifies the problem. The inevitable results are crises of overproduction and overcapacity. In the long term, the capitalists cannot overcome this problem. As a result, capitalism is a system riven by repeated crisis.

While some establishment commentators have accepted that Marx predicted the fundamental features of the modern economy remarkably well, in general they shy away from the conclusions that he drew. Marx’s prediction that capitalism would lead to an ever-increasing concentration of wealth in the hands of a tiny minority and the increased exploitation of the vast majority worldwide is graphically borne out by the reality at the beginning of the 21st century.

Today the capitalists are a far wealthier and a far smaller class than they were in Marx's time. Capital has been concentrated in fewer and fewer hands at the same time as it has grown beyond the wildest dreams of the capitalists in the early and mid-19^th century. Today, the world’s 100 biggest capitalist companies control 70% of global trade. Any one of them sells more than any of the poorest 120 countries on the world export market, while 23 of the most powerful sell more than even semi-developed countries such as India, Brazil, Indonesia or Mexico.

The working class sells its ability to work to these people who maximise their profits by paying as little as they can get away with. As far as the capitalists are concerned, as long as we have enough to live on and can ensure that our children -future generations of workers - survive, we have plenty. In many countries of the world that is all that workers get - enough for a bowl of rice and a floor to sleep on at night.

Marx explained that capitalism is the first society based on the mechanised mass production of commodities. In previous feudal societies goods were produced by individuals or families, primarily for the use of their lords and masters, as well as for their own personal use. Any production of goods for sale was on a small scale. 

By contrast, under capitalism, goods are mass-produced for sale with machinery owned by the capitalist class. This class does not make commodities itself, it pays the working class to do that. The commodities produced then enter a process of exchange in which the capitalists attempt to sell them to make a profit. Under this system, market relations dominate every aspect of our lives. In other words, the inner logic of capitalism is that everything – even art, literature, sex and sport – becomes a commodity to be bought and sold.

Marx explained that the underlying value of commodities is determined by the amount of “socially necessary human labour”, i.e., at the socially average productivity, used to produce them. Of course, he understood that the reality of the market is far more complicated than that. Supply and demand, shortages and overabundance all mean that the prices of commodities fluctuate around the underlying value. Nonetheless, it is the labour of the working class which ultimately determines the value of all commodities.

All workers sell their labour power. This is a commodity to be bought and sold like any other. We receive a certain sum of wages in return for selling our time. How is the value of labour-power determined? Why does a manager receive more than a secretary? Who decides what a journalist is paid, or a checkout worker, or a bricklayer? The answer is horrifyingly simple: the value of 40 hours’ labour is decided in the same way as the value of anything else. It depends on what it costs to produce 40 hours of labour!

What does that mean? It means what it costs to keep a man or woman in a fit state to do 40 hours’ work. In other words, if an employer wants those hours worked, he or she has to pay enough to produce those 40 hours of labour or, to be more exact, enough to produce a man or a woman capable of performing it. Skilled workers are paid more simply because it costs more to “produce” them – to train them to do their job.

As with any other commodity, supply and demand means that the price of labour-power fluctuates around its underlying value. At bottom, however, the capitalists have to pay enough for a man or woman who is capable of doing the job to live on and to bring up children to do the work for the next generation. From the bosses’ point of view, why pay more than this? 

Why pay more than enough to secure a supply of the commodity required? In fact, employers would probably not be able to pay more even if they wanted to because someone else would pay less and undercut them. Capitalists can only be forced to pay more by the collective struggle of the working class.

Labour-power is like, but also unlike, other commodities. It is different in that it creates new commodities and therefore new value. For the capitalist it is like the goose that lays the golden egg. This, Marx argued, is the root of the exploitation of the working class. The working class is never paid the full value of its labour-power. The capitalists pay workers what is necessary for the survival of our class, what Marx called “necessary-product”. The rest, which the capitalists expropriate, is called “surplus-product”.

How much goes to the worker and how much to the capitalists is not fixed. It is determined by a living struggle between the classes. Speed-ups, increasing working hours, cutting tea breaks, stopping bonuses, and the introduction of performance-related pay, all result in the employers getting a larger proportion of the surplus product. On the other side, cuts in the working week and improvements in pay or working conditions increase the workers’ share of the surplus product.

Today it is fashionable to assert that the working class no longer exists, we’re supposed all part of the “middle class”. The fastest growing sector of the labour market belongs to those who clean, shop, child mind or garden for others. Low wages and long hours are the norm for working-class people. More and more workers have to take on several jobs just to survive. As one journalist stated in British Guardian daily noted in June 2000: “For those on rock bottom wages, both parents need to work all the hours they can to keep the family afloat financially. Karl Marx would recognise their situation even though the job descriptions may be unfamiliar."

When Marx talked about the working class he did not simply mean people worked in factories and mines. While in Marx’s day the average worker was more likely to sell their ability to work in a factory or mine. Today in Australia, millions still work in factories and mines but there are millions of others who have nothing else to sell but their labour power and who produce value for their capitalist employers. In fact, it is objectively bigger than it was in Marx’s day. When Marx and Engels were writing the working class was a small minority worldwide. The working class was growing but large sections of the population were still artisans, small shopkeepers, peasants, and small-business people.

Now, in Australia and other capitalistically developed countries, those of us who rely on wages make up the overwhelming majority. Of course, some people – the unemployed, pensioners and many single parents – have to survive on the meagre pittance provided by state benefits. They are still members of the working class and the only way they can hope to improve their living standards above the breadline is to work.

Working for a capitalist company is the only option available to the big majority of the population. Capitalism has led to the concentration of wealth and power in ever decreasing numbers of hands at the top. Meanwhile at the bottom, more and more previously middle-class people are forced downwards into the ranks of the working class. Many sections of the population - such as teachers, civil servants and even university lecturers – who were relatively privileged in the past and who saw themselves as middle class, are now low paid, overworked and increasingly see themselves as part of the working class. They are also beginning to draw the conclusion that the only way they can defend their pay and conditions is to use the traditional weapon of the working class, by forming trade unions and taking strike action.

It is true that the working class has not made its strength felt in Australia for many years now. However, this does not primarily stem from an objective weakening of its latent power. It is more a result of subjective reasons that can be summed up as a temporarily debilitating lack of confidence in the power of collective action and their lack of confidence that there is any viable social alternative to capitalism. 

Marx did not reduce his analysis of the oppression of the working class to a simple question of exploitation alone. He explained that in a capitalist society workers are alienated from the work they do. Hours spent every day producing commodities are not undertaken for the satisfaction of making something useful or beautiful, but to receive a wage on which to survive. Marx wrote: “And the worker, who for twelve hours weaves, spins, drills, turns, builds, shovels, breaks stones, carries loads etc. - does he hold this twelve hours’ weaving, spinning, drilling, turning, building, shovelling, stone breaking to be a manifestation of his life, as life?  On the contrary, life begins for him where this activity ceases, at the table, in the public house, in bed. The twelve hours labour has no meaning for him as weaving, spinning, drilling, etc, but as earnings, which bring him to the table, to the public house, into bed. If the silk worm were to spin in order to continue its existence as a caterpillar, it would be a complete wage-worker.”

This description of working life would apply just as much to the workers at McDonald’s, in call centres, on modern building sites or in factories, as it ever did to the weavers and labourers Marx was describing. Instead of making life easier, the increase in automation has reduced ever more jobs to mind-numbing repetition and boredom.

It is not only work that is dehumanising under capitalism. The commodification of human existence – a society where everything is for sale - is deeply alienating. Marx talked about how, in its drive to sell ever new commodities, capitalism created “imaginary appetites" long before TV started to bombard us constantly with a thousand new products that claim to keep us young and beautiful, or that we “must” own to keep up with the Joneses. And long before having the right mobile phone or pair of trainers became a major pressure on almost every young person’s existence!

As capitalism has become more brutal over the last 20 years, alienation has undoubtedly increased. Work is alienating but it also brings with it the experience of being part of a collective workforce that, potentially at any rate, is where the latent power of the working class exists. The working class is the embodiment of the co-operative labour that which is the unique product of capitalism and the germ of a more advanced social order, i.e., of socialism. At times when class struggle is at a high level it tends to increase the sense of common interest among wide sections of the working class.

As long as we live in a capitalist society then, as Marx described, "brutalisation" and "moral degradation" will remain. However, future action by working-class people – both in the workplaces and communities – will to a degree counter the current trend.

In the two decades after the second world war capitalism developed at a rapid pace, largely because of the destructive results of the war. It was in those post-war years that workers in the West won many of the benefits that that are being constantly eroded today. 

In the early 1970s capitalism went into a prolonged crisis internationally. Since then the capitalists have set about attempting to restore their profit rates to the level of the immediate post-war years.

They have done this primarily by driving down the real incomes of the working class, in other words, by increasing their own share of the surplus product. As the American left-liberal economist William Greider explains: “ In 1975, an average American family needed 18 weeks of earnings to buy an average-priced car; by 1995 the cost of the new car consumed 28 weeks of income.”

William Greider begins his 1998 book One World Ready or Not,  by describing the contemporary capitalist system thus: “A wondrous new machine, strong and supple, a machine that reaps as it destroys… Now imagine that there are skilful hands on board, but no one is at the wheel. In fact, this machine has no wheel or any internal governor to control the speed and direction. It is sustained by its own forward motion, guided mainly by its own appetites.”

Under capitalism it is the blind forces of profiteering that are in the driving seat. Pro-capitalist governments bow down before the rule of capital. Nowhere is this clearer than on the issue of the environment. climate scientists agree that emissions of carbon dioxide and other greenhouse gases need to be cut by at least 90% by 2050.Yet all that has been agreed by capitalist governments internationally is a non-binding agreement to work towards a 50% reduction by 2050. In 1997 these governments signed the Kyoto Protocol in which they committed to reduce greennhouse gas emissions by 2012 to 5.2% of their 1990 levels. Since then, the emissions of the developed capitalist countries have risen by 12.8% and that 55% of that increase has comes from the United States, which refused to even ratify the protocol.

In his famous Preface to A Contribution to a Critique of Political Economy, written in January 1859, Marx specifies the necessary and sufficient preconditions for a historical epoch of social revolution in the most concise way possible: “At a certain stage of their development, the material forces of production in society come in conflict with the existing relations of production, or – what is but a legal expression for the same thing – with the property relations within which they have been at work before. From forms of development of the forces of production, these relations turn into their fetters. Then begins an epoch of social revolution.”

The keystone of Marx’s materialist theory of social revolution is therefore the concept of the contradiction between production and property relations on the one hand and the productive forces on the other hand. In today’s world this conflict expresses itself in the inability of world capitalism to fully harness the science and technology it has brought into being to meet the elementary needs of billions of people in the so called Third World. Moreover, Marx’s famous prediction made more than a century ago, that the productive forces would transform themselves more and more into destructive forces if they were not in time liberated from the domination of capitalist ownership and the drive for private profit is now a deepening reality. The growing pollution of the atmosphere, land and seas all testify to the realism of Marx’s prediction.

Marx’s materialist theory of social revolution is predicated upon the recognition that it is not consciousness which determines social existence, but social existence which determines social consciousness; that it is in the realm of the conditions of the contradictions between human needs and capitalist relations of production that we have to look for the possibility of the development of the emergence of revolutionary consciousness within the working-class. Under normal conditions, the ruling ideology of society and the ruling pattern of behaviour of workers cannot but be determined by the ideology, the values and patterns created and promoted by the capitalist ruling class. Then, under conditions of growing social crisis, a growing part of that same working class cannot but liberate itself progressively from that same ideology and pattern of behaviour inspired by the ruling class.

A whole series of conjunctural factors is required to bring this reflection of the structural contradictions of capitalism to the threshold of the workers’ consciousness. Conjunctural shifts in the trends of income and employment, for example, steady decrease of real wages after a long period of increases; or a sudden increase in unemployment after a long period of full employment;  or a deep-going political crisis as a result of foreign imperialist adventures. Such factors and many others can create a favourable climate for a growing awareness by the workers of their alienation as producers, and for a sudden shift of the class struggle to questioning the employer’s authority in the shops, factories, and offices themselves.

Capitalism is a integral structure which can absorb and integrate many reforms (e.g., wage increases) and which automatically rejects all those reforms which run counter to the logic of the system (such as completely free public services which completely cover social needs). But you can abolish the structure only by overthrowing it, not by gradually reforming it out of existence. A capitalist army, i.e., an army commanded by pro-capitalist officers cannot by gradually reformed out of existence, unit by unit. It has to be disintegrated and replaced in a relatively short period of time through the organisation of its ranks, i.e., the working people in uniform, into a military force capable of defending the class interests of the working people through replacing a capitalist government, a government headed by pro-capitalist politicians with a working people’s government, i.e., a government based on the collective organisation of working people and committed to advancing their interests through replacing the capitalist ownership of the means of  production with social ownership of all the means of production. 

A socialist economy would have to be a planned economy. This would involve bringing all of the big corporations, which control around 80% of the Australia economy, into democratic public ownership, under the control of a working people’s government.

Of course, it would not mean bringing small businesses, such as the local shops, many of which are forced out of business by the big business, into public ownership. Nor would it mean, as opponents of socialism claim, taking away personal ‘private property’A genuine socialist government would would extend and deepen democracy enormously. This would be much more far-reaching than the parliamentary democracies of capitalism where we simply get to vote every few years for MPs who do whatever they like once elected. Instead, everyone would get to take part in deciding how society and the economy would be run. 

Nationally, regionally and locally – at every level - elected representatives would be accountable and subject to instant recall. Therefore, if the working people who had elected them did not like what their representative did, they could make them stand for immediate re-election and, if they wished, replace them with someone else.

Elected representatives would also only receive the average wage. Today MPs are a privileged section of society. Their lives are remote from those of ordinary people. This is no accident: it is a high salary, a very comfortable lifestyle and the drip, drip of ceaseless flattery about how “sensible” and “wise” it is to be “moderate” and “realistic” that ensures that “our” elected representatives serve the interests of the capitalist ruling class.  

There is another crucial sense in which democracy would be far fuller under a socialist government. Under capitalism most of the important decisions are not taken in parliament or local council chambers, they are taken in the boardrooms of the big corporations. By contrast, a socialist government would bring major industry into democratic public ownership. 

It would be necessary to draw up a plan, involving the whole of society, on what industry needed to produce. At every level, in communities and workplaces, committees would be set up and would elect representatives to regional and national government – again on the basis of recall at anytime if they disagreed with their decisions. Everybody would be able to participate in real decision-making about how best to run society.

In addition, for a planned economy to work, it would be vital that working people had the time to take part in the running of society. Therefore, measures such as a shorter working week and decent, affordable childcare would be a prerequisite for society to develop towards socialism.

Another argument against a planned economy is that society is now too complicated to be planned. Some people argue that, in the past, when the majority of people's aspirations were more limited, it may have been possible to plan an economy. But that today, when people want washing machines, videos and fashionable clothes, they claim planning just would not work.

Yet modern technology would, in reality, make planning far easier than it was in the past. In Russia, following the revolution in 1917 - when working-class people took power for the first time - an attempt was made to build a new society in a situation of extreme economic and cultural backwardness. The Russian peoples faced a desperate situation. Many of the most active socialists had been killed fighting the civil war. At the same time, illiteracy was widespread and most workers lacked administrative skills. This meant that in many cases, the soviets or councils of working people’s delegates had no choice but to keep on the specialists and administrators of the old absolutist regime, even at the cost of bribing them with privileges. In the town of Vyatka in 1918, for example, no fewer than 4,476 out of 4,766 officials were the same individuals who had previously served the tsar.

The Russian economy had been highly distorted by Russia’s participation in the first world war. It was then devastated by a civil war and invasion by 14 capitalist armies, including those from the US, Japan, Britain, France and Australia. Under these conditions, the soviet system degenerated and a hideous bureaucracy developed. The economy was, therefore, a mangled distortion of a planned economy. Decisions, far from being taken by society as a whole, were taken by a some number of privileged officials at the top.

Nonetheless, up until the early 1970s the nationalised economies of the Soviet Union and Eastern Europe produced impressive advances, though consumer goods were generally in short supply and of poor quality. Despite their many shortcomings, however, they also provided free education, free healthcare, low-cost housing, guaranteed employment  and other social amenities to the majority of the population. The restoration of capitalism in the Russia has been an unmitigated disaster. Within a decade, the economy collapsed by 50% and life expectancy has fallen in 10 years to the same level it was in the 1950s. The human suffering that has resulted from the reintroduction of capitalism has been immense. 

While there was widespread dissatisfaction in the Soviet Union because of the the system of bureaucratic rule, at least it provided the basics. In a negative sense, the reintroduction of capitalism has shown how much better a planned economy (even a fatally distorted one) was in providing a far higher standard of living for ordinary people than capitalism has been able to do.

Capitalism today has provided the tools which could enormously aid the genuine, democratic planning of an economy. Firstly, there is a far higher level of education among working class people than there was at the beginning of the last century. And capitalism has developed all kinds of technology that could be used to assist in planning. Big business uses this technology to find out what it can sell. Could it not be used rationally instead to find out what people need and want?

In any case, big businesses themselves plan their operations, but this is planning in the service of maximising corporate profits, not meeting social needs. By contrast, a democratically run planned economy would be able to take rational decisions on the basis of aiming to meet the needs of humanity. It would decide what technology to develop and use, what food to produce, and when and where to build, while taking into consideration the need to protect and repair our planet for future generations. It is not possible or necessary here and now - amid a society where profit is god and humanity is bent and distorted under its endless dictates – to draw up a full or accurate picture of a socialist society. Future generations, who will be more informed and knowledgeable than us, will do that.