Why we Struggle

RAISE THE RED BANNER OF SOCIALISM

Austerity has been criticised as an irrational policy, which further exacerbates the economic crisis by creating falling effective demand. However, this criticisms scarcely explains why such a policy persists, despite its ‘failure’. In reality, economic crises express themselves above all in a reduction of profitability of the capitalist class. Austerity constitutes a strategy for raising capital’s profit rate.

Austerity constitutes a strategy of reducing business costs. Austerity reduces the price of labour, increases profit per labour-unit cost and thus boosts the profit rate. It is complemented by institutional changes that, on the one hand, enhance capital mobility and competition and, on the other, strengthen the power of managers in the enterprise and share and bondholders in society. As regards fiscal consolidation, austerity gives priority to budget cuts over public revenue, reducing taxes on capital and high incomes, and downsizing the welfare state. However, what is cost for the capitalist class is the living standard of the working majority of society. This applies also to the welfare state, whose services can be perceived as a form of ‘social wage’. It is clear, therefore, that austerity is primarily a class policy. It constantly promotes the interests of capital against those of the workers, pensioners, unemployed and economically vulnerable groups. In the long run, it aims at creating a model of labour with fewer rights and less social protection, with low and flexible wages and the absence of any substantial bargaining power for wage earners.

Recession puts pressure on every capitalist to reduce all forms of costs, to more intensively follow the path of ‘absolute surplus-value’, i.e. to try to consolidate profit margins through wage cuts, intensification of the labour process, infringement of labour regulations and workers’ rights, massive redundancies, etc. From the perspective of big capital’s interests, recession gives thus birth to a ‘process of creative destruction’. There is a redistribution of income and power to the benefit of capital, and concentration of wealth in fewer hands as small and medium enterprises, especially in retail trade, are being ‘cleared up’ by big enterprises and shopping malls.

This strategy has its own rationality It perceives the crisis as an opportunity for a shift in the correlations of forces to the benefit of the capitalist power, subjecting societies to the conditions of the unfettered functioning of financial markets, attempting to place all consequences of the systemic capitalist crisis on the shoulders of the working people. This is the reason why, in a situation of such an intensification of social antagonisms like today, a government that wants to side with labour and the social majority cannot even imagine to succumb to pressures to continue implementing austerity policies.

The financial sphere is not simply the reign of speculation, it is not a casino, it is much more an overseeing mechanism. In his analysis in Volume 3 of Capital, Karl Marx illustrates that social capital is being occupied by two ‘subjects’: a money capitalist and a functioning capitalist. In the course of a lending process, the money capitalist becomes the recipient and proprietor of a security, that is to say a written promise of payment from the functioning capitalist, the manager. In Marx’s own words: “In the production process, the functioning capitalist represents capital against the wage-labourers as the property of others, and the money capitalist participates in the exploitation of labour as represented by the functioning capitalist.” Secondary contradictions between the managers and the big financial investors certainly do exist, but they are minor in comparison to the capital-labour class contradiction.

Every enterprise is Janus-faced, comprising on the one hand the production apparatus per se and, on the other, its financial existence, its shares and bonds, which are being traded on the global financial markets. The production of surplus value constitutes a battlefield situation where resistance is being encountered, meaning that the final outcome can never be taken for granted. Techniques of risk management, organized within the very mode of functioning of the ‘deregulated’ money market, are a critical point in the management of resistance from labour, and thus for promoting and stabilizing austerity. Financial markets generate a structure for overseeing the effectiveness of individual capitals, that is to say a type of supervision of capital movement. The demand for high financial value puts pressure on individual capitals (enterprises) for more intensive and more effective exploitation of labour, for greater profitability. This pressure is transmitted through a variety of different channels.

When a big company is dependent on financial markets for its funding, every suspicion of inadequate valorization increases the cost of funding, reduces the capability that funding will be available and depresses share and bond prices. Confronted with such a climate, the forces of labour within the politicized environment of the enterprise face the dilemma of deciding whether to accept the employers’ unfavourable terms, implying loss of their own bargaining position, or face the possibility to lose their job: accept the “laws of capital” or live with insecurity and unemployment. This pressure affects the whole organization of the production process. It therefore presupposes not only increasing “despotism” of managers over workers but also flexibility in the labour market and high unemployment. Hence, “market discipline” must be conceived as synonymous with “capital discipline.”

The working majority in practically every capitalist country will always be opposed to shrinking wages and precarious employment, to degeneration and cut-back of public services, raising the cost of education and healthcare, weakening of democratic institutions, strengthening of repression. They will always conceive the ‘crisis of labour’ (i.e. unemployment, precarious and underpaid work etc.) as a social illness that should be tackled by itself, not as a side effect of the recovery of profits. The continuation of austerity is therefore a matter of the social relation of forces. As Karl Marx commented on the limits of the working-day: “The capitalist maintains his rights as a purchaser when he tries to make the working-day as long as possible … On the other hand… the labourer maintains his right as seller when he wishes to reduce the working-day to one of definite normal duration. There is here therefore an antinomy, of right against right, both equally bearing the seal of the law of exchange. Between equal rights force decides.”

Under capitalism, the economic power of society is only used to produce goods which can be sold at a profit; if this cannot be done then nothing will be produced. The owners of the means of production would rather allow their businesses to sit idle than to produce at a loss, even if the things that could be produced are desperately needed. The capitalist economy is governed by profit not need, and for this reason is highly inefficient in terms of meetings society’s needs, despite what all the apologists of capitalism claim. We are frequently told that capitalism is the most efficient of all economic systems – yet if this were the case, why would factories and offices lie idle and empty, despite being able to produce an abundance of goods and services that society needs? If profit were removed from the equation there would be no barrier to using all the means of production at our disposal to their fullest extent.

For many, it is clear what we are fighting against but it can be harder to picture exactly what we are fighting for. Socialists are not crystal-ball gazers. We cannot predict the future with absolute certainty and so we cannot say exactly what socialism will look like. Society is not shaped by the speculation of past generations, but by the decisions and actions of the present. Nonetheless it is still possible to make some deductions about what socialism will look like by applying a materialist analysis to the development of history and society. In other words, we can make hypotheses about the future, based on the evidence from the present and the past. This is not a precise science that can predict exactly when a revolution will break out or the specific form that it will take but by looking at capitalist society we can see potentially what a socialist society will look like. This idea of an economy that isn’t run for profit gives us the first glimpse of what socialism will look like. Socialism means the end of a society in which human beings are oppressed and exploited by other human beings. It means an end to private property and an end to profit and the anarchy of the market. A socialist society would be able to plan in the interests of the needs of the many, instead of the profits of a few. This is the foundation of a society of abundance, in which all the forces of economic production are rationally and democratically planned in the interests of the majority. Instead of alienating us from our work, socialism will gives us a real stake in the economy and in society, by giving us collective ownership over it. The work itself will therefore have a more direct purpose and be clearly for our own benefit and the benefit of others around us, instead of paying dividends for far away investors.

For people to be able to genuinely participate in the democratic running of society they must have the time to do so. Under capitalism, the length of the working week and the pressure of day-to-day life mean that the vast majority are completely divorced from political activity. For someone working long hours or two jobs, the last thing they are capable of or willing to do with their evenings and weekends is attend meetings on proposed. In a socialist society, where the efficiency of technology and automation has greatly reduced the hours of the working day, people will finally have the free time necessary to participate fully in how society is run. By placing the economy under genuine democratic control of the working class, people will also have the motivation to participate thanks to the knowledge that their thoughts and actions can make a tangible difference. At the heart of socialist democracy, therefore, is the ability for society to actually be able to implement the decisions it makes.

 Socialism does not mean an immediate end to all of the world’s problems and the creation of a paradise in which everyone lives happily ever after. It does promise a system where humans can stop destroying themselves and their planet, and instead begin to take conscious control of their own lives. From a capitalist’s point of view, destroying the planet is an acceptable price to pay for higher profits, not least because it is the world’s poorest people who will be the ones who bear the brunt of extreme climate change. When it comes to climate change socialism is the only thing that can save us from destroying the planet by reducing emissions to mitigate climate change which would contribute to solving the most serious problem facing all life on earth today. The technology already exists to harness the energy from wind, waves and sun, which could be used to power the entire planet. This is not done because it would be an unprofitable exercise for those capitalists who have built and invested in enormous fossil fuel companies. Capitalism is incapable of planning for the future, interested as it is only in short term gain.