The Characteristics of Mature Capitalism v. 4

by Rawlinsview –New York Jan 29, 2014

– –  The Current Situation – –

Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance , is self-evident. No natural laws can be done away with. What can change in historically different circumstances is only the form in which these laws assert themselves. And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.[1]

The history of the 20th century was defined on its surface by the contest between Soviet Socialism on the one hand and “Western” capitalism on the other. Despite this and despite the spectacular collapse of the Soviet state, it seems clear at the present time that little in terms of social contradiction was resolved by the demise of the Soviet Union. As the binary simplicity of the cold war contest fades into a quaint memory, the present world order –if it may be considered an order at all—is characterized by the massively expanded political and economic weight of China, by the post-colonial rise of mass struggle in the Middle East, North Africa, Central and South Asia known as the “Arab Spring”, by the multi-polar fractalization of economic power characterized by the emergence of the BRIC nations and other rising second world economic stars such as South Korea, Indonesia, Mexico and by the grinding extended stagnation of the economies of the 20th century imperialist nations, Japan, the European Union countries and to a lesser extent but not insignificantly the United States and Canada.

The historical development of the period following the World Wars was not however a contest of “two systems” but rather the extended workings of the development of capitalism in its confrontation with the awakened aspirations the worlds populace which brings us to the present moment. Rising above the fearful tremblings of the middle-class left and the triumphal bluster of neoliberal dogma are clear social facts which can be reduced from the boiling broth of 20th century history.

–Characteristics of the Epoch of Mature Capitalism

In the journalistic back and forth of the mainstream media and the dialogue familiar to the university student one side of the conversation defends the “market” or “free market” approach, the antique “laissez-faire” concept.

To borrow the words of another mentor of mine, Jack Kemp, Mitt and I understand that “No government in history has been able to do for people what they have been able to do for themselves, when they were free to follow their hopes and dreams.”[2] Paul Ryan

What America needs is not Robin Hood but Adam Smith. In the year we won our independence, Adam Smith described what creates the Wealth of Nations. He described a limited government that largely did not interfere with individuals and their pursuit of happiness.[3] Rand Paul

The other side defends the importance of government regulation or intervention to correct the “excesses” of the market, to stimulate growth and employment, to develop core infrastructure, to concentrate capital resources toward undeveloped areas and sectors, and occasionally to act charitably toward the aged and infirmed and “those” less fortunate.

“History tells us that in fact a completely unmanaged economy is subject to extreme volatility, subject to extreme downturns. I know this legend that some people like that the Great Depression was somehow caused by the government or the Federal Reserve, but that’s not true. The reality is it was a market economy run amok, which happens repeatedly…I’m a believer in capitalism. I want the market economy to be left as free as it can be, but there are limits. You do need the government to step in to stabilize. Depressions are a bad thing for capitalism and it’s the role of the government to make sure they don’t happen, or if they do happen, they don’t last too long.” ***

“I’m a defender of the economic policies that we followed after World War II that produced the best generation of economic growth this country has experienced. We had a set of policies that provided mild inflation, there was effective government regulation of the financial system so it didn’t go wild…We had fiscal policy that stimulated the economy when it was needed. We had policies that fostered a strong middle-class instead of using the worship of the supposedly ideal force of the market….I like the America that my parents prospered in. I think we can restore a lot of that.”[4] Paul Krugman

“The system would work better if it were left alone.”

“The system can be improved if we tinker with it or manage it with greater efficacy.”

Historical forces and established social facts have transcended the original context of this dichotomy as it was framed during the period of the rise of mass Socialist movements at the beginning of the 20th century and again during the ‘Great Depression’ which fell between the First and Second World Wars. The colonial system collapsed through and following the Second World War. The United States and Europe saw a period of economic crisis as well as social and intellectual upheaval following the civil rights and other social movements in the United States. Nationalist, anti-imperialist and socialist movements rose in Africa, Asia and Latin America, the Cuban Revolution (1959), the defeat of US imperialist intervention in Vietnam (c1974), and then after the Sandinista Revolution in Nicaragua (1979), the revolutionary civil war in El Salvador (1980s), the overthrow of the Shah in Iran (1979), The Revolution in Grenada (1979), and crowningly the overthrow of the Apartheid regime in South Africa (c.1990-1994).

More or less loudly and quietly a new epoch has come in to being brought by combinations of resounding blood and turmoil and small incremental changes in the way of life of the earth’s citizens. Capitalism has failed, and socialism has not triumphed.

—  The Victory of the Commodity

The principal economic feature which defines the present epoch is the penetration of commodity production as the dominant feature of economic life for virtually all of the world’s populations. This is a fact of life which it was possible to predict, but which was as yet 100 years away at the close of the 19th century. Involvement of the entire world society in relations of commodity exchange remained an incomplete development at the end of the Second World War. Today this process has neared its completion and the “world market” has come in to its full fruition.[5]

Though not complete in an absolute sense, and though variations and even new forms of production relations continue to develop, the qualitative fact is such that pre-capitalist forms of subsistence production–which remained substantial throughout the 20th century and various movements and institutions of resistance to the operation of the law of value[6] –including the establishment of anti-capitalist regimes–have, in their mass, given up their ghost to the modern god–the commodity.[7] [8]

In another manner of speaking, virtually all purposeful material production in which the labor of virtually any living citizen of world society engages at this point is produced for money or equivalent exchange in some or another sector of a global market. While the tendency toward this state of existence is hundreds of years old the fact of its virtual completeness is as recent an occurrence as the rise of the current century.

–The Universality of the Republican Nation State–

In the political sphere, the history of the 20th century may be defined by the transformation of the world’s political structure such that the assertion of the right of nations to self-determination has won out against the forces opposing it. The great majority of the world’s citizens live in more or less modern nation states which are self-governing republics, however uneven the degree of internal democratic or civil development of any given nation may be. There are notable exceptions such as Saudi Arabia and the Gulf States which remain hereditary monarchies and specific divided states in which the relationship of the forces of global power intervene to block the natural development of a nation state, Korea, Palestine, Kurdistan etc. but the circumstances surrounding these tend more to substantiate than to disprove the stated rule. While the drive for national self-determination remains a potent political force and an ongoing factor in geopolitical relations and conflicts. Nationalism as a progressive historical force is meeting its demise by virtue of its own success. The examples of South Africa, Egypt, Tunisa, Iran and Turkey make this clear as the principal questions facing the development of these countries transcend the largely achieved formation of an independent national state. In Egypt in particular the potential power of the proletariat has come to be seen, though there has yet to develop a leadership there capable of harnessing that power for the direct interests of the Egyptian working class itself.

The wars and revolutions of the 20th century drove the colonial arrangement out of existence and set the imperialist powers on the run. No state has been returned to monarchial or other non-republican governmental form nor effectively recolonized in the recent course of history.[9] Attempts to repress the natural tendency toward nationhood on the part of like peoples sharing common histories and languages have proven doomed to relentless bloodshed and eventual failure.

Neither the statist socialism of countries governed by Stalinist political parties, nor the traditional political powers of Europe, nor the hyper-capitalist young imperial power of the United States proved able to forestall these powerful tendencies in the long course of history. Monarchies and colonial arrangements collapsed into failing wars or revolutions, and markets opened up to virtually everyone everywhere. Even states in which there has been meaningful progress toward the development of some or another form of socialism such as in Cuba and to some extent Vietnam have tended since the end of the 20th century toward greater rather than less participation in global commodity exchange.

The massive advancements in transport technology and infrastructure which occurred throughout the 20th century and the ‘warp speed’ advancement in communications and information access and storage which occurred at the end of the 20th century and at the beginning of the 21st century have reinforced this general tendency and advanced the development of a worldwide cosmopolitan civil society.

 –The Development of Productive Forces–

Capitalism has done humanity the favor of having effectively buried itself in overproduction. As the gross productive capacity has risen however, the social needs of large sectors of the world’s population remains unmet. A unique characteristic of the present epoch is that in terms of simple capacity the productive forces of the human race are now sufficient to provide for the material needs of the whole of the world’s population, the technical and material foundations of extreme poverty and disenfranchisement are eradicable but for political will and effective social organization. Thus hunger, disease, poverty, and ignorance must be understood as social dysfunctions of the current order. These problems stand, at present, as proof of the inability of the operation of the “law of value,” the “invisible hand” or other understandings of “natural” market mechanisms to effectively allocate social resources without conscious direction and political commitment.[10]

At the same time that hundreds of millions of the Earth’s citizens live in destitution and ignorance millions if not billions of those of us who are able to obtain education and who are in a position to make a significant contribution toward the betterment of both ourselves and our fellow citizens are obstructed from the opportunity to do so by rates of unemployment that exceed in many cases 20 percent by any real terms in the developed world and 50 percent in many the developing economies. As the commodity production of goods has expanded to include virtually all economic activity on our globe so too has the dispossession of labor from productive assets and thus the proletarianization and commodification of human labor. Hundreds of millions of able bodied and otherwise capable people are denied the opportunity to work gainfully and thus to support themselves and contribute to society as a whole. On top of all of the waste of the system and all of the counterproductive activity the greatest waste of all is that of the millions upon millions of people who are cut off from the opportunity to help in the process of fixing what is obviously broken.

— Government intervention in market operations, life support of the system.

Effectively the epoch of state-monopoly capital and classical imperialism, which reigned for much of the 20th Century, may now be seen as another developmental phase of the capitalist system rather than as its “final stage.” Specifically this may be understood by grasping that imperialism served two key functions in the development of capitalism as a world system, one is broadly understood in that it was the mechanism of exploitation of the developing world on the part of the imperial centers. Concurrently, as described by Lenin,[11] it was a system of competition between the imperial centers in which each vied for advantage over the other. As well, the imperialist system served to drive forward the expansion of the social relations of capitalism globally bringing us to the point where we are now–that is, thoroughly extending commodity relations to the whole of the system.

As Western imperial power recedes in the face of a polycentric geopolitical system, and as the imperialist system shows evidence of losing its control but prior to the establishment of states and social relations in which the working class holds effective political power, the tendency toward state monopoly capitalism continues to strengthen. The resulting state form in the majority of advanced economies is a sort of civilly administered institutionalized Bonapartism as is required to maintain social stability, permanent professional armies, and to administer the massive, complex, modern bourgeois state.

The established social fact of the welfare state and the inescapable reality that government spending represents between 20 and 60 percent of GDP in all developed societies is such that macro level economic planning, regulation and monetary/financial intervention is an integrated aspect of modern capitalist society. These mechanisms do not simply exist as mediating forces in the class struggle, or to alleviate social disproportions, but also because they have become essential to the basic operation of the capitalist system itself as they are directly integrated into the process of appropriation and distribution of surplus value now that the classical “laissez faire” operations of the capitalist market have been rendered by its own contradictions, not just socially nonviable, but in fact nonviable at an economic level without perpetual state intervention.[13] The rise of governmental financial and monetary intervention schemes and other forms of social entitlement programs comes at the same time that the actual social conditions of most working people are worsening rather than improving. The principal function of state intervention in the major capitalist economies at the present juncture is ever more desperate attempts at stabilization rather than the improvement of the lives of the majority of the earth’s citizens.

–Expansion of the global proletariat–

It may now be considered that the majority population of most of the world’s nations are more or less best described as proletarians[14] in the classical sense. This is to say that they/we are non-owners of significant social means of production and that to the extent that we are employed we are so engaged in production for the market in a relation in which the means of production is owned either socially, by a state entity, or privately by some or another form of capitalist concern. Even in agriculture, in most cases, the mass of production is carried out by toilers who are either fully or partially proletarianized, and human labor power is bought and sold as a dispensable commodity the principal purpose of which is to earn profit for the capitalist class.

–The cosmopolitan proletariat–

The working class has matured along with the system that created it. It is now larger and stronger than it has ever been. The advancement of communications and information tech-nology, the establishment of global networks of travel, the internationalization of popular culture, and the driving mechanism of monopoly capital as is roves the globe in search of cheap labor and drives huge migrations of workers in search of employment has created a literate, informed, cultured, multilingual, technically sophisticated and globally inter-connected working class which mirrors the development of globalized monopoly capital.

–The Untimely Death of the Law of Value

“The Law of Value is passing into the phase in which it is transformed and gradually dies out, also on the basis of the Law of Value”[15] EA Preobrazhensky

If we examine the nature of the economies of all countries presently engaged in the construction of some form of Socialism today we find forms of the same challenges faced by the Bolsheviks during the New Economic Policy period. It is even so that in North Korea in which the state attempts to fully suppress market forces there are varied levels of operation of the “Law of Value” as this remains the dominant force in world economic development at the present time. On the other side in virtually all of the capitalist world with the ascendance of ‘Keynesian’ methods of state intervention and even on a global scale with the operation of the International Monetary Fund and coordinated actions on the part of the “G20” governments the European Common Market, The North American Free Trade Alliance and major corporate monopolists engage in variedly successful and unsuccessful attempts to “manage” or bend the operation of the ‘free market’ in pursuit of normative economic goals. The essential conflict described by Preobrazhensky remains at the core of the challenges facing human progress at the second decade of the 21st century, four years short of the centennial of the October Revolution. It is not a stretch to make the assertion that economic theory in the 21st century has moved from the descriptive science that it was in the hands of Adam Smith and even Marx toward a proscriptive technology and that the competing schools, including the neo-classical, are separated much less by the question of whether than they are of how to manipulate, adjust mediate or compensate for the ‘natural’ forces of the market. In the section of The Law of Value and Monopoly Capitalism Preobrazhensky writes.

With the development of monopolist tendencies in capitalism the ideal period of bourgeois free competition comes to an end. A number of highly important branches of production in the largest capitalist countries are taken over by powerful trusts, or at any rate organizations are formed which are not purely production organizations but are concerned with realizing the products, that is, syndicates and cartels. A fusion of the biggest trusts with bank capital takes place, or else banking centers become the points of departure of a far-reaching control over production. Free competition is either entirely abolished within the given country, in the fully trustified or syndicated fields, or is seriously restricted, owing to control by bank capital which does not encourage desperate struggle between enterprises which it finances or controls. Monopolist tendencies extend beyond national frontiers; attempts are made, sometimes successfully, to create in certain branches of production single international capitalist trusts, or else free competition is reduced to rivalry on the world market between two or three gigantic trusts dominating a certain branch of production. Restriction of freedom of competition leads also to restriction of the working of the law of value, in that the latter encounters a number of obstacles to its manifestation and to some extent is replaced by that form of organization of production and distribution to which capitalism can in general attain while still remaining capitalism. …***

The equalizing of the rate of profit between the trustified branches of production is rendered almost impossible; they are transformed into closed worlds, into the feudal kingdoms of particular capitalist organizations. It is very important for the future to note here that economic necessity imposes itself in these circumstances in a way which is significantly different from what happens under the law of value, so that political economy opens a new chapter when it analyses these forms, in so far as a transformation begins in that very concept of ‘law’, with which we are concerned when we study free competition.[16]

One way to understand the effect of this transformation is to say that the intense concentration of capital achieved over the course of the 20th century has created a situation in which capital, or more precisely the social class that control’s capital is now more powerful than the natural operations of the market which was their creator. Because the class structure of Bourgeois society remains, and the cultural product of that society is based upon the individual right of a dominant class, the dictatorship of capital is in some ways more arbitrary than it was in its natural phase which according to Marx “In England alone, which we take as our example, has it the classic form.”

Again it is understanding these dynamics that will allow for a conscious working class movement to make a challenge for political power.


[1] Marx to Kugelmann, In Hanover Abstract, London, July 11, 1868 http://www.marxists.org/archive/marx/works/1868/letters/68_07_11-abs.htm

[2] Ryan PaulTranscript, Video: “Paul Ryan Speaks at Values Voter Summit” by Fox News Insider // Sep 14 2012 // 12:16pm  http://foxnewsinsider.com/2012/09/14/transcript-video-paul-ryan-speaks-at-values-voter-summit#ixzz2aVEpLtI3

[3] 2/13/13 at 12:08 AM Video and Transcript: Rand Paul Gives Tea Party Response to State of the Union by Christian Post http://blogs.christianpost.com/cp-events/video-and-transcript-rand-paul-gives-tea-party-response-to-state-of-the-union-14596

[4]Krugman Paul from Bloomberg TV “Paul Vs Paul” April 30, 2012  http://www.valuewalk.com/2012/04/ron-paul-vs-paul-krugman-exciting-debate-on-video-with-transcript/

[5] “The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.”
Marx, Karl The Communist Manifesto http://www.marxists.org/archive/marx/works/1848/communist-manifesto/

[6] Preobrazhensky E.A. The New Economics (1926) English Translation Brian Pearce Clarendon Oxford (1965)
the law of value is the spontaneous regulation of the production process in commodity society”

[7] Every product of labour is, in all states of society, a use value; but it is only at a definite historical epoch in a society’s development that such a product becomes a commodity, viz., at the epoch when the labour spent on the production of a useful article becomes expressed as one of the objective qualities of that article, i.e., as its value. Marx Karl Capital Vol 1 ch1 section3 A, 4 “The Elementary Form of Value Considered as a Whole.” http://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#S1

[8] Whence, then, arises the enigmatical character of the product of labour, so soon as it assumes the form of commodities? Clearly from this form itself. The equality of all sorts of human labour is expressed objectively by their products all being equally values; the measure of the expenditure of labour power by the duration of that expenditure, takes the form of the quantity of value of the products of labour; and finally the mutual relations of the producers, within which the social character of their labour affirms itself, take the form of a social relation between the products.Ibid, Chapter 1 section 4 “The Fetishism of Commodities and the Secret Thereof”

[9] In terms of the tendency of capitalism and in particular state capitalist political forms to degenerate toward Bonapartist or Facist dominance of the state and society. It appears that unlike the processes which took place in times of political crisis of the 20th century, the civil societies which exist in most nations and the global civil society which has come in to being are capable of resisting such trends and so these tendencies are thereby moderated by middle class public opinion and more significantly the potent and present threat of mass working class political action. The speed of information flow and the engagement of so many hundreds of millions of people in the Global discourse is evidently a factor in this development.
It is a significant for example that in most of Latin America fairly stable republican governmental forms persist despite ongoing economic challenges and open class conflict.
Another way to say this is to say that in most countries in the world today there is substantial civil space for the working class to carry out political action and to participate in the political sphere

[10] I cite one web based source here http://www.globalissues.org/article/26/poverty-facts-and-stats#src8  but the availability of substantiating information is overwhelming. On this site it is indicated that over 80% of the world’s population lives on 10 dollars per day, that 2 billion people are functionally illiterate, etc. The specific veracity of any one statistic is beside the obvious fact that a near majority of the world’s population lives in destitute poverty. Meanwhile global military spending is over 1.5 trillion dollars by recent statistics.

[11] Lenin, V.I.; Imperialism the Highest Stage of Capitalism (1917) Lenin’s Selected Works, Progress Publishers, 1963, Moscow, Volume 1, pp.667–766. To the numerous “old” motives of colonial policy, finance capital has added the struggle for the sources of raw materials, for the export of capital, for spheres of influence, i.e., for spheres for profitable deals, concessions, monopoly profits and so on, economic territory in general. When the colonies of the European powers, for instance, comprised only one-tenth of the territory of Africa (as was the case in 1876), colonial policy was able to develop—by methods other than those of monopoly—by the “free grabbing” of territories, so to speak. But when nine-tenths of Africa had been seized (by 1900), when the whole world had been divided up, there was inevitably ushered in the era of monopoly possession of colonies and, consequently, of particularly intense struggle for the division and the redivision of the world.

[12] Chart showing progress of US Government spending as a factor of GDP over time http://www.ritholtz.com/blog/2011/07/government-spending-as-a-percentage-of-gdp-2/ by Barry Ritholtz – July 29th, 2011

[13]State capitalism manifests in several ways and it can be complex as well as sophisticated, such as the public policies aimed at supporting the private South-Korean conglomerates, or the setting up of sovereign wealth funds from Asia and Gulf States with growing influence on capital markets and investments.
There can however be no overlooking the fact that ‘State capitalism’ in emerging countries is mirrored by equally aggressive ‘State intervention’ in the economy in developed countries. The Norwegian State-owned oil company, Statoil, and American and European policies for subsidies in the agricultural sector are familiar examples”.
http://thebricspost.com/in-the-times-of-state-capitalism/#.UgHDcm2oOQI

[15] EA Preobrazhensky; The New Economics pp 157

[16] E.A. Preobrazhensky; The New Economics pages 151-152

About rawlinsview

News and political commentary from the point of view of the social interests of the international working class.
This entry was posted in Analysis of Mature Capitalism, Bonapartism, E.A. Preobrazhensky, opinion/current affairs, Political Economy and tagged , , , , , , , , , , , , , . Bookmark the permalink.

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