Home

Looking For Answers

A Primer in Political Economy

For Workers  in the 21st Century

George Hewison

Introduction

Stating the Problem-Looking For Answers

  1. The great global economic crisis of 2008 that persists through the present and threatens to undermine the future also suggests a crisis in modern economic theory. The great exponents of capitalist economics, Keynes, Samuelsen, Friedman, and Galbraith from the past and the current crop of bright economic gurus, Roubini, Geitner, Summer and Krugman can offer little comfort to struggling society. Their panaceas are variants of solutions already tried and tested by history and found wanting, and are more akin to shuffling deck chairs on the Titanic. If their economics is supposed to explain how an economy should be structured to serve people in society, it has failed miserably.
  2. Missing from the works of all these gentlemen is a basic understanding of the economic system revealed by Marx.  Even the great liberal, John Kenneth Galbraith, is most flattering to the works of Marx, but fails to grasp the most important discovery by the founder of modern socialism, much less contradict him[1]. Marx’ discovery was as important to economics as the discovery of the atom was to chemistry and physics. Yet almost all modern economists dismiss Marx as a relic of the past, link him to the failed experiment in the Soviet Union, or ignore him altogether.
  3. Marx discovered the secret of capitalist profit, the engine of our modern society. Without understanding that secret, any and all attempts to explain the economic crisis in the complexities of globalized capitalism must fail.
  4. The working class movement that Marx had a hand in stimulating 150 years ago is having serious difficulty orienting itself in face of the immense change in its playing field and the assault on itself and all the gains of generations of workers. 
  5. In Canada, private sector unions have faced large losses of membership and bargaining strength (forestry, mining, manufacturing, etc. with the loss of tens of thousands of good-paying unionized jobs). While the assault on workers within the commodity-producing sectors worsens, the full extent of the threat to service and public sector workers is only now becoming apparent. What is now being advanced as an attack on the public sector is really a blitzkrieg on the positions gained by the working class as a whole over decades.  Our social programs and civilizing infrastructure such as government controlled liquor boards, forest management and environmental and health and safety regulations, and legal aid, etc., etc. is the achievement of those years of struggle. This is being savaged almost overnight, as corporate interests seek to loot the public treasury.
  6. The rough patching job on the cyclical and resultant fiscal crisis of capitalism barely completed, our ruling circles are now using the capitalist-produced crisis as pretext for an even bigger massive shifting of the burden of the crisis to the working class. The conditions for the one trillion dollar bail-out in Europe is evidence of “who will pay” for the crisis. The plans of the new Conservative-Liberal Democrat coalition government in Britain are but added testimony of who’s going to pay, and Stephen Harper’s leadership in proposing a 50% cut in the government deficits over the next three years is an ominous signal of what lies in store for Canadians in the immediate future. There is no money for social programs, but billions for new armaments and “security” for the elite bandits of the G-20.
  7. The Greek bail-out package is failing as the draconian measures being implemented by the “socialist” Papandreou seriously erodes consumer purchasing power, leading to a massive jump in unemployment.
  8. Despite Conservative chest-beating, the situation here in Canada, could actually be as grim, or worse, than that of the other capitalist economies.  The cost of fending off a Second Great Depression in Canada has left record deficits and debt. The underwriting by the Central Mortgage and Housing Commission of home mortgages to the tune of one half trillion dollars, and the buying up of toxic bank mortgages at the beginning of the crisis for  seventy billion more are direct subsidies to Canada’s banks (any wonder they’re so “stable”). This is at a time when the social gains/programs of the working class won since the Great Depression have already been battered.
  9. I think it’s safe to say, we “ain’t seen nothing yet!”
  10. For instance, at this time of record deficits, municipal governments, who have the least constitutional power but deliver a large chunk of front line services to people, will take an enormous hit from neo-liberal budgets.  The Canadian Federation of Municipalities suggests there already is an enormous structural deficit amounting to billions of dollars that must be paid for by someone going forward. Senior levels of government are saying: “Not by us”.  We know who neo-liberals think should pay. There will be service cuts and fees and attacks on unionized workers as we have not seen.
  11. Provincial governments are also jumping on the fiscal restraint wagon as all the recent provincial budgets have indicated with new rounds of cuts and attacks on workers rights. In Ontario, for example, the government has initiated sector talks with unions to inveigle them into accepting the burden of cuts coming down the track with the implicit threat that they either accept the pain voluntarily or have it rammed down their throats.
  12. Federally, our pension plans, EI, and Medicare and all of the many programs that we take for granted are at serious risk.
  13. Taken together, our public services are part of our “social wages”, and the wage bill one way or another is always a point of corporate attack.
  14. Most distressing is the direct attack on unions that have taken generations to build. We all can cite examples where the employer no longer argues with union bargaining committees about the ability to pay. In many cases, they now say “we are profitable and can afford your increases but that’s not the issue. We need to position ourselves in the global economy and change the culture of the workplace.” What they are really saying is if we must tolerate a union, we want a compliant union in the workplace more akin to the corporatist model, in which the employer tells the union what they want, and the union helps to deliver the goods. The Steelworkers strike in Sudbury, Port Colbourne, and Voissey’s Bay is a most egregious example of this new employer attitude, and in this and other cases, while refusing to negotiate in good faith, they are scabbing the job in an unheard of way. In other cases, employers cry crocodile tears over what the economic crisis has done to their bottom line and insist the workers must pay the price.
  15. If the current attack on unions succeeds and the unions are crippled or even destroyed, we need to pose the question “who will lead the fight for social progress on all of the other questions facing Canadians? Who will lead the fight for survival of the planet and social justice?” The stakes are very high.
  16. Where is the trade union movement in all of this? Implicit in this question is the reality that the unions, by virtue of their organization and resources, are best positioned to lead a fight back.  So far, the union movement is desperately fighting back.
  17.  But to a great extent, the fight back is compartmentalized to individual unions and sectors. The unions, the Federations of Labour, the CLC and Labour Councils try to pick out “manageable” parts of the assault to fight on, hoping against hope that they have hit the correct strategic button to stop the assault all down the line. I believe our tactics, to a large extent, are the obligatory tactics of yesterday developed during a period of capitalist expansion, but are not up to the task of beating back the latest wide-ranging assault in a period of sharp capitalist crisis.

PART TWO

  1. Beating back the assault is a prerequisite to society’s well-being and advance down the road, but we need to acknowledge that the unevenness of the attack has led some unions and social activists to be more engaged than others; and in the worst cases to unions fighting with one another over diminishing turf, and with communities that should be natural allies.
  2. We need a cultural shift in our entire movement, but not the kind contemplated by the transnational corporations, to meet the challenge. The culture of leadership that is needed will not come overnight, but will come about as an imperative of the struggle. The culture that the labour movement built up over the past decades worked during periods of expansion when the Rand Formula had unions flush with cash and able to build large administrative structures. Today, even the International Steelworkers with a quarter billion dollar strike fund will be sorely tested by a lengthy strike of more than 3,000 members, up against a monstrous transnational corporation with assets and options larger than many countries.
  3. The culture of caucuses that were a product of an intense ideological struggle within organized labour decades ago has now often devolved into caucuses of electoral machines that offend membership sensibilities, and stand in the way of development of the rank and file as the force capable of mustering the strength to defeat the attack on labour AND society. The days of the culture of entitlement that went with election/selection to Union office are over. In the months and years ahead, union leaders will be tested like union leaders have not been tested since the formation of the mass unions.
  4. In my opinion, a great shortcoming of the current crisis facing labour is the absence of a coherent and strong, NON-SECTARIAN socialist presence in the labour movement. For the first time in more than a century, the socialist left is not providing the vision that can inspire thousands and millions of Canadians. That Left is called upon to do more but is too weak, too disillusioned, too busy calling out leadership, and too disorganized itself at the present to provide vision and the strategic leadership called for. Whatever tiny Marxist Left that remains within the trade unions is so busy fighting day-to-day struggles, it is not replicating itself for the future struggle that will surely intensify. As experienced socialist cadre retire from the scene, there are no replacements.  It takes years to develop serious socialist/Marxist cadre within the working class. Youthful Anarchist, Communist, and other often well-meaning sects, whose strategic vision has also been tested by history and found wanting (they are re-inventing a crooked wheel and axle) often enter the fray repeating the mistakes of yesterday. In today’s climate and facing a powerful adversary, adventurist tactics and strategy merely based on anger or failed theories will prove disastrous to labour and the people that depend on labour.  The movement needs the spirit of resistance and energy of the anti-capitalist youth, but it needs that enthusiasm to be tempered by an absolutely ruthless critique of infantile tactics and strategy.
  5. The tiny Marxist presence in the trade unions, sometimes in key positions understand the problem, but seem powerless, in terms of energy and time to bring their understanding of  the fundamentals of capitalism to penetrate a stale debate between failed neo-liberalism and failed Keynesianism (in which organized  labour often falls in behind Keynesian solutions as the lesser of evils). They also seem to lack the resources to engage youthful activists in a polemic on the nature of capitalism and the way forward.  Two solitudes develop and capitalism, as THE problem, is not a material force in the national and global discourse.
  6.  Marxists have learned the hard way that merely pronouncing capitalism as the problem is childish rhetoric. Still, having said that, an understanding of capitalism is prerequisite to strategic and tactical thinking.
  7. Of the three basic struggles that the working class engages in, economic, political and ideological, it is the ideological that will ultimately determine the outcome of the other two, including an eventual struggle for working class political power. It is this aspect of the struggle that is at its pathetic worst. Capital can not be defeated simply by exposing and defeating the effects of its rule. Like the hydra, it merely generates new more sinister effects.
  8. (Before proceeding, I would like to offer the following based on my personal observations: the Communist Party, at one point, played a role in gathering the revolutionary Left into and around itself; helped produce tremendous gains for the working class; and helped train a militant cadre for the future battles. Thousands of activists threw themselves into a struggle with no thought of personal gain, because they were fighting for something much loftier than themselves. They had a vision of a superior system to the one they found themselves in. The sacrifices they made are a matter of record. But this zeal for the struggle was also handicapped by (1) an endorsement and lack of understanding of a model of socialism that could never resonate with the working class of any country much less our own; and (2) its turf wars with socialists who disagreed with them and/or were content to fight the effects of capitalism but not capitalism itself.
  9. The most serious deficiency of the Communist Party, though, was its inattention to ideology, because it borrowed its theory most heavily from others not rooted in the Canadian experience. The main thesis of Communists everywhere, epitomized by the decision to form a COMMUNIST INTERNATIONAL to guide the final conquest of political power, was that capitalism, as evidenced by World War One and the Great Depression was in its terminal stage. All that was needed was to organize the working class for the final push against capitalism, and to oppose all those within labour who failed to share this view. This terrible underestimation (upon which all strategy was based) of the class opponent was ultimately fatal and disastrous for those who must now pick up pieces.
  10. We should not underestimate the historic consequences of the collapse of the Communist experiment on the working class (and the effects of ninety years of defending a form of “socialism” with barbaric feudal overtones). Globally, there developed a vacuum of historic proportions, and no examination of the difficulties facing the labour movement would be adequate without giving proper weight to this. ).
  11. The most recent capitalist crisis should have been a major opportunity to advance a powerful and emotive working class alternative against an evil system that threatens our survival; but instead the corporate rulers have used the crisis to step up their attack, further weaken the positions of the people in general, and the working class and the trade unions in particular.
  12. The response of the trade unions, the lack of a serious challenge, reflects a reality rooted in our history. The union response is understandably totally defensive and lacking in overall perspective, and nowhere in keeping with its potential. The result is each union and each sector fighting the battle in isolation, and sometimes fighting one another.  Egos of leading personalities, or fear of losing power, often stand in the way of finding effective solutions. Ideological and political consciousness is at an extremely low level. This not an indictment of anyone. Rather, it is a statement of matters as they stand.
  13. In fairness, nowhere in the capitalist world has the response been adequate. In Europe, the working class is being asked to give major concessions all down the line. Here too the fightback is uneven and not up to the task.
  14. This is a grave situation and there is no immediate magic bullet.
  15. I do believe, however, that as part of finding the way forward, we must re-inject a missing ingredient- the development of living socialism. We need to find ways to see the attack for what it is (not just the effects) and find the ways to organize fitting strategic and tactical responses. Otherwise, we are reduced to chasing the “cause of the day”. As part of that we need to start re-building a serious and resilient Marxist presence in the labour movement, one that consistently maintains a clear socialist (anti-capitalist) perspective while engaging in the struggles of the day; that involves itself in tactics and strategy of labour, generalizes the lessons of the struggle as a means of assessing the stage of the struggle (victories and set-backs); and most important develops the next generation of non-sectarian, socialist cadre. That is a long term process of years that must go side by side with helping win battles today. It is an energizing process.
  16. Urgently needed is a Marxist understanding of the capitalist economy and training in this economic theory on a larger scale. Workers need to understand the source of profit and their own place in the production and reproduction of capital. Clear and firm class consciousness and tactics and strategy flow from this. There is some good analysis all around us; some interesting organizational models being advanced; and overall good work, but often that work is coupled with political agendas that merely marks time or leads to a dead end.
  17. Some are searching for a new template for socialism and the path to it. Experienced socialists should be the first to warn the working class of the danger of blindly copying this or that model.
  18. Cuba, Venezuela, Bolivia, Nepal, or the Latin American experience, and elsewhere are full of rich lessons and fully deserving of support…and study, just as militant labour/socialists supported the fledgling Russian Revolution ninety years ago; they provide great inspiration; but we should never minimize, or lose sight of, the rich experience of the Canadian working class in the fight for social change. Internationalism and the defence and advancement  of the Canadian working class should never be counter-posed;
  19. In many respects the struggle for socialism will emerge from the overall class struggle.  We now understand why Marx never tried to work out a completed socialist template. Marxist methodology can, at this stage, only outline the skeletons of what a superior working class alternative society might look like.
  20. Therefore the work on a new socialist alternative vision is important but must not be an excuse for passivity. Today the impressive and growing new cadre of activists who are fighting the effects of capitalism, if they are not to repeat past mistakes need an institutional memory of what has happened before (the successes and failures),  or often the past is romanticized to the point that the real lessons cannot be drawn out; grounding in the basics of Marxist political economy and how social change comes about; and developing and nurturing working class ideologues so that a new generation of activists do not face the numbing fatigue that flows from operating on spontaneity with little clear strategic vision.
  21. Today, there is an added urgency. There is a whiff of fascism in the air as real solutions to the capitalist crises seem to disappear, and large chunks of the population become disaffected with the democratic political process while the Christian Right and others rally the most backward elements of our society, while governments propose greater powers and new equipment for the police and military.
  22. Working class political economy is a science. As a science, it is necessary to unpack and understand capitalism so as to separate capitalist neo-liberal and neo-Keynesian mythology from the actual reality of the system. This is not for the faint-of-heart given how complex capitalism has become since the days of Robert Owen, Adam Smith, Karl Marx and Fredrick Engels. A walk through the aisles of Walmart or Canadian Tire and the results of globalized commodity production is impressive. So too is the vast social service infrastructure that would probably impress Karl Marx himself. The newest forms of banking instruments using the latest technology makes finding the source of capitalism’s power akin to finding the proverbial needle in a haystack. But it can be done and we must engage in this study because it brings a powerful ideological (and material) force to our struggle to defend our gains, and for social progress and change down the road.
  23. We need a strengthened core within labour that can explain the contradiction between wage labour and capital- the fundamental contradiction of capitalism and ultimately the basis of labour’s unity and strength/the objective basis of our struggle as workers. Understanding profit as the driving force of capital means unlocking the “mystery” of, and de-bunking corporate rationalizations for profit that starts with understanding of the basics of capitalism.
  24. 40.   The recent collapse of General Motors had our entire society fixated on whether or not to bail out what was once the flagship of international capitalism. [2] To be sure, the failure of General Motors would have been devastating to workers, communities and workers’ invested pension plans and the collapse of this behemoth would have been a catastrophe for society. If the state intervention leads to the working class drawing the correct conclusions, then society has purchased time to analyse what went wrong and proceed down a different path; but if it does not, we are doomed to repeat the crisis with even more dire consequences. The fundamental economic laws discovered by Karl Marx came shining through in this crisis and we need to understand those laws. 
  25. 41.   At play in that crisis was a global overproduction of automobiles on a massive scale. The market place was increasingly limited by the inability to consume all that the workers had created, even before the credit crunch caused by the financial collapse (also a lesson in Marx). Ruthless capitalist competition has created a workforce so unbelievably productive that even Henry Ford would be spinning in his grave. Two to three workers can produce an automobile in less than a shift. The labour costs for assembling a vehicle are less than $2,000.00. Nevertheless, General Motors went bankrupt! This in and of itself should be enough to take another look at Marx.
  26. We never talk about this, in fact it is fashionable to refer to the unionized people who produce the wealth as “middle class”. This assumes a class below the "middle" class, and denies a "working" class. BUT class struggle is at the heart of our labour relations practice. Our various labour codes, boards, and a whole body of labour relations jurisprudence all have the task of mitigating and dulling the adversarial relationship between labour and capital, yet we fail to understand that it flows from an objective process of capital’s reproduction cycle. We fail to appreciate that the growth of capital brings about the exponential growth of the working class, and with it an exponential growth of working class impoverishment, both relative and absolute. Going deeper into the complexities of capitalism, we need to be able to explain the relationship and differentiation amongst capitalists: industrialists, bankers, retailers, realtors, service corporations, etc. that all line up for a share of the profit that the working class creates. We also need to analyse the corresponding differentiation of the working class in the private, service, and public sectors, as now essential parts of the modern capitalist reproduction cycle, including the reproduction of labour, and why “an injury to one”, really is “an injury to all”.  We need to show more explicitly that the state is an instrument of the rule of capital to: first of all defend the rule of capital and second to re-distribute wealth from the working class to the capitalist ruling class through state budgets and deficits and debts. The fiscal crisis ultimately flows out of the basic contradiction of capitalism that all corporate apologists attempt to hide: that the working class is not able to consume all that it produces; and this creates recurring economic crisis and all attempts to manipulate fiscal policies to off-set or mitigate these crises only prolongs the onset of, and guarantees, deeper crisis when it finally hits. We need to be able to explain the globalization of the capitalist reproduction cycle along with the globalization of labour and the necessity of working class internationalism. Last, but by no means least, we must now confront capital’s necessity for exponential growth and how that plays out in the looming environmental catastrophe.
  27. We need to challenge not just the effects of neo-liberalism and Keynesianism, but the underlying theories. We need to re-discover the real role of politics and political parties and unions and the inevitability of social change and the leading role of the working class in that change.
  28. This is but an introduction to the essentials of political economy that we desperately need as we confront qualitatively new conditions.
  29. We have rich examples everywhere of how the objective laws of capitalism play out in our everyday lives. We need to refresh and deepen our critique of capitalism and constantly re-insert our understanding of the laws of capitalism back into our struggle in meaningful and useful ways. If manufacturing, and especially auto production, is still central to our Canadian economy, we must take the excellent data that is out there supplied by the corporations themselves and distil it through the prism of working class theory to seek real alternatives. As the struggle grows, as it inevitably must; and as that struggle is infused with knowledge of how capital operates, it will be capital, not labour, that will be increasingly on the defensive.
  30. Before starting the discussion on political economy, it may prove necessary to identify various components of the working class, for the as a result of the capital reproduction cycle, the working class has become widely diversified.
  31. If we look at the trade union movement of Canada and compare it with that same movement half a century ago, we see a startling shift.
  32. Fifty years ago, the trade union movement was comprised of private sector unions largely engaged in commodity production and distribution. A glance at the modern day trade union movement, makes the shift is all-too-apparent. The public and service sector unions far outnumber those in the private, commodity producing areas of the economy. Once we have examined the nature of the capitalist system as a whole and in its development, we must come back to the changing structure of the working class and what it means. It will be argued that the changing structure of the working class only reflects the complexities of a system of commodity exchange, based on the exploitation of wage labour.
  33. A mental exercise before proceeding: how many people are required to produce a bottle of Molson’s Canadian? Or any other commodity for that matter?

 Hint: What is involved in the production of the components of the beer? The grain? The fertilizers to produce the grain? The harvesting machines? Hops? The machinery? The bottle? Glass? Labels? Printing? Ink? The training? Literacy skills? In other words, how many millions of people are needed to get that sip of beer to your lips? Just how complex has the division of labour become in our society?

Chapter One-Commodity Production

 

 

[1] Galbraith, John Kenneth, “The Age Of Uncertainty”, Houghton, Miflin Company, Boston, 1977, p 102-105.

[2] In the 1950’s the slogan was “What’s good for General Motors is good for America”. That proved to be the mantra behind the bail-out.