Behind the Crisis: Marx’s Dialectic of Value and Knowledge, Guglielmo Carchedi

Haymarket Books 2012, 303 pages, £21.99 paperback

Introduction

Gugliemo Carchedi (GC) defends Marx’s value theory and his theory of crisis which sees the falling rate of profit as the key force driving capitalism into crisis.[1] He exposes the inadequacy of alternative explanations which dominate in academic Marxist circles. In particular he points to the class bias of these alternatives and shows they implicitly or explicitly view capitalism as rational and thus relegate class struggle against the system to voluntarism. The book contains a good detailed explanation of the crisis of 2007 but has a much broader scope than simply political economy.

Since capitalist political economy grows out of the social relations and processes within this society, GC starts by considering, in a general way, how relationships and processes lead to social phenomena and the contradictory nature of these phenomena. For him social phenomena are subject to continual change, and can only be understood dialectically. Capitalism is a system which is continually in a process of reproducing itself but also in the process of being superseded. The central contradiction, which colours all phenomena in the system, is the ownership relation, the fact that all property is in the hands of the bourgeoisie and the working class owns only its labour power. Class struggle is the force driving the tendency towards its supersession. It follows that capitalism is a system in disequilibrium with conflicting tendencies and counter tendencies. To understand this, an analysis using dialectical logic is necessary since the premises contain contradictions. Formal logic, which necessarily excludes contradictory premises and the dimension of time is inadequate. This is the general background to his treatment of political economy and crisis. It gives him the tools to refute those who claim key elements of Marx’s analysis, namely his labour theory of value and crisis theory, need to be rejected, or at least revised.

GC goes on to consider the production of knowledge and the production of consciousness. He points out that knowledge is material and the production of knowledge under capitalist relations is the production of value and surplus value just as in the case of production of goods which he calls objective production. This is dealt with in great detail and provides a comprehensive refutation of the popular myth that abstract knowledge, in the form of the “general intellect”[2] has today become a productive force marginalising the importance of material labour and undermining the labour theory of value. GC points out that knowledge produced under capitalist social relations, even science, is capitalist class knowledge. Its main purpose is to increase the exploitation of the working class in order to increase profit. Under capitalist social relations science is not class neutral. In this he opposes the views of Engels, Lenin and Gramsci. However, GC’s aim is to relate knowledge to class consciousness and consider how knowledge and consciousness produced under capitalist social relations could be used to create a new society in the period of transition. Certain types of knowledge, since they are produced under capitalist social relations, necessarily contain a contradictory element since they are socially produced by wage labour. These may be adapted and used by transitional society.

GC insists that Marx’s labour theory of value and his dialectical method provide the intellectual compass for the working class to create a new society. Fashionable contemporary theories, such as “neo-Ricardianism”,[3] “value form theory”[4] and especially “workerism”[5] only serve to disorient and disarm labour in its struggle for a higher form of society.

The book is logically structured in four chapters. The first deals with dialectical method and the ‘Marxist’ academics who argue Marx’s work is logically contradictory and requires revision. This is dealt with in the second chapter which leads on to a chapter on capitalist tendency to crisis and the 2007 crisis. The final chapter deals with knowledge and consciousness and touches on how knowledge produced under capitalism could be adapted for use in the period of transition to socialist society.

The book thus deals with key issues relevant to revolutionaries today. Although the issues are complex the book is clearly written and deserves to be widely read. We will look at some of these issues in greater detail below since many of them form the bulk of the current critique of Marxism.

Dialectics

The sub-title of the book indicates that GC sees his treatment of dialectics as derived from what is implicit in Marx’s work. He sees his work as completing analyses which Marx was unable to pursue. He argues that dialectics apply only to social relationships, processes and phenomena. This puts him in conflict with Engels, who attempted to base dialectics in nature and thereby prove that socialism was the inevitable outcome of a natural dialectical process. Though GC admits a similarity between Engels’ laws of dialectics and those he proposes he disagrees with Engels’ view that science is class neutral. Since scientific knowledge is produced by labour power under capitalist social relations it retains a capitalist content. He points to Taylorism and scientific management as examples of this. Engels’ view, he argues, leads to seeing the productive forces and developments like Taylorism as class neutral, and the idea that socialism could be built using capitalist productive forces.[6]

Phenomena in class society, GC argues, result from the interaction of social processes and social relations. They result from people pursuing their aims. Social phenomena, however, have a double dimension, their realised dimension and their potential dimension. A commodity, for example, has a use value which is realised by its production and a potential exchange value which can only be realised if it is sold. To move from potential to realised requires time, but what can be realised at a later time must however have been potentially present.

The social system of capitalism similarly has a realised dimension, its reproduction, and a potential dimension, its supersession. Its realised dimension expresses itself in the reproduction of the system and the accumulation of capital, and its potential supersession in its cyclical crises. The contradictory social content of capitalism can be seen in that its reproduction implies exploitation, inequality, egoism while its supersession implies cooperation, solidarity and equality. This is the contradictory social content of the capitalist ownership relation which ultimately determines other relationships in capitalism.

Because of their contradictory nature, social phenomena can only be understood by dialectical logic. GC proposes three rules of dialectical logic. Social phenomena are always both realised and potential, both determinant and determined and subject to constant change. Formal logic is only able to analyse realised phenomena that are not subject to change. It is unable to treat issues where the subject has a realised reality and a potential reality which is in contradiction to it, since in formal logic all contradictions are a mistake.

Once the basis of a dialectical approach to social phenomena is set out GC proceeds to review critics of Marx’s labour of value.

Defence of the Labour Theory of Value

Marx’s labour theory of value has been subject to sustained attacks since the publication of the third volume of Capital. It has been termed incoherent and logically inconsistent by both bourgeois economists and Marxist academics. The four main areas where it is alleged the theory fails are:

1. Abstract labour is not the only source of value
2. The abstract labour is not material
3. The falling rate of profit is incorrect
4. The transformation of values into prices is impossible.

If these critiques were proven correct, capitalism would not have a tendency towards crises, and its own supersession. GC argues that the primary reason these critiques are incorrect is that they are mainly based on formal logic and quantitative analyses of these issues.

The first critique asserts that machines create value. For Marx machines do not create value; the value contained in machines is transferred to the product by the work of living labour. This was an early criticism of Marx but has gained ground in recent years through the advent of programmed machines and the use of artificial intelligence. At the extreme, in a fully integrated economy, machines could, so the argument goes, create other machines without human labour. The implication is, of course, that labour’s struggle against capital is irrational while the system itself is rational and will overcome all its problems. GC points out that if machines could produce machines, what they would create would be use values, which could not be aggregated or exchanged as they lacked a common element. Distribution under capitalist social relations could not take place. It needs to be pointed out, however, that distribution could take place under communism since use values would simply be distributed free. The tendency to produce ever more sophisticated machines and replace living labour with them is actually a tendency towards the supersession of capitalism, since it leads to falling profitability of capital and crisis. It is also a tendency which lays the ground for communism.

The second critique claims abstract labour does not exist. Marx argues that human labour is concrete meaning it is specific, e.g. making steel or growing wheat, but is at the same time abstract, namely human labour in general. It is this second aspect which makes commodities exchangeable. Rates of exchange are determined by the quantity of abstract labour contained in the commodities. The second school of criticism[7] argues that concrete labour cannot be reduced to abstract labour and that there is no empirical evidence for the existence of abstract labour. Material existence does not, however, GC points out, require observability, e.g. electricity or gravity, whereas the effects can be observed. The effect of abstract labour can be observed in exchange and must, therefore, have been potentially present in production. Human labour is material and can be measured. It depends on the expenditure of energy which we get from food and drink and this can be measured in calories and the work performed measured in Joules. Abstract labour is the expenditure of undifferentiated human energy.

The general flaw of this criticism is that it does not approach the issue dialectically. Production and realisation of value and surplus value are collapsed into each other and time is eliminated. Dialectical understanding of the commodity sees it as crystalising both concrete labour determined in its use value, which is realised in production, and abstract labour which is potential and is only realised subsequently in exchange.

The third critique, that of the falling rate of profit, is an issue the ICT has written extensively on and we will only briefly review the issue here.[8] Marx argues that increases in productivity resulting from new means of production generally replace workers with machines. The organic composition of capital, the ratio of constant to variable capital, rises and less value and surplus value is produced. This tends to cause the average rate of profit (ARP) for the capitalist system as a whole to fall. It has been argued that this is logically inconsistent and more productive means of production necessarily increase the rate of profit. This was formulated in a theorem by Okishio[9] and is still widely accepted as valid. GC is a supporter of the Temporal Single System Interpretation (TSSI) of Marx’s theory which holds that if inputs and outputs to production are valued over time and value and price form a single system, Marx’s analysis is not inconsistent. He shows through an example of a single commodity economy, the corn economy, how increases in productivity actually cause profit rates to fall when inputs and outputs are valued temporarily. The general refutation of Okishio is that is that his theorem excludes time by assuming simultaneous valuation of inputs and outputs and so relies on formal logic.

A further critique of the falling rate of profit analysis is that it is indeterminate. This is argued by the Monthly Review School and amounts simply to the argument that, while there is a tendency for average profits to fall, there is also a tendency for them to rise as a result of cheaper means of production and increased exploitation of workers etc. GC shows that the tendency for ARP to fall is a tendency precisely because it is held back by counter tendencies. It is therefore the dominant tendency. Reducing the cost of means of production occurs at the same time as reduction in labour and hence reduction in surplus value produced.[10] While lengthening the working day has finite limits and the reduction in the value of the means of production, if it even occurs, is marginal. The more the ARP falls the weaker the counter tendencies become. This critique fails because it is a critique relying on formal logic. It argues from a premise which contains contradictions, namely a tendency and a counter tendency, and concludes that the outcome is therefore indeterminate.

The fourth critique is that values cannot be transformed into prices which makes the whole labour theory of value inconsistent. This is a critique of Marx’s theory of distribution and supposedly showed that under his value system even simple reproduction could not occur. However, as GC shows, if inputs and outputs are valued temporarily in a single system, the inconsistency vanishes.[11]

Again this is a criticism using formal logic and assuming the system is in equilibrium. The critics fail to understand the dual nature of commodities and, by simultaneously valuing inputs and outputs, fail to allow for time.

Theories of Crises

If crises are a constant feature of capitalism a theory is needed to explain their inevitability. Crises spring from the production sphere of the economy where productive labour power is employed. Productive labour is labour which changes existing use values into new use values. In the central capitalist countries today an enormous amount of labour is unproductive and largely engaged in distributing surplus value produced in the productive sphere. Labour expended in commerce, banking finance, speculation, state repression are all examples of this, while sectors such as the military actually destroy value. Crises are caused by the falling rate of profit in the productive sector which, in turn, is caused by insufficient production of surplus value. This results from the process of capital accumulation itself. Increases in accumulation of capital lead to increased productivity. This means expulsion of workers from production and a consequent decrease in production of surplus value. Crises are, therefore, inherent in capitalist production relations and are unavoidable. The attempts of capital to increase surplus value produced by the working class lead to increased exploitation and a host of other attacks on the class. The class which is at the centre of capitalist production is also the class which faces deprivation and poverty as the inevitable outcome of the system's workings. The working class is therefore objectively revolutionary and has an objective interest in creating a higher system of production, namely communism.

This is also the position argued by GC. He examines alternative views of the causes of crises and shows how these explanations imply the system is rational and thus by implication the struggle against it is irrational. This amounts to the theoretical disarming of the working class. We will briefly review GC’s refutations of the main alternative explanations.

Although production and distribution are dependent on each other, production comes before distribution and determines distribution and so realisation of surplus value. Production is the determinant relationship and distribution is the determined relationship. This needs to be understood since the principal arguments against the falling rate of profit as the cause of the crisis are arguments based in the sphere of distribution.

The first argument which GC reviews is that the crisis has originated in the financial sphere due to high levels of debt, speculation, permissive monetary policy, deregulation and so on and so forth. In other words the crisis is caused by mistakes by the bourgeoisie in managing the system. The system is therefore seen as rational and the problems located in the stupidity of capitalists. Yet crises are a recurrent phenomenon. Why would the managers of the system repeatedly make these mistakes? Clearly there must be some structural reasons within the system which cause these mistakes but this explanation offers none, and is not worth considering further.

A more widely held explanation is that the crisis is caused by under-consumption. This view was first put forward by Rosa Luxemburg as an explanation of imperialism before the First World War. She argued that capitalism was unable to realise all the surplus value produced within the system itself and therefore needed extra capitalist markets for this. Imperialism was explained by the struggle for extra-capitalist markets. The exhaustion of the extra-capitalist markets would, she thought, lead to a terminal crisis of the system. Because of the enormous expansion of the capitalist system after World War Two without significant non-capitalist markets, this view has been abandoned by almost all its supporters.[12] However, the theory has metamorphosed from a shortage of non-capitalist markets to a shortage of capitalist markets. This amounts to the view that the working class wages are too low to allow them to buy all the commodities they produce. Lower wages, it is argued, cause the rate of profit to fall. Lower wages are a neo-liberal policy therefore neo-liberalism is to blame for the crisis.

GC shows clearly that lower wages cannot decrease the rate of profit even if all the commodities represented by the wage decrease remain unsold. If this is the case the rate of profit will remain unchanged. Under all other conditions a decrease in wages would raise the rate of profit. This indicates that the falling rate of profit is the determinant tendency and lower wages which tend to raise the rate of profit are a counter-tendency limiting its effect. Empirical evidence also goes against this argument. As Marx notes there is generally a rise in wages before a crisis.[13] GC produces figures which show that this was also true of the crisis which started in the mid-70s. In the seven year period leading up to 1973 there was an annual rise in wages of 2.5% in the US. Wages only began to stagnate after the start of the crisis in 1973.[14]

Generally, if the crisis could be avoided by higher wages, namely a lower rate of exploitation, higher wages could solve the crisis. If this were true the crisis would be due to poor distribution policies and could be avoided by more enlightened distribution! If the capitalist class was less stupid the system would, therefore, tend to move to prosperity and growth. The system would therefore be rational and the struggle to replace it irrational. A higher system of production would not be required. Class struggle would therefore be an act of will rather than a necessity based on the objective need for survival. This is the class content of this explanation.

An inverse of this explanation is the profit squeeze theory which holds that high wages are the explanation of the crisis. This is the view of the Monthly Review school. They argue that during recoveries wages increase until they become too high and profitability falls. The system is then pushed from growth to depression. If wages are then lowered sufficiently profits start increasing again. Falling profit rates are, in this view, caused by the high costs of labour power. As GC points out this theory assumes a constant quantity of new value, (wages and profits), and the problem is, once again, in distributing this quantity. However, the upward phase of the cycle when both wages and profits are increasing, can only be explained if the value produced is increasing. The theory cannot explain the tipping point where growth turns to depression. Marx, himself notes:

Nothing could be more absurd ... than to explain the fall in the rate of profit by a rise in the rate of wages.[15]

GC also points out that this theory has been empirically contradicted by studies of the relative weight of organic composition and wage share for the US capital from 1929 to 1998. These studies show that organic composition accounts for the entire variation in the profit rate with the exception of only a few years.[16]

This, like under-consumption, is a distribution explanation of crisis located in the sphere of consumption and is basically arguing that if distribution could be corrected the system would tend to growth. The system is therefore rational with all the same consequences for the class struggle which we saw above in the under-consumption theory.

An explanation of the crisis located in the sphere of production is that the crisis is caused by decreasing productivity levels. This is actually the view of many bourgeois commentators. It is, however, completely contradictory to Marxís view that the crisis is the outcome of decreased production of surplus value caused by increasing productivity which we have explained above. GC provided an empirical refutation of this by listing the massive increases in productivity of US labour since the end of the 1950s. If the output per worker per hour is set at 100 for 1992 output has increased from 51.3 in 1959, to 76.2 in 1975, to 80.6 in 1980, to 115.7 in 2000 to 135.9 in 2007.[17] In other words productivity has massively increased as the crisis has developed rather than decreased as the proponents of this theory would have us believe.

The Crisis of 2007

For GC the crisis of 2007 is to be found firmly in the productive sphere with its cause as the falling rate of profit. Financial crises are caused by the shortage of surplus value. The general development of crises is as follows:

As production of surplus value decreases due to decreasing employment in the productive sectors firms start closing down and working class purchasing power decreases. Some wage goods remain unsold. Equally capitalists’ purchasing power of the means of production decreases. Some investment goods remain unsold. To stimulate the sale of unsold commodities ... monetary authorities stimulate credit by increasing the quantity of money. Capital flows from the productive to the unproductive sectors. This makes possible artificial inflation of profits in these unproductive sectors. Debt and speculation start growing disproportionally compared to the production of value and surplus value incorporated in commodities ... The process snowballs ... as unemployment surges an increasing number of debtors default on their debts. This applies to both productive and financial sectors. But it is in the financial and speculative sectors that the crisis erupts at first because it is in these sectors that the bubble has increased most ... the collapse of the financial and speculative sectors reveals in a sudden and abrupt way, the continuously shrinking productive basis of the economy that had been concealed through increasing levels of debt.[18]

The shrinking of the productive sector in the US is illustrated by figures GC quotes. The goods producing sector shrank from 27.8% of US employment in 1979 to 16.6% in 2005 while employment in the services sector rose from 72.2% to 83.4%.[19]

Recovery and War

Can the system recover? It is generally true that the crisis itself creates the basis for a recovery. It does this by devaluing constant capital while also reducing wages, prices of commodities and wiping out debt. These things have not happened since 2007. The state has bailed out the unproductive sector, notably the banks, and parts of the productive sector, for example the car producers; it has reduced taxation and interest rates. Debts have not been reduced, in fact, total global debt has increased by over 40% since the 2007 crisis.[20] All this is quite insufficient to stimulate a new round of accumulation. On the contrary, it is more likely that we appear to heading for another global crash. Crises such as that of 2007 are unable to devalue sufficient capital to start a fresh round of accumulation. The other instrument of capital devaluation is generalised war. The clearest historical example is the ending of the crisis of the 1930s by the massive devaluation of capital achieved in WW2.

GC recognises the role of war in devaluing capital and increasing the rate of exploitation, though he does not characterise it as the only economic exit route from the crisis in the present cycle of accumulation. Socialist revolution is, of course, the other exit route from the crisis. GC is, however, completely correct when he writes:

The use of weapons in ... wars is a powerful method of destruction of capital in its commodity form and ... of the means of production and thus of capital as a social relation. .. (this) creates the basic condition for an economic upturn. At the same time wars make possible the cancellation of debt contracted with labour (for example inflation destroys the value of money and of state-bonds) and (makes possible) the extraction of extra surplus value (labourers either forced or instigated by patriotism accept higher intensity of exploitation, longer working hours etc.) ... The capitalist economy is determinant of wars in the sense that the capitalist economy is the condition for the existence of wars and wars are the condition of reproduction (or supersession) of the capitalist economy. ... The notion that wars are caused by extra-economic factors is simply wrong. ... After the war is over, a period of reconstruction follows. ... The two basic conditions for economic recovery, the destruction of capital and an increase in the rate of exploitation have been created.[21]

Knowledge and Consciousness

The crisis-ridden nature of the capitalist economy must manifest itself at the level of individual and social consciousness. This consciousness in turn must necessarily be a key force in the tendency to overturn capitalism and supersede it as a social system. The final section of the book considers the production of knowledge and consciousness and how knowledge developed under capitalist relations of production could be used in the transition from capitalism to socialist society.

Knowledge is produced by mental labour. Mental labour, as GC stresses, is not ultimately different from manual labour. Both entail expenditure of human energy. The human brain, we are told, consumes 20% of all the energy we derive from nourishment,[22] and the development of knowledge in the brain produces material changes in the nervous system and synaptic changes which can be measured.[23] Once the material nature of knowledge is established the material nature of mental work follows.

Productive labour, as mentioned above, transforms existing use-values into new use-values. Mental labour is labour transforming mental use values into new mental use values. Simple examples would be the development of computer analysis programmes from laws of structural or fluid mechanics to solve specific problems of engineering involving these disciplines. However, labour is always a combination of both intellectual and manual transformations the distinction between the two depends on which type of labour which is dominant. Manual labour consists of objective transformations of the world outside us; mental labour of transformations of our perception and knowledge of that world. Both are material.

As Marx notes in The German Ideology:

The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking the ideas of those who lack the means of mental production are subject to it.[24]

Mental production, under capitalist social relations, produces capitalist class knowledge. The capitalist class today own the means of production of knowledge such as libraries, schools, universities, research institutes, computers and so on, just as they did in the 1840s when Marx wrote the section quoted above. Discoveries, generally now made by teams of mental workers, are appropriated by capital and controlled by patents, by intellectual property or similar means. Production of knowledge is directed towards profit. Medical research, for example, is directed towards developing medicines to treat disease, not preventing disease, agricultural research is directed to developing plant types which capital can own and control, rather than relieving starvation.

GC identifies 3 types of knowledge produced within capitalism.

1. Knowledge used to control labour and increase exploitation. e.g. Management techniques, efficiency techniques such as Taylorism.
2. Knowledge used only by labour such as mutual help, solidarity, cooperation. Such knowledge is used in resistance to capitalism and prefigures a socialist form of knowledge to be used in a higher type of society.
3. Knowledge produced to be used by capital but which could also be used by labour. This is possible since knowledge is generally produced by collective mental workers selling their mental labour power. It is therefore produced under a web of contradictory social relationships. Although the knowledge is specifically designed for the capitalist class, it retains the imprint of its collective production. This makes it possible for labour to use this knowledge for resistance to capital. For example, the internet and mobile technology have been designed to exploit and dominate labour as never before, yet they can be used for resistance as in organisation of protest such as the Arab spring, the occupy movement or the recent Deliveroo strike.[25]

Consciousness is a type of social knowledge. GC describes how individuals, throughout their lives, undergo a process of internalisation of social phenomena. These are structured into a conceptual framework which is necessarily social and historical since it depends on previous observation and experience, experience which has an historical dimension. Knowledge becomes social when it is commonly shared by a class. Social knowledge is, therefore, a specific instance of the wider process of the struggle between the two fundamental classes. As the capitalist system oscillates between the movement to reproduce itself and movement to its supersession, which is expressed in crises, so does social consciousness.

It will be possible to use the types of knowledge developed by labour, identified as type 2 above, and that produced for capital, identified as type 3, in the transition to socialism. The third type of knowledge will, however, be radically changed. In this transition GC sees different type of science and labour arising, one whose objective is benefitting labour and mankind in general. Labour will be built on equality, cooperation, self-management and self-development, and both specialisation and division between mental and manual labour will be eroded. Production will be oriented to needs and environmental sustainability.

The book outlines the theoretical basis for a rupture of social consciousness from capitalist domination and the creation of a higher form of social production. Marx notes, in the quotation above, that the ideas of those who lack the means of mental production are only generally those of the ruling class. For a minority this is not the case. The process of development of the ideas, knowledge and consciousness of this minority is omitted by GC. He appears to give this task to intellectual representatives of the class such as himself rather than to an organised political force, namely a political party. This is an important omission in an otherwise important book.

CP

Notes

1. This is the position defended by the ICT and which has been defended by PCInt (Battaglia Comunista) since its foundation in the 1940s
2. This is supported by Paul Mason in his book Postcapitalism reviewed in Revolutionary Perspectives 07. leftcom.org. See also P Virno General Intellect. Quoted by G Carchedi.
3. GC quotes I Steedman Marx after Sraffa

4 . See C Arthur Value Labour and Negativity

1. ‘Operaismo’ in the original Italian. See Empire by Hardt and Negri

6 . This is clearly a criticism aimed at the Bolsheviks and Lenin who introduced one man management and Taylorism in 1918.

1. This is the criticism of the value form critics. See C Arthur Value Labour and Negativity.
2. We have dealt with the falling rate of profit in other publications. See Piketty Marx and Capitalism’s Dynamics in Revolutionary Perspectives 06. leftcom.org and ‘The tendency for the rate of profit to fall and its detractors’ in Revolutionary Perspectives 62 (Series Three) leftcom.org
3. See N Okishio Technical changes in the Rate of Profit.
4. Empirical evidence shows that when new means of production are installed, while parts of the new productive machinery may be reduced in value, the system as a whole contains more value and organic composition tends to increase. See fixed capital per worker and fixed capital per hour worked, G Carchedi Behind the Crisis p.153.
5. See G Carchedi op.cit. Chapter 2 5.3. This refutation is also developed by A Kliman in Reclaiming Marx’s Capital, p .150.
6. The Internationalist Communist Current, to take one example, still supports this view.
7. See K Marx Capital Volume 2.
8. See G Carchedi op.cit. p.133.
9. See K Marx Capital Volume 3 (See G Carchedi op.cit. p.141).
10. Carchedi op. cit. p.150.
11. loc.cit. p.143.
12. loc. cit. p.149.
13. loc. cit. p.155.
14. See Financial Times 5 February15. It was $142tn in 2007 by 2014 it was $199tn and has undoubtedly risen since 2014
15. See op.cit. p.178.
16. See A Roberts The Incredible Unlikeliness of Being p. 219.
17. See G Carchedi op.cit. p.194.
18. K Marx The German Ideology p.64.
19. For more see our agitational broadsheet, Aurora No 39.

SEE HERE FOR COMMENTS AND DISCUSSION

https://www.leftcom.org/en/articles/2017-02-24/behind-the-crisis-marx%E2%80%99s-dialectic-of-value-and-knowledge-guglielmo-carchedi

The state and the future of socialism
When capital is in crisis, there are always two options—to give in or to move in

Michael A. Lebowitz / April 25, 2023

https://canadiandimension.com/

Wojciech Fangor, “Forging the Scythes” (1954). 

Image courtesy the Museum of Warsaw.

REALLY LONG READ

The following essay by Marxist economist Michael A. Lebowitz was first published in the 2013 edition of Socialist Register. Lebowitz, who passed away on April 19, 2023 at the age of 85, was a giant of the socialist left. Over the years, Canadian Dimension published several of his essays. He taught at Simon Fraser University for decades and was the author of numerous books including Beyond Capital: Marx’s Political Economy of the Working Class and Build It Now: Socialism for the 21st Century. He was Director, Program in Transformative Practice and Human Development, Centro Internacional Miranda, in Caracas, Venezuela, from 2006-11.

We are in the midst of a class war. That’s not unusual. There is always class war in capitalism—although sometimes it is hidden and sometimes there is the interlude of an apparent Carthaginian Peace. But the class war has intensified now because of the crisis in capitalism—a crisis rooted in the over-accumulation of capital. And, in this crisis, capital has intensified the class war against the working class. Austerity, cutbacks, the need to sacrifice—these are the demands of capital as it calls upon workers to bear the burden of capital’s own failures. This is a war conducted by capitalist states against workers to compel them to give up their achievements from past struggles. And, in some places (but, unfortunately, not all), we see that the working class is saying, ‘no.’ In some cases, we see that workers are fighting to defend their past successes within capitalism and that they are fighting against the racism and xenophobia which are the default position when workers are under attack but are not in struggle against capital. Such struggles, as Marx knew, are ‘indispensable’—they are the only means of preventing workers ‘from becoming apathetic, thoughtless, more or less well-fed instruments of production.’ But, who will win this class war?

In his recent book, The Communist Hypothesis, Alain Badiou describes the past defeats of May 1968, the Chinese Cultural Revolution and the Paris Commune as well as those of factory occupations and other such struggles as defeats ‘covered with glory.’ Because they remain in our memory as inspirations, they must be contrasted, he insists, to the ‘defeat without glory’ that social democracy brings. This is certainly true. However, we need to acknowledge that the current struggles against capital’s attempt to make the working class rescue it from yet another of its crises may yet be added to the list of glorious defeats. Of course, it is necessary to try to stop the cutbacks and to communicate to capital how high its costs will be for attempting to shift the burden of its own failures to workers. And, of course, we must celebrate those struggles taking place wherever the working class has not been anesthetized as a result of previous defeats without glory, leaving only what Marx once described as ‘a heart-broken, a weak-minded, a worn-out, unresisting mass.’

But it is not enough to say ‘no.’ There are those who think that an accumulation of loudly screamed no’s can be sufficient—let alone the ‘silent farts’ celebrated by John Holloway. These poets of negation demonstrate thereby that they don’t understand why and how capital reproduces itself. Why is it that after so many defeats so many still cannot see what Marx grasped in the nineteenth century – that capital has the tendency to produce a working class which views the existence of capital as necessary? ‘The advance of capitalist production,’ he stressed, ‘develops a working class which by education, tradition and habit looks upon the requirements of this mode of production as self-evident natural laws.’

Marx understood that capitalism tends to produce the workers it needs, workers who look upon capitalism as common sense. Given the mystification of capital (arising from the sale of labour-power) which makes productivity, profits and progress appear as the result of the capitalist’s contribution, it followed that ‘the organization of the capitalist process of production, once it is fully developed, breaks down all resistance.’

And, Marx added that capital’s generation of a reserve army of the unemployed ‘sets the seal on the domination of the capitalist over the worker’ and that the capitalist can rely upon the worker’s ‘dependence on capital, which springs from the conditions of production themselves, and is guaranteed in perpetuity by them.’ Obviously, for Marx, capital’s walls will never be brought down by loud screams or silent farts.

Even with a certain resistance marked by struggles over wages, working conditions and the defence of past gains, as long as workers look upon the requirements of capital as ‘self-evident natural laws,’ those struggles occur within the bounds of the capitalist relation. In the end, workers’ subordination to the logic of capital means that faced with capitalism’s crises they sooner or later act to ensure the conditions for the expanded reproduction of capital. Nowhere is this clearer than in the defeats without glory of social democracy.

And, defeat when capitalism is in crisis means that capital can emerge from the crisis by restructuring itself—as it did internationally with the Bretton Woods package after the crises of the 1930s and the 1970s. As is often noted, there is a big difference between a crisis in capitalism and a crisis of capitalism. The latter requires conscious actors prepared to put an end to capitalism, prepared to challenge and defeat the logic of capital. But this requires a vision which can appear to workers as an alternative common sense, as their common sense.

Like the ‘worst architect,’ we must build our goal in our minds before we can construct it in reality; only this conscious focus can ensure the ‘purposeful will’ required to complete the defeat of the logic of capital. To struggle against a situation in which workers ‘by education, tradition and habit’ look upon capital’s needs ‘as self-evident natural laws,’ we must struggle for an alternative common sense. But what is the vision of a new society whose requirements workers may look upon as ‘self-evident natural laws’? Clearly, it won’t be found in the results of twentieth century attempts to build socialism, which, to use Marx’s phrase, ended ‘in a miserable fit of the blues.’
The ‘key link’ for twenty-first century socialism

‘We have to reinvent socialism.’ With this statement, Hugo Chavez, President of Venezuela, electrified activists in his closing speech at the January 2005 World Social Forum in Porto Alegre, Brazil. ‘It can’t be the kind of socialism that we saw in the Soviet Union,’ he stressed, ‘but it will emerge as we develop new systems that are built on cooperation, not competition.’ If we are ever going to end the poverty of the majority of the world, capitalism must be transcended, Chavez argued. ‘But we cannot resort to state capitalism, which would be the same perversion of the Soviet Union. We must reclaim socialism as a thesis, a project and a path, but a new type of socialism, a humanist one, which puts humans and not machines or the state ahead of everything.’

There, at its core, is the vision of socialism for the twenty-first century. Rather than expansion of the means of production or direction by the state, human beings must be at the centre of the new socialist society. This marks a return to Marx’s vision—to the contrast he drew in Capital between a society subordinate to the logic of capital (where ‘the worker exists to satisfy the need of the existing values for valorization’) and the logic of a new society, that ‘inverse situation, in which objective wealth is there to satisfy the worker’s own need for development.’ This concept of the worker’s need for development is the culmination of Marx’s consistent stress upon the centrality of the development of human capacity—the ‘development of the rich individuality,’ as the real wealth and explicit goal of the new society. Here was the ‘inverse situation’ which would allow for ‘the all-round development of the individual,’ the ‘complete working out of the human content,’ the ‘development of all human powers as such the end in itself,’ a society of associated producers in which ‘the free development of each is the condition for the free development of all.’

But this is only one side of Marx’s perspective. A focus upon the full development of human potential was characteristic of much socialist thought in the nineteenth century. What Marx added to this emphasis upon human development was his understanding of how that development of human capacities occurs. In his Theses on Feuerbach, he was quite clear that it is not by giving people gifts, not by changing circumstances for them. Rather, we change only through real practice, by changing circumstances ourselves. Marx’s concept of ‘revolutionary practice,’ that concept of ‘the coincidence of the changing of circumstances and of human activity or self-change,’ is the red thread that runs throughout his work. Marx was most consistent on this point when talking about the struggles of workers against capital and how this revolutionary practice transforms ‘circumstances and men,’ expanding their capabilities and making them fit to create a new world.

But this process of changing ourselves is not at all limited to the sphere of political and economic struggle. In the very act of producing, Marx indicated, ‘the producers change, too, in that they bring out new qualities in themselves, develop themselves in production, transform themselves, develop new powers and new ideas, new modes of intercourse, new needs and new language.’ And, certainly, the relations within which workers produce affect the nature of the workers produced. After all, that was Marx’s point about how capitalist productive relations ‘distort the worker into a fragment of a man’ and degrade him and ‘alienate from him the intellectual potentialities of the labour process.’ It is essential to recognize that every human activity has as its result a joint product—both the change in the object of labour and the change in the labourer herself. Unfortunately, that second product is often forgotten.

Marx’s combination of human development and practice constitutes the key link. Taken seriously, it has definite implications for relations within the workplace – rather than capitalism’s joint product (the fragmented, crippled human being whose enjoyment consists in possessing and consuming things), it implies a person who is able to develop all her potential through her activity. Taken seriously, that key link has definite implications for the nature of the state—rather than allowing us every few years to elect those who misrule us as our representatives to a state which stands over and above us, it implies what Marx called the ‘self-government of the producers,’ the ‘reabsorption of the state power by society as its own living forces.’ Taken seriously, that key link has definite implications for the nature of the party—rather than a body that sees itself as superior to social movements and whose members are meant to learn the merits of discipline in following the decisions made by infallible central committees, it implies a party which learns from popular initiative and unleashes the creative energy of masses through their own practice. Taken seriously, that key link has obvious implications for building socialism.

Consider the characteristic of socialist production implicit in this key link. What are the circumstances that have as their joint product ‘the totally developed individual, for whom the different social functions are different modes of activity he takes up in turn’? Given the ‘dialectical inversion’ peculiar to capitalist production that cripples the body and mind of the worker and alienates her from ‘the intellectual potentialities of the labour process,’ it is clear that to develop the capacities of people the producers must put an end to what Marx called, in his Critique of the Gotha Programme, ‘the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour.’

For the development of rich human beings, the worker must be able to call ‘his own muscles into play under the control of his own brain.’ Expanding the capabilities of people requires both mental and manual activity. Not only does the combination of education with productive labour make it possible to increase the efficiency of production; this is also, as Marx pointed out in Capital, ‘the only method of producing fully developed human beings.’ Here, then, is the way to ensure that ‘the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly.’

The activity through which people develop their capacities, however, is not limited to the sphere of production as narrowly defined within capitalism. Every activity with the goal of providing inputs into the development of human beings needs be understood as an aspect of production. And the goals that guide production must be democratically established so that people can transform both their circumstances and themselves and thereby produce themselves as subjects in the new society. The implication is obvious—every aspect of production must be a site for the collective decision-making and variety of activity that develops human capacities and builds solidarity among the particular associated producers.

When workers act in workplaces and communities in conscious cooperation with others, they produce themselves as people conscious of their interdependence and of their own collective power. The joint product of their activity is the development of the capacities of the producers—precisely Marx’s point when he says that ‘when the worker cooperates in a planned way with others, he strips off the fetters of his individuality, and develops the capabilities of his species.’ Creating the conditions in workplaces and communities by which people can develop their capacities is an essential aspect of the concept of socialism for the twenty-first century. But it is only one element. How can the worker’s own need for development be realized if capital owns our social heritage—the products of the social brain and the social hand? And, how can we develop our own potential if we look upon other producers as enemies or as our markets—i.e., if individual material self-interest is our motivation?

Capitalism is an organic system, one which has the tendency to reproduce the conditions of its existence (including a working class which looks upon its requirements as ‘self-evident natural laws’). That is its strength. To counter that and to satisfy ‘the worker’s own need for development,’ the socialist alternative also must be an organic system, a particular combination of production, distribution and consumption, a system of reproduction. What Chavez named in January 2007 as ‘the elementary triangle of socialism’ (social property, social production and satisfaction of social needs) is a step forward toward a conception of such a system.

Consider the logic of this socialist combination, this conception of socialism for the twenty-first century:

1. Social ownership of the means of production is critical within this structure because it is the only way to ensure that our communal, social productivity is directed to the free development of all rather than used to satisfy the private goals of capitalists, groups of producers or state bureaucrats. But, this concerns more than our current activity. Social ownership of our social heritage, the results of past social labour, is an assertion that all living human beings have the right to the full development of their potential—to real wealth, the development of human capacity. It is the recognition that ‘the free development of each is the condition for the free development of all.’

2. Social production organized by workers builds new relations among producers—relations of cooperation and solidarity. It allows workers to end ‘the crippling of body and mind’ and the loss of ‘every atom of freedom, both in bodily and in intellectual activity’ that comes from the separation of head and hand. Organization of production in all spheres by workers, thus, is a condition for the full development of the producers, for the development of their capabilities—a condition for the production of rich human beings.

3. Satisfaction of communal needs and purposes as the goal of productive activity means that, instead of interacting as separate and indifferent individuals, we function as members of a community. Rather than looking upon our own capacity as our property and as a means of securing as much as possible in an exchange, we start from the recognition of our common humanity and, thus, of the importance of conditions in which everyone is able to develop her full potential. When our productive activity is oriented to the needs of others, it both builds solidarity among people and produces socialist human beings.

These three sides of the ‘socialist triangle’ mutually interact to form a structure in which ‘all the elements coexist simultaneously and support one another,’ as Marx put it. ‘This is the case with every organic whole.’ Yet, the very interdependence of the three sides suggests that realization of each element depends upon the existence of the other two. Without production for social needs, no real social property; without social property, no worker decision-making oriented toward society’s needs; without worker decision-making, no transformation of people and their needs.

The state’s place within ‘socialism as an organic system’

Is there a place for the state in socialism as an organic system? In the absence of a mechanism by which this particular combination of production, distribution and consumption can be realized, it remains purely a vision. Thus, implicit in the concept of socialism as an organic system is a set of institutions and practices through which all members of society can share the fruits of social labour and are able to satisfy their ‘own need for development.’ To produce and reproduce ‘rich human beings’ in a society based upon solidarity requires a conscious attempt to ensure that the necessary conditions for full human development infuse all levels of society.

Consider one possible scenario for a process of participatory diagnosis and planning. At the level of an individual neighbourhood, it is possible for neighbours to discuss directly the kind of community they want to live in and what they see as necessary for the development of their capacities and that of those around them. While this process identifies needs, the discussion also allows this community to explore its own ability to satisfy those needs itself; in other words, it identifies the capabilities of the community. Thus, at the level of the community, there is a direct attempt to coordinate the system of needs and the system of labours. In addition to being able to identify its needs and the extent to which those can be satisfied locally through the labour of community members, this process (which occurs under the guidance of elected neighbourhood councils) has a second product. By sharing and attempting to reconcile views of the most urgent needs of members of this community, there is a learning process—one in which protagonism builds and reinforces solidarity—i.e., the process of participatory diagnosis produces particular people, a particular joint product. At the core of this process, thus, is revolutionary practice—the simultaneous changing of circumstances and human activity or self-change.

Of course, the probability of a precise match between capabilities and needs within this community is negligible. The community is likely to have needs it cannot satisfy locally and capacities it does not need. In this situation, autarky supports neither the ability of people to secure the use-values they identify as important for their development nor the satisfaction in meaningful activity that can come from meeting the needs of others outside their immediate neighbourhood. Thus, to satisfy ‘the worker’s own need for development,’ the community needs to go beyond this barrier in order to coordinate with other communities in a larger body.

The commune represents a further step, bringing together the information transmitted by local neighbourhood councils about the needs and capabilities of their communities as well as drawing upon the knowledge of workers within units of production in this geographical area. Do workers have the capacity to satisfy the needs identified by the communities? By exploring this question in their workers councils, workers engage in conscious consideration of production options within their workplaces and focus upon the logic of producing for communal needs; however, to answer this question adequately requires more than responses from individual production units taken separately. By combining their knowledge and capabilities, workers in particular workplaces can achieve results which are greater than the sum of their individual parts taken separately. But, here again, more than a process of producing for communal needs and purposes occurs. Cooperation within and between units of production for this purpose generates solidarity among the combined workers and reinforces their understanding of the goals of production.

Throughout this process, community members and workers can interact through communal meetings and a communal parliament. And, the result of the process is that the commune councils have at their disposal data on (a) needs that can be satisfied from within the commune and (b) the needs which cannot be satisfied locally. Further, there is information on (c) the potential output of workplaces that can be provisionally utilized within the commune, and (d) the potential output of workplaces that is unutilized. Thus, there is both an indication of the level of needs that provisionally can be satisfied locally as well as identification of the excess demand and excess supply within each commune.

To stop here would reproduce the problem of remaining at the level of the individual neighbourhood. To create the conditions for the free development of all, it is necessary to go beyond geographical barriers. Thus, this process is extended to larger areas: the data from communes is transmitted upward to cities (communal cities), to the states or provinces and ultimately to the national level – to bodies composed of delegates from the communes, cities and the states, respectively. At the national level, then, it is possible to identify (a) provisionally satisfied needs, (b) unsatisfied needs, (c) provisionally assigned output and (d) provisionally unassigned output. It is fair to assume that there will not be a balance between needs and capacities at the first iteration.

Accordingly, the process of reconciling the system of needs and the system of labours is an essential requirement of the set of institutions and practices characteristic of socialism as an organic system. If there are excess needs, there are two logical resorts: (1) find a way to increase output (a question for workers councils to explore), and (2) recognize the necessity to reduce satisfaction of some needs. Thus, a critical discussion must occur here—what is to be unsatisfied? Exploration of this question requires a discussion of the relative requirements of different areas and the different types of needs to be given priority. It is only at this level that identification of national and regional inequality occurs as well as a discussion of priorities and choices for the society as a whole. This dialogue needs to take place not only at the national level but at every level down to the neighbourhood. Such a discussion is absolutely essential because, through such a process of participatory planning, people learn about the needs and capacities of others elsewhere in the society. There is no other way to build solidarity than to put faces upon other members of society. Thus, throughout this process, there are two products: development of the plan and the development of the people who participate in its construction.

The result of this scenario is a process of production for communal needs and communal purposes in which protagonism within the workplace and community ensures that this is social production organized by the producers. Obviously, too, the third side of the socialist triangle, social ownership, is present in that there is neither production for capital nor production for any particular group, i.e. a process of group ownership. In each workplace, workers are conscious that their productive activity is for society. In short, begin with communality, and the product of our activity is ‘a communal, general product from the outset.’

How, though, could the concept of socialism as an organic system be made real in the absence of institutions and practices such as these? This combination and articulation of councils and delegates at different levels of society is necessary to ensure the reproduction of a society in which the ‘free development of each is the condition for the free development of all.’ And, it is a state—a particular type of state, a state from below, a state of the commune-type. This state does not wither away—rather, it is an integral part of socialism as an organic system.

Of course, some people may not wish to call this set of institutions a state because these are society’s ‘own living forces’—i.e., not ‘an organ standing above society’ but ‘one completely subordinate to it.’ How would designation of this as a state be compatible with the view that, by definition, as Holloway puts it, ‘the state is the assassin of hope’? Like those who conceive of labour as inherently a burden (and thus can think of nothing better than to reduce it to zero), those who reject these institutions as a state demonstrate that they are trapped in the categories of old societies.

Old habits die slowly, though. And, taxonomy should not trump content. So, if some people prefer to call these articulated councils a non-state or the ‘Unstate,’ this should not present a problem—as long as they agree that socialism as an organic system requires these institutions and practices in order to be real.


Michael A. Lebowitz. Photo from Flickr.


Subordinating the old society: Contested reproduction

However, an organic system does not drop from the sky. In socialism as an organic system (to paraphrase Marx’s description of capitalism as an organic system), ‘every economic relation presupposes every other in its [socialist] economic form, and everything posited is thus also a presupposition, this is the case with every organic system.’ Yet, a new system never produces its own premises at the outset. Rather, when a new system emerges, it necessarily inherits premises from the old. Its premises and presuppositions are ‘historic’ ones, premises which are produced outside the system and which thus do not arise upon its own foundations.

In short, every new system as it emerges is inevitably defective: it is ‘in every respect, economically, morally and intellectually, still stamped with the birth marks of the old society.’ Accordingly, the development of an organic system is a process of becoming. ‘Its development to its totality,’ Marx indicated, ‘consists precisely in subordinating all elements of society to itself, or in creating out of it the organs which it still lacks. This is historically how it becomes a totality.’

In the 1920s, the Soviet economist Evgeny Preobrazhensky made this very point about how a new system develops. ‘Not a single economic formation,’ he argued, ‘can develop in a pure form, on the basis merely of the immanent laws which are inherent to the particular formation. This would be in contradiction to the very idea of development. The development of any economic form means its ousting of other economic forms, the subordination of these forms to the new form, and their gradual elimination.’ So, what is to be subordinated? If socialism is to develop into an organic system, social ownership of the means of production must supplant private ownership; worker management must replace despotism in the workplace; and productive activity based upon solidarity and community must subordinate individual self-interest. And, of course, the old state must be transcended, replaced by the new organs which foster the simultaneous changing of circumstances and self-change.

Obviously, this cannot happen overnight. It also, however, is something that cannot take place in stages. The idea of putting off some questions until a later stage is prepared is alien to a concept of an organic system. The continued presence of elements of capitalism does not simply mean that socialism is at yet incomplete because a few parts are missing. After all, what kinds of people are produced within the old relations? In fact, every moment that people act within old relations is a process of reproducing old ideas and attitudes. Working within a hierarchy, functioning without the ability to make decisions in the workplace and society, focusing upon self-interest rather than upon solidarity—these activities produce people on a daily basis; it is the reproduction of the conservatism of everyday life—indeed, the reproduction of elements of capitalism.

The concept of socialism for the twenty-first century as an organic system theoretically posits what the experience of the twentieth century has demonstrated – the need to build all sides of the socialist triangle. One war, three fronts. In the absence of a struggle to subordinate all the elements of the old society, the new society is inevitably infected by the old society. And, the matter is worse if we choose homeopathic medicine to cure the infection. In short, rather than build upon defects (such as the orientation toward material self-interest that Marx warned about in his Critique of the Gotha Programme), the point is to subordinate them.

Just as capitalism, though, required the development of a specifically capitalist mode of production to be an organic system, socialism also cannot subordinate all elements of society to itself until it develops a specifically socialist mode of production. Consider capitalism before it developed to the point where it produced its own premises in their capitalist form—i.e., when it was still in the process of becoming. That process of becoming necessarily involved the contracted reproduction of the existing relations—relations Marx described as ones in which the producer ‘as owner of his own conditions of labour, employs that labour to enrich himself instead of the capitalist.’ The separation of producers from those means of production and the compulsion to sell their labour-power marked the beginning of capitalist relations. Wherever possible, however, workers attempted to extract themselves and to become independent producers rather than to sell their ‘birth-right for a mess of pottage.’ This possibility was always present as wages increased with the accumulation of capital in the absence of the specifically capitalist mode of production. ‘Two diametrically opposed economic systems’ were present—and not only in the colonies where the problem of non-reproduction of wage-labourers was most marked.

The struggle over the subordination of the elements of production, thus, did not end with the original (or primitive) development of capitalist relations of production. Reproduction of those new relations was not secure until the development of the specifically capitalist mode of production that ensures reproduction of the premises of the system. ‘As soon as capitalist production stands on its own feet,’ Marx noted, ‘it not only maintains this separation [between workers and the means of production] but reproduces it on a constantly extending scale.’ Until capital developed upon its own foundations, however, differing relations and differing logics existed simultaneously.

So, what happens when differing relations coexist? Rather than peaceful coexistence, there is contested reproduction—with each system attempting to expand at the expense of the other. Considering the Soviet Union in the 1920s, Preobrazhensky argued that the state economy was in ‘an uninterrupted economic war with the tendencies of capitalist development, with the tendencies of capitalist restoration.’ This, he proposed, was a ‘struggle between two mutually hostile systems,’ a war between two regulating principles—one, the result of the spontaneous effects of commodity—capitalist relations (‘the law of value’); and the other, based upon the conscious decisions of the regulatory organs of the state (which he called ‘the law of primitive socialist accumulation’). And, Preobrazhensky argued that each of these regulating principles was ‘fighting for the type of regulation which is organically characteristic of the particular system of production-relations, taken in its pure form.’ However, the result of their interaction was that the Soviet economy was regulated by neither in its pure form. There was not a simple combination or addition of the productive relations and their associated regulating principles; rather, they interpenetrated—coexisting, limiting and (significantly) deforming each other.

Preobrazhensky’s insight, in short, was that in the process of becoming of a new system, two systems and two logics do not simply exist side-by-side. They interact. They interpenetrate. And, they deform each other. Rather than the combination permitting the best of both worlds, the effect can be the worst of the two worlds. Precisely because there is contested reproduction between differing sets of productive relations, the interaction of the systems can generate crises, inefficiencies and irrationality that wouldn’t be found in either system in its purity. Accordingly, as is well known, Preobrazhensky argued that rather than search for balance between the two, it was essential that what he called primitive socialist accumulation subordinate and replace the law of value.

But consider capitalism in its process of becoming. How, in the absence of the specifically capitalist mode of production, were capitalist relations of production reproduced? After all, the interaction between what Marx had called ‘two diametrically opposed economic systems’ was definitely producing problems that would not occur outside that combination. This was exactly what was occurring when the labour-intensive accumulation of capital produced a tendency for the non-reproduction of wage-labour as the result of rising wages. Marx was quite clear on what capital’s answer was—i.e., how capital ensured the reproduction of capitalist relations of production under these conditions. He detailed the measures undertaken with the emergence of capitalism—‘the bloody discipline,’ the ‘police methods,’ ‘the state compulsion to confine the struggle between capital and labour within limits convenient for capital.’ In direct contrast to the conditions for the reproduction of capitalist relations once the specifically capitalist mode of production has been developed, he argued that ‘the rising bourgeoisie needs the power of the state, and uses it to “regulate” wages.’

In short, until capital produced its own premises with the development of the specifically capitalist mode of production, it needed what I have called a ‘capitalist mode of regulation’—a mode of regulation which could ensure the compatibility of the behaviour of workers with the requirements of capital. In the absence of what Marx called ‘the sheer force of economic relations,’ that specific mode of regulation relied upon the coercive power of the state to prevent wages from rising and to compel workers (through ‘grotesquely terroristic laws’) ‘into accepting the discipline necessary for the system of wage-labour.’

The necessity of a socialist mode of regulation

Can the associated producers, in their turn, use such a state to support socialist productive relations before the development of socialism as an organic system? Consider the situation described in the Communist Manifesto where the ‘battle of democracy’ has been won (through a revolutionary rupture or a longer process) with the result that a government representing workers exists. At every step in the process of the becoming of socialism, the elements of capitalism and socialism (‘two diametrically opposed economic systems’) will interact and produce systemic incoherence and crisis. For example, when capitalist elements dominate, attempts to subordinate or make ‘despotic inroads’ upon them will tend to generate a capital strike and an economic crisis. If a government is prepared to break with the logic of capital, it will understand (as the Manifesto indicates) that it is ‘compelled to go always further’ and to make ‘further inroads upon the old social order’ and thus to ‘wrest, by degrees, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the State.’ In contrast, the sorry history of social democracy has been that, sooner or later, it yields to the logic of capital and reinforces its rule.

A socialist mode of regulation must achieve consciously what a specifically socialist mode of production will tend to do spontaneously—ensure the reproduction of socialist relations of production. The building and reproduction of those relations (represented by the sides of the socialist triangle) ‘consists precisely in subordinating all elements of society to itself, or in creating out of it the organs which it still lacks.’ Thus, the socialist mode of regulation must subordinate consciously every element which supports the old society—both the institutions and the common sense that supports those old relations. Further, it must create new socialist elements which can become the premises and foundation for the new society.

The socialist mode of regulation, accordingly, must embrace the Battle of Ideas—the ideological struggle oriented toward human development. It must stress how the logic of capital is contrary to the development of our potential, and it must use every example of capital’s response to measures supportive of human development as yet another demonstration of the perversion of capitalism. Further, the acceptance of the logic of capital as ‘self-evident natural laws’ must be challenged by development of a coherent alternative which stresses the importance of democratic, participatory and protagonistic practice in workplaces and communities and emphasizes a new social rationality based upon cooperation and solidarity. Of course, an ideological struggle cannot succeed by itself. Without the creation of institutions like workers councils and neighbourhood councils, which provide the necessary space for human development through practice, the battle of ideas lacks a real basis for the development (‘both individual and collective’) of new socialist subjects. Indeed, this mode of regulation requires a state that supports this struggle ideologically, economically and militarily and thus serves as the midwife for the birth of the new society.

But, what do we mean by the state? Do we mean the old state or the emerging new state based upon workers councils and neighbourhood councils as its cells? How could the old infected state whose very institutions involve a ‘systematic and hierarchic division of labour’—a state which has the character of a public force organized for social enslavement, of an engine of class despotism—possibly be part of the socialist mode of regulation?

Marx and Engels grasped that the working class ‘cannot simply lay hold of the ready-made state machinery, and use it for its own purpose.’ At last, Marx proclaimed, following what he saw as the spontaneous discovery by workers in the Paris Commune of an alternative form of state—a new democratic and decentralized state where the legitimate functions of the state were to be ‘wrested from an authority usurping pre-eminence over society itself, and restored to the responsible agents of society.’ At last, the necessary form of the workers’ state has been discovered: the Commune (which combined legislative and executive functions) was ‘the political form at last discovered under which to work out the economical emancipation of Labour.’ Here was the state which would ‘serve as a lever for uprooting the economical foundations upon which rests the existence of classes, and therefore of class-rule.’

The commune form represented the destruction of centralized state power insofar as that state stands above society. Marx called it ‘the reabsorption of the state power by society as its own living forces instead of as forces controlling and subduing it, by the popular masses themselves, forming their own force instead of the organised force of their suppression—the political form of their social emancipation.’ With the conversion of the state ‘from an organ superimposed upon society into one completely subordinate to it,’ self-governing producers thus wield the state for their own purposes, continuously changing both circumstances and themselves.

This new type of state, based upon direct protagonistic democracy in workplace and community, is indeed essential for the development of socialism as an organic system. Not only does it permit the unleashing of tacit knowledge and popular energy to link the capacities of people to communal needs and purposes but it has as its joint product new social subjects with new capacities, pride and dignity. With the transparency that is necessary for any control from below, those councils in workplaces and communities can police waste, sabotage and other attempts to reverse the process effectively; and, this too, reinforces the sense that the process belongs to the people and is not alien to and above them.

Yet, that new state does not drop from the sky. For one, given the effects of the ‘education, tradition and habit’ of those formed within the old society, we should not be surprised at the power of the old ideas to undermine efforts to build the new state from below. Although people transform themselves through their practice in workers and communal councils, they do so in small units and the spontaneous focus of these cells of the new state inevitably will be one of localism and self-interest (both individual and collective). The development of solidarity and a concept of community that goes beyond the local to other communities and workplaces (and beyond the self-interest that is manifested as consumerism) will tend to emerge only through practice.

These cells, of course, need to be connected if they are to emerge as the new state. They need to develop horizontal and vertical links with other workplaces and communities (as well as with bodies which consolidate these). But the creation of such links through the delegation of spokespersons on their behalf is not the same as the development of solidarity that transcends local self-interest. It takes time before the concept of the whole develops organically in these units and is internalized. In short, although the course of development of socialism as an organic system requires the creation of links based upon solidarity from below and the acceptance of collective democracy that transcends the particular, that process cannot be instantaneous. Accordingly, the new state is not capable initially of making essential decisions that require concentration and coordination of forces.

In contrast, the old state is more likely to be able to see the overall picture at the outset. With the presence of revolutionary actors in the government of the old state, it is possible to confront not only individual capitals but the power of capital as a whole. This is essential because the process of subordinating capital requires the working class to take the power of the existing state away from capital (and thereby to remove its access to the military forces of the state). This is the strength of the old state; it is well situated to identify critical bottlenecks and places for initiatives that require a concentration of forces (including actions to defend the process militarily against internal and external enemies determined to reverse every inroad). Can we imagine building a new society without taking the existing power away from those who possess it in the old society? In contrast to modern fantasists, Marx understood that ‘the transfer of the organized forces of society, viz., the state power, from capitalists and landlords to the producers themselves’ is necessary; he understood that you cannot change the world without taking power.

However, as might be expected from this ‘engine of despotism,’ with its ‘systematic and hierarchic division of labour’ and ‘ready-made state machinery,’ the old state has the tendency to act from above to change circumstances for people rather than to foster revolutionary practice. That state remains above society; it divides society into two parts, one part of which is superior to society and which would bestow socialism as a gift to an underlying population. How could the old hierarchical state—even if made more democratic—foster the key link of human development and practice? Inherent in the logic of representative democracy is the separation of governing from the governed. Thus, rather than the necessary involvement of people which ‘ensures their complete development, both individual and collective,’ the spontaneous tendency of such a state is to reproduce ‘the delusion as if administration and political governing were mysteries, transcendent functions only to be trusted to the hands of a trained caste.’ The faces may change in the legislative branch, but the face of the old state to those below is that of the functionary, ‘an authority usurping pre-eminence over society itself.’ That is precisely why the Commune’s combination of legislative and executive bodies is so central to the development of a state which is society’s ‘own living forces instead of… forces controlling and subduing it.’

During the interregnum when the old state cannot yet die and the new state is not yet able to stand upon its own feet, a great many morbid symptoms appear. Both states are necessary at the outset for the subordination of the old society and the nurturing of the new. However, the inherent tension between the top-down orientation from within the old state and the bottom-up emphasis of the worker and community councils is obvious. In their interaction over a period of indeterminate length, each state will tend to deform the other.

Thus, the desire on the part of revolutionaries in the old state to enact national policies according to a predetermined timetable, for example, tends toward the creation of uniform rules which ignore differences in the history and practices of the cells of the emerging state from below. Both in those cases where organic development is lagging and those where it is more advanced, the effect of demands placed by the old state upon the new shoots will tend to deform their development, as the impatience of functionaries of the old state will either turn the cells of the new into instruments of the old state, or impose a uniformity that tends to reverse unique advances and thereby to discourage initiative and enthusiasm.

Nor, viewed from the other angle, can the old state easily achieve goals of coherent planning, balance and equality when worker and communal councils assert their right to self-determination. As long as these local units insist upon their unique character and the right to pursue their own collective self-interest without interference, the tendency will be to foster relations of exchange (the quid pro quo), inequality and a lack of solidarity. Here, again, the combination of the two states produces incoherence rather than the best of both worlds.

In the context of growing tension and crises produced by the interaction of two diametrically opposed systems, there will be those in the old state who see the solution as the enforcement of power from above. Similarly, there will be those in the new cells who will see the solution as the removal of any authority above the individual unit in order to permit the unfettered pursuit of their particular collective interest. Both those tendencies must be struggled against because each leads to a different deformation of the socialist triangle of social production organized by workers, using socially owned means of production for the purpose of satisfying social needs.

The socialist mode of regulation requires a combination of revolutionary actors within both the old state and the new. Within the old state, it is essential that the policies pursued focus upon both the changing of circumstances and the changing of human beings; this calls for the rejection of capitalist measures of accounting and efficiency and their replacement by a concept of socialist accounting which explicitly recognizes the joint product which emerges from the key link of human development and practice. Within the cells of the new socialist state, on the other hand, the struggle must be against the defects associated with the self-orientation inherited from the old society. In both workplaces and communities, it is essential to find ways to build solidarity with other communities and society as a whole and to develop the understanding that the free development of each has as its condition the free development of all.

In short, the socialist mode of regulation involves a combination of the nurturing of the new state and the withering away of the old. In this process, there is a natural alliance within both the old and the new, not with the goal of achieving a balance between the two states, but unified in the commitment toward building a new socialism oriented explicitly toward human development and defined by the socialist triangle.

The state and the struggle for socialism

This combination of old and new states, however, is not only essential for ensuring the reproduction of socialist relations. A struggle against one-sidedness must be at the core of a strategy to end capitalism and to build socialism. Some people, however, focus only upon the new state (or, if you will, the ‘Unstate’) and reject the idea of using the old state. ‘The very notion that society can be changed through the winning of state power,’ Holloway argues, is the source of all our sense of betrayal; we need to understand, he announces, that ‘to struggle through the state is to become involved in the active process of defeating yourself.’ Why? Because ‘once the logic of power is adopted, the struggle against power is already lost.’ And, why even try? After all, the existing state cannot ‘be made to function in the interests of the working class’ because as a capitalist state ‘its own continued existence is tied to the reproduction of capitalist social relations as a whole.’ The state is ‘just one node in a web of social relations’ and, indeed, is ‘not the locus of power that it appears to be.’

From this perspective, the need to use the state (the armed ‘node’) to rip apart that web of social relations is just so old fashioned—so nineteenth and twentieth century. Forget the military, police, judicial and legislative apparatus now at the disposal of capital. The alternative to capital’s power is already there: ‘ubiquitous power implies ubiquitous resistance. Ubiquitous yes implies ubiquitous no.’ With the Hegelian magic by which things can be miraculously transformed into their opposites (as long as we don’t watch too closely), we come to understand that electoral abstention is victory, lack of leadership is leadership, and the ‘Many’ (the multiplicity of negative struggles against capitalism) is by definition ‘One.’ Negating the existing state through the mind means that it continues in the hands of capital in reality.

The other form of one-sidedness focuses exclusively upon the capture of the old state. Whether choosing the electoral road or invoking glorious victories of the past to support a direct assault upon state power, from this perspective the process of building the institutions and practices characteristic of the new state must be subordinated to the principal task. Social movements essential for the organic development of a new socialist consciousness based upon practice are viewed instrumentally—as fodder for election committees or as the source of cadres for the party. Subordinate, subordinate—that is holy Moses and the prophets! Thus, whether due to the imperatives of electoral rhythm or to the perceived need to rehearse military discipline, the tendency of parties fixated upon the old state is to draw the lifeblood from the incipient elements of the new state and to suppress within their own ranks those who would argue otherwise.

According to Marta Harnecker, this lack of respect for the autonomous development of popular movements was characteristic of elements of the political left in Latin America and brought with it a ‘verticalism, which cancels out people’s initiative’ and a ‘traditional narrow conception of politics’ which ‘tends to reduce politics to the struggle that has to do with political-legal institutions and to exaggerate the role of the state.’ And, the tendency for ‘hierarchization’ is the kernel of truth, too, in Holloway’s argument that the party, ‘whether vanguardist or parliamentary,’ subordinates ‘the myriad forms of class struggle to the overriding aim of gaining control of the state.’

However, rather than inherent in a party as such, this ‘hegemonist’ characteristic is precisely the result of a one-sidedness focused upon the old state. A different left is possible. As Harnecker argues, to build the left essential for socialism for the twenty-first century, we have to change the traditional vision of politics and overcome the narrow definition of power. The new political instrument must grasp the importance of practice for developing consciousness and capacities, needs to learn to listen to popular movements and to respect and nourish them. But it also has a special role—it should not ‘try to gather to its bosom all the legitimate representatives of struggles for emancipation but should strive to coordinate their practices into a single political project’—i.e., to create the spaces where they can learn from each other.

There is an organic link between state and party, and a party which recognizes the necessity for the articulation of old and new state in the process of building socialism differs substantially from one which focuses solely upon the capture of the old state. It is necessarily ‘a political organization which, as it advances a national programme which enables broad sectors of society to rally round the same battle standard, also helps these sectors to transform themselves into the active subjects building the new society for which the battle is being waged.’ In short, the party that is needed is one that learns to walk on two legs.

Two sides, two struggles: a party determined to defeat capital and to build the new state from below must always be consciousness of the danger of one-sidedness. Thus, if crises within capitalism propel a political organization into government, it must not only use that opportunity to defeat the logic of capital and to reduce capital’s power over the old state but also to use the power it has to foster the accelerated development of the sprouts of the new state. And, if conditions are not such as to permit a party to grasp the reins of power in the old state, then it must work to create those conditions by encouraging the autonomous development of social movements through which people can develop their powers and capacities and by building unity among them based upon recognition of difference.

Thus, just as a socialist mode of regulation requires the articulation of old and new state in the process of building socialism as an organic system, so also must we walk on two legs in order to defeat capital and to build collective power. And, at no time is it more possible to demonstrate clearly the gap between the logic of capital and the logic of human development than in the intensified class war when capital is in crisis and the nature of capital comes to the surface. It provides the opportunity to shatter the idea that accepting the demands of capital is common sense. But to show there is an alternative we need the vision of a society in which the free development of each is understood as the condition for the free development of all. And we need to reinforce that vision with more than rhetoric. Unless we are creating through our struggles the spaces which prefigure the new society, we face more glorious defeats.

When capital is in crisis, there are always two options—to give in or to move in. If masses are armed with a clear conception of the socialist alternative, they can turn a crisis in capitalism into the crisis of capitalism. Of course, it is possible that, as the result of our ideological disarmament, the current struggles against the capitalist offensive ultimately may lead to a glorious defeat. It is possible but we must take that chance.

Michael A. Lebowitz (1937-2023) taught Marxian Economics and Comparative Economic Systems at Simon Fraser University in British Columbia since 1965. He was directing the programme in Transformative Practice and Human Development at Centro Internacional Miranda (CIM). His latest book is Between Capitalism and Community (New York: Monthly Review Press 2021). His publications can be found at michaelalebowitz.com.