And this is the best you could do?

Over the last thirty to forty years, capitalism leveraged the developing Internet and a rapidly-industrialising Far-East to reorganise itself on a thoroughly global basis. It's just a fading memory now, the latter part of the twentieth century with its industrially-based national capitalisms, first-world manufacturing and millions of production-workers in secure, well-paid and unionised jobs with prospects.

The advent of globalisation coincided with massive overproduction in manufacturing (cf the car industry, steel)  so that the smart money moved into finance. Bailed out in the aftermath of 2008, and with a dearth of profitable investment opportunities, the global elite continue to enjoy their luxuries while the masses stagnate .. and wonder where their lives are going.

We all know something about globalisation and many of us want our politicians to fix it. Part one of Tony Smith's book reviews the leading proposals for reform.

Amazon link

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As I mentioned in a previous post, I learned a lot from Tony Smith. Here is how he begins: the quotes below are taken from his chapter 8, "A Marxian Model of Socialist Globalisation".

"The various models of globalisation examined in part one are designed to ... provide a spur to reform existing institutions and practices.

1. Proponents of the social state call for a renewed state commitment to social welfare and full employment. 


2. Neoliberals advocate increased free trade and capital liberalisation, along with the dismantling of 'crony capitalism'. 


3. Defenders of the catalytic state insist that public authorities must aggressively and comprehensively provide the necessary preconditions for a region's successful participation in the global economy. 


4. Democratic-cosmopolitan theorists propose a global social charter guaranteeing the material preconditions for autonomy and substantive equality of opportunity."

Smith has little difficulty in establishing that all four schools of thought (since they accept the continuing existence of capitalism) fail to propose realistic measures which put a 'democratic' control of economic activity ahead of relentless global profit maximisation.

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There is, of course, no end to the list of critics of capitalism. But the socialist alternatives are completely tarnished, are they not? By the disastrous experience of 'soviet communism'?

Smith tackles this issue with commendable rigour and honesty:

"A wide variety of objections have been proposed against Soviet-style bureaucratic central planning, widely taken to be either the only form of socialism or the form to which all others degenerate. I shall first list what I take to be the eight most significant criticisms of this framework. ..."

Smith's case against state bureaucratic-socialism is familiar:

"(i) Ownership of the means of production lies in the same hands as control of the coercive state apparatus. While this arrangement may not make the worst forms of totalitarianism inevitable, no one familiar with the historical record could deny its close association with authoritarian regimes.

(ii) Ownership by everyone in general is equivalent to a lack of ownership by anyone in particular. When private property rights to capital goods are not defined, no one has an incentive to use them efficiently.

(iii) Product quality tends to be poor. It is far easier for planners to formulate, implement, and monitor plans in quantitative than qualitative terms. The lack of an effective feedback mechanism connecting producers and users/consumers also leads to a neglect of product quality.

(iv) The informational burdens placed on bureaucratic central planning are now almost universally acknowledged to result in economic inefficiency. Central planners cannot appropriate adequate information regarding all potential inputs, all potential outputs, and all potential social wants and needs, when possible inputs, outputs, and wants and needs are all changing over time.

(v) If we take planners as 'principals' and managers of enterprises as their 'agents', centralised bureaucratic planning necessarily tends to generate severe principal/agent problems. Collective ownership leads managers to distort the information they pass on to central planners, underestimating the output their enterprises are capable of producing while overestimating the inputs required to produce any given level of output.

(vi) Authoritarian central planning is not able to develop successfully in areas where personal initiative and creative responses to unforeseen problems are important. Ordinary workers feel dehumanised and cynical, with pernicious economic effects.

(vii) State ownership of the means of production and centralised planning by a bureaucratic caste cannot match the technological dynamism of capitalism. In certain circumstances, bureaucratic central planning is able to attain considerable extensive growth, that is, growth resulting from the mobilisation of greater and greater inputs. And, in certain sectors where mass resources could be devoted and where success or failure was relatively easily measured (for example, space, military, heavy industry), significant accomplishments were in fact attained in the Soviet Union and elsewhere.

But this sort of social order is unable to generate intensive growth based on the more efficient use of inputs. The lack of incentives for managers to engage in risky activities like innovative behaviour is surely a significant factor. Managers appropriate few of the fruits of such activities when they are successful, and may suffer significant penalties when they are not.

(viii) A lack of hard budget constraints allows inefficient firms to continue in production and even expand over time.

Taking all of these factors into account, most observers conclude, it should have come as no surprise that bureaucratic central planning with state ownership of the means of production eventually generated vast material and spiritual stagnation."

It's surprising how many nostalgic communists and left social-democrats have still not taken these forceful (and thoroughly correct and legitimate) points on board.

"These considerations appear to justify the conclusion that there is simply no feasible alternative to capitalist markets with private ownership of the means of production. Market competition appears to provide private owners with incentives to ensure a level of efficiency and dynamism unattainable in either bureaucratic socialism or market socialism.

"One can accept this conclusion without having to deny that capitalism brings with it profound social costs. Financial crises, environmental crises, extreme levels of economic and political inequalities, and so on, are not likely to ever be entirely eliminated. But the harms they inflict can be lessened over time.

"If there is no feasible and normatively attractive alternative to a capitalist framework, lessening these harms must be our goal, and the failed project of collective ownership of the means of production must be unequivocally abandoned.

"In the present historical context, the burden of proof lies entirely with those who continue to call for the socialisation of the means of production [my emphasis]. Meeting this burden requires developing an alternative model of socialism capable of avoiding the fundamental structural flaws listed above."

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You can imagine at this point how excited I was that such an incisive and profound thinker was about to unveil a model of post-capitalist economics and politics which might actually work!

"I shall adopt the model of economic democracy developed by David Schweickart, adding three modifications to make it a more adequate alternative form of globalisation."

David Schweickart's book is called "After Capitalism" (2002) by the way: I haven't read it.

"The model Schweickart defends has the following essential elements:

(i) Production and distribution are primarily undertaken within worker collectives. Workers are not hired as wage-labourers by capital; they instead join worker collectives as fellow members. There is a basic right to employment, with state enterprises providing jobs for those unable to find positions in collectives."

Hiring is the easy bit. Smith does a fair amount of hand-wringing later in the chapter when he considers how you might have to get around to actually firing workers.

"(ii) Managers of worker collectives are democratically accountable to those over whom they exercise authority, either through direct elections or through appointment by a workers' council that is itself directly elected. These enterprises are required to have representatives from a range of social movements (environmental groups, consumer groups, feminist groups, and so on) on their boards of directors, accountable to those movements."

Given the intellectual coherence and balanced judgement observed in radical social movements in the real world, I think you can guarantee that they would wreck any otherwise-viable economic enterprise. I might also mention the ample opportunities for rent-seeking and intimidation.

"(iii) Worker collectives produce public goods, inputs into the production process, or final consumption goods. Funds for the first are directly allocated to collectives by the relevant planning agencies (see below). The latter two categories of products are offered for sale in producer and consumer markets.

"In Schweickart's view, attempts to centrally plan all inputs and outputs in a top-down fashion are simply not feasible, at least not in a complex and dynamic economy. But it does not follow that capitalist market societies are the only acceptable forms of economic organisation.

It is possible to imagine a feasible and normatively attractive society combining markets with the socialisation of the means of production, that is, a society making use of producer and consumer markets after abolishing both capital markets and labour markets."

This doesn't pass the innovation test. Would Steve Jobs have got the funds he needed from the relevant 'planning agency'?

"(iv) Workers in enterprises are granted use rights to facilities and other means of production. But ultimate ownership rights remain with the local community. Workers cannot use their enterprise as a cash cow and then walk away; they have a legal duty to maintain the value of the community's investments. If sufficient depreciation funds cannot be appropriated from revenues to maintain the value of these investments, it is the responsibility of community banks to shut down an enterprise."

Shutting down a community enterprise? Yes, that's going to happen. To be fair, Smith himself worries about that but his Pollyanna assumptions that everyone would 'do the best thing' are unfortunately just so much pie-in-the-sky.

"Once depreciated funds have been deducted, the remainder of the revenues from public allocations or sales in consumer/producer markets (apart from the taxes to be considered below) are then distributed among the members of the collective according to formulae set by the democratically accountable management."

Incidentally, this focus on local communities is endearingly Victorian but hopelessly anachronistic. Modern globalised industry (which Smith agrees is a productivity advance that post-capitalism needs to build upon, not roll-back) increasingly organises both production and employee-allocation globally. Localised, and presumably small-scale communities are simply not the scale at which state-of-the-art enterprises operate at.

"(v) The origin of funds for new investment and public goods is a flat tax on the non-labour assets of all enterprises. In Schweickart's proposal, the rate of this tax is initially set by a democratically elected legislature, operating on the national level. This legislature also decides on the appropriate division of revenues between funding for national public goods and funds that are allocated to democratically elected regional and local legislative bodies.

"Each of these assemblies, in turn, must also decide upon the level of funding for public goods to be supplied in the relevant geographical area vis-à-vis the level of funds set aside for distribution to the level below it. These legislative bodies can also set aside a percentage of funds for investment in areas of pressing social needs."

It's touching that Smith thinks that allocations of resources in the billions of dollars are going to be somehow resistant to powerful lobbying, rent-seeking and every form of power-play. Plainly the human nature that Smith sees is not the same as most of us observe.

"(vi) After all decisions have been made regarding the general level of new investment and the order of social priorities, and after funds required for public goods on the national, regional, and local levels have been allocated, the remaining revenues are distributed to local communities on a per capita basis (at least this should be the presumption in the absence of compelling reasons to do otherwise, such as the need to temporarily favour historically disadvantaged regions).

"Community banks would then undertake the actual allocation of new investment funds to worker collectives. The boards of directors of these banks would include representatives of a broad range of social groups affected by the banks' decisions. New enterprises would be formed, and existing ones expanded, through allocations by community banks rather than private capital markets."

Still this idea that 'local communities' are the essential unit of future social organisation. Leading edge corporations today operate globally and have to raise resources on global financial markets. Any socialist alternative is going to have to recognise that global is not simply the additive sum of hundreds or thousands of local community banks.

"(vii) When allocating investment funds for new worker collectives and the expansion of existing ones, community banks must take three main questions into account. Is there likely to be sufficient demand for the output of the given enterprise for it to maintain the value of the community's investment and provide adequate income for its members? Will the investment provide stable employment? And is the investment consistent with the set of social priorities democratically affirmed on the national, regional and local levels?

"Extensive external financial and social audits can be regularly imposed on all enterprises and community banks to assess their performances in terms of these criteria. These independent social audits are a crucial component of the socialist version of the principle of transparency, institutionalising a level of accountability and transparency far beyond the limited neoliberal version of the principle.

"Community banks can then be ranked on the basis of the results of these audits. The level of income of the staff of a particular bank, and the amount of funds allocated to this bank for distribution in the future, are determined by the bank's place in this ranking."

I think we're looking at an impenetrable veto-network here. How many crucial innovations were funded by capitalists taking a punt? There will be precious few punts in the above arrangements.

"(viii) In Schweickart's model, there are no markets for capital assets, and so there will be no capital flight in the form of cross-border investments in capital assets. There will also be little foreign direct investment, since worker collectives are unlikely to outsource their own jobs, and community banks are assessed according to the extent they create employment in their own communities. But there will still be trade across borders.

"For a period of time, this may include trade with regions that have not institutionalised a version of economic democracy. In such circumstances, regions committed to socialist globalisation should follow the principle of fair trade rather than 'free' trade. To ensure that this occurs, Schweickart calls for a 'social tariff'." If oppressive labour practices hold down wage levels in a given region, the prices of imports from that region will be raised to what they would have been had worker income been comparable to the level prevailing in the importing country.

"A social tariff will also be imposed to compensate for a lack of adequate spending on the environment, worker health and safety, or social welfare in the exporting nation. The revenues collected by this tariff will then be distributed to the groups in the exporting country with the best record of effectively implementing anti-poverty programmes, whether or not they are agencies of the government."

A touching faith in (chronically ineffectual) do-gooding organisations and a complete lack of insight into the intractable developmental issues in the third world, particularly sub-Saharan Africa.

"I believe that three additions to this framework should be made:

"(ix) Schweickart does not investigate the monetary dimension of international trade in his model. I believe that the proposals made by Paul Davidson discussed in the last chapter are incompatible with capitalist social relations, but quite feasible if socialist production relations are established. In the latter set of circumstances, it would be possible to have something like Davidson's International Monetary Clearing Units serve as the sole form of world money. It would also be feasible to establish a set of rules that ensure that excessive trade imbalances do not persist, and that the burdens of adjusting to the imbalances that do arise are not disproportionately imposed on the most vulnerable regions of the global economy.

"(x) David Held's proposals for democratic-cosmopolitan law are also incompatible with capitalist social relations, as Chapter 4 established. But they, too, would be feasible if socialist production relations were in place. More specifically, a level of global governance above the state should be established. This would include a representative assembly selected more democratically than the United Nations, a global social charter, an international court of justice, and so on."

Ah yes, world government through a beefed-up UN. presumably with a world army to enforce its decisions. That will go down well. If only we could all get along, like a vast ant colony of genetically-related and sterile individuals.

"(xi) Schweickart holds that local communities within a nation ought to receive new investment funds on a per capita basis. In this manner, the material preconditions for both individual autonomy and flourishing communities are furthered. The force of this argument extends to the global level. There should be a democratically accountable socialist international planning agency to ensure the provision of global public goods. It must also guarantee that regions across the planet have access to new investment funds in direct proportion to their population in the absence of special considerations (such as the need to temporarily favour previously disadvantaged regions of the global economy).

"This is an extension of Held's proposal for global social investment funds, but with these funds now replacing, rather than merely 'complementing', global capital markets. In this manner, the systematic tendency to uneven development that afflicts all possible forms of capitalism could be abolished."

We know how popular transfer payments are.

"This model of economic democracy undoubtedly needs to be greatly supplemented and modified, and compared and contrasted with other approaches with which it shares 'family resemblances'. Once again, however, the goal here is not to provide a fully fleshed-out blueprint of the single best form of socialism. If the model is developed enough to show that a feasible and normatively attractive socialist alternative is possible in principle, that is sufficient."

So you can see how unimpressed I was by Tony Smith's model of post-capitalism. A fantasy of infeasible cooperation and general niceness. To be fair, Smith recognises that not everyone will be thinking altruistically of the greater good of all humanity all of the time, but his architecture kinda presupposes that.

It's what happens when you ignore biology and your model assumes a human nature which would indeed work if almost everyone was a sterile clone.

Still, even if the solution is utterly unconvincing, the analysis isn't bad. I listened to Professor Smith lecturing for an hour last night - to a rather sparsely-attended class at Iowa State - and I was impressed by what he had to say about current global economic difficulties.

Tony Smith, Iowa State University, October 25, 2016.

He comes across as a slightly manic Bernie Sanders.

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I am still waiting for the Martian Marxist, the social scientist who simple analyses without confected, activist rage.

I am also of the opinion that a post-capitalist future will emerge from a capitalism which has automated away almost all routine jobs. Call me a fan of AI and robotics.

What happens when the few remaining jobs are at a level of skill and intelligence denied to, say, 95% of the workforce? Those 95% will insist on a radical reordering of things, one which is probably incompatible with the reproduction of capitalist relations of production.

But it will be better.

Total automation under capitalism?

1. Introduction

"Primitive communism is a concept originating from Karl Marx and Friedrich Engels who argued that hunter-gatherer societies were traditionally based on egalitarian social relations and common ownership." (Wikipedia).

We know more today about the cultural and material poverty of hunter-gatherer societies and the frequently brutal xenophobic warfare between tribes driven by Malthusian pressures.

But hunter-gatherers looked down upon early farmer societies, seeing gross inequalities, intense, lengthy and servile labour and an absence of freedom for the majority.

They were right.

The dream of human utopia, the vision which drives social change, is that of an enlightened return to that dawn-era of human equality. A best-case bountiful environment back then of plants, fruit and plentiful game is to be replaced by a sophisticated automation-economy which provides for every need: food, shelter, transport, communications, entertainment and so on.

So productive is this imagined future robotic economy that products are produced at need and no money is involved. Hunter-gatherers did not have to 'pay' to pluck fruit from a wild bush or to hunt animals.

Our future machines are self-producing and self-maintaining. They can be freely used by interested groups to build stadiums, new kinds of computers, rocket ships or to embark upon great projects such as colonising Mars.

Speculative as this sounds, it's not beyond extrapolation from our current technological base; a century might do it. In the jargon, it's called 'development of the productive forces' towards abundance.

But what happens as we move inexorably towards total automation under capitalism?

2. Michael Roberts's three-part series

Noted Marxist economist Michael Roberts has an excellent analysis, starting here.

3. Peter Cooper's Model

Peter Cooper (heteconomist) had an extremely useful post about this back in 2011 entitled "Implications of a Purely Mechanized Economy" which I'm going to discuss in detail.

Peter starts like this:

“It is well known that in Marx’s theory of commodity production, labor is the source of all new value. The means of production merely pass on their already existing value to new commodities. [...]

“It is critical to recognize that Marx’s argument applies to value, not physical output or wealth. He is not suggesting that labor is the only source of physical output or wealth. Nature, other animals and machines all clearly create new physical output and wealth, as does labor. The argument, rather, is that only labor translates into new value. The plant, machinery and raw materials used up in the production period only pass on their preexisting value (actually, their prices).

"Nature, in contrast, does not transfer any value to output. Instead, private property rights give owners of natural resources a legal entitlement to a payment of rent, which comes out of the surplus value created in the production period."

This is a really important point, at the heart of Marx's theory. When a wild tree produces grapes (from thin air) which you eat, value has been created for sure. A use-value.

What has not been created is the kind of value which mediates and regulates commodity exchange via the market, called exchange-value. There is no market!

Exchange-value is a social construct, it is constructed through the human activity of equitably implementing the market exchange of commodities, the normal mode of distribution of goods and services in a capitalist society.

“Of the new value that is created in the production period, some goes to workers as wages and some goes to capitalists and other social groups as surplus value. Specifically, surplus labor – the labor carried out in excess of what is required to produce the equivalent of the value paid to workers in wages and salaries – is the basis of surplus value in Marx’s theory. In aggregate, surplus value equals profit, prior to its distribution among various recipients. Some of it will go to rentiers as rent or creditors as interest income.

“Considering that surplus labor is the sole origin of surplus value in Marx’s theory, it is interesting to reflect on an extreme scenario in which the entire production of the economy becomes purely mechanized. Marx’s theory suggests that, in this scenario, capitalism must have ceased to exist! The reason is that there would be no production of surplus value (profit) in such a system, making it unviable for capitalists.

“But what does it mean to say that a purely mechanized economy could not be a capitalist economy? After all, even in such a society, surely we humans would still be doing some things that were not mechanized. So what would be going on?

“It would simply mean that this human activity (labor) was no longer being treated as value production and that our human capacity to work or create (labor power) was no longer being treated as a commodity.

“In such a system, there might still be a requirement to work in order to gain access to material needs, and there might still be authoritarian measures used to direct production. However, it would not be capitalism. The surplus would not take the form of value, but simply its physical form – the material output produced in excess of the needs of social reproduction.

“Equally possible is that we might choose to organize our activities in such a way that income was no longer tied to work. Material needs could be met through the free distribution of the output of mechanized production processes. Required resources and facilities for human endeavors could be made freely available. Human activity could then be genuinely free and associations between individuals voluntary.

“Highly Mechanized Production Under Capitalism

“For capitalism to remain despite a high degree of mechanization, it would instead be necessary that at least some human activity continued to be value production. That would require that some human endeavors were only enabled within the context of value production, just as is the case in our present society.

“In the absence of a basic income guarantee, there would be an onus on the government to ensure demand remained sufficient to sustain high levels of employment. Otherwise, in the midst of such plenty, periodic episodes of mass unemployment, especially if continuing for sustained periods, would likely result in extreme social conflict.

“If human activity remained commodified – i.e. capitalist social relations remained in place – capitalists would retain significant ownership and control of the means of production, including the purely robotized or mechanized production processes. Surplus value would continue to be created out of the employment of labor under capitalist conditions. Just as now, all capitalists would compete for a share out of aggregate profit, irrespective of how much surplus value was created in their own sectors.

“The reason for this, in Marx’s theory, is that competition tends to equalize the rate of profit realized by different sectors, even though it is the least capital-intensive sectors (least efficient sectors) that produce the most surplus value (because proportionately they outlay more on the employment of workers than means of production).

I going to replace Cooper's symbols with their spelled-out meanings to make reading a little easier.

“Briefly, for Marx, the [exchange] value of a commodity equals c + v + s. Here: c is ‘constant capital’, the value (or dollar amount) outlaid for the means of production used up in producing the commodity; v is ‘variable capital’, the sum of value outlaid for the employment of labor; and s is ‘surplus value’, the amount of value produced by workers in excess of the amount (v) outlaid on their employment.

“Marx argued that in exchange there would be a tendency for commodities to sell at their ‘prices of production’, 'price', rather than their values. These are the prices that would ensure all sectors received the same rate of profit. They are equal to c + v + profit, [ie cost + profit].

"Prices of production differ from values whenever surplus-value s differs from profit. In sectors with an above average ‘organic composition of capital’ (c/v), profit  > surplus-value and price > value.

"The reverse is true of sectors with an organic composition of capital below the average. In this way, competition causes surplus value to be transferred from sectors with below average compositions of capital to those with above average compositions.

“In aggregate, however, Marx maintained that total value equals total price (the sum of all values equals the sum of all prices), surplus-value equals profit, and the value rate of profit equals the rate of profit.

"In effect, the creation of aggregate surplus value in production determines the amount of aggregate profit that can be realized in exchange, with competition between capitalists merely causing a transfer of surplus value between sectors according to their compositions of capital.

“For example, if the economy were divided into two sectors, one completely mechanized and the other employing a combination of labor and means of production, the situation might look something like this (for simplicity, I have assumed all means of production are used up each period so that there is no fixed capital):

Here I'm replacing Cooper's spreadsheet with my own copy: same numbers, easier to read labels. Note that in his simple model, there are just two commodities produced in the time period of production - one by the Robot sector (completely automated) and one by the Mixed sector (with some human input).

Robot and Mixed Capitalist economy producing two commodities, each of value 100

“In this example, production in the robot sector occurs entirely without labor. Over the period, $100 worth of robots and other means of production, including raw materials, is used up, passing on $100 to the final value. No new value is produced in this sector, and therefore no surplus value. It is simply the already existing value of the means of production that is passed on to the final value.

"The robots, if able to learn, could be getting smarter and smarter throughout the period, thereby enabling larger and larger material output. But in value terms, there is no new value produced, because the amount paid by capitalists for the means of production will reflect costs of production and the rate of profit, not the material output produced by the means of production.

“In the mixed sector, $20 of value is passed on to the final commodity through the using up of means of production and $80 of new value is created through the employment of labor. Capitalists appropriate $40 as surplus value.

“As already noted, competition between the sectors and between capitalists tends to equalize the profit rate in each sector (in the example, it is 25% in each sector and in the economy as a whole). This is argued to occur as a result of capitalists seeking out the highest return for their investment. If one sector offered a higher rate of profit than the other, investment dollars would flow into the more lucrative sector until no further advantage could be obtained, assuming competitive conditions, which, for Marx, following classical political economy, entails free mobility of money capital.

“The example illustrates that capitalists in the mixed sector do not get to keep the entire surplus value, even though that is the sector in which the surplus value is actually produced. Instead, total price in the robot sector rises above total value produced in that sector ($125 > $100) and total price in the mixed sector falls below total value produced ($75 < $100).

"In Marx's theory, this tendential equalization of profit rates ensures that technical innovation and mechanization are not discouraged by operation of the 'law of value' (value based on labor time). It means that innovators are not penalized in terms of profit for minimizing their use of labor (minimizing their amount of new value production). It provides a competitive impetus to economize on the use of society's labor time.

“The Social Possibilities are Open

“Since it is technically possible for capitalism to continue even in a highly mechanized economy provided human activity remains commodified, the social ramifications of increasing mechanization are an open question. Increasing mechanization makes it possible at some point to sever the connection between work and income entirely. That would seem to offer the greatest potential for human freedom and creativity.

“Yet, there is no inevitability that this option will be taken unless general populations actively press for this social progression. Those with the greatest stake in the existing system may persist in their efforts largely to confine employment opportunities (and access to infrastructure and productive facilities) to the sphere of capitalist social relations. General populations might be persuaded to go along with this state of affairs provided there was sufficient class compromise to ensure that real wages and general living standards rose more or less in line with productivity improvements.

“Nevertheless, with material needs so easily met, the absurdity of such a social relation, in which much of human potentiality can only be expressed on terms acceptable to the capitalist class, may well become increasingly apparent over time. For this reason, there are probably grounds for optimism that, ultimately, some kind of basic income scheme or non-monetary type of guaranteed access to material needs and facilities will emerge provided we put our collective foot down and demand it. If there had been the political will, it probably could already have happened.”

4. The model as automation becomes dominant

Peter Cooper's model has additional mileage. What happens to capitalist production as the mixed sector declines and the total-automation sector continues to grow?

Let's start by halving all the numbers so that the total value of the two commodities produced in this model economy is exactly 100. Rates of surplus-value and profit remain the same.

Value parameters halved so that total economy (2 commodities) is of size 100

Now dramatically reduce the constant and variable capital assigned to the Mixed sector. That is, put most of the capital invested in machinery and raw materials into the robotic sector, and employ very few people. In numbers, we have 90% of the produced value  invested in robots, 2%  invested as constant capital in the Mixed sector, 4% invested as wages and the capitalists appropriate 4% as surplus value.

Here's the spreadsheet.

Wages are now only 4% of the economy

As you can see, due to the enormous organic composition of capital (c/v = 92/4 = 23) and in the absence of any increase in the rate of surplus value (s/v = 100%), the rate of profit has crashed to 4%. The Mixed sector commodity price at 6.25 is only slightly above the cost of 6.

Doing the maths shows that as the mixed contribution (ie the amount of employed labour) tends to zero, surplus value also tends to zero and price tends to cost leading to zero profits. At this point, capitalism simply can't work.


5. The experience of total automation for the mass of non-capitalists

What would that be like for the great mass of people who are not owners of the vast amounts of capital sloshing precariously around here? 

In the comments on his post, Peter Cooper observed:

“In narrow material terms, a purely mechanized economy could generate considerable growth in material output over time. Machines might be creating more and better machines that create more and better machines, etc. No new ‘value’ (appropriated labor) would be created, but material output would be increasing.

“The living of our lives in the broadest sense – our thinking, learning, communicating, interacting, creating, working, playing, etc. – could be developing in a very dynamic fashion with the aid of technology. The potential, in this sense, seems unlimited. As one example, interactive virtual reality technology provides access to a wide range of experiences, albeit vicarious, that would not otherwise be accessible. As an aid to imagination or to physical, emotional and intellectual development, the possibilities seem endless.

“I think the real question is whether human activity – life in the broadest sense – has been freed completely from the production of value. Even once we have been freed, we will still be living and experiencing life, including pursuing vocations we find interesting. It’s just that our activities won’t be dictated by value relations.

“Regarding the risk of human redundancy, I am not familiar with the theoretical limits to artificial intelligence – for example, whether some kind of robot consciousness is possible and, if so, in what sense – but even if robots were able to reach a point where they could live life better than us, this would not remove our own desire to live life. I don’t think our own experiences would become redundant just because robots might be capable of greater experiences.

“Technology often seems ominous under capitalism because it is a threat to our employment prospects as wage labor or undermines the profitability of past investments that relied on older technologies. But that is a defect of capitalism, not of technology. Technology provides the potential for better lives for humans and other species. It is an open question whether we will be able to organize ourselves socially in a way that enables us really to benefit from these opportunities.

“I would also question the notion of redundancy in a post-capitalist society. From the perspective of capitalist value production, a worker’s existence is only justified to the extent it enables the production of new value, either immediately through the expenditure of living labor or potentially as a member of the reserve army of labor. But the day we end value production will hopefully also be the day we reject this justification for a person’s life. Hopefully it will be the day we recognize that life needs no justification.

“I have always liked the saying, “we work to live, not live to work”. Unfortunately, it is not really true for many people under capitalism. However, post capitalism, I hope we can do better, and say, “we live for its own sake, and work if we want”.

“It is not that I am necessarily optimistic about the future. I am just suggesting that the social possibilities are open.”

6. The transition to post-capitalism

We have some prior experience with abundant goods produced at zero marginal cost. Remember the saga of MP3 music files?

There was originally a small cottage industry (around Napster) of people downloading digitised music for free. After a while, pretty much everyone was sharing music files with their friends and families. And so the (secondary) production and distribution of music was taken out of capitalist relations of production: communism in music had arrived.

The first recourse of the capitalist providers of commoditised music was to resort to the power of the state. People were prosecuted, as was Napster. But the masses were too many, the activity too widely-practised and the threats ultimately unenforceable.

In the next iteration, legal and cheapish channels of digitised, downloadable music were provided. Many people were persuaded on moral grounds to use these. After all, communism in the means of general consumption hadn't arrived; musicians had to eat!

Some musicians rebased their revenue streams around live performances or hold-in-the-hand artwork. Streaming developed, which was more easily monetisable. And in the background, people continued to rip/download and share music tracks for free with impunity.


7. The wonderful 3D printer/fabricator

I think this is an interesting template for a possible future.

Suppose a philanthropic billionaire develops the ultimate 3D printer/fabricator. Using sunlight, water, air + scrap materials, it can synthesise food, drinks, shelter, transportation and most other basic and quite sophisticated needs. The machines can also self-reproduce if so instructed.

Think of it as a super-fast-growing tree-analogue - indeed, it might be the result of genetic technology.

The billionaire donates this machine to the world for free. What happens next?

Like the MP3 scenario, I imagine that an idealistic network of early adopters would take up this machine and remove themselves entirely from the capitalist economy. Thus sustained and as in Paul Mason's vision of the future, they would no doubt work on endless open-source improvements.

The capitalists see a sharp decline in the wage-labour force. If you don't want to work, perhaps you don't have to. (There are some issues in this scenario to do with land rights - all land is owned by someone and no-one's making much more of it - but let me skirt over these.)

No doubt some capitalists will make use of these wonderful machines to create a totally-automated robotic sector of the capitalist economy, as Paul Cooper discussed above, but it's in competition with the non-capitalist economy which produces only use values.

Notice in this scenario, which is very bottom-up, the automated printer/fabricators are so competent that coordination issues usually addressed by the capitalist market and which have proved so troublesome for Marxists ('central planning') are largely non-existent.

Insofar as there are big projects which require coordination, these could be done by voluntary associations of those interested.

Tempting as it is to say that the capitalist state would attempt to outlaw these machines and 'restore order', I think that in most cases the balance of forces would be against them. Potential abundance is just too compelling and in this scenario, too easy to accomplish.

Other scenarios are alluded to by Cooper above, including a basic income while the capitalist economy is still completing its work of increasing the productive forces.


8. Conclusions

The left finds itself in a century-old dilemma. The reformist left wants to manage capitalism by using control of the capitalist state to tilt the scales a little more towards the interests of the masses; the revolutionary left wants to abolish the capitalist state and the dominance of capitalist relations of production and exchange, and institute central planning based on workers councils instead, as Lenin and Trotsky envisaged.

The former promises at best limited, quantitative gains while the latter looks completely implausible.

Capitalism is the best social system ever devised for increasing standards of living, productivity and the forces of production. The problem is that its motivation and driving force is capital expansion, not human welfare.

That works for quite a lot of the people whose labour power is required to do that mission, but ignores many more who are economically superfluous. It's usually not malicious - it's just that they don't have a specific capability to be useful right now, or the purchasing power to get noticed.

I suspect Marx was right when he suggested that capitalism could only be surpassed when it was obvious to the mass of people that it was no longer the best way to develop the productive forces in the interests of everyone, and where a superior alternative was also obvious.

This suggests that it's been no accident that capitalism continues to reign supreme, even giving a new lease of life to countries such as Russia and China. The conditions just aren't here yet.

But as long as capitalism continues to drive technological progress, brighter prospects will emerge ahead.

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Related posts

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Paul Mason and PostCapitalism

There are just a few people whose public personas I have rather taken against.

Number one on my current list is Owen Smith. He, you may recall with difficulty, is the insincere and glib little weasel who resembles a mini-me version of François Hollande and who is attempting, for reasons of petty ambition, a doomed campaign to displace Jeremy Corbyn.

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We move on. Whenever I saw Paul Mason on BBC's Newsnight or Channel 4 news, I observed my twitching hand reach unconsciously for the channel-flip, impelled by some combination of his northern lad with a chip on his shoulder schtick, his self-righteous anger at every policy trying to fix the economy combined with a fanboy gullibility as regards the modish antics of Occupy and every other middle-class angst-fest.

It was Kevin the Teenager reprised at fifty-something.

I understand the type only too well: too smart, idealistic and empathic to fit in with his working class contemporaries; too working class to be accepted into the well-born elite. His perpetual estrangement from power and influence fueling an inchoate rage channelled into left wing rebellion.

Paul Mason was a trotskyist in one of the more cerebral outfits, Workers Power, which has now dissolved/entered into the Corbynista mass to rebuild under the motif of Red Flag.

But Paul Mason noticed that none of the trotskyist predictions of proletarian revolution ever came good. Being of independent mind, he conceptualised an alternative road to communism; at least one reviewer bathetically called him 'the new Marx'.

Amazon link

His book is uneven: historical discussions of subsequent misinterpretations of Marx echo those of Michael Heinrich (blogged about here) who discussed 'worldview Marxism' as a coarsening of Marxist theory. Mason believes, I think correctly, that Lenin and Trotsky fundamentally misunderstood what really happened in Russia in 1917, documenting the reasons for that failure in convincing detail.

It's when he starts to advance his own ideas for post-capitalist transition that wishful thinking and blind hostility come to the fore. Owen Hatherley's review nails it.

"The organised factory proletariat in the US, Europe and Japan never carved out a path to post-capitalism – or socialism as it was then known – but Occupy, Maidan, Tahrir Square, and even the protests against the Workers’ Party government in Brazil, ‘are evidence that a new historical subject exists. It is not just the working class in a different guise; it is networked humanity.’

"The ‘new gravedigger’ produced by capitalism consists of ‘the networked individuals who have camped in the city squares, blockaded the fracking sites, performed punk rock on the roofs of Russian cathedrals, raised defiant cans of beer in the face of Islamism on the grass of Gezi Park’ etc. This is kitsch, but more significant is Mason’s failure to analyse the political content of the movements of the young.

"Not a lot of people in any of them considered ‘capitalism’ their main enemy, probably less so than the average striker in the 1930s or 1970s. They are a disparate bunch, from all manner of class backgrounds, advocating various positions across the political spectrum, but all united apparently by their use of Twitter and their distrust of ‘old elites’ and hierarchies.

"Since they carry no baggage, it isn’t worth investigating why, say, the protests in Brazil so easily passed over into racism, why some in Tahrir Square preferred a new general to an elected Islamist, why both sides in Ukraine’s unrest had a crucial far-right element, or why the descendants of Occupy in London and New York now find themselves campaigning for ageing, old-school leftist social democrats.

"Mason sweeps all this away on a tide of goofy utopianism."

Taking Wikipedia as your model for post-capitalist relations of production is to completely miss the intrinsically parasitic, hobbyist and career-furthering (let alone corporate) nature of so much open-source activity. It's never going to shake its shoulders and sweep aside all those mundane commoditised relations of production which coordinate activities to keep us fed, sheltered, defended, powered-up and online.

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Mason would have been more acute had he observed that, while Marx gave a very good conceptual account of capitalism in terms of systematised and recurrent patterns of human economic and political activity (process rather than structural models, if you will), he had considerably less to say about why capitalism was either inherently bad news for humanity or precisely why it would necessarily create the conditions for its own supersession.

Due to the inadequate development of the productive forces it inherited, capitalism was truly awful for its human participants (disproportionately for the working class, of course) in Marx's time and as recently as the second world war - but since then it has, by historical standards, not been so bad. Ask the Chinese or the Vietnamese.

And don't blame capitalism for Africa or the Middle-East.

Capitalism still seems pretty efficient at developing the forces of production as Mason, a fan of automation, is happy to concede. So what's going to light the fires of mass revolutionary zeal? Apparently nothing - so we're left with incremental socialism-creep within the interstices of capitalism,

Good luck with that.

Good try, Paul, but we need look elsewhere for possible paths to humanity's future.