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Concerning the article in Literaturnaya Gazeta on the 28th June 1989

USA, Socialism, Us...

I read L. Liubimov's article, "To what system does the USA belong?" and I wanted to; 
  • agree,
  • object.
  • First of all I wanted to express agreement with the raising of the question; it is essential for us to investigate the social organization of this state, at the very least, in order to understand why the Americans live better and we live worse, or, to anticipate the handy half-answer, why the Americans work better while we work worse. 

    Surely their is nothing wild or seditious in discussions of socialism in the United States. It is well known that the higher the level of social organization of society, the higher the effectiveness of production (or the productivity of labour to use the classic terminology, although, here, the later term is more precise). This is the law of social development. But then, if we live in a socialist society, have the Americans reached communism already? And if they still have capitalism, what have we got? 

    We are able to pose such a question by comparing our life with the situation of many other countries, traditionally considered capitalist. But the main thing is that we must investigate the others in order to investigate ourselves. 

    But for this purpose, not just any comparison will do, it is essential to make the comparison on the basis of some scientific concept. And, although in the present climate, I risk appearing old-fashioned, I must, all the more strongly, insist on a Marxist analysis. 

    And this is where Liubimov's views provoke disagreement from me. Liubimov writes, "Although diligently delineated by many authors, the conception that the achievements of the USA in the social sphere are the result of the class struggle and skillful manoeuvring of business and the authorities is completely outdated. Such an explanation sets to one side all the essential transformations of all the systems of production relations which in no way coincide with the fundamental interests of yesterday's ruling class." 

    Of course, the truths which Liubimov touches on here have long since become banal. Yet "Twice two is four" no longer distinguishes itself by its novelty. So don't banal truths remain true? Yes, but they move off into that general realm for those who no longer try to maintain their links with life, they wither in the fields of scholasticism, where battles are fought out between groups of doctrinaires and their no less doctrinaire opponents. 

    And in essence? 

    Let us attempt to investigate this question, posed by Liubimov, relying on the most banal theses of Marxism. 

    The capitalist obtains labour power as a commodity. The capitalist pays for the reproduction of labour power. He pays the minimum for it. Does this offer us any possibility of understanding why it is that American workers live quite well? Cartelization and monopolization, processes that were just coming into being at the end of the last century, would appear to create conditions exclusively for the lowering of prices in the market for labour power. However, the well-being of workers does not fall, but rises. How can this be explained according to Marx. 

    This puzzle arises from the assumption that, while capitalism changes over time, labour power does not. Yet, of course, it does change; but the point is not the raising of qualifications, it is the change of individual labour power into ever more organized labour power. In order to convince oneself of the difference in the cost of organized compared to unorganized labour power, it is enough to remember the investigations of Gunter Walraf into the position of Turkish immigrants in the Federal Republic of Germany. 

    The law, uncovered by Marx, thus remains unshakeable. The capitalist pays for the reproduction of organized labour power in the context of the historical facts. And organization demands a high cultural level, which, in turn, is impossible without the necessary material security. Payments are driven down to the minimum, but the minimum is not static. 

    Now, let us take a look at the laws of capitalism itself. As early as the beginning of this century, the English economist John Maynard Keynes declared the inevitability of crises under the then existing organization of capitalist society. Consider this for yourself. The aggregate of enterprises, that is all capitalists taken together, produce a given quantity of goods in a year. The aggregate consumer is paid off with, let's say, given a modest rate of profit of 100 percent, half of these goods. No more can be paid because the capitalist only ventures into production for the sake of profits, for the sake of his half. But the consumer cannot buy the second half of the goods, he simply does not have the money. 

    Dead end. From this, it follows immediately, that capitalism cannot exist. This is no joke, it is an authentic scientific conclusion. So how has capitalism existed for all these years? 

    And yet, through both boom and bust, it has existed. In periods of rising development, a flourishing capitalist does not try to obtain his profits in money, he prefers to get them in the form of additional means of production which will bring him further profits. He invests his profits in construction, the purchase of equipment and scientific research; this returns money to the consumers, permitting them to purchase all the goods which have been produced. 

    But if capital is to be increased and production developed, the entrepreneur must see some prospect for demand, he must know that the goods he is planning to produce will be sold. The more the market becomes saturated, the less there remains any zone of potential demand and the fewer are the clearly unsatisfied consumers. Then each capitalist must start to think of withdrawing money as a reserve. First one, then another, then a third ... Money no longer flows to the consumers and they buy fewer goods; the contraction of production and layoffs follow ... And the seeds of crisis grow into an avalanche. 

    After the crisis, things flourish once more. 

    In order to break out of this terrifying cycle, Keynes proposed a system of state regulation of the economy. At the heart of which is that the state must secure the consumption of all of the production output; partially by organizing additional means of consumption, but principally through its own consumption. And where must the state get the wherewithal? There are three sources; highly progressive taxes on profits, planned budget deficits secured by government revenues, and printing money. 

    This system was adopted by the USA during the FDR years and exists to this day. Within its framework the large-scale road construction projects of the 30's were undertaken, and thereafter the military industrial complex occupied this role. Just as the VPK, which was born of economic necessity, this was an instrument for returning money from the state to consumers. It was within the context of such systems that all social programmes were realized. The state was simply obliged to spend enormous quantities of money. 

    Taxes on powerful companies swallow up about 80 percent of their profits. It is true that under the Reagan administration this rate was somewhat reduced. Smaller enterprises paid less, but the average was still around 60 percent of all profits. 

    So what sort of capitalists were these, locked in the perpetual struggle for maximum profit, that were doomed, in order not to find themselves ruined by the competitive struggle, to suddenly agree to hand over the largest part of their profits to the state? And if they were compelled, by whom? 

    Here we enter the realm of class interests. 

    The interests of a class never coincide with the interests of the individuals of which it is composed. This too is one of the foundations of genuine Marxism, one of those which was somehow forgotten over time. Under the feudal state, entrepreneurs were also interested in just one thing, the receipt of maximum profits. But all land belonged, and could only belong, to the aristocracy. Enterprises require some sort of accommodation, and here the entrepreneur found himself completely unprotected from the arbitrariness of the landowners. 

    Agreements were of no help, since the only guarantee was from the very same landowner who could revise or revoke any agreement and who could declare that anything situated on his land was his own property. And the arbitrariness of the landowner was defended by the full power of the feudal state. 

    This is why the fundamental idea of bourgeois society arose; state property in land and freedom of enterprise, that is to say, the defence by the state of the right of private property in the means of production. These were class ideas, and the 18th and 19th centuries were occupied with their assimilation by the leading classes and the unhealthy search for practical forms for their realization. 

    Let us take note of one important feature; was the idea of state property in land realized? Surely private landownership was preserved in all capitalist states? But can an Italian sell his land to France. And if it is bought by a Frenchman, does it become French territory? But even this is not the most important thing, what is important is that the stability of all agreements regarding the leasing or sale of land are secured by the state, by state legislation. In other words, private property in land was maintained in form but not in essence. 

    Having realized its two fundamental class ideas, the bourgeoisie carried its heavy cross through an unbroken series of production crises in the 19th and 20th centuries. This continued until such time as the third class idea had ripened; that, in order to secure the ability to extract maximum profit, it is insufficient to settle the land question and to uphold the inviolability of private property in the means of production, it is also essential to have social stability. 

    For in troubled times, when no one is producing any goods and when no one is buying them, even the best factory in the world cannot return a profit. 

    Resolving the problem of social stability was entrusted to the state. Clearly, the powerful of this world proved to be ready to part with a large fraction of their profits for this purpose. Class interests prevailed over individual ones. 

    The state found itself directly drawn into economic processes. But what could this mean? 

    If the profits of any enterprise are divided between two subjects in the ratio four to one, then which of the subjects owns this enterprise? Reflecting on this, it is not hard to come to the conclusion that more than half of the means of production in the United States belong to the state. The nominal owners only manage their enterprises completely, but they own a minority share. The state, incidentally, risks nothing by entrusting everything to the enterprise; should the entrepreneur sell his factory, he shares the proceeds of the sale with the state, and should the entrepreneur be ruined, this is not so terrible since it opens up a market niche which will be occupied by another company and thus the profits will, in any case, be shared with the state. 

    Thus, in the USA more than half of the means of production are owned by society in the person of the state. Isn't this a well known formula? This is surely one of the more important indications of socialism. 

    In the USA the Keynesian system of state regulation of the economy was consciously adopted. Many capitalist countries moved toward an analagous solution under the influence of the demands of the second world war. Incidentally, Keynes participated personally in this, taking on the post of advisor to the British exchequer in 1942. In one form or another such elements of socialism are now present in the economies of all advanced states. At any rate, it is certainly possible to declare that the high standard of living in the capitalist countries is directly dependent on the extent to which such socialist ideas have been introduced. History and current events reveal that is this way around, rather than the reverse, as it now appears to some of our economists. 

    But is this socialism? 

    Social ownership of the means of production is one of the more important indicators of socialism. But not the most important. For this is the organization of the proletariat into the ruling class. 

    The comparison between the socialist elements in bourgeois economies and socialism is like that between private enterprise in the feudal epoch and those of today, between the quit rent peasant and the contemporary marketing. The feudals themselves did not uproot enterprise, they only strove to subordinate it to their control, in complete dependence. 

    But neither this nor the term 'state-monopoly capitalism' expresses the historical materialist essence of contemporary capitalist society. Whatever it is, it is capitalism, though, of course, not the classical form which tried to develop itself exclusively on the basis of capitalist relations. Socialized capitalism, this is the term that is needed. 

    Let us try to investigate this in more detail. In 1917 the socialist revolution occurred in the world. And, in saying the world, I am not misspeaking. The fact that it was realized in Russia does not change the heart of the matter. From that moment on, all humanity was compelled to live with the recognition of this fact. 

    History happens just once in the world, so variations of it are hard to investigate. But did the bourgeoisie not finance fascism and nazism because it feared its own October? However fascism is a retreat toward feudalism so it brings back similar problems. The American bourgeoisie travelled a different road, they preferred to make concessions to socialism forestalling the demands of their proletariat. And this road turned out to be the more effective. Not only did it sharply lower the temperature of class relations, but it hindered the development of class consciousness, which lost its immediate stimuli and closest points of reference. True, it gave birth to such feudal outgrowths as the military-industrial complex, which has, long since, lost any desire to play its ordained role as a mechanism of economic regulation and began an independent life with little consideration for the interests of the life of society. But this is not an organic defect of the chosen path. Although it led the United States into crisis, this will not be the terminal crisis; it will be completed by the transformation of the VPK into such other systems of non-commodity production, possibly ecology or space exploration 

    But the most important feature of the chosen solution was that it permitted the maintenance of political power, it continued the political mastery of the bourgeoisie. Concessions of the second rank are not fatal for capitalism; unlike those of the first rank. The bourgeoisie can agree to develop 90 percent of socialism, as long as it maintains political mastery and the capitalist class doctrines. 

    As you can see, I am not disputing the fundamental conclusion of Liubimov on the obvious existence of socialism in the social life of the USA and many other capitalist states. But, in arriving at the conclusion along a different road, the possibility exists to make a scientific comparison of the stage of development of capitalist and socialist society. In particular, what is interesting for us today, is to note how capitalism decided the question of private land ownership. Socialism has before it a completely analagous task in relation to the means of production, and it is easy to take note that, at the time of the NEP it was resolved on the same basis. Comparison of the tendencies in different epochs on the basis of historical materialism and Marxist political economy, also permits the assimilation of historical experience without resorting to costly and risky experimentation, this however is already the theme of another discussion. 

    Both progressive and regressive social processes in the 20\u\s-3th\s0\d century carry the imprint of October. But we cannot close without drawing attention to the fact that the whole world is busy with searching for and studying socialist forms in the economic sphere, thus converting the world into a vast testing ground for the practical verification of socialist ideas. This international experience still awaits an unbiased investigation and generalization. 

    It is not necessary to renounce the durability of Marxist theory merely because the servants of the dogmatists, who stick to it some places while abandoning it in others, have pretty well discredited it. It is necessary to renounce the servants of dogmatism, and then Marxism can again truly serve the working class.

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