MARXISM TODAY, APRIL.
1977
the decades from the one implied by the founders
of Marxism and is often associated with the nega-
tion of democracy, it is more correct in present-
day conditions to speak of the power of the work-
ing class relying on a wide alliance of classes,
without using the term 'dictatorship".
The capitalist countries are dominated by a
handful of monopolies exploiting all social strata
and subordinating social development to their
selfish interests. In these conditions an alliance
that may emerge around the most revolutionary
class of our time—the working class—has every
reason to be very broad-based and truly nation-
wide.
The positions won among the masses of the
people by the Italian and French Communist
Parties and the successes of communists in other
countries make the prospect of left-wing forces
coming to power quite real. Reaction is doing all
in its power to prevent this. Among the methods
of struggle most employed against the threat of
society moving to socialism are the intimidation
of the people with all sorts of horror stories and
Discussion Contributions on:
Economic Policy and Marxist
Theory
Laurence Harris
{The author is Lecturer in Economics at Birkbeck College, London University. He has written several
articles on monetary theory and on Marxist economics.)
The British Communist Party has a well-defined
economic policy which includes three main elements.
The first is restoration of free collective bargaining
and imposition of strict price controls together with
increased expenditure on the social services. The
second concerns the balance of payments and the
international economy; it comprises selective import
controls, control of the export of capital, and
nationalisation and sale of assets owned abroad by
British-based capital. The third concerns control of
the economy, an extension of nationalisation (in
particular the nationalisation of banks, insurance
and other financial companies), but nationalisation
with democratic control. These three elements are
related to each other and also to the social and
political aspects of the Party's policy. In addition
they are complemented by other economic policies—
reduction in military expenditure, pulling out of the
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by counterposing 'freedom' against 'socialism' and
'democracy' against 'dictatorship". In reality, how-
ever, it is sociaUsm that brings real freedom; it is
only the anti-monopoly power of the people that
can ensure genuinely wide democracy.
The bourgeois press readily blows up the ques-
tion about the term 'dictatorship of the proletariat"
in the contemporary communist movement.
Among its writers we see a sort of division of duty.
Some, in connection with the 'dictatorship of the
proletariat', condemn communists for dogmatism,
others, in the same connection, censure them
for departing from the principles of Marxism-
Leninism.
Communists, however, reject such playing with
words. They understand the dictatorship of the
proletariat not in terms of the form in which power
is exercised, which is always historically deter-
mined, but in terms of its essence. For them this
essence is the historical leading role of the work-
ing class in the modern world and an alliance of
social forces capable of carrying out social reforms
in crisis-afflicted capitalist society and paving the
way to the victory of a socialist system.
EEC, development of trads with socialist countries.
I am concerned with the three main elements con-
sidered by themselves, as far as this is possible,
although a full assessment must regard them as
components of a coherent whole.
Although the policies are well known and often
stated, their theoretical basis is less frequently dis-
cussed. In this article I examine the relationship
between the Party's economic policies and the
Marxist theory of capitalist economies.
In doing this I start from the principle that the
policies can only be judged by relating an assessment
in terms of economic theory to political judgements.
For the Party's strategy is essentially a political
strategy with the objective of taking state power as
a crucial step on the transformation of society. The
economic policies must be seen as part of this
political strategy. This becomes clearer when it is
118
realised that the economic pohcy has several different
roles. At one extreme it constitutes a set of demands
to be put to the capitalist state under Tory or right-
wing Labour government; a set of demands around
which struggle is organised. At another extreme it
constitutes a programme—the alternative strategy—
policies to be adopted by a government of the broad
democratic alliance; adopted as steps in the con-
struction of socialism. The point about these two
roles is that they are closely related to each other.
The demands are such that by organising struggle
around them, the alliance can be built, strengthened
and developed to the point where the alternative
strategy can be implemented. This means that they
are such that politico/ consciousness and political
struggle can be developed in relation to the struggle
for the economic demands.
I shall consider the Party's economic policy as a
set of demands around which struggle is organised,
struggle for implementation. Marxist economic
theory, as I shall show, gives us a basis for assessing
the potential for struggle for these demands and the
effect of these struggles. But the first problem is to
set out the main elements of Marxist economic
theory; those, at least, which are directly related to
the Party's economic policy.^' ^
ECONOMIC LAWS AND STATE MONOPOLY
CAPITALISM
In Capital Marx sets out the general laws of de-
velopment of capitalist economies. Capitalist accu-
mulation is a process punctuated by economic crises
and high unemployment, but to understand why this
is so Marx argues that we must understand the dis-
tinctions and interrelations between production,
exchange and distribution. Production is the process
in which commodities, both as useful things and
objects to be exchanged, are produced. It is therefore
where value and surplus value, the source of profits,
are produced. Exchange is where newly produced
commodities are sold for money and where those
commodities which are 'inputs' into production are
bought. In the exchange process, for example,
workers buy commodities at a price and also
capitalists buy labour-power from workers at a price,
wages. Distribution concerns such matters as the
division of produced values between workers (as
wages) and capitalists (as profit).
Production, Exchange and Distribution
Underlying and central to Marx's theory is the
' This article is developed from a lecture given at the
Communist University of London 1976. I thank several
Party comrades for valuable discussions of early drafts.
^ This statement of the Party's economic policies and
political strategy is based upon The British Road to
Socialism (1958) and (Draft) British Road to Socialism
(1977).
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interrelation between production, exchange and dis-
tribution. Each has effects on the other but produc-
tion is fundamental to the whole interrelated pro-
cess.^ This is not intuitively obvious for it appears
that there are many events which appear in exchange
and distribution and seem as if they can be explained
without exploring their relation to production. Such
explanations however, would be inadequate and
wrong if intended as applications of Marx's theory.
To illustrate this, take the problem of the distribu-
tion of national income between profits and wages.
It may appear that this distribution is simply
determined by exchange, so that pointing to a rise
in wage-rates, the price at which labour-power is
sold, is sufficient to explain a change in distribution.
That such a neglect of production would be incon-
sistent with Marx's theory can be seen from two
arguments. First, Marx argues that the change in
wage-rate itself must be explained by the pace of
accumulation (since a low rate of accumulation
would increase the reserve army of labour and
decrease real wages) and accumulation itself is
fundamentally determined by production, the pro-
duction of surplus value. He argues:
"the rate of accumulation is the independent, not
the dependent variable; the rate of wages the de-
pendent, not the independent variable." (Capital
Vol. 1, Ch. 25)
Second, the effect on distribution of a change in
the wage-rate in Marx's theory is limited by the
amount of value and surplus value which is pro-
duced. A fall in wage rates cannot increase profits
beyond the limit of the amount of surplus value
which is actually produced.* Thus, even a matter
which appears to result solely from exchange rela-
tionships can only be understood in terms of the
underlying role of production.
All this appears to be highly abstract but we will
see below that attacks on the Party's policy are based
upon abandonment of these principles.
Maintaining these principles Marx produces ex-
planations and analyses of the phenomena which
we experience in our everyday lives. Unemployment
' See K. Marx Crundrisse (Pelican Edition), pp. 99-100:
"The conclusion we reach is not that production, dis-
tribution, exchange and consumption are identical, but
that they all form the members of a totality. . . . Produc-
tion predominates not only over itself . . . but over the
other moments as well."
^ Unless wages are pushed below the value of labour-
power. It may also be the case that a fall in wages itself
indirectly assists in the production of surplus value by
causing a reduction in the value of labour-power, the
value of what workers regard as a 'normal' standard
of living.
MARXISM TODAY, APRIL, 1977
experienced by over 1.4 million in today's Britain;
centralisation and concentration, the effects of which
are experienced by millions in their work, consump-
tion and social life every day; internationalisation
with its concomitant development of multinational
corporations—all these are explained as part of a
coherent whole by Marx's development of the rela-
tions between production, exchange and distribu-
tion. This can best be seen by examining Marx's
theory of crisis for it is in relation to economic crises
and the ensuing depression that unemployment,
centralisation and internationalisation are brought
to the fore.^
Marx's Theory of Crises
For Marx, crises are the indirect effects of capital's
laws of production. The law of the tendency of the
rate of profit to fall and its counteracting effects is
"the most important law of modern political economy
and the most essential one for understanding the most
complicated relationships". It is at the root of "over-
production, speculation, crises, and surplus capital
alongside surplus—population". (Capital, Vol. I l l ,
p. 242, Lawrence & Wishart).
This is not the place to discuss the complexities of
that law." We need merely note that it is based upon
the development of capitalist production as opposed
to exchange; its basis is the fact that accumulation
of productive capital involves the expulsion of living
labour. Economic crises are the means by which
capitalism temporarily resolves the contradictions
produced by this accumulation. But how do they
do so? How do they and the subsequent depression
lay the foundations for renewed accumulation?
Crises do this by partially destroying existing
capital and stimulating the restructuring of produc-
tive capital and its internationalisation.' Restruc-
turing is what the capitalist means when he talks of
'rationalisation', 'increasedproductivity', 'efficiency';
for the workers the equivalent word is 'dole queue',
[t involves the firing of workers in order to operate
existing plant more productively ('reduction of over-
manning' as the media put it); the closing of old
'' The relationship to crises is sometimes indirect.
Centralisation, for example, is most prominent during
the boom periods when takeovers increase in size and
number. But such takeover movements, reorganisation
of finance and ownership, are themselves related to the
reorganisation of physical capital which is stimulated by
crises.
" For an exposition and a survey of debates over the
law see B. Fine and L. Harris "Controversial Issues in
Marxist Economic Theory" in R. Miliband and J. Saville
(eds) Socialist Register 1976 (Merlin Press).
' See Capital, Vol. 111 (Lawrence & Wishart), pp.
253-55.
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plants and the concentration of production in the
m^re modern ('efficient') plants; and the installation
of new, more automated and labour-saving plant.
From this we can see the central role of unemploy-
ment in crises. It is not only that realisation problems,
a decline in demand and resulting unemployment,
precipitate crises and thereby stimulate restructuring
of production by forcing capitalists, in competition
with each other, to strive harder than ever for in-
creased 'productivity'. It is also that this restructuring
itself stimulates unemployment still further by the
expulsion of living labour from the production
process.
We can also deduce the central role of inter-
nationalisation in this restructuring. Marx showed
how capital constantly strives to overcome the
limitations of national boundaries. The intensified
restructuring of capital following economic crises
intensifies this process of international expansion,
as capital is forced to take advantage of the increases
in productivity and profitability which can result
from intensification of the international division of
labour. Production is increasingly organised across
national boundaries (the parts of a car, for example,
being manufactured in one country and assembled
in another, as in the 1975 plan for Chrysler) and
there is also an increased tendency for finance to be
organised internationally and finished commodities
to be traded (the search for an export-led recovery,
for example).
The stimulus which the crisis and slump give to
these processes of restructuring and internationalisa-
tion is the way in which capitalist crises lay the
conditions for their own resolution and for eventual
resumed expansion. Associated with these are events
which occur in the sphere of exchange, but which
are related in a fundamental way to the developments
in production. These are the events which often
dominate the headlines. One is changes in real wages.
Another is the balance of payments and international
finance. Both are inextricably linked, in the era of
state monopoly, with the economic role of the state
so I consider this first.
The Capitalist State
Capital has relatively little to say about the
economic role of the capitalist state (although the
discussion of the state's role in limiting the length
of the working day, there and in Wages, Price and
Profit is highly pertinent). Marx's historical works
which concentrate on the capitalist state—Civil War
in France and The Eighteenth Brumaire, for example
—are concerned with its political role. Moreover
the state today is different from the state in the
era of competitive capitalism, which was Marx's
primary concern in Capital. I shall start from this
last fact, that we live under state monopoly capi-
talism, in order to examine the economic role of
120
the state and particularly its role in economic crises.
Because capitalist accumulation can only proceed
by going from crisis to crisis the capitalist state
cannot be thought to simply abolish crises. The state,
in other words, cannot abolish the contradictions
inherent in capital and expressed in tendencies such
as the tendency of the rate of profit to fall. Since the
contradictions are inherent in capital, the state
cannot abolish them without abolishing capital.
What the state can do, however, is to 'interfere' in
the ways in which they operate. This 'interference'
(which I put in quotation marks to indicate that the
state is not something outside and above capitalist
society) is encapsulated in the emphasis which the
theory of state monopoly capitalism puts on the
links between the state and monopoly capital. In
crises and their aftermath the major element in the
state's involvement is to intervene in the re-struc-
turing and internationalisation of capital. This is so
much so that despite vacillations, mistakes and con-
tradictions it does not give much too crude a picture
if one thinks of the state as supervising the processes
of restructuring and internationalisation following
crises. The danger in that simple view is that it hides
the fact that these processes occur also in periods
when accumulation is relatively smooth, but in a
less intense manner, and it hides the fact that the
forces of competition give an impetus to these pro-
cesses, an impetus which exists even without state
intervention and affects state intervention itself.
Nevertheless the importance of state intervention
in the processes set in motion by crises is so great in
state monopoly capitalism that Marxists can take it
as central to analysis.
An important component of this state interven-
tion is direct involvement in the process of restruc-
turing itself. This takes several forms. Capital
employed in the nationalised industries is restruc-
tured, so that in the context of the recent British
crisis we find, for example, the steel industry em-
barking on a major programme of modernisation
(such as the high productivity plant at Scunthorpe)
and rationalisation (such as the attempts to close
plants like Shotton). In addition, private capital is
nationalised at least in the form of being taken into
the ownership of the emasculated National Enter-
prise Board. And these nationalisations (British
Leyland & Alfred Herbert for example) are under-
taken not to 'featherbed lame ducks' but in order
to increase productivity. Finally, the state advances
money to privately owned capital (such as the
ferrous foundry industry) so as to finance a re-
structuring programme under state supervision.
Such direct state intervention in production to
assist the forces, which lay the basis for renewed
expansion, is central to Marxist analysis. Its implica-
tion is that having to intervene in this way, the state
has to tolerate and even encourage high unemploy-
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ment. For this is the immediate implication of the
state's encouragement of increased productivity. But
related to its involvement in production the state is
also involved in the processes of exchange and
distribution.*
One element of this involvement is its role in
struggles over pay. The state is forced to participate
in the attempt to push down real wages so as to
increase the rate of profit. Marxist theory does not
see this as an end in itself or an isolated policy, for
the effectiveness of this type of redistribution is
limited unless sufficient surplus value, the basis of
profit, is actually being produced. The role of such
redistribution toward profits stems from the fact
that higher profits are required in order to finance
the restructuiing which the crisis shows to be neces-
sary for production of surplus value. The state's role
in redistribution to this end involves several policies.
One is the imposition of pay restraint without
effective price controls so as to push down real
wages. Another is cuts in social services so as to
reduce the amount of surplus value appropriated by
the state to finance them and thereby release surplus
value for accumulation by private capital.
Balance of Payments
A further element in the state's role in the process
of exchange focuses on the balance of payments—
the account of international exchanges. The balance
of payments is affected in complex ways by the
processes of production, exchange and distribution
associated with restructuring. One effect, for ex-
ample, is that investment abroad and the import of
raw materials, semi-finished parts and other com-
modities associated with the process of restructuring
and internationalisation may worsen a country's
balance of payments in particular circumstances.
The state is obliged to take responsibility for the
finance of international exchange, for financing the
balance of payments. This, however, is a very different
matter from doing what the state presents itself as
doing. In other words it is not the same thing as
protecting the balance of payments because it is in
the 'national interest' to do so. The bourgeois claim
that this is what the state does is part of the ideo-
logical struggle inherent in capitalism; it implies
that the state is above class struggle and acts in the
classless 'national interest' so that workers must
restrict consumption, avoid strikes and other class
as struggles so to protect 'our' balance of payments.
The truth of the matter is that the state's respon-
* For analyses of recent events in the British economy
based on the propositions presented above, see B. Fine
and L. Harris "The British Economy since March 1974",
Bulletin of Conference of Socialist Economists October
1975 and "The British Economy, May 1975-January 1976"
Bulletin of CSE i\xn& 1976.
MARXISM TODAY, APRIL, 1977
sibility for the balance of payments is for the
financing of capitalist accumulation in its inter-
national effects. This can be achieved in several
ways. One is pay restraint to reduce imports of
wage goods so that workers are forced to finance
capital's investment abroad and other operations
rather than protect 'our national interest'. Another
is international borrowing by the state—loans from
the IMF for example. Because bourgeois propaganda
around these matters is so strong it is worth em-
phasising the falsity of its arguments. It presents
workers' restraint and letters of intent to the IMF
as evils reluctantly imposed in order to avoid
national 'bankruptcy'. The picture offered us is that
of a family which, through overspending is about
to go bankrupt. But the nation is not a family; it
is divided into classes with antagonistic interests.
And if international loans are arranged from, say,
the IMF, the international central bank is not to be
seen as a stem bank manager who may refuse to bail
out the family.
For since British capital is a leading component
of advanced imperialism, the financmg of its opera-
tions—loans in respect of balance of payments
deficits—are in the general interests of the foreign-
based imperialist interests with which the British
state co-operates in institutions such as the IMF.
If matters were as they are presented by the state,
if the nation's bankruptcy were the issue, it would
be the simplest of matters to 'protect the national
interest' by controlling the outflow of money into
foreign investment. The reason why such policies
are not adopted is precisely that 'protection of
balance of payments' is in fact protection of capi-
talist interests with its imperative necessity for inter-
nationalisation of capital and continued foreign
investment.
Underlying these statements is a view of the nature
of modern imperialism. Being an integrated system
whose major conflicts are against the socialist nations
and the dominated third world, its own internal
conflicts become relatively insignificant. Inter-
imperialist competition takes place within the con-
fines of co-operation between imperialist nations
and it is this co-operation which predominates in
relations between imperialist nation states. It is
incorrect to see imperialist states as simply repre-
senting against each other the competing interests
of their 'own' national capitals. They are forced to
represent the interests of internationalised capital
which, precisely because it crosses international
boundaries and because it exists in a delicate inte-
grated system, requires co-operation between nation
states. This co-operation extends to the financing
of the British balance of payments if this is necessary
to further the internationalisation of capital and
strengthening of the imperialist chain.
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ECONOMICS, THE STATE AND CLASS
STRUGGLE
Having set out the elements of the Marxist theory
of capitalism's laws of accumulation and the role
of the state in this under state monopoly capitalism
we are now in a position to examine a question which
is central to an asssessment of the policy demands
which the Party puts forward. Since as argued at
the beginning, these policies must be seen as part
of a political struggle—a struggle to build, lead and
develop the broad democratic alliance—the imme-
diate question is what types of class struggle emerge
in the course of capitalist accumulation.
Economic Struggles
It is a basic Leninist principle that the capitalist
mode of production involves spontaneous class
struggle over economic issues such as wages, with
the class organised in trade unions. For these to
develop into political struggle led by the working
class with a high level of class consciousness the
leadership of the Marxist party is necessary. How-
ever, at different times the forms of economic
struggle differ and the opportunities and difficulties
for political and ideological leadership differ. The
Marxist view of economic developments presented
above has implications for our understanding of the
development of class struggle.
Of particular importance is the fact that the state
is intimately involved in the economic processes of
modern capitalism. There are two major results of
this. One is that economic struggles develop not
only around wages but also around unemployment,
housing and social services since the state's role in
these provides a potential focus for such struggles.
Such a focus would be absent if, say, medicine were
provided in a fragmented manner by private doctors
rather than for the whole class by the state. Economic
struggles also take new targets simply because before
state monopoly capitalism developed these objects
did not exist in an important way; for example the
struggle over taxation becomes an important aspect
of the struggle over distribution.
The second result is that economic struggles take
on a more direct connection with political struggles
and the development of class consciousness. Because
the state plays such an important direct role in
capitalist accumulation, economic struggles in-
creasingly involve struggles between workers and
capital through the state. Even struggles over wages
which under competitive capitalism are essentially
between workers and their employers now become
struggles involving the state which is acting as the
'supervisor' of capitalist accumulation. Struggles
over taxes, unemployment in state controlled indus-
tries, housing, social services necessarily involve the
state because of its dominance in these areas. But,
and this is most important, the state is primarily a
122
political institution so that struggle over the stale's
economic role immediately raises political issues.
Role of the Party
It may be deduced from this that the role of the
Party is weakened for, if spontaneous economic
struggles quickly raise political issues, the necessity
for Party leadership is surely reduced? This is a
false conclusion. One reason is that the traditional
institutions of economic struggle, trade unions, are
not structured along lines which enable them to
organise non-factory struggles. They cannot organise
housing, unemployment, and social struggles since
their main and historic function is the organisation
of employed workers over their workplace issues.
The Party is the only workers' organisation which
can—and must—take the initiative in organising
around such economic issues.
The second reason why the state's predominance
enhances rather than reduces the Party's role is that
although it implies that economic struggles imme-
diately raise political questions they do not by them-
selves lead to political struggles. Political leadership
is required for this. This is well illustrated by the
Social Contract disaster, where the trade union
leadership attempted to do a political deal. Without
a widely accepted Marxist political party's leader-
ship to develop struggle the workers were led into
a political deal which they were bound to lose. They
were bound to lose because the bourgeoisie is strong
in political struggle; its political hegemony is in fact
condensed in the state, for the capitalist state's
function in the most general sense is the maintenance
of capitalist relations.
ECONOMIC POLICY AND CLASS STRUGGLE
The Party's economic policies, seen as a set of
demands around which struggle is organised and
led, must be understood from the perspectives pre-
sented above. Their only logical consistent basis is
the Marxist theory of the economy, the state's role
in it, and its implications for class struggle. Bearing
in mind that, as Eric Hobsbawm (MTD July 1976)
notes, the broad democratic alliance has both defen-
sive and offensive elements in its strategy, we can
examine the balance of these elements in the Party's
demands.
Pay Restraint and the Standard of Living
The demands for an end to pay restraint, for a
price freeze, against redundancies, for a restoration
of social services and for progressive tax policies
are essentially defensive demands. Since attacks on
the standard of living of workers and their allies
are, as we have seen, integral to the capitalist state's
supervision of crises and depression, the fight for
these demands is essential if living standards are to
be defended. And the defence of living standards is
the most basic element in building and strengthening
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the broad democratic alliance. Being the immediate
issue which affects all workers and employees, it is
an issue around which millions can be mobilised
however undeveloped their anti-capitalist under-
standing. Although a primarily defensive struggle,
it also has offensive elements. Because of the state's
involvement in these matters the struggle for living
standards can and must be organised around propa-
ganda and education concerning the nature of the
capitalist state and its role. Because of the significance
of unemployment and reduction in living standards
for capitalist restructuring and accumulation de-
termined struggle over these issues involves a struggle
for the alliance to affect the terms on which this
accumulation takes place.
Moreover these immediate struggles against pay
restraint and related capitalist policies have a natural
line of development into an element of the pro-
gramme that the Party and alliance would adopt
under a socialist government—the alternative
strategy. They are not the same as the requirements
of the socialist programme but they are the essential
starting point from which urtderstanding of it is to
be developed. The reason that the immediate de-
mands are related to the socialist programme is that
both have as a common element the aim of a fund-a.-
mental raising of living standards. The reason that
they differ is that under capitalism the struggle for
this must involve a struggle for free collective bar-
gaining; no curtailment of free collective bargaining
by the capitalist state is based on the fundamental
principle of redistribution toward workers and other
wage-earners. Under a socialist government the same
aim can be realised by state planning although this
general view raises important detailed questions about
the role of trade unions under a socialist government.
All this could hardly be doubted. The struggle for
living standards organised as a struggle for free col-
lective bargaining, against cuts, against redundancies
is integral to the Party's whole strategy. The methods
of this struggle—strikes, marches, work-ins—in
trade unions, tenants' associatioas, organisations of
the unemployed, these methods are essential parts
of the Party's armoury of tactics. Yet from within
the Party there have been serious criticisms of this
policy. Dave Purdy (Comment, 26.6Jb; The Leveller.
January 1977) has argued that the Party should
abandon its attack on the principle of pay restraint
under capitalism. This is an astonishing argument
for an experienced Party militant to promote and
clearly it is wrong in terms of the analysis I have
presented in this article. In fact it is easy to show
that it results from Purdy's adoption of economic
theories different from the Marxist theory advanced
here.
The Conflict Theory
Purdy's argument is based on two propositions.
MARXISM TODAY. APRII , 1977
The first is that wage struggles are largely respon-
sible for inflation and, through this, are responsible
for balance of payments deficits, low or unproduc-
tive investment, unemployment and crises. The
second is that knowing this supposed truth, the
British working class and its allies are correctly
willing to support pay restraint. On the basis of these
propositions it is argued that the Party is in danger
of losing its credibility by demanding free collective
bargaining because if the demand were to succeed
the British people's standard of living would be hurt
rather than improved.
The first proposition is based on a type of
ecoaomic theory which is fundamentally opposed
to Marxist economic theory. Similar to what James
Harvey (MTD, January 1977) described as conflict
theory, it emphasises the role of struggles between
workers, capitalists and the state over wages, prices
and taxes—struggles over exchange relations—as
determining production, causing crises and low
investment."
Marx's view of this type of theory is well sum-
marised by his critical conclusion that wages are
determined by accumulation rather than vice vcrsa,^"
but that is only a summary. In fact, the whole of
Capital in taking production as the sphere which
fundamentally determines exchange and distribution
argues against the conflict-theory view.''
But it is not even necessary to appeal to Marx's
authority to demonstrate the error of conflict theory.
Its inadequacy and internal inconsistency can be
exposed by posing to it the question: why did in-
flation accelerate so rapidly in the 1970s?
Problem of Inflation
Conflict theorists' answer to this is that this
acceleration resulted from increased workers'
militancy. The problem is to explain why this
militancy reached its peak in the 1970s. As Harvey
(MTD, January 1977) explains, conflict theorists
generally claim that this economic militancy stems
from the fact that near full-employment was experi-
" James Harvey's presentation of this conllict theory
as a theory of inflation confuses two elements. One is the
upward spiral of wages, profits and taxes as workers,
capitalists and state attempt to maintain the real value
of their revenues. This is the basic element in conflict
theories. Harvey's second element which is not in fact
essential to these theories is the idea that these struggles
cause an excess demand for commodities which pushes
up prices.
'" See quotation above.
" See B. Fine and L. Harris "Controversial Issues in
Marxist Economics" in R. Miliband and J. Saville (eds)
Socialist Register 1976 for an elaboration of this and for
the connection between such matteis as the status of
value theory and the analyses of crises.
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enced for 20-25 years after World War 11.'^
But that explanation is totally inadequate. By
itself it leaves unanswered the question of why there
was prolonged high employment. An explanation
which is commonly employed to fill this gap is that
the state adopted Keynesian policies to maintain full
employment" but this simply removes the problem
one step further back. It raises the question of how
the state was able to defy and overcome the laws of
capitalism which Marx discovered. Since, for
Marxists, crises and unemployment are necessary
for capitalist accumulation how could the state have
abolished them for 25 years or so? To pose the
question in another way, if the state was able to
overcome crises in the post-war boom, why did a
crisis develop in the 70s with the active encourage-
ment of the state? Distributive struggle theorists
basically avoid these problems by denying that crises
have any fundamental role in capitalist accumula-
tion. It is denied that at their source is the law of
the tendency of the rate of profit to fall in value
terms (that is, the tendency for it to fall even if
money wages are constant) and that their funda-
mental necessity is reflected in the impetus they give
to a restructuring of production. The only role for
unemployment in their view is to push down wages.
The view that the post-war boom, by raising
militancy, is the source of the ptesent it^flation
raises an additional problem, too. Why is it that
high inflation has been experienced in recent years
when unemployment is high rather than in the 50s
or early 60s when employment was high ? An answer
to this is not always provided by the distributive
struggle theorists. One which is sometimes put for-
ward is that the state has exacerbated the conflict
by increasing its own struggle for revenue and this,
together with workers' struggle for wages and
capitalists' struggle for profits, causing a spiralling
leapfrog of wages, prices and taxes. This view how-
ever, is not supportable within the distributive
theorists' own framework. In that framework, an
increase in the state's expenditure on social services
(which including housing, is the main component of
the 1970s expansion in state expenditure) is equiva-
lent to an increase in wages. It is an increase in the
so-called 'social wage'. If so, then state expenditure
should reduce workers' pressure on wages from
employment. If it does not do so we are back to an
explanation in terms of workers' militancy and we
have failed to answer the question of why militancy.
'^ See A. Glyn and B. SutclilTe Brilisli C'upilalisni,
Woricers and llie Profit Squeeze (Penguin) for a classic
statement of this view.
" See Glyn and Sutcliffe. op.dr., and 1. Gough "State
Expenditure in Advanced Capitalism", New Left Review,
p. 92.
124
explained in terms of high employment, is particu-
larly great in a period of high unemployment.
Purdy's Political Strategy
The economic theory behind Purdy's approach is,
then, questionable. But his argument is also based
on a view of political strategy and on his assessment
of political and ideological circumstances. Whether
or not free collective bargaining does lie at the root
of inflation, low investment and high unemploy-
ment, the important thing for Purdy is that the
British working class thinks that it does. In his view,
the Party's struggle against the social contract;
"offends against popular intuitions of the inflationary
process and damages the Left's public credibility."
(Comment, June 26, 1976)
so that:
"Only if We recognise and state openly now that
voluntary pay restraint is a necessary adjunct of this
alternative policy will we have any chance of
cementing together the bloc of social forces which
over the difficult years which lie ahead for us in
Britain can transform our programme from a gleam
in the eye into a living reality." {pp. cit.)
Which communist would not agree with the
necessity of cementing together this bloc of social
forces? Which would deny that we must not lose
public credibility? The acceptance of these key
components of our strategy is fundamental to the
present article and to everything written in Marxism
Today. But their acceptance does not lead to the
view that the Party should support pay restraint;
it leads to precisely the opposite.
A Complex of Struggles
The struggle for socialism is precisely that; a
struggle, class struggle. In fact, it is a complex
structure of different struggles. One way to decipher
this structure is to see it as an interrelated set of
economic, political and ideological struggles.
Economic struggle itself involves interrelated
struggles over distribution, exchange and pro-
duction. Trade union wage struggles are primarily
located within distribution and exchange. Struggles
over unemployment, work-ins against closures, dis-
putes over the control of the production line are
concerned primarily with production. The struggle
for socialism is, for Marxist-Leninists, a struggle to
forge the unity of all these different elements of
class struggle. It is often characterised as the
struggle to develop the working class from being a
class in itself to a class for itself. It involves de-
veloping a unity between economic, political and
ideological struggles and that, surely involves de-
veloping a unity between the different types of
economic struggle.
The problem that we all face is how to develop
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that unity and what precisely is the form of that
unity. Purdy's answer is that unity of the different
economic struggles involves abandoning distribu-
tional struggle in favour of struggle over control of
production. Moreover, he virtually urges us to
abandon all economic struggle so that the struggle
for control of production is fought entirely at the
level of politics. I say 'virtually' because contrary to
this implication, he does argue that:
"the programme must not simply address itself to
the Central Government, but must project lines of
action at workplace and community level." (Leveller,
January 1977, emphasis added.)
But this argument is inconsistent with the whole
basis of his views. These start from the proposition
that economic struggle over wages will worsen un-
employment and the prospects for capitalist accumu-
lation and should therefore be avoided. Since any
economic struggles, strikes, 'lines of action at work-
place . . . level' would have the .same effect in his
view, Purdy's argument in the last quotation must
be dismissed as an inconsistent aberration.
Thus, it seems that Purdy wishes to forge a unity
of struggles by abandoning trade union struggles
which are essentially sectional and, although struggle
for economic change is to be emphasised, this should
occur at a political level and should not be concerned
with raising wages. The foolishness of this is that it
involves trying to make a sudden leap from those
areas of struggle where the working class and its
allies are strong and where struggle will occur
whether or not the Party leads it (trade union
struggles against employers and state over wages)
to those areas which are relatively undeveloped
(struggles through the state for control over produc-
tion and over capital as a whole). Indeed he even
seems to see the possibility of doing a deal, for he
writes that state intervention and planning can be
won as the 'quid for the quo of pay restraint'. These
ideas are precisely those of well-meaning social
democrat trade union leaders. Giving up their
formidable weapon, trade union struggle over wages,
as the quid pro quo of a political deal, the Social
Contract, they have lost all. This is bound to be the
case.
The weakness of Purdy's view is to be contrasted
with Bert Ramelson's view of the development of
unity between different types of struggle (MTD,
July 1976). Its fundamental principle is that the
areas where the balance of forces are to our advan-
tage should never be abandoned. But neither should
struggle be limited to such areas as trade union wage
struggle. Instead higher forms of struggle, struggles
over production, political power, and ideas, must be
developed out of and together with wage struggles.
The historic struggles of 1974 arising out of the
MARXISM TODAY, APRIL, 1977
miners' action for wages is a classic example of this
strategy in practice. As I have argued, state monopoly
capitahsm increases the potential for economic
struggles, with proper leadership, to be intimately
involved with political questions and the struggle
developed accordingly. But to develop it by aban-
doning its base is to concede the ground to capitalist
hegemony, for it is precisely in the areas of politics
and ideas that the bourgeoisie is strongest so that
we can only venture into them with our rearguard
covered. Why else did Marx argue that "Trade
Unions work well as centres of resistance against
the encroachments of capital" and their role in this
is the important but limited role of fighting "a
guerilla war against the effects of the existing
system" (Wages, Price and Profit). This guerilla role
must be encouraged as a defensive policy on the
basis of which the Party can build the political
offensive.
Balance of Payments Policies
While the struggle for free collective bargaining
and the related struggle around living standards is
primarily defensive, the struggle for selective import
controls, controls over capital movements, liquida-
tion of British owned foreign assets and the ending
of sterling's reserve role is primarily an offensive
policy when seen as a demand around which struggle
is organised.
To some extent these demands can be and are
presented as necessary to defend living standards
under capitalism and they can gain support on this
basis as long as workers and their allies believe that
the balance of payments problem is the source of
unemployment and crises. The Party can never forget
that its propaganda and struggles must start from
existing levels of consciousness and be designed so
as to develop consciousness. Since as I have argued
above, the balance of payments is not the source of
unemployment and crises and in advanced capitalist
economies, is not even a significant instrument of
political-economic struggle between competing im-
perialist states, the Party's task is to develop con-
sciousness along new lines. It is to organise struggle
around our balance of payments policies so that
they bring to the fore the idea which is implicit in
them, the idea of social control of foreign trade as
an integral part of socialist planning of use values.
The demand for import controls now, for example,
must be fought for in such a way that it puts on the
agenda the question of the state monopoly of foreign
trade under socialism.
The fact that the demand for import controls and
controls on capital movements now are likely to be
rejected by the capitalist state^^ enables the Party
^* Although in certain circumstances they may be
accepted in part.
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to press the question of the nature of capitalist
internationalisation and of why, if the state presents
the balance of payments problem as a problem for
the 'national interest' it does not control imports
and capital movements to 'protect the nation'. In
this way, the struggle for controls can be part of the
debate over many issues including the debate over
the n&.ture of the state. It is also central to a full
discussion of the Party's programme for a socialist
regime, for it raises the question of the problems that
will be faced. It enables the Party to argue for a state
monopoly of foreign trade in such circumstances, a
state monopoly which will be essential for two
reasons. One is that under a socialist government,
the balance of payments will then be used by im-
perialist states as an instrument of political-economic
destabilisation. It will no longer be the case that the
financing of balance of payments deficits is a matter
for inter-imperialist co-operation, and bankruptcy
will have a real meaning if the state does not take
control of trade and money flows. The second is
that, even apart from this, a socialist economy en-
tering into market relations with capitalist economies
is under constant threat. The principle of socialist
planning is endangered by the existence of trade
through capitalist markets and therefore a state
monopoly of foreign trade will be necessary to
control this intrusion of market relations into a
planned economy.'^
It is this offensive nature of the demands for im-
port and capital controls—the questions which they
raise about the nature of capitalism and the alterna-
tive socialist economy—which gives them their sig-
nificance. Moreover, they are offensive also in the
sense that they can in some circumstances be par-
tially won from the capitalist state and, if so, the
influence of the broad democratic alliance over the
terms on which the accumulation and international-
isation of capital are conducted is thereby extended
to some extent.
The ultra-left seems to be unable to understand
these arguments, for it vehemently attacks the
Party's balance of payments policy. In particular
it attacks the demand for import controls and it
does so on the basis of two main arguments. First
it argues that import controls create unemployment
abroad in the attempt to save jobs at home and are
therefore contrary to the principles of proletarian
internationalism. Second, they are demanded by
capitalists as an aspect of inter-imperialist rivalry so
that working-class support for them is a form of
jingoism'" But such criticisms can only be put for-
ward by abandoning Marxist economic theory and
adopting Keynesian theory.
'* Although there are circunistances where a socialist
government may be forced to temporarily accept capi-
talist market relations, as did the Soviet Union in
adopting the New Economic Policy in 1921.
126
The criticisms are based on Keynesian theory in
two respects. First they represent the view that
capitalist accumulation, which is what determines
the level of employment, is determined simply by the
demand for goods. It is argued that if import con-
trols are established by Britain this would lead to a
fall in British demand for foreign goods thereby
reducing the rate of accumulation in other countries
and increasing their unemployment. At the same
time it would increase home demand for British
made import substitutes thereby decreasing British
unemployment. This emphasis on demand as the
determinant of accumulation is entirely Keynesian
and contrary to the Marxist view that accumulation
is fundamentally dependent on production condi-
tions. Following a crisis, what determines the path
of accumulation is whether or not the crisis and
recession lays the conditions for renewed accumula-
tion by the partial destruction of capital and by
stimulating the restructuring of productive capital.
Thus one cannot argue that import controls will
increase unemployment abroad and decrease it at
home, unless one has conducted a detailed analysis
of each country's particular circumstances, paying
special attention to production conditions.
The second reason why these criticisms are
Keynesian is that they imply that the state, serving
the interests of its 'own' national bourgeoisie is
required to maintain demand and high employment.
Clearly this is incompatible with the Marxist theory
of the state which argues that the state, acting in the
interests of capital, has to encourage unemployment
and crises at times in order to stimulate the restruc-
turing of capital. Indeed, this is necessary precisely
in order to further internationalisation and mono-
polisation—the weakening of the national bour-
geoise and the strengthening of international
monopoly capital.
This points to another weakness in the criticisms;
they are based on an undeveloped concept of im-
perialism. The critics' picture of the world is one
where powerful national bourgeoisies struggle
against each other for the division of the world
and they ignore the important elements of inter-
imperialist co-operation which predominate. Thus,
they view the nation state, again, as simply repre-
senting its 'own' national bourgeoisie in conflict
with other national bourgeoisies.
Nationalisation
The theory of the capitalist state's economic role
appears at first sight to destroy the validity of
the Party's demands for an extension of nationalisa-
'" These arguments have been articulated most clearly Keynesian or conflict-theory approaches. On the
in Revolutionary Communist, No. 3/4, p. 7, although they basis of Marxist theory we have considered the
are common to many ultra-left groups.
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tion. For I have argued that the capitalist state is in
any case forced by capitalist pressures to increase its
supervision of capital and this involves an extension
of nationalisation. Our demands appear to coincide
with capital's own interests. However, the demand
is a major offensive demand. It involves a struggle
for a different type of nationalisation and a critique
and exposure of the role of capitalist nationalisation
as being in the interests of capital and against
workers' interests. The demand involves a struggle
for nationalisation under democratic contiol.
There is nothing offensive about a demand for
nationalisation per se. But the Party's policy is not
of this nature. It is a demand for nationalisation
under workers' control requiring reorganisation of:
"the industries on democratic lines with governing
boards made up of workers and technicians from the
industry concerned." {Britisli Road to Socialism,
1968, p. 32)
Thus it directly challenges the capitalist national-
isations of British Leyland, Rolls Royce, Alfred
Herbert, etc., where control lies in the hands of the
emasculated National Enterprise Board, essentially
a capitalist holding company.
The demand for nationalisation under effective
workers' control is not one which can be fully won
under capitalisation. But it is an offensive demand,
the focus for a struggle whose function is to make
whatever gains it can and, most importantly, to
develop consciousness. As the Party makes clear,
the struggle for such gains forms:
"one of the decisive fronts on which the broad
popular alliance can be built. As the battle for them
develops it will increasingly throw up the question of
the ownership and control of the whole economy."
(British Road to Socialism, 1968, p. 35, emphasis
added)
Moreover, the demand for nationalisation of the
major financial institutions with effective democratic
control is one which brings together offensives in
different areas. The central role of financial capital
ensures that this demand simultaneously raises the
question of democratic control of investment and
of foreign trade and finance.
CONCLUSION
I have argued that the only coherent basis for the
Party's economic policies is the Marxist theory of
the economy and the state's role in it. Two examples
have shown us that critics of the Party's policy base
their arguments on non-Marxist theory and their
criticisms seem to be the inevitable result of adopting
defensive and offensive aspects of the Party's policies
MARXISM TODAY, APRIL. 1977
and their place in a wider struggle. This has an
important implication for Party propaganda in these
struggles. It means that wecannot justify our policies
by a simple appeal to Keynesian or conflict-theory
reasoning. We have the extremely difficult task of
framing our propaganda so that it is acceptable to
The Politics of Rank and Filism
Stan Broadbridge
Geoff Roberts's article (Marxism Today, Decem-
ber 1976) does the movement a service in its
application of Gramsci"s approach to the problems
of trade union activism. However, he seems to
draw back from the full consequences of his
analysis.
Gramsci did not merely point out that trade
unions are, as at present constituted, part of the
capitalist system; he also emphasised the need for
new organisations of the producers in order to
carry out a revolution. He saw these as the
Workers" Councils, but it is not necessary to follow
him in every detail in order to understand the
basic need for such an approach. Roberts, how-
ever, is quite explicit that these new organisations
should be transformed trade unions apparently
not realising that such a transformation goes
against the whole trend of his argument.
Democratic Control
Revolution is a question of state power: it
involves the transformation of the state from being
an organ of one class into being that of another.
This cannot be carried out by organs of economic
struggle formed in the matrix of capitalism, how-
ever they may be 'transformed'. Marx and Lenin
spoke of the need to smash the machinery of the
capitalist state; the British Road speaks of the
need to transform it, but in essence we are re-
ferring to the same process. The ditference lies in
the changes the state has undergone in the last
fifty years. It is now much larger and more com-
plex and, as a result, employs vast numbers of
people who are basically no different from other
members of the working class and can be won
over to the side of revolutionary change. But that
change must be revolutionary -it must go outside
the bounds of the present system and create some-
thing new.
In its essentials that something new involves the
democratic control of the state's functions bv the
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127
millions who remain non-Marxist, but so that it
raises questions, questions which have Marxist
answers. We also have the difficult task of actively
organising struggles across a broad spectrum of
demands, for a demand without active struggle in
organisations is merely a word on a piece of paper.
whole population—including, of course, those who
work in state institutions (apart, probably, from
the replacement of certain ruling-class supporters
in the upper echelons). This can be carried to com-
pletion only after a revolution, but it can be pre-
pared for as part of the struggle. Schools, for
example, should be run by broadly-based bodies
including not merely teachers and other staff, but
also parents, pupils and representatives of the
workers; hospitals and health centres by similar
bodies involving patients (and potential patients).
Above all, we should Hght for local democratic
control of police forces and the democratisation of
the armed forces, with full involvement in political
life.
All this is widely accepted—it is what is meant
by the 'anti-monopoly alliance". It is the basis of
our concept of a peaceful transition. No one denies
that the capitalist class will not give up without a
light; the point is that they are too few to fight
alone. They, too, must have allies, both within and
without the state machinery, and it is the job of
the left to ensure that they do not get them, and
thai those wht) might fill this role are won over.
Fight for a New Strategy
The point I wish to make is that this cannot be
done by merely seeking to move to the left
organisations whose whole existence depends upon
defending the interests of the workers within the
present system. Obviously the left have to fight on
day-to-day issues (though I think we sometimes
fail to see just how broad an alliance on such
issues can be militancy is not the same as social-
ism or even left-wing politics). Equally obviously
we should point out the long-term lessons and
perspectives. This can, and should, be done in the
workplace, but it cannot be done in the trade
unions: such mailers, literally and figuratively, are
not on the agenda.
This is still true even in Britain where the
structure of the l^abour Party involves trade