Panta Rhei: Exchange of email letters – Dov Schoss and Moshé Machover

Exchange of email letters, Dov Schoss and Moshé Machover, following Machover’s article “The 20th century in retrospect“

1. From Dov (22 May 2000)

Some comments on Moshé Machover, ‘The 20th Century in Retrospect’.

Unquestionably, capitalism is not moribund. I feel duty-bound to mention my late friend Theo Bleiweiss who spoke about this subject at the end of the last world war, while in the ranks of the Fourth International it was then accepted as a matter of common sense that ‘the final crisis of capitalism’ is arriving.

Nevertheless, we have to ask ourselves whether the capitalism of our time is still a vital and young system in a process of development. What is the character of the development of the productive forces today?

We have to learn from Marx, but with a mind of the 21st century. We should not ask, What did Marx mean in his texts? We have to ask, What do we understand?, from the standpoint of a new perspective. We are living in a different era and we have had different experiences. Today’s capitalism is very different from that of Marx’s time, even it is basically the same system and cannot be analyzed without Marxist theory.

Let us re-appraise the capitalism of our time: the productive forces are developing at an unprecedented rate, but carry with them worrying destructive forces. No, not weapons alone. Arms, and even global weapons, are not new. And we may say that for capitalism weapons may be ‘constructive’, as they help the capitalist system to survive. The second world war was nothing like the first: this time, the objective was not a redistribution of the colonies, but ‘cleansing’ the world of ‘superfluous’ industries. Of course, each side wanted to destroy the industry of the ‘enemy’. As almost all the industry of Europe was destroyed, the American economy was able to develop at an unprecedented pace. Is there a possibility of a third world war? Perhaps. But, again, not as a repetition of the previous two: this time, the industry in other countries is ‘one’s own’ industry. But there is a need to ‘cleanse’ the world of ‘superfluous’ people, and the neutron bomb is an appropriate device, as it leaves no radiation after killing the population.

So from a capitalist standpoint weapons are constructive means. But we are witnessing a process of pollution of the world environment, a process that threatens the whole of society. We cannot conceive of a capitalism that can survive without workers and without capitalists!

And another problem encountered by ‘post industrial’ capitalism:¹ the scarcity of working brains. The increased productivity of work has ‘freed’ workers from manual labour, and transformed them into unemployed. Our society is characterized by high technology. A high percentage of workers are involved in information.²

In Marx’s lifetime, the capitalist system’s existence was threatened, as it destroyed the workforce by extorting extensive work from children. Then the bourgeois parliament of England itself, at the insistence of factory inspectors, voted laws restricting the workday of children under the age of ten to nine hours.³

Is present-day capitalism able to prepare a new class of educated workers? This task is not as simple as the voting of a law limiting the working day for children. We have to take into account the fact that finance capital rather than industrial capital rules today.

Why has the working class not acted in order to save itself and consolidate its future? The ‘present shock’⁴ of the rapid development hit the industrial workers and the trade unions, so they were not prepared to change tactics. Under the rule of the Keynesian system, the living standard of the workers in the industrial countries rose to a reasonable level, so it was possible to strive for a shortening of the working day, in order to be able to study and improve their knowledge.⁵

Do we still believe capitalism will collapse all by itself, and all we have to do is wait, mouth open, expecting socialism to fall into it like a ripe fruit? Social change is achieved by human action. The question is whether there is a correlation between ‘the terminal crisis of capitalism’ and the motivation of the social forces (the proletariat, according to socialist tradition) to perform the change. ‘Motivation’ is a good term for a combination of readiness, need and (class?) consciousness.

I am not sure I can quote Marx, but it seems to me that the ideas I want to put forward are in the spirit of Marx. I think a social structure can persist so long as it ensures the existence of the exploited class. Today, lots of classical workers are ‘superfluous’. Unemployment is no longer due to a periodic crisis, and the unemployed do not serve as a reserve army. The development of the productive forces today does not include the development of the working class. The workers who are still employed are worried and cannot look forward to a future. The high-tech workers will soon be threatened with obsolescence by new technological revolutions. In this situation, the working class has nothing to lose but the lack of security. But the working class cannot act so long there is no better perspective. In the socialist tradition, the concept of class consciousness is understood in terms of an automatic reaction to a critical situation, like the behaviourist concept of stimulus and response. But the term ‘consciousness’ is a cognitive one, it implies understanding of the objective situation and knowledge of possible action in order to achieve social change, and a minimal schema of a society that may arise from this action. Such a consciousness does not arise automatically, as a reaction to reality, but under the influence of intellectual factors. I do not know a political party, or another kind of social factor, that presents to the public a new program for revolution or an idea for a better society.

In his footnote No. 2, Machover mentions ‘a respected Marxist scholar … claiming that the productive forces would have developed even more highly had capitalism been replaced by socialism.’ If we think that socialism is no more than a planned production of commodities, we can suppose the new society would be able to produce more, quantitatively: if a ‘socialist’ society will produce more atom bombs than the United States, would that be a success of socialism?

A social revolution, in the sense of a fundamental change in the relations between people, cannot be performed by the working class alone, without the collaboration of other sectors of society. And the by-product of capitalism, the pollution of the world, does not endanger the workers alone. It is no longer a question of class consciousness, but of social consciousness, ‘social’ in two senses: consciousness of the society, and about the society.

2. From Moshé (22 May 2000)

Dov shalom,

I was very happy to hear from you, and receive your comments. I find myself in agreement with much of what you say (perhaps more than you realize).

Here are a few points in reaction to what you write.

You say:

‘Do we still believe capitalism will collapse all by itself, and all we have to do is wait, mouth open, expecting socialism to fall into it like a ripe fruit? Social change is achieved by human action. The question is whether there is a correlation between ‘the terminal crisis of capitalism’ and the motivation of the social forces (the proletariat, according to socialist tradition) to perform the change. ‘Motivation’ is a good term for a combination of readiness, need and (class?) consciousness.’

I don’t think Marxists (except perhaps very stupid ones) ever believed that capitalism would collapse ‘all by itself’. Of course, social change is achieved by human action, which is mediated by consciousness. But for Marxists human consciousness is not the ultimate and independent cause. Consciousness of such-and-such a kind (for example, a socialist or even simply anti-capitalist consciousness) requires certain material conditions. These conditions may not be sufficient; but they are necessary.

What I was discussing was whether such conditions existed in the past. My conclusion was that they did not exist during the 20th century.

In my article, to which your comments are addressed, I did no answer in full the question: What are these conditions, and how are they likely to arise?

Let me do so now, very briefly. Like Marx, I believe that a necessary condition for the overthrow of capitalism is that it will no longer be capable of developing the productive forces. But the concrete meaning I give to this is very different from that which I find in Marx.

Marx believed that the organic composition of capital has a long-term tendency to rise, and that as a result of this the rate of profit has a long-term tendency to fall. This tendency may be arrested temporarily, but not forever. In the long run, capitalism will no longer be able to operate. Its rate of growth will decline.

I think all the statements in the above paragraph are false. There is no long-term tendency of organic composition to rise, nor of the rate of profit to fall.

In my view capitalism will get into a terminal crisis not because its rate of growth will decline, but quite the contrary: because capitalism can only exist with an uncontrolled rate of growth, an irrational growth, which is not sustainable in the long run. Because of this, capitalism is increasingly confronted with ecological and other barriers, which it cannot overcome. In order to overcome them, economic development and growth must be made in a rational, planned and controlled way – which is incompatible with capitalism.

Socialism will become necessary (and increasing numbers of people will be able to see that it is necessary) not because under capitalism the rate of economic growth will decline, but because capitalism is like the sorcerer’s apprentice. It will either be destroyed or it will destroy everything on this planet. I think there are already signs that more and more people (although not very many, so far) are realizing this.

As to the question about the role of the working class: I agree completely that a socialist revolution cannot be achieved by the working class alone. But I think that the working class has a central role in this.

It is true that the nature of the working class has changed, especially in the richer countries: less traditional manual workers; more workers in new technology. But the basic relations of exploitation have not changed in any fundamental sense. The role that Marx ascribed to the working class did not depend on its being manual (or even industrial); it depended on the nature of the relations of production (and exploitation) in which it was involved.

Today, things (including IT products and services) still have to be produced by someone; and the direct producers are still hired workers who are exploited.

So I think it would be too hasty to dismiss the idea that the working class must play the central role in transforming our society.

With warm greetings, Moshik

3. From Dov (9 August 2000)

Dear Moshik,

I hope you remember we changed some ideas. It has taken to me a long time to continue. I had some personal problems. I apologize.

In my letter, my intention was to mention that, in the light of many changes in our society, there is a need to analyze anew many points.

Let us consider the role of the working class in a future social revolution. How central would it be today? Let us remember that in Marx’s lifetime the working class was a mass, at the workplace and at home as well: the workers lived in separate neighbourhoods, isolated from members of other classes. Their 24-hours living together created, almost automatically, a feeling of belonging and so transformed them into a class for itself.

Today, work may be performed at home, and not necessarily in a workplace. I quote from your article: ‘Previously, human beings could not normally engage simultaneously in a consciously synchronized and coordinated productive activity, unless they were physically brought together to one place. Now, with the advent of new modes of communication, they can synchronize and coordinate their productive activity in real time, across continents.’

For ‘human beings’, in general, modern technology makes possible political organization and activity on an international scale. But for a specific group of human beings, such as a scattered working class, it may act as a hindrance. Verbal communication between people, in unexpected situations, may not be effective. Few workers follow intensely debates on revolution and socialism.

Yes, in order to perform a socialist revolution, the working class should play a central role. The problem is whether the working class of today is able to initiate revolutionary action. Lenin’s phrase, about a revolution ‘under the leadership of the proletariat’ seems to me empty of content. So far as I understand, the leadership consisted always of intellectuals. Today, the working class, or sectors of the class, may be dragged into a revolution by active groups from other classes. Further clarifications will show that workers participation may play a significant role.

There is a need to analyze anew the content of the consciousness and the process of its development.⁶ I reckon that public opinion and the general atmosphere play a considerable role. Other aspects of the problem may be analyzed on the basis of the ‘sociology of knowledge’ and new psychological theories on information processing.

Some minimal idea about the character of the society we are striving for seems to me to be of central importance for a revolutionary consciousness. Today, on the basis of Marx’s analysis and our experience, such an idea cannot be called ‘utopian’. In the light of the Soviet experience, only fools will be ready to struggle for a Soviet-like society. A thorough review of our ideas about the subject is necessary, not only on the ground of human feelings (and we have not to underestimate such a factor), but especially on theoretical grounds. In order to act, people need to know where their action leads.⁷

Let us recall: in the socialist tradition, the abolition of capitalism was a very simple concept: the working class takes power and decrees new laws. Marx said that the working class cannot use the capitalist state for itself? No problem: In the same manner as the religious people make compromises with God, so did Lenin find ways to be faithful to Marx: he changed the names, from ‘minister’ to ‘commissar’ and from ‘police’ to ‘militia’. And capitalism was outlawed!

Here we come to a point on which we disagree. You mention anarchic production as the characteristic of capitalism. Lenin too considered anarchic production as the key problem of capitalism. If so, the only thing necessary was to organize a planned economy. But this is only their problem, the problem of the capitalists. Soviet planning did not change the situation of the workers; but this time, they were exploited in an orderly manner.

Marx defined different class societies by the relations between the classes. So, the capitalist society is characterized by economic relations between the classes. All previous societies were characterized as ‘subsistence economy’. Capitalism produces commodities. In capitalism, even labour power is a commodity.

I think that the abolition of capitalism means production of goods.⁸ It means the abolition of the commodity character of products, as they will cease to have exchange value or price, including the value of labour power, the wage.⁹ Here we have to ask again: is such a social change possible without the participation of the workers?

Here I have to come back to another point. It seems to me that the question of a ‘terminal crisis’ of capitalism is not relevant. The increasing production of commodities irrespective of their social utility (including weapons and drugs) does not signify vitality of a society.¹⁰ The unprecedented growth of industry leads to the destruction of humanity (world pollution). Objectively, the situation is revolutionary: modern capitalism does not need masses of workers and permanent unemployment is the characteristic of our time.¹¹ As the revolutionary situation is not reflected in the consciousness of the humanity (including the workers), there is no social factor able or ready to perform the revolution.

The points discussed here have an immediate practical significance: what kind of revolution may lead to such changes? I make a distinction between insurrection and revolution (social change). I feel it was believed that the revolution will be an outcome of the insurrection: after ‘taking power’, the socialist government would take care of all the changes. On my opinion, laws cannot dictate relations between persons, their attitudes and behaviour. This social change can be achieved only by the people involved themselves. We have to try to address the interactions between insurrection and social revolution.

Comradely greetings, Dov

4. From Moshé (10–20 August 2000)

Dov shalom,

Thank you for your document ‘More Comments’, which I read with great interest. It touches on some issues of central importance for present-day socialism. I have been thinking myself about these questions and have something to say about them.

I would like to respond to your document. By the way, I hope that the ‘personal problems’ you mention are not too bad, and that your health is OK.

You said:

‘My intention was to mention that, in the light of many changes in our society, there is a need to analyze anew many points.’

Yes; I agree. The first question you raise is

‘…the role of the working class in a future social revolution. How central would it be today? Let us remember that in Marx’s lifetime the working class was a mass, at the workplace and at home as well: the workers lived in separate neighbourhoods, isolated from members of other classes. Their 24-hours living together created, almost automatically, a feeling of belonging and so transformed them into a class for itself.’.

Yes; this is true. But it was also very small. Even in Lenin’s time, at the beginning of the 20th century, the working class was relatively small, not only in Russia (where it was tiny, although very concentrated) but even in the most advanced capitalist countries. In England the most numerous occupation was domestic service. Domestic servants, as I explained in my article, are not economically part of the working class. Socially speaking they are, of course; but they are not particularly known for having developed class consciousness.

You continue:

‘Today, work may be performed at home, and not necessarily in a workplace. I quote from your article:

“Previously, human beings could not normally engage simultaneously in a consciously synchronized and coordinated productive activity, unless they were physically brought together to one place. Now, with the advent of new modes of communication, they can synchronize and coordinate their productive activity in real time, across continents.”

‘For “human beings”, in general, modern technology makes possible political organization and activity on an international scale. But for a specific group of human beings, such as a scattered working class, it may act as a hindrance. Verbal communication between people, in unexpected situations, may not be effective. Few workers follow intensely debates on revolution and socialism.’

We cannot be sure about this. It is true that immediate verbal communication may be less effective today. But from the moment workers who do not happen to be physically together achieve consciousness and want to coordinate their actions, it is easier today. This was shown very clearly in the recent anti-capitalist demonstrations in Seattle, in which the organized working class played a central role. (Much of the coordination and organization was provided by the local unions, especially the longshoremen (stevedores). By the way, when – before this year – did you last hear about mass demonstrations of youths and workers, directed explicitly against capitalism?

Then you say:

‘Few workers follow intensely debates on revolution and socialism.’

This was also true in the past.

Further:

‘The problem is whether the working class of today is able to initiate revolutionary action. Lenin’s phrase, about a revolution ‘under the leadership of the proletariat’ seems to me empty of content.’

I think you are jumping too hastily to this conclusion. In my opinion, the answer to your question is not at all certain, either way. We cannot be sure that the working class is able objectively to lead a social anti-capitalist revolution. But we also cannot be sure that the opposite is true. We simply do not know, because there is not yet enough experience on the basis of which we could form a secure conclusion. This question is still open.

What we can say for sure are two things.

1. The working class is, in the most advanced countries, more numerous now than ever before. Perhaps for the first time in history, it forms the absolute majority of the population. For example, in the economic page of the British liberal daily, The Guardian, I read (14.8.00) an article according to which a recent survey of occupations in the US has found that over half of the population (I assume this refers to the economically active population, although the article didn’t specify this) belongs to the working class. More surprisingly: “When asked, 55% of Americans said they were working class”. This, in the US, where (compared to all other developed countries) class consciousness is traditionally very low among workers, and many of them falsely think of themselves as ‘middle class’. Nevertheless, more than half of all Americans do not only belong to the working class objectively, but have a subjective consciousness ofbelonging. Of course, this may not go very far. Just accepting that one is working class does not necessarily imply any developed class consciousness. But it is something.
2. Since the middle of the 1970s, the working class in most developed countries has suffered very massive defeats – economically, organizationally and politically. The same article in The Guardian quotes data according to which ‘in the post-war period up to 1972, real wages rose in line with productivity [in Marxist terms this means that there was no change in the rate of surplus value. –MM]. After 1972, productivity and output carried on rising but real wages fell for a quarter of a century until starting to rise again in 1997.’ These data are taken from a recent book by Michael Zweig, The Working Class Majority (ILR/Cornell University Press), which I have not read. Also, the proportion of organized workers has fallen in most capitalist countries. And the political centre of gravity in most of these countries moved sharply to the right.

It is dangerous to draw absolute conclusions from the situation that we see in this period of defeat. It may well be that the present retreats are temporary. For example, as the above quote from Zweig in The Guardian mentions, there are signs that the real wages in the US have recently begun to rise again, after 25 years of decline. Employment in the US and in other capitalist countries is also increasing. Historically, these are signs that precede a rising class combativeness of the workers.

You say: ‘So far I understand, the leadership consisted always of intellectuals.’

This was not always so even in Lenin’s time. But it was true in most cases. In my opinion the reason was that very few workers, even in the most advanced countries, had the level of literacy and education needed for leading a movement. Nowadays things are very different.

You continue: ‘Today, the working class, or sectors of the class, may be dragged into a revolution by active groups from other classes.

Since in our day there has not been a socialist revolution, or even a revolution that (like the Russian Revolution of 1917) declared itself subjectively as ‘socialist’, we cannot draw any conclusion about this.

You say: ‘Further clarifications will show that workers participation may play a significant role.’

I agree.

You go on:

‘Some minimal idea about the character of the society we are striving for seems to me to be of central importance for a revolutionary consciousness. Today, on the basis of Marx’s analysis and our experience, such an idea cannot be called ‘utopian’. In the light of the Soviet experience, only fools will be ready to struggle for a Soviet-like society. A thorough review of our ideas about the subject is necessary, not only on the ground of human feelings (and we have not to underestimate such a factor), but especially on theoretical grounds. In order to act, people need to know where their action leads.’

Again, I agree. But then you say:

‘In the socialist tradition, the abolition of capitalism was a very simple concept: the working class takes power and decrees new laws.’

You must be joking. What ‘socialist tradition’ are you talking about? Neither in the Communist Manifesto nor in Marx’s much later Critique of the Gotha Programme is the abolition of capitalism presented as simple. On the contrary, a whole historical period of transition is assumed to be necessary.

You continue:

‘Marx said that the working class cannot use the capitalist state for itself? No problem: In the same manner as the religious people make compromises with God, so did Lenin find ways to be faithful to Marx: he changed the names, from “minister” to “commissar” and from “police” to “militia”. And capitalism was outlawed!’

This is no example at all, unless you believe that socialism was a serious possibility in Russia in 1917–24. Lenin himself did not believe this, but he thought that socialism was a realistic possibility in the West, and that a proletarian revolution in Russia would serve as the catalyst. When a socialist revolution in the West failed to materialize, Lenin & co were reduced to taking short-term steps simply to stay in power. Lenin however was too honest to define any of these steps as ‘socialism’. He defined the early soviet state as a ‘proletarian state with severe bureaucratic deformations’. Economically, far from forbidding capitalism by law, he finally had to admit that the continuation of capitalism in Russia was necessary, even if it could be put under state control (NEP).

You say:

‘Here we come to a point on which we disagree. You mention anarchic production as the characteristic of capitalism.’

I did not say it was the characteristic of capitalism. Let me remind you how I defined capitalism in my article:

‘I use the term “capitalist mode of production” in its strict Marxian sense: referring to the mode of production in which the means of labour are privately owned, but mostly not by the direct producers, who must sell (alienate) their labour power as a commodity; the owners of the means of labour appropriate the surplus product (extracted from the direct producers) in the form of surplus value. Capitalism is the social order in which the capitalist mode of production predominates.’

However, following Marx himself and most Marxists, I believe that global anarchy is an inevitable consequence of the capitalist mode of production.

You continue:

‘Lenin too considered anarchic production as the key problem of capitalism. If so, the only thing necessary was to organize a planned economy. But this is only their problem, the problem of the capitalists. Soviet planning did not change the situation of the workers; but this time, they were exploited in an orderly manner.’

I don’t know (or even think it is important) whether Lenin indeed considered anarchic production as the key problem of capitalism. I certainly don’t think capitalist anarchy in itself is the key problem. In my opinion the key problem of present-day capitalism is that, because it produces only for profit, it must therefore create growing pollution, degrade the environment and waste non-renewable resources. The anarchic nature of capitalism is only important in this context, because it means that it is fundamentally uncontrollable and that its ‘negative’ consequences cannot be avoided.

Nor do I think that planning in itself is the solution. It all depends planning for what. Under Stalinism, planning was aimed at increasing production and productivity, in a very crude quantitative sense. Even this it did very badly, and produced a lot of waste and pollution.

But planning for the satisfaction of human need, protection of our planet, and conservation of precious resources simply cannot be done in a bureaucratic way. And of course it is out of the question under capitalism. It requires the far-reaching extension of democracy to the whole of what is now called ‘the economic sphere’. This extension of democracy is what I mean by socialism. Perhaps we agree on this.

Comradely greetings, Moshik

5. Dov (11 April 2006)

Is capitalism immortal?

‘Capitalism is not moribund’ wrote Moshé Machover in 1999, as a reply to the attitude of many ‘revolutionary’ parties that repeat, time and again, the same phrase. The slogan, and it is only a slogan, is not founded on some analysis of the actual situation, but only on theory. And no matter of the changes that occurred with the time, they are allways ready for the funeral. Machover recalls Lenin’s book Imperialism, the last stage of capitalism. Let us also recall Trotsky’s manifesto entitled The death agony of capitalism.

Machover was right. Nevertheless, I sent him a comment, asking whether the capitalism of our time is still a vital and young system in a process of development. We have to learn from Marx, but with a mind of the 21st century.¹²

Ed George, in a paper entitled “Through what stage are we passing?”¹³ tries to analyse the whole of capitalist development. He asks an important question: what happened to the socialist revolution? In order to analyse capitalist development at large, he describes the history of capitalism in the form of long waves representing rising and declining phases of economic activity.

The author characterises each period as a different stage in the development of capitalism. I tried to represent his description graphically. I found it necessary to make some changes and I wrote my definitions in italics. One period I mentioned as ‘wars’ and put it in parentheses, for further clarification.

Ed George supposes that capitalism may continue to exist in the same manner: ‘We can surmise that we stand on the brink of a new long-wave cycle – the fifth under capitalism.’ Can we imagine a new rising phase? In my graphic representation I did not describe such a trend. Why?

Every cycle seems to be a repetition of the former, but it is not. The expansion or growth of capitalism in the second cycle, imperialism, (I called it industrial capitalism) is higher than in the former. Every economic system is different. And even the products are more sophisticated and diversified than before. The last period of growth, financial capitalism, was characterised by an unprecedented prosperity, productivity growth and technological revolutions. For the first time in history, labour productivity attained such a degree that any sort of scarcity was not inconceiveable. Food became so cheap that it was no more a problem.

In the 19th century, overproduction acted as negative feedback. Negative feedback is a reaction to changes, tending to bring a process back to its former position. In some circumstances, negative feedback may bring a system to oscillations. And that was the situation.

In the second half of the 20th century, American hegemony over the world economy made possible controlled inflation, which acted as a positive feedback. Positive feedback acts in the same direction as the deviation and so amplifies it indefinitely. The trend was not of further oscillations and repetition of the cyclical development, but explosive!

I would suggest the following graphic representation of the last cycle:

Such a sudden drop? How did it happen? It did not happen by itself. The US government took care to bring it about.¹⁴ The oil boycott of 1973/74 was exploited. Business activity was restricted ‘in order to reduce pollution’. Mass unemployment was created. Due to the high productivity of labour, production may be performed and profits earned with fewer workers.

Can governments do anything they like? ‘Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past.’¹⁵ May I suggest that political activity is similar to a chess game: the players use their intelligence and skill, but they are limited by the rules of the game. Always? I heard a story about someone who, the moment he understood he was going to lose the game, drew out his pistol and killed his opponent. Not everyone would kill his rival at play. The killer in the story was a nobleman. A commoner would throw down the pieces of play and so stop the game.

And this is how the leaders of the civilised world behaved in the period I called ‘wars’: the game board was broken (Europe destroyed) and new rules of the game established. And in our own days? The master of the world puts his pistol on the table and decides alone the rules of the game. George W Bush is president of the US in spite of the fact he did not win the elections. The war on Iraq started in spite of the fact that it was not sanctioned either by Congress nor by the UN.

So, what name can we give the present stage of capitalism? I suggest calling it ‘military capitalism’. It survives due to its military rather than economic power. The US government tries to revive business by systematic destruction (and reconstruction!) of countries.¹⁶

And now, what about revolution? Ed George, like all other socialists, is waiting for the revolution. The revolution will not come. It must be organised.

The revolution is conceived as uprising, and uprising alone. We have to develop further the concept of revolution, and to clarify the role of insurrection as a component of the revolution. The revolution itself is the social change. It is assumed that people will revolt in bad and difficult situations. In my opinion, people are not robots and do not act mechanically, following a stimulus. Sometimes, they do. A pity! In the French revolution, in all the struggles before and after the 14th of July, people of different strata (sans-cullotes, students, intellectuals) and workers as well, took part intuitively, and were disappointed by the outcomes.

To perform a revolution, a social change, people have to know more, they need a programme of change. Is it enough to take power, and leave the rest to be accomplished by the revolutionary government? Impossible! Our society is very complex and no ‘good’, ‘benevolent’ and clever ruler will be able to deal with all the problems.

Contrary to the received view, I suggest the best conditions for revolution were in the prosperity period of financial capitalism. First, because plenty is the condition for abolition of capitalism. In the 19th century and in the beginning of the 20th, especially in Russia, there was no other way but to strive for a transitional period, a ‘first stage of socialism’, in order to create prosperity. Today we are witnessing an unexpected development: capitalism itself has done the job of the first stage of socialism. And a second important condition for revolution (social change!) is the ability of the mass of the population, workers and others, to understand the problems they are facing and how to deal with them.

Yes, we live in a new, explosive era. The first atomic explosion may be considered its starting point. Then: population explosion, pollution explosion and information explosion. Explosives are, generally, destructive devices. But, used consciously, they may help clear space for new construction. The explosive development of production and of science has led to an explosive mode of thinking.

The new type of worker needed by industry, the substantial improvements in the standard of living and the revolutions in communication have led to an essential change in the cultural level of the western population, with similar trends in the third world. Never was the feeling of ‘world citizenship’ so strong and natural as at present. Masses of people, especially young, started to travel throughout the world. The same television program is seen in different parts of the globe. Again, a cultivated population can grasp wider and more complex problems, have a richer imagination and so is able to deal, not with imaginary, but with real, possible change of the social organisation.

It’s time for revolution. What kind of revolution? We do not live in the 19th century, or in Czarist Russia. We still witness, sometimes, impressive and even successful mass demonstrations. Can such movements develop into a revolution? And let us take into account that the revolutionaries will have to cope with tanks and helicopters, controlled by high technology devices.

We cannot base our actions on prophecies. There is no formula for revolution. We have to learn from the basic theories of our teachers, but we have to study and understand the situation and the problems of our time. Do not wait for leaders. Be your own leaders. We have at our disposition communication devices that permit instant mass discussion around the world. A million people may reach better decisions than one genius leader. Have the courage to analyse anew the situation and the perspectives.

It is not a matter of striving to take power. It is not a problem of the kind of regime. There is a need to change society, society as a whole, and society cannot be changed by a political party or by political parties. Society can only change itself. Political parties may act only as catalysts.

The important role of revolutionary parties is to help the population to develop an adequate social consciousness. We are accustomed to the term ‘class consciousness, restricted to the sense of belonging to the class, and solidarity. For an uprising such a consciousness may be sufficient. For a revolution, there is a need to know what to do and how to act. Not class consciousness only, but social consciousness. And, as the revolution is supposed to be a total change of the whole society, there is reason to assume that almost all the members of the society will take part in the revolution. Of course, not all of them on the same side. The general atmosphere in the society may influence the attitudes of different people, or even groups, toward the general course of the revolution or at least of some actions. This should be taken into account in the propaganda.

A US defeat in a war against Iran may be an opportunity for action. Iran is not Iraq and the US may have difficulties.¹⁷ Let us be prepared!

6. Moshé (23 May 2006)

Dov shalom,

Thank you for a very thoughtful and thought-provoking article. It is a valuable contribution to a discussion for which I have called in my 1999 article, which you quote at the outset of your piece.

If you look carefully at that article, you will see that you misquote me.

You say:

‘Capitalism is not moribund’ wrote Moshe Machover in 1999.

From the quote-marks it may seem that you are quoting my words. But these are not my words. Nor was this idea expressed in any other way in my article.

What I argued in my article was that in retrospect we can see that capitalism was not moribund in 1916 when Lenin claimed that it was; nor for a long period after that, when Leninists kept repeating Lenin’s claim.

I am stressing this, because it is an essential point. The whole point of my article, on which I continue to insist, is that such a judgment can only be made in retrospect. This is why I gave my article the title ‘The 20th century in retrospect’.

By the way, this has nothing to do with the question as to whether Marxism, or any other socio-historical theory, is ‘scientific’. This is a separate question.

Great social events, such as the end of capitalism, can only be seen correctly in retrospect. Their timing cannot be foreseen.

This is true not only in the social sciences. Some natural sciences also share this lack of exactness.

For example, geologists were not able to predict exactly the tsunami that destroyed big parts of south- and south-east Asia on 26 December 2004. They knew in advance that the area in which the huge earthquake occurred was very unstable, and they could predict that an earthquake was going to occur there some time; but they couldn’t tell in advance exactly when.

Similarly, geological science can tell us that the area of the San Andreas Fault in California is unstable, and a huge earthquake is going to happen there – perhaps on the scale of the one that destroyed San Francisco in 1906. But they cannot tell exactly when this is going to happen. On the other hand, we can be sure that the ‘big one’ will be closely preceded by some non-catastrophic tremors.

Now suppose that next week we shall hear that there are some earth tremors in the San Andreas area. Will this be a sure sign that the ‘big one’ is coming in a few days’ time? Or are these just ordinary tremors, of the sort that happen in that area from time to time? No-one can answer this with certainty. The answer can only be known in retrospect.

The great eruption of Vesuvius, which buried Pompeii and Herculaneum in the year 79, was preceded by some strong earth tremors. But the contemporary Roman writer Pliny (Plinius) the Younger tells us that these tremors ‘were not particularly alarming because they are frequent in Campania’.

Of course, the fall of capitalism, unlike an earthquake, is not going to happen ‘by itself’. It will be the result of collective human action. We think and hope that it will be overthrown by a socialist revolution.

As you say, this can only be done by a great broad social movement, in which revolutionary organizations have an important role of raising consciousness.

But under what conditions is such a broad movement likely to develop and become a great social force capable of changing the course of history?

People’s consciousness has to change. But people don’t change their consciousness, and certainly don’t undertake revolutionary mass action, simply as a response to preaching.

I think that the mass of the people of our planet will be open to revolutionary ideas, and ready to undertake great mass action, only when and if they can see from their own experience that capitalism is not working and cannot work any longer.

I think that Marx was right when he said: ‘No social order ever perishes before all the productive forces for which there is room in it have been developed; and new, higher relations of production never appear before the material conditions for their existence have matured in the womb of the old society.’

He said this not because he thought that social change happens ‘by itself’, as an automatic action of ‘objective’ material forces, but because social consciousness can only change sufficiently to transform the social order if certain material conditions are present.

I think that a sufficiently powerful socialist revolutionary movement can only develop when masses of people believe that capitalism is in terminal crisis and is no longer able to satisfy their needs, let alone improve their condition.

Revolution is risky, and revolutionary activity can be dangerous. Most people will not undertake it if they still hope that capitalism can still work somehow. Even a crisis will not convince them if they believe that it is only temporary, one of the periodic crises that occur from time to time.

This brings us to the question: Is there some objective process within capitalism that will lead it to terminal decline?

Marx thought that the answer was positive. He also thought that he could diagnose correctly the process in question.

In my opinion he was right on the first point. (This is why I said in my 1999 article: ‘… I do no believe that history has come to an end, or that capitalism will continue as long as there is human life. I find such views not only repugnant but also absurd.’)

But Marx was wrong in his diagnosis of the process that would lead capitalism to its terminal decline. Following the great classical economist David Ricardo, Marx believed that the rate of profit has a long-term tendency to decrease. Of course, in the short term it can fall and rise, but according to Marx’s analysis (based on the assumption that the ‘organic composition’ of capital must inevitably go up) in the long term the rate of profit will go down. When the rate of profit will become sufficiently low, capitalism will no longer be able to operate properly, and will enter its terminal period.

(This is of course only a very rough and somewhat over-simplified outline of Marx’s prognosis. But I think it is essentially a correct outline.)

But Marx’s argument, predicting the falling tendency of the rate of profit, was theoretically faulty. And his prediction has in fact not been confirmed empirically. (Emmanuel Farjoun and I discussed this in detail in a book, Laws of Chaos, we published in 1983.)

Does this mean that ‘objectively’ capitalism can go on forever? No, it does not. As I said in my 1999 article: ‘Capitalism, precisely because it is driven by blind market forces which operate as it were behind the backs of humanity, carries within it the seeds of its destruction.’

Let me expand a little on this. Two of the most essential features of capitalism are that it is driven by profit; and that it is an unplanned competitive market system.

Capitalism cannot possibly operate for long without profits. In fact, if the average rate of profit falls below a certain threshold, a capitalist economy goes into a crisis, until profits recover.

But profits are merely a monetary expression of a material surplus. The fact that capitalism is based on profit means that it must create a surplus: each year the total product must exceed the amount of materials etc used up as inputs in production.

Capitalism must constantly deliver surpluses. But these surpluses cannot all be used for increased consumption of capitalists and workers. Some of the profits must be invested in order to expand production. This follows from the competitive essence of capitalism. If a capitalist firm stops expanding, it will eventually be killed by competition. Capitalist firms are faced with a choice: expand or perish.

So capitalism is driven by an inexorable need to expand production. A capitalist economy needs to expand – not in order to satisfy more human needs but in order to continue the extraction of profits, which derive ultimately from the exploitation of human labour.

This expansion does not happen according to any overall rational plan, but in a chaotic unplanned way, in the jungle of capitalist competition.

Can this chaotic economic expansion go on forever? Is it sustainable in the long term? I think that in our times we can see that it cannot be sustained. This may not have been so clear 100 or 50 years ago, but is becoming clearer every day.

Our planet does not have infinite resources. Continued blind unplanned expanded production must encounter objective barriers. This is already beginning to happen, and it creates great social anxiety and increasing unrest.

Just imagine: China is now undergoing furious capitalist expansion. Soon perhaps every Chinese family will ‘want’ to own a motor-car, just as families do in the already developed countries. The capitalist firms producing cars in China will try to persuade every Chinese family that it must buy a car.

How many cars will need to be produced? Just try to calculate the area needed as parking space for these cars, even before they move onto the roads. And then, when the cars start moving: How much fuel will they burn?

How much area will be taken up by the roads needed for them? How much pollution will come out of their exhaust pipes?

This is just a small example. And I don’t want to imply that the problems of this world are caused by China. They are caused by capitalism.

Capitalism is driving our species and our planet into a catastrophe; and people are gradually beginning to see this.

All sorts of remedies are being tried; capitalist firms are given ‘incentives’ to be a little more ‘green’. But such remedies cannot solve the problem. The problem is capitalism itself, with its inexorable drive for chaotic unplanned expansion.

More and more people are beginning to understand this. A new movement is forming – not against globalization, but against capitalist globalization.

The conditions are being created for a totally different kind of society, in which production will be for human need and not for profit. Expansion? Yes, of course, but expanded production must be democratically planned, directed for human needs and for conservation of the natural environment.

There is a name for a society in which national and global production is democratically planned, and directed for human needs. It is called ‘socialism’.

I have addressed here only a small part of the issues raised by your article. I hope the discussion will continue.

Warm wishes, Moshik

7. Dov (11 September 2006)

Dear Moshik,

I have to apologise: I started to write to you in May, but I had to stop writing and I completed it only now. So, it is necessary to recall: the subject was whether capitalism is immortal.

Metamorphoses of capitalism

After reading your letter I understood I did not emphasise enough my central subject: ‘The survival of capitalism for so long . . . is a mystery that requires illumination.’¹⁸ Perhaps the transformations of capitalism, in its continuous process of change, need to be examined. Our contemporary capitalism is completely different from that described by Marx. Today we cannot sing the song of praise to the revolutionary capitalism that developed science and technology, as you quote from the Communist Manifesto.

Some remarks are necessary. You wrote:

‘So, capitalism is driven by an inexorable need to expand production. … This follows from the competitive essence of capitalism’.

I would rather say: capitalism was driven by … (the) need to expand production. I wrote also some years ago: ‘For capitalism, scarcity is an indispensable need for the functioning of its economic mechanism: the need of a market where the produced commodities may be sold. But capitalism must unceasingly increase production, and so undermine scarcity, thus choking its expansionability.’¹⁹ But this is a description of 19th century capitalism. Even during Marx’s life, finance capital started to rule over free competition, and trusts, cartels and monopolies appeared on the market. The falling tendency of the rate of profit was not a theory, but a reality. Marx only explained its cause. And, in fact, by the turn of the century, industry was choked with heavy and expensive equipment. The capitalism of the 19th century came to an end, but not capitalism as a whole. The only outcome was the destruction of the old industries, and this was achieved in the second world war.

One of the problems of 19th century capitalism was its chaotic, unplanned way of operation. It was a problem of capitalism. Is it the task of socialist parties to help operate the capitalist production system in a planned economy, and so to save it? By ‘capitalist production system’ I mean production of commodities, so the workers have to buy their own product. I do not think the workers will be happier if they will be exploited in a planned way!

Now a new era started. No more free competition. No more unplanned expansion. The involvement of the state in the economy started circa 1933 – in Germany under Hitler and … in the US under Roosevelt (the New Deal). As the destruction of Europe by war was completed, the US remained the only big producer. With the British gold in the American banks and with the atom bomb in hand (then a US monopoly) the Breton Woods agreement was signed. Money was no longer based on gold but on the dollar, and financial institutions were created in order to initiate and supervise the European economy, with global trends. ‘A powerful Wall Street/US Treasury financial regime was created with controlling powers over global financial institutions (such as the IMF) and able to make or break many weaker foreign economies through credit manipulations and debt management practices.’²⁰

In the new system, under the rule of finance capital and huge companies, the old mechanism of expansion due to competition no longer worked. The decreasing tendency of the rate of profit disappeared as the organic composition of capital ceased to rise. This was due to a number of factors. As a result of the revolutionary increase in the productivity of labour, equipment became cheap (the organic composition is measured as a ratio between the capitals invested). The nature of the equipment changed, with emphasis on electronics and automatic control. The new equipment did not produce more, quantitatively, with fewer workers, but on the contrary, more (and more skilled) workers were needed. The improvements were designed for tasks human beings are not able to perform.

This time production did not merely expand but exploded. It started by supplying food to the hungry Europe. People and countries received loans in order to be able to buy. Productivity of labour increased at an unprecedented rate. Technological revolutions were an important factor. At the beginning of the 20th century, 80% of the working people were employed in agriculture. By the 1960s, only 4% were employed in this sector.

The hungry worker disappeared, to the indignation of public opinion (‘they do not strike for bread, but for butter; what an impertinence!’) and the confusion of the socialist parties. Some people, and even some socialists, understood ‘exploitation’ as super-exploitation. If the wage is ‘fair’, there is no exploitation. Somewhere in Capital, Marx remarked that workers might reach a high standard of living, as a consequence of increased labour productivity. In such a situation they would be more exploited! He did not write further on the subject, as it was not topical. Lenin was disgusted by British workers getting higher wages than the Russian, and ascribed that to their being partners of imperialism. And Lenin has disciples.

With such an increase in labour productivity, the purchasing power of workers ensured ever-growing sales and at the same time an increased rate of exploitation.

Under the hegemony of US power and its influence on the weakened classical colonial countries, the de-colonisation process opened the doors to the US penetration everywhere.

Meanwhile, the US ceased to be the only producer on the globe as competitive economies appeared. The dollar started to fluctuate.

‘The United States … lost its superiority in production after 1970 and may well now be losing financial dominance leaving it with military might alone.’²¹ The economic and political leaders (but not the socialists!) began to understand that a too-happy worker might demand a shortening of the working day (or working year) so as to ensure a better quality of life. Eventually, working time was reduced, but at the expense of the working class, as mass unemployment was created.

‘The “global” wave which occurred during the 1980s and 1990s, set in motion the process of creating truly global companies (a shift from US-based multinational firms to transnational organizations).’²²

‘… The US countered by asserting its hegemony through finance. It … entailed shifting the balance of power and interests within the bourgeoisie from production activities to institution of finance capital.’²³

Capitalism today is not chaotic: production is controlled and restricted. No longer increase in production, and profits are increased by raising prices.

‘All modern ownership is financial, and only financial. … Profit comes not from production, but from power … . Traditional analyses of imperialism emphasized the benefit for accumulation of territorial conquest, access to raw material and the expansion of markets.’²⁴

‘And when war does break out, dominant capital often supports it not for the added territory or the pacification of a rival, but for the mere turmoil it creates. … The key question is how war will affect their differential accumulation. … The interest of weapon companies in renewed conflict is pretty obvious, … . The interest of the oil companies, however, is more complicated and often misunderstood. Contrary to popular belief, since the 1970’s the oil companies, taken as a group, have become relatively impartial to “access rights” and “drilling concessions”. … The key to their profit is not volume, but price. … When crude oil prices go up, so do their profits… .

And what makes the price of oil go up and down? According to popular conception, the blame rests either with the “oil sheiks” of OPEC or with the market forces. … The reality … [is that] … over the past thirty years the single most important factor affecting the price of oil was the ebb and flow of conflict in the Middle East.

‘Tension and war brought higher oil prices, … Thus, if the oil and armament groups surrounding the current Bush Administration have a broad interest here, clearly it is an interest in some measure of instability and war, not peace.’²⁵

‘[OPEC’s] inability to keep prices high – something which a new era of conflict ‘menaged’ by direct US intervention may help remedy.’²⁶

‘Officially, of course, the government of the United States was “fundamentally, irrevocably committed” to maintaining the free flow of oil, and “the interest in the United States is bound to be cheap energy prices.” That, at least, was how Vice President George Bush Sr. put it 1986 (New York Times, 7 April 1986). Interestingly, Bush made this declaration during his emergency trip to the Saudi Arabia, a trip whose explicit purpose was to persuade the kingdom to cut output in order to raise the price of oil!

‘The various US administrations, along with the Soviet Union and countless other countries, did their best to arm the Middle East to the teeth. Israel, Saudi Arabia, Iraq, Egypt, Iran under the Shah, Iran under Khomeini, Kuwait, Jordan, the Gulf Emirates – all received massive weapon shipments. These shipments, of course, were all made in the interest of ‘stabilisation’… .

‘Unfortunately, or fortunately, depending on the viewpoint, the “balance of power” provided little stability to the region. … Since 1967, the region has had numerous major conflicts, . . . all connected directly or indirectly to oil.’²⁷

‘… The background to the September 11 attacks is still engulfed in mystery if not secrecy; but the enthusiasm of Bush Jr. to use these attacks as a pretext for invading Afganistan and Iraq is hardly in doubt.’²⁸

‘… The 2001 timing of the attacks was “perfect”. … The attacks came after the stock market had been punctured, after the merger boom had collapsed, … and after deflation had emerged as a threat.

‘Officially, the new wars are against “terrorism”. Unofficially, they are about securing cheap oil. And so far, they have “failed” on both counts. … And yet, to the surprise of many, despite this double failure, the “business community” remains quiet… .’²⁹

I am sorry. I am compelled to use long quotations, in order not to repeat my old arguments. I always insist: we live a new era and we have to understand the new situation, in order to be able to act.

Is this the whole picture? And what about the global policy, the New World Order?

‘It is hard to imagine that the US would peacefully accept and adapt to the phenomenal growth of East Asia and recognize, as Arrighi suggests it should, that we are in the midst of a major transition towards Asia as the hegemonic center of global power.’ (Arrighi and Silver, Chaos and Governance, pp. 288–9)³⁰

It seems to me that we have enough problems to deal with, to think about and to try to analyse anew.

8. Moshé (12–13 September 2006)

Thank you for this email. I was glad to get it, not only because it would be a pleasure to continue our discussion, but also because I hope it shows that you are in better health.

Let me start by saying that I agree in part with what you say about capitalism; but there are several things about which I think you are mistaken. Here I will concentrate on the point on which we disagree.

You say: ‘Perhaps the transformations of capitalism, in its continuous process of change, need to be examined. Our contemporary capitalism is completely different from that described by Marx. Today we cannot sing the song of praise to the revolutionary capitalism that developed science and technology, as you quote from the Communist Manifesto.’

Yes, capitalism today is ‘completely different from that described by Marx’. And yet, it is the same capitalism. As the French say, ‘Plus ça change, plus c’est la même chose’ (the more it changes, the more it is the same thing).

Let us look again at how Marx and Engels describe in the Communist Manifesto the dynamic nature of Capitalism:

‘All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.

‘The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

‘The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe.

‘In place of the old wants, satisfied by the productions of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes.

‘In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

‘The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.’

What they describe here is a process of constant change: panta rhei. And yet, reading this text it is surprising how up-to-date it is! Perhaps the only clue that it was not written recently but 158 years ago(!) is the sentence ‘The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls…’. This may be a reference to the first Opium War (The Manifesto was published between the first and second Opium Wars). But we have come a long way from that, because – ironically – now it is the Chinese who use the cheap price of their commodities to batter down the Western ‘walls’.

So here we have a kind of paradox. You and I agree that capitalism is changing all the time. Marx and Engels also agree with us ;-)…; and when they write about this change, it seems that they are describing the capitalism of our day! Plus ça change, plus c’est la même chose… .

You say that a few years ago: you wrote: ‘For capitalism, scarcity is an indispensable need for the functioning of its economic mechanism: the need of a market where the produced commodities may be sold. But capitalism must unceasingly increase production, and so undermine scarcity, thus choking its expansionability.’

But now you no longer believe that this is true for present-day capitalism:

‘But this is a description of 19th century capitalism. Even during Marx’s life, finance capital started to rule over free competition, and trusts, cartels and monopolies appeared on the market.’

First of all, it was never true that scarcity was ‘an indispensable need for the functioning of [capitalism’s] economic mechanism’. It is one of the dominant bourgeois economic schools that makes ‘scarcity’ a central issue. But Marx pointed out correctly, beginning from his earliest works, that capitalism creates new needs, that it keeps creating new markets for new products. In the passage from the Manifesto quoted above, he and Engels repeat this idea: ‘In place of the old wants, satisfied by the productions of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes.’

And this is true today no less than in the 19th century. Thirty-five years ago, no-one wanted a personal computer; no-one knew they needed such a thing. Now we all need them: you and I need them to conduct this discussion. It is a huge new industry, selling billions of new products in new markets. The same is true of cellular phones: you and I remember a time when no-one had heard of them; now, like, every school-kid absolutely, like, needs one. And our PCs and cellular phones are ‘the products of distant lands and climes’.

As for monopolization, it not only started during Marx’s lifetime; he was acutely aware of it and put it at the centre of his description of the development of capitalism. In one of the most brilliant and important passages of Capital vol. I he says:

‘As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialisation of labour and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers.

‘This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralisation of capital. One capitalist always kills many. Hand in hand with this centralisation, or this expropriation of many capitalists by few, develop, on an ever-extending scale, the co-operative form of the labour-process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common, the economising of all means of production by their use as means of production of combined, socialised labour, the entanglement of all peoples in the net of the world-market, and with this, the international character of the capitalistic regime.’

Again, this reads as a very modern up-to-date description of capitalism: Plus ça change, plus c’est la même chose.

Of course, monopolization, the centralization of capital, does not exclude competition. It is a mistake to think so. Monopolization and competition coexist: as we used to say in the old days, it is a dialectical process.

You say: ‘Now a new era started. No more free competition. No more unplanned expansion. The involvement of the state in the economy started circa 1933 – in Germany under Hitler and … in the US under Roosevelt (the New Deal). As the destruction of Europe by war was completed, the US remained the only big producer. With the British gold in the American banks and with the atom bomb in hand (then a US monopoly) the Breton Woods agreement was signed. Money was no longer based on gold but on the dollar, and financial institutions were created in order to initiate and supervise the European economy, with global trends. “A powerful Wall Street/US Treasury financial regime was created with controlling powers over global financial institutions (such as the IMF) and able to make or break many weaker foreign economies through credit manipulations and debt management practices.” ‘

I think you are far behind the times. The era of state-capitalism of Hitler’s Germany, Roosevelt’s New Deal and Keynesian semi-planned economics in countries such as the UK is long gone. In fact, the world capitalist economy today is in many ways more similar to the capitalism of the 19th century than to that of the mid-20th century.

Of course, this does not mean that markets and competition are genuinely free; actually, they never were, not even in the 19th century. But the difference is that the huge multinational corporations are so rich and powerful that it is more difficult for the capitalist states to control them. It is true that the World Bank and the IMF dominate the weaker economies of the Third World; but this is almost as nothing compared to the degree of domination and control during the colonial era, when a few European countries ruled directly over their colonies. Britain controlled the Indian economy in Marx’s day much more tightly than the IMF now controls even the weakest economies.

You say: ‘In the new system, under the rule of finance capital and huge companies, the old mechanism of expansion due to competition no longer worked. The decreasing tendency of the rate of profit disappeared as the organic composition of capital ceased to rise.’

Actually, the story about the rising organic composition and the falling rate of profit was always mistaken theoretically. Marx (following Ricardo) was wrong on this, as Emmanuel and I showed in our book in 1983. Empirically too, these processes were not characteristic of capitalism, except perhaps for a short initial period, very long ago.

You say: ‘Capitalism today is not chaotic: production is controlled and restricted. No longer increase in production, and profits are increased by raising prices.’

This is simply false. I mentioned before the IT industry, making PCs and cellular phones. This is one of the most important branches of production today, the place where the present technological revolution is happening. No longer increase in production? Profits increased by raising prices? How many PCs and cellular phones were produced 20 years ago? And how much did you have to pay for them?

The same is true of other important branches. As you are living near a port, let us take maritime transport. The containerization revolution – which is quite recent – has made possible much larger quantities to be transported, at much greater profits, but at a lower price per unit.

The same is also true of air transport. My supermarket offers for sale not only vegetables from Israel (which I boycott) but also from much more ‘distant lands and climes’ – flown at lower prices and greater profits than 20 or even 10 years ago.

More generally, the big problem of world capitalism today is no longer inflation, but deflation: prices of most products keep falling.

The price of oil is a different story. Bichler and Nitzan have interesting things to say about this. But this industry is very special. And what they say about capitalism in general is much less sound.

Well, I think it is enough for today.

Warm wishes, Moshik

The exchange of messages was cut short by Dov’s death at the end of October 2006.