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Fossil fuel and the ebbing of globalisation

April 18, 2017

n the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or this merely expresses the same thing in legal terms with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure. (Marx et al. [1978],Preface)

What distinguishes a utopian approach to social transformation from a materialist one is that the latter must start with the real contradictions that exist between technological imperatives and the social forms that currently exist. These specify not a future that might be desired, but what may be required.

One has therefore to start with technology complexes and demographics since all social formations combine a particular set of technologies with a particular density of human population. Only some technology complexes are compatible with a given population density. Our current population could not survive on the basis of pastoralism, so much is obvious. But nor can the present population long survive on the basis of an extractive fossil fuel economy.

Contemporary capitalism is heavily dependent on fossil fuels. Almost 90% of world primary energy comes from these sources and the percentage coming from nuclear and renewable sources has if anything tended to fall slightly in recent years. Industry and commerce use about 60% of all primary energy, transport and residential use around 20% each.

The current mature alternatives to fossil fuels are nuclear energy and hydro power. The latter obviously has severe geographical limitations, the limitations to the use of nuclear power are on the one hand political opposition and on the other the fact that only a small number of countries and firms have the ability to commission nuclear plant. In terms of cost it is already competitive with coal power for electricity1.

The the two rapidly maturing alternative energy sources are solar and wind power. Prices of both of these have been falling rapidly and in the US are already competitive with coal for electricity generation when measured as levelized costs. Obviously both of these depend for their yield on the local wind and sunshine, and so will vary in yield from place to place.

Although Van Vuuren et al. [2011] lay great emphasis on carbon capture
and storage as a mechanism that will allow green house gas emission targets to be met, this is one of the least developed techniques so far. Although there is experience of injecting CO2 into oil reservoirs for enhanced recovery, there is as yet little practical experience in operating full scale coal fired power stations far from oil reservoirs, extracting the CO2, and then piping it to appropriate injection sites. The components are plausible, but the working experience that for example nuclear power has, is absent.

There are clearly hazards associated with subsequent escape of the carbon dioxide from subteranean reservoirs, as shown by the Lake Nyos disaster[3] were 1700 people were killed by a sudden escape of the gas.

However given the good progress being made in other areas it seems plausible that, at least for electricity generation, a combination of nuclear, solar and wind power could replace a large part of current dependence on coal for electricity generation.

Marx claimed that the stage of development of technology is what ultimately determines the bounds on social relations. He believed that communism was the likely future of industrial society and that coal powered steam engines were the foundation of capitalist economy. Is there anything about the transition anything about the transition to a post fossil fuel economy that would favour communism over capitalism?

The USSR depended heavily on large scale integrated production both of energy and other products. The economic regression which followed the
establishment of capitalism made it clear that capitalist property relations were incapable of sustaining this form of the productive forces. The one industry that did relatively well in the new capitalist Russia was fossil fuel extraction.

 

energiya

Figure 1: The Soviet Energiya launcher that was intended to put up
orbiting solar power plants. The Buran shuttle is shown attached.

 


iter

 

Figure 2: Model of the ITER reactor. Note the human figure for scale. Photo by Stephan Mosel released under Creative Commons.

 

The USSR did have long term plans for non-fossil energy sources : nuclear, thermonuclear and orbiting solar power stations. All of these are post capitalist forms of energy production in the sense that their development has depended on socialist economy in the East, or in the West on state sponsored development: AEC in the US or the AEA in the UK for nuclear power.

Thermonuclear power research has been overwhelmingly state funded, and the most promising reactor design the Tokamak, was invented in the USSR and forms the basis for the international ITER experimental power reactor[2]. Orbiting solar power stations[8] were a futuristic technology much talked about in the 1970s and 80s. They would overcome the limitations of day and night and bad weather by being bathed in permanent sunlight, and would beam energy to Earth as microwaves. The ultimate Soviet space launcher, Energiya[9], was seen as the tool to build such orbiting stations.

So we could hypothesise that the energetic basis of communist economy would be orbiting solar power stations and huge tokamaks able to supply essentially limitless energy from the deuterium in sea water. This is a pair of technologies that private capital has been unable to develop because of the huge initial investment over many decades before any possible profit could be returned. It would moreover, be a highly capital intensive path and high capital intensity is associated with low profitability, which deters private firms.

The scale of development costs associated with thermonuclear power are so large that they are beyond even what individual nations can afford. The only practical project to build a thermonuclear reactor ITER is being constructed by a consortium of 35 states. ITER was started at the initiative of the USSR at the Geneva Superpower Summit in November 1985. Design work took from 1988 to 2001. In 2005 it was agreed that the site of the reactor would be in France. In 2010 construction started near Aix-en-Provence.

It will be the largest and most complex machine ever constructed. The first plasma is scheduled to be generated in 2025 but it is not anticipated to use actual deuterium/tritium plasma to generate useful power until 2035. The whole project will thus have taken 50 years to yield power. But prior to ITER being formed there had already been a 35 year history of development of the technology since Sakharov and Tamm initially proposed the design in 1950.

The development of thermonuclear plasma reactors is something that private capitalism could not have done. It required foresight based on an appreciation of future human needs that only public bodies, indeed a world public body, could undertake.

Solar and wind power, can in contrast be developed piecemeal with relatively modest capital costs. A such, private firms are quite willing to invest in them, given modest initial government incentives. We do not know yet whether these lower tech approaches to alternative energy will be enough to power future civilisation. If they are enough then – other than international political sanctions restricting fossil fuels – there will be nothing in the energy base that militates against the perpetuation of private ownership. If it turns out that the supply of energy from wind and sun is too intermittent, too dependent on the seasons, too deficient at night, then fusion power will be the most plausible way of providing base load power. If energy storage technologies, either batteries, pumped storage, compressed air storage of even flywheel storage develop fast enough, fusion may not be needed.

This possibility give rise to fantasies about self sufficiency and a society of people who are economically self sufficient, living off-grid. The idea breaks down as soon as it is examined in detail. Solar power only brings an element of self sufficiency to those with enough capital to buy the panels, and enough roof area or free land to install it on. It is not an option for urban dwellers in rented flats or for those who can not afford the initial capital.

Whilst owners of houses with big roofs will be able to reduce their electricity purchases, electric grids will still be needed for industry, telecoms, offices, electric railways etc.

But electical power generation is only part of the emissions problem.

Carbon dioxide is generated by transport and by materials processing.

 

 Materials

Industrial society is heavily dependent on materials whose production either uses fossil fuel, or unavoidably emits carbon dioxide. In the 19th century industrial buildings and housing in industrialised nations were largely built from brick. Brick production involved the mixing of clays with ground coal which were then dried and sintered in kilns, with the coal in the mixture providing a large part of the fuel.

From the 20th century concrete became the main building material. But this too involves a lot of energy in its construction. Concrete is a mixture of sand, stones and cement powder. Cement powder is the biggest energy consumer here. The process involves heating limestone to disassociate the CaCO3 it contains to produce CaO+CO2.
This obviously involves a direct release of carbon dioxide. The process requires between 4GJ/ton and 7GJ/ton of energy[21]. This energy is currently supplied by fossil fuels with of the order of 5% of world industrial energy use going on this process. Worrell et al. [2001] estimated that in 1994 around 5% of total carbon dioxide emissions world wide came from cement production. For China something between 7% and 9% of all emissions are from cement making[14].

It is in principle possible to produce cement without carbon dioxide by a combination of solar heating to melt limestone and then electrolysis by the STEP process[13].
By choice of temperature one can obtain the electrolytic transformation CaCO3→ CaO+C+O2 with elemental carbon and oxygen being released. Assuming that the carbon produced was buried, the overall process would be carbon neutral.2
If operated in a strictly carbon neutral fashion the cost of cement produced this way would be two to three times as great as with current methods.

Steel has been the fundamental metal of industrial society, used in making machinery, ships, bridges, cars and in the construction industry. Steel production comes from two processes today, the basic oxygen process, and the electric arc process.

The basic oxygen process refines pig iron produced in blast furnaces into structural steel, though a portion of the feedstock is recycled scrap steel. Electric arc furnaces work entirely with recycled scrap. In the USA around 70% of all steel output is from recycled sources. The remaining 30% comes from the processing or iron ore. The iron oxide in the ore, is reduced to metalic iron using carbon, currently in the form of coke, though charcoal was used in the past. As such the process inevitably emits carbon dioxide, both because the coke provides the fuel to heat the furnace, and because carbon monoxide produced by burning the coke is the reducing agent.

If we assume that the world will require drastic reductions in CO2
emissions, this implies :

  • That the steel industry will have to become overwhelmingly one based on recycling, supplemented with only such small amounts of basic steel
    as can be produced from charcoal.

 

  • That other metals, most likely aluminimum, will have to substitute for steel in many uses. Aluminium is produced by an entirely electrolytic process, with a relatively small carbon dioxide emission from the erosion of the
    carbon electrodes.

 

Per ton, in 2017, aluminum cost about 5 times as much as steel.  It is also weaker than steel so aluminium structural members have  to be thicker than the corresponding steel ones.  But given its lower density these effects partially cancel out,  and the corresponding aluminium part will weigh only about 60%  of the steel part. Overall then the use of aluminium instead of  steel is about three times as expensive.

So it is likely that the two fundamental construction materials  of industrial civilisation, concrete and steel will have to be replaced by alternatives that
are around 3 times as expensive.  Cheap concrete has been the foundation of world urbanisation[5], and  cheap steel the foundation of mechanisation.

Stone, of course, will remain available as a low carbon building material when
carbon emissions restrict brick and concrete.  Smout [1986] attributes the greater overcrowding and worse slum housing conditions in  indutrial Scotland to the statutory requirement, up to the 1930s,  to use expensive stone in residential accomodation in Scotland  where cheap brick could be used in England.

Now, the old stone tenements of Glasgow are appreciated for their aesthetics,  in comparison to the brick and concrete housing that went  up in the 1950s. But if the billions of new urban  dwellers across the world will have to depend on the building of
stone housing, then over-crowding will persist much longer than  would be the case were brick and concrete to be still available.  Overcrowding itself brings exploitative landlords;  reinforces the dominance of the propertied classes.  On the other hand, once population growth slows down, the durability  of stone construction is an advantage. Over time, with a static  population, relatively high standards of housing could be achieved  using stone. In the shorter term it may be necessary for mass produced
aluminium units to stand in where 20th century urbanisation used poured  concrete flats.

 

 Transport

As Smil [2010] says, the two engines of globalisation are the high bypass turbine and the high compression diesel. The one powers aircraft, the other: ships, trains, lorries and buses.  MAN and Wärtsilä drive the vast ships linking Asia, Europe and America. Diesel trains carry more than half of America’s goods. Turbines power all air freight. All run on oil. Without oil, most world transport stops.

Oil is not going to run out or be banned overnight, but over a  few decades either due to resource exhaustion or international  restrictions of fossil fuel use, it will become progressively less  available. How then is a transport system, and behind that, a whole global capitalist division of labour going to respond?

Looking first at shipping, it is clear that costs will rise.  Today we have diesel powered steel ships. At the end of this century what  will ships be built of and powered by?

Before steel ships we had wooden ones, and sail power hung on into the early 20th century, so international trade would still be possible by a reversion to earlier technologies. But this would mean both a severe reduction in trade volume and a rise in carrying costs.  Vessels of modern size can not be built of wood. Wooden construction implies ships of at most a couple of thousand tons, about a hundredth of the size of the largest contemporary container ships and a tenth the size of the most common bulk carrier. Costs would be much higher because of the large crews needed to handle sails.

 

Figure 3: The Flettner rotor ship. This was developed in the 1920s as an improved form of sail which relies on the perpendicular force generated by the wind on a spinning cylinder. The original ship is on the left with the modern experimental Eship1 on the right.

 

But there are obvious alternatives. Aluminium has been extensively used in warship construction, and could be used for merchant shipping were owners forced to pay the higher contruction cost.
But nobody has yet built large aluminium ships. The largest have been around 100 metres whereas current freighters run up to four times that length. They have been plauged by corrosion problems. As a highly electo-positive metal, any contact with other metals like bronze or steel sets up a battery on contact with water. The consequence is electrolytic corrosion which eats away at the aluminium.  In principle this can be avoided by using only aluminium in the hull. Designs have existed for bulk cargo ships of this type for decades, but have been uneconomic[1]. Overall, an over decades, though there seems little doubt that the technology of building such ships can be mastered. Propulsion is the bigger problem.

Batteries and solar power are ruled out. Batteries, which have long been used in submarines, do not last long enough for ocean voyages, and solar power provides too little energy for a large heavy vessel.  Wind remains the most likely alterntive. Designs do exist for  cargo ships with conventional masts and sails, but the crew  required to handle sails, even with some form of power assist  is likely to be more than would be needed for a motor vessel.
A promising alternative is the Flettner rotor.3 This relies on  the fact that the wind will exert a perpendicular force on  a spinning cylinder. It requires a modest power to rotate the  cylinder but, by harnessing the wind, yields much more propulsive power than is put in.  Such ships do not need big crews. A couple of cargo ships  using this were built in the 1920s, but at that time they proved uneconomic in comparison to diesel. Given that diesel ships have improved a lot since then,  they remain uneconomic in the absence of controls on the use  of fossil fuels.4

Another possibility is that nuclear energy, long used in  warships, might be applied to cargo vessels. There is no doubt  that it works, and can drive ships very fast. But there is a big  difference between operating it in an environment where cost  is no object and you have highly trained crews, and using it  in a commercial ship. Of the four experimental atomic cargo ships, Savanah(US),  Otto Hahn(German), Mutsu(Japanese) and Sevmorput(Soviet) only  the last was a sucess. Cost, reliability and safety considerations  have prevented a general uptake of the technology.

So the conclusion to take from this is that the end of the fossil fuel era is likely to lead to a significant increase in shipping costs. They will cost more to build, more to operate, and probably be slower.

This will tend to substantially undermine the current model of globalisation. Higher shipping costs will favour local producers compared to global ones, and land links rather than sea links.

 

 

Rail freight is still heavily dependent on diesel in many countries, but electric railways are an old and well tried technology. It is expensive to put in the wires and to buy new locomotives, but running costs subsequently are similar.
Even with the current structure of electricity generation electric trains release  less carbon than diesel[7]. As the electricity generation system moves towards renewables and nuclear, this advantage will be come more pronounced.  Electrification tends to be high in countries like China where the railways are state
owned and planned and low in countries like the USA where the infrastructure is private.

China’s rail transport volume is one of the highest in the world, having a 93 000 kilometer-long network of which 46 000 km is electrified (Ministry of Railway, China, 2012). The rate of electrification increased gradually: in 1975 it was only 5%, by now it is about 40% as a result of a conscious central planning. (Juhász et al. [2013])

In contrast, only 1% of the US network is electrified. We discussed earlier how, in capitalist economies, high capital intensive industries have a low rate of profit, which discourages investment in them. The contrast between the US and Chinese railways is a particularly stark example of this. The electrification of the railways in large countries like the US is technically feasible as China shows, but it is held back by private ownership. Thus the need to convert to electric trains will tend to favour the replacement of private with public railways.

The percentage of freight carried by train may well rise, because in the absence of of diesel engined lorries, long distance trucking is likely to be unviable. The best electric heavy lorries have a range of only 100km and take several hours to charge. The goods transport system is likely to have electric trucks being used only for final delivery within cities5

For urban transport, electric cars with lithium batteries are certainly a viable replacement for fossil fuel ones. There are questions associated with the long term availability of lithium for the batteries[12]. If the whole world were to attain the current European levels of car ownership, and these all used lithium batteries, it is questionable whether world lithium resources are sufficient, but that is a relatively extreme projection of future use. Gaines et al. [2009] on more modest projections of future car use, conclude that lithium resources are unlikely to be a big constraint.

Lithium is very geographicaly concentrated with the top 4 producing countries having 90% of world reserves. In the event of it being used in all cars, these countries would be in a position to gain rent revenues analogous to the leading oil producers today. On the whole though, these are likely to be smaller than the oil rents in the current world economy, because a) lithium can be recycled, b) unlike oil it will not be a primary energy source.

There are no serious engineering problems with converting the aviation industry to
use non fossil fuels. Liquid hydrogen is a viable alternative fuel[11,[4]. It
has a much better energy to weight ratio than existing fuels. Its main drawback is that it is much less dense, meaning that a substantial part of the fuselage volume would have to be given over to fuel tanks. Designs exist for modified Airbus and Boeing jumbo[17] jets powered by it. The Boing design had the upper deck extended the length of the fuselage and entirely filled with liquid hydrogen tanks. In 1988 Tupolev actually built a modified Tu155 that flew on hydrogen[16], the back part of the passenger cabin having to be occupied by the fuel tank.

 

Screenshot from 2017-04-18 10-27-30

Figure 4: Airbus design study for hydrogen fuel, from Contreras et al. [1997]

 


Screenshot from 2017-04-18 10-29-01

 

Figure 5: Tu155 modified for hydrogen use in 1988. Note that much of the passenger space is sacrificed. This was fitted with only one hydrogen engine, if all were using hydrogen then the tank would have been bigger.

 

Although the conversion is possible, it will come at the cost of more expensive flights.  Because the fuel is so bulky, the aircraft will be able to carry fewer passengers than  a conventional one of the same size. The fuel is also more expensive. Although photo voltaic electricity is begining to rival fossil fuel electricity in lifetime costs, this does not imply that hydrogen produced by electrolysis from solar power is as cheap as kerosene.

Producing electricity from oil proceeds thus:

a) oil(40% efficient)→ electricity

Producing hydrogen by electolysis starting with oil fuel progresses thus:

b) oil(40% efficient)→ electricity (70% efficient)→ hydrogen

Because of the thermodynamic loss in electrolysis. If we substitute this with photovoltaic we have

c) photovoltaic electricity (70% efficient)→ hydrogen

The hydrogen or kerosene aviation fuel then has to be turned into motive power

d) aviation fuel (40% efficient)→ motive power for flights

Suppose photovoltaic electricity costs the same as process a. That means that photovoltaic electricity is of the same cost as flight motive power in process (d) where the aviation fuel is kerosene. But if we have to generate hydrogen and then burn it in a turbine, the overall subsequent efficiency is 70% × 40% = 28%.
So even if photovoltaic electricity is as cheap as fossil fuel electricity, as a source of aviation fuel it will still be more than three times as expensive as kerosene.

Lower passenger capacity and lower thermodynamic efficiency mean that cost per passenger mile will rise substantially.

Overall then we have a series of changes which adversely affect transport, and which, taken together undermine the current basis of globalisation. They shift costs to favour more local production and will make the outsourcing of industry to low labour cost
areas somewhat less viable. 
If we combine this with the demographic changes which are going to slow the expansion of the world labour force, then one of the main factors which, this last half century, has worked to undermine the position of labour relative to capital will stop working.

References

[1]
Charles J Altenburg.
Design Considerations for aluminium hull structures.
Ship Structure Committee US Coast Guard, 1971.

[2]Englen A Azizov.
Tokamaks: from a d sakharov to the present (the 60-year history of
tokamaks).
Physics-Uspekhi, 55 (2): 190, 2012.

[3]Peter J Baxter, M Kapila, and D Mfonfu.
Lake Nyos disaster, Cameroon, 1986: the medical effects of large
scale emission of carbon dioxide?
BMJ, 298 (6685): 1437-1441, 1989.

[4]A Contreras, S Yigit, K Özay, and TN Veziroglu.
Hydrogen as aviation fuel: a comparison with hydrocarbon fuels.
International Journal of Hydrogen Energy, 22
(10-11): 1053-1060, 1997.

[5]David Edgerton.
Shock of the old: Technology and global history since 1900.
Profile books, 2011.

[6]Linda Gaines, Paul Nelson, et al.
Lithium-ion batteries: possible materials issues.
In 13th international battery materials recycling seminar and
exhibit, Broward County Convention Center, Fort Lauderdale, Florida
,
page 16, 2009.

[7]Moshe Givoni, Christian Brand, and Paul Watkiss.
Are railways climate friendly?
Built environment, 35 (1): 70-86, 2009.

[8]Peter E Glaser, Owen E Maynard, JJR Mackovciak, and EI Ralph.
Feasibility study of a satellite solar power station.
Technical report, NASA, 1974.

[9]Bart Hendrickx and Bert Vis.
Energiya-Buran: the Soviet space shuttle.
Springer Science & Business Media, 2007.

[10]Mattias Juhász, Tibor Princz-Jakovics, and Tünde Vörös.
What are the real effects of rail electrification in hungary?
In European Transport Conference 2013, 2013.

[11]C Koroneos, A Dompros, G Roumbas, and N Moussiopoulos.
Advantages of the use of hydrogen fuel as compared to kerosene.
Resources, Conservation and Recycling, 44
(2): 99-113, 2005.

[12]Duncan Kushnir and Björn A Sandén.
The time dimension and lithium resource constraints for electric
vehicles.
Resources Policy, 37 (1): 93-103, 2012.

[13]Stuart Licht, Hongjun Wu, Chaminda Hettige, Baohui Wang, Joseph Asercion, Jason
Lau, and Jessica Stuart.
STEP cement: solar thermal electrochemical production of CaO without
CO 2 emission.
Chemical Communications, 48 (48):
6019-6021, 2012.

[14]Zhu Liu, Dabo Guan, Wei Wei, Steven J Davis, Philippe Ciais, Jin Bai, Shushi
Peng, Qiang Zhang, Klaus Hubacek, Gregg Marland, et al.
Reduced carbon emission estimates from fossil fuel combustion and
cement production in China.
Nature, 524 (7565): 335-338, 2015.

[15]Karl Marx, Salomea W Ryazanskaya, and Maurice Dobb.
A contribution to the critique of political economy.
Progress Publishers, 1978.

[16]Hans W Pohl and Valentin V Malychev.
Hydrogen in future civil aviation.
International journal of hydrogen energy, 22
(10-11): 1061-1069, 1997.

[17]Robert O Price.
Liquid hydrogen—an alternative aviation fuel?
International journal of hydrogen energy, 16
(8): 557-562, 1991.

[18]Vaclav Smil.
Two prime movers of globalization: the history and impact of
diesel engines and gas turbines
.
Mit Press, 2010.

[19]T Christopher Smout.
A century of the Scottish people, 1830-1950.
Collins London, 1986.

[20]Detlef P Van Vuuren, Elke Stehfest, Michel GJ den Elzen, Tom Kram, Jasper van
Vliet, Sebastiaan Deetman, Morna Isaac, Kees Klein Goldewijk, Andries Hof,
Angelica Mendoza Beltran, et al.
Rcp2. 6: exploring the possibility to keep global mean temperature
increase below 2 c.
Climatic Change, 109 (1-2): 95-116, 2011.

[21]Ernst Worrell, Lynn Price, Nathan Martin, Chris Hendriks, and Leticia Ozawa
Meida.
Carbon dioxide emissions from the global cement industry 1.
Annual Review of Energy and the Environment, 26
(1): 303-329, 2001.


Footnotes:

1Data from US Energy Information Administration, Annual Energy Outlook Report 2015.

2 Licht et al. [2012] claim that their proposed STEP process would actually be cheaper than the current method of cement production. But their costings depend on operating the process at a higher temperature at which the outputs would be CO and O2 rather than elemental carbon and oxygen. They then propose to sell the carbon monoxide as a feedstock for plastic production. But this process would not be carbon neutral, as part of the plastics would eventually end up being burned and entering the air.

3I recall my grandfather describing to me the sight of one of these ships in the
20s. At the time I could not understand how it could work.

4Restrictions on fosil fuel for ships may first come as bans on the use of high sulfur oil. The threat of this has alone been enough to spur the revived experimental work on wind power.

5 This is similar to the model of delivery that existed in the UK in the period immediately after nationalisation of the railways and road transport in 1948. Railways for long distances, small trucks for
final delivery.

The articulation of forms of economy, Causes of the sexed wage gap

March 31, 2017

 

1  Modes of economy

The Marxist starting point on these questions comes from three classical sources, the section in the communist manifesto on the abolition of the family, the analysis of the value of labour power in Capital[Marx(1887)], and the work of Morgan[Morgan(1907)] and Engels[Engels and Hunt(2010)] on the family. The Manifesto alludes in a very brief way to the aim of abolishing the family and creating a ‘community of women’, but the meaning of this is not immediately apparent from the text. To understand the implications one has to refer to the pre-existing communist literature of the day and to infer conclusions from the later works.

1.1  Basic concepts

The methodological premise of historical materialist investigation is set out in the preface to [Engels and Hunt(2010)].

According to the materialistic conception, the determining factor in history is, in the last resort, the production and reproduction of immediate life. But this itself is of a twofold character. On the one hand, the production of the means of subsistence, of food, clothing and shelter and the tools requisite therefore; on the other, the production of human beings themselves, the propagation of the species. The social institutions under which men of a definite historical epoch and of a definite country live are conditioned by both kinds of production: by the stage of development of labour, on the one hand, and of the family, on the other.

A key point that Engels wanted to emphasise, drawing on Morgan, was that monogamous marriage is a late historical invention. The aboriginal form of human sexual relations was general promiscuity within a band or horde. Natural selection operating at the group level then favoured groups or tribes who adopted successively more elaborate rules prohibiting consanguineous sex, since such rules against incest improved genetic fitness of the group. Promiscuous sex is replaced by various forms of group marriage: groups of ‘brothers’ marrying groups of ‘sisters’ who are not their sisters.

The development of first horticulture, and then plough agriculture then leads via forms of matriarchal marriage to patriarchal polygamous or monogamous marriage. The programmatic interest of Engels in what would otherwise seem arcane works of ethnology comes down I think, to his and Marx commitment way back in 1848 to the abolition of the family as it then exists. This is why he is so enthusiastic about Morgan’s discovery that group marriage was a general predecessor to modern marriage forms. Not only did this prove that contemporary marriage was just one of multiple possible forms; it suggested that just as society was, as the communists maintained, destined to move from primitive communism via class society to a future communism, so would marriage move from group or matriarchal family forms, via monogamy and private property, back to a future system of group sexual relations.

Morgan and Engels views have been controversial, and there has been a strong social pressure for writers to project back contemporary monogamy and patriarchy onto the distant paleolithic past. But the argument that pre-agricultural societies had much more promiscuous sexual relations than post agricultural ones can be supported by modern reseach. [Ryan and Jethá(2012)] collect data from anthropology, primate behaviour and sperm competition theory to argue that Morgan’s basic hypothesis of aboriginal promiscuity is right. But although with Engels the methodological point the importance of production and reproduction is hammered home, there are still a couple of key concepts that are missing and either developed by or made explicit by later Marxists. These are the concepts of combinations of modes of production and the concept of domestic or patriarchal economy otherwise called the domestic mode of production. [Lenin(1965)] described the modes of production or forms of economy in revolutionary Russia as follows:

Let us enumerate these elements:

(1)patriarchal, i.e., to a considerable extent natural, peasant farming;

(2)small commodity production (this includcs the majority of those peasants who sell their grain);

(3)private capitalism;

(4)state capitalism;

(5)socialism.

Lenin was concerned to chart a political strategy of political class alliances in a society characterised by several forms of economy. This concept was developed and popularised in [Rey(1973)]. Although Rey is little known to English readers, his ideas ( sometimes misattributed to Althusser ) are crucial and have had an influence on other thinkers.

[Sahlins and Economics(1972)] developed the concept of the domestic mode of production to describe early economies, and Delphy [Delphy(1980),Delphy and Leonard(1984)] develops the concept of the coexistence of the domestic mode of production with capitalism in her studies of French patriarchal families, particularly peasant families. The idea of the domestic mode of production or domestic economy is examined in greater depth by the Marxist anthropologist Claude Meillassoux[Meillassoux(1981)] who says:

Neither feudalism, nor slavery, even less capitalism, know such regulating and correcting built-in mechanisms governing the process of reproduction. On the contrary, in the last analysis, we find that all modem modes of production, all classes of societies depend, for the supply of labour-power, on the domestic community. As for capitalism, it depends both on the domestic communities of the colonised countries and on its modem transformation, the family, which still maintains its reproductive functions although deprived of its productive ones. From this point of view, the domestic relations of production can be considered as the organic basis of feudalism, slavery as well as of capitalism or bureaucratic socialism. None of these forms of social organisation can be said to represent an integrated mode of production to the extent that they are not based on homogeneous relations of production and of reproduction.[Meillassoux(1981),p. xiii]

The domestic mode of production in the feudal period was the real base of the economy. Peasant households grew food, milled grain, cooked it, spun wool, wove it and out of this fed themselves, clothed themselves and raised the next generation. Since this could typically be done in say 3 days labour a week, that left 3 other days during which they could work, unpaid, in the manorial economy. With the liberation of the peasantry in France from feudal dues, the surplus time could be devoted to producing cash crops to sell on the market. This was the incipient state of the domestic peasant economy when Lenin wrote A Tax in Kind.

Inside the domestic economy there is, Delphy argues, a class antagonism between patriarchs on the one side and on the other side wives and to an extent older children. The patriarchs exploit their wives and children. The wives and children provide labour which yields goods which are partly consumed on the farms, and partly sold on the market. The property relations ensure that the product from the sales of these commodities belong to the male head of household. In addition, the patriarchs typically did fewer hours work a week than their wives. This is not from a historical materialist standpoint women’s oppression, that it too liberal and vague. It is an exploitative class relationship built into the production and property relations.

In the stage of patriarchal commodity production, the patriarchs have a direct interest in their wives bearing children. Children, in a period before compulsory schooling, are an additional labour force to be exploited on the farm from an early age. The pro-natalist ideology of Catholicism, with its accompanying emphasis on pre-marital chastity for girls, is a pretty direct ideological expression of these production relations.

As capitalist industry developed the number of use values produced within the domestic economy started to decline. First went milling as water and wind mills replaced querns. This was well under way in the late feudal period. Next spinning and weaving as factory production of cloth took over by the mid 19th century. Home manufacture of clothes, extended by home sewing machines lasted until the mid 20th century. But production of people continued unabated. So much so that the domestic economy characteristically produced a surplus population that migrated to towns to become wage workers. This stage constituted Lenin’s second economic form : petty commodity producing peasant farms. It was also the dominant economic form over much of the US countryside at the same period.

Expanding capitalist industry required an ever greater labour force, and got it cheap. The wage rate paid did not have to be sufficient to fully recompense the cost of reproducing the next generation, since the patriarchal domestic economy was the main source of supply of labour. This is still the case in India for example.

Marx termed the supply of workers from the countryside the latent reserve army of labour. Latent, because the reserve population was hidden but present, to be called to the colours when industrial cycle goes through an expansionary phase. But this latent reserve army eventually dries up. Once the latent reserve starts to be exhausted real wages have to rise to fully cover the cost of reproducing labour power. [Kuczynski(1946)] argued that it was not until almost a century after the start of the industrial revolution in Britain tha this stage was reached in the 1870s.

2  Domestic and market economy

Working class families are a partial transformation of the old domestic economy. They still produce people, but they do no longer produce any other commodities, and the children they produce have a quite different economic significance to the family. In the rural patriarchal family the children were, within a few years, useful workers who contributed to the family income. In the first phase of industrialisation, families would hire out their children as young factory workers. But soon capitalist industry required an educated workforce. Compulsory schooling followed. Children now became a cost not an asset. The work of child rearing lasts longer, without the income in kind or cash that kids once brought.

 

Figure 1: Characteristic capitalist law of population. Developed capitalism suppresses fertility below reproduction requirements. Illustration is the historical trend of German birth rate. From [Michael J. Kendzia(2012)].

 

Children remain necessary to society, and as a future source of labour power, they are an obvious necessity for employers, but the family now raises them in what amounts more to a social duty conditioned by ideological expectations, than an internal economic necessity. The inevitable consequence of this has been a decline in family size: a falling birth rate. As Fig 1, shows for Germany, the tendancy is for birthrate to fall below reproduction levels. Similar trends exist for other developed countries. Capitalist countries like the US with substantial immigration from predominantly agricultural countries show higher fertility due to the delayed transformation of family forms.

 

Table 1: Time use of Canadians by sex. Note: Averaged over a seven-day week, for population 15 and older. Source: Statistics Canada, General Social Survey, 2005, Catalogue no. 12F0080XWE. Last modified: 2009-09-08.
Males Females
hours per day hours per day
total 24 24
Total work 7.8 7.9
 Paid Work and related activities 4.7 3.1
   Paid work for employer 4.2 2.8
   Commuting 0.4 0.3
 Unpaid work in domestic economy 2.7 4.2
    Household work and related activities 2.3 3.8
    Child care 0.3 0.5
Civic and voluntary activities 0.3 0.4
Education and related activities 0.5 0.6
Personal Care 10.4 10.8
  Night sleep 8.2 8.4
  Meals (excl. restaurant meals) 1 1
  Other personal activities 1.2 1.4
Free time 5.7 5.3

 

In patriarchal domestic economy the labour wives and children are directly exploited by the husband. Their labour contributed directly to his property. The development of capitalist society gives women equal rights to property and eliminates most of the productive activity in the household. Both sexes are now forced to sell their labour power, something that neither did in the old patriarchal family. For both sexes the working day is divided into working hours they sell to an employer, and hours that they continue to work in the domestic economy. If we take Canada as an example, because it publishes excellent statistics on time use, we can see from Table 1 that whilst total working hours for men and women are almost exactly the same, the way these hours divide between work in the domestic and market economes are in reciprocal proportions for men and women. For men it divides [3/2] in favour of the market economy, whereas for women the ratio market/domestic is only [2/3]. The important thing to note however, is that whilst we would conventionally say that Canada is a capitalist economy, the time use statistics show that it is only at most 50% capitalist. Half the work done each day is still done in the home, and a signicant part of the paid work, particularly that done by women[Morissette et al.(2013)Morissette, Picot, and Lu], is done for the state not for private firms, and as such generates no profit.

 

2.1  Gender pay inequality

Now let us look at how the interaction of the domestic and capitalist modes of production affects the position of women in paid employment.

In 2005, the year that Table 1 covers, average male hourly pay was $ 23.41 and average female pay was $ 19.96[Morissette et al.(2013)Morissette, Picot, and Lu].Taking into account the difference in hours worked that means that on average a Candian woman earned only a little over half as much money per day as men.

Gender Paid hours Pay rate Daily earning
per day
Female 2.8 19.96 55.89
Male 4.2 23.41 98.32

It is obvious that the biggest factor affecting daily earnings of women was the shorter number of hours for which they sold their labour power. But that left a gap in pay rates to explain. Let us take what a prominent organisations speaking for women says. The Canadian Womens’ Association1 gave the following reasons for the gap.

  1. First, traditional  women s work  pays less than traditional men s work.  As one researcher notes: ” Female-dominated job classes are often seen as not being skilled because the tasks are related to domestic jobs that women were expected to carry out for free in the home. ”
  2. Second, most women workers are employed in lower-wage occupations and lower-paid industries. Women work in a narrower range of occupations than men and have high representation in the 20 lowest-paid occupations. About two-thirds of the female work force are concentrated in teaching, nursing, and health care, office and administrative work, and sales and service industries. Women aged 25 to 54 accounted for 22% of the Canada’s minimum-wage workers in 2009, more than double the proportion of men in the same age group.
  3. Another reason for the wage gap is that more women than men work part-time. About 70% of part-time workers in 2013 were women, a proportion that has remained steady for three decades. Women working part-time or temporary jobs are much less likely to receive promotions and training than those in full-time jobs.

    Women work part-time for several reasons, including lack of affordable child care and family leave policies, along with social pressure to carry the bulk of domestic responsibilities. These factors make it more likely for women to have interruptions in employment, which has a negative effect on income.

  4. A large portion of the wage gap remains unexplained and is partly due to discrimination. An estimated 10-15% of the wage gap is attributed to gender-based wage discrimination

This appears as a good surface account of the difference but it begs some questions. Why does traditional womens work pay less?

Surely that is just using the gender wage gap to explain the gender wage gap?

The same circular reasoning is present in point 2. If there is a gender wage gap, it follows that any industry with a high portion of women will have relatively low wages compared to an industry with a high portion of men. So this is again circular and can not get to the cause of the gap.

Point 3 is the only real causal explanation, related to the role of women in the domestic economy and a reason why they have difficulty getting out of that economy. Point 4 is merely saying that there is some unexplained difference and that this must by this definition be discrimination. But what causes this discrimination. Employers would like to reduce the wages of all employees. The question is why they are more successful in holding down womens’ wages?

Figure 2: Canadian real wages for men and women. Source [Morissette et al.(2013)Morissette, Picot, and Lu]

 

Look at Figure 2, it is clear from this that the historical trend has been for the wage gap to decline. There was a 20 year period from the mid 1980s during which men’s wages were static and during which women’s wages rose. We need to explain first why a gap exists at all, and then why the gap has changed with time.

[Morissette et al.(2013)Morissette, Picot, and Lu,table 4] examine the change in the gap by doing multi-factorial analysis against union membership, marital status, tenure of job, education and occupation. Taking all factors into account they could explain about 38% of the decline in the wage gap. The three most significant explanatory variables were union membership, educational status and occupation. Changes in union membership by men and women accounted for 11% of the decline in the wage gap(see Table 3).

Women in Canada are now more unionised and better educated than men, reversing the previous situation. Women typically have been in their job slightly longer than men again reversing the situation that used to hold and whilst both men and women are more likely to be employed in health or government services which have been growth sectors of the economy (Table 2).

 

Table 2: Change in statuses for Men and Women, Canada. [Morissette et al.(2013)Morissette, Picot, and Lu,table3]
Men Women
1998 2011 Change 1998 2011 Change
Workers aged 17 to 64
Average tenure (months) 102.2 99.9 -2.3 94.2 101.3 7.1
Percent with a university degree 19.4 24.6 5.2 20.4 29.9 9.5
Percent unionized 33 29.7 -3.3 31.3 33.1 1.8
Percent in health occupations 1.5 1.9 0.3 8.9 11.7 2.8
Percent in occupations in
 social sciences, education,
 and government service 5.2 5.3 0.1 11.2 14.5 3.3

[Morissette et al.(2013)Morissette, Picot, and Lu] have as summary conclusion:

Although women today still earn relatively less than men on average, the gender hourly wage gap decreased significantly over the last three decades. Relative to men, women increased their productivity-enhancing characteristics at a faster pace than men did.

 

Table 3: Explanation of change in wage gap according to [Morissette et al.(2013)Morissette, Picot, and Lu]

 

Change Percent of gap explained
Age 0.002 -2.8
Education -0.006 10.5
Province 0.003 -4.6
Union status -0.006 11.4
Marital status -0.001 1.3
Tenure -0.004 7.3
Occupation -0.01 18
Industry 0.002 -2.8
Total portion explained -0.021 38.4
Portion unexplained -0.035 61.6

This account depends on the idea that wages are determined by productivity. That is to say it follows the textbook neo-classical idea that wages are set by the marginal product of labour and that the wage contract is an equal non-exploitative one. But even if we accept this, which obviously Marxian economists do not, they are only able to account for 38% of the change. They are left with 62% unexplained.

The statistical analysis in Table 3 focuses on things where there are only minor differences between men and women and leaves out the one big thing that differentiates them, womens’ greater participation in the domestic economy.

Now look at Figure 3 and compare it with Figure 2, and you can see that they look pretty similar. As the womens share of the workforce rises their wage rate as a percentage of mens wages rises. In fact the correlation between the two series is 90.9%. That means that only 9.1% of the change in the wage gap needs to be explained by other factors: for instance union membership.

This strongly suggests that should men and women end up working equal number of hours the wage gap will either be eliminated or slightly reversed in Canada; taking into account womens’ higher unionisation and better education.

Figure 3: Canadian employment rates of women and men, 1976 to 2009. Source Statistics Canada, Labour Force Survey, online catalogue entry 89-503-X.

 

 

3  Exploitation and the wage gap

But what are the obstacles to a higher rate of women participating in the workforce?

The key point is that a set of activities are still performed within the domestic economy, and of those women do more than men ( Table 1). The domestic economy still organises a part of the work necessary for social reproduction. This work still needs to get done. Basically there are three ways that womens’ workload in the home can be reduced: (1) a larger share of housework has to be done by men; (2) the productivity of labour in these tasks has to rise; (3) the same tasks have to move out of the domestic economy.

3.1  Division of domestic labour

 

Table 4: Comparison of hours housework in 1998 and 2008 in the respective editions of Time Use of Canadians.

 

Year Mens’ hours Womens’ hours Ratio
housework per day housework per day m/f
1998 2.4 4.1 0.58
2008 2.7 4.2 0.64

There was a previous edition of Time use of Canadians in 1998. By comparing it with the 2008 edition we can see if, over a decade there was a change in the housework done by men and women. As Table 4 shows the share of housework done by men did rise modestly over the 10 years, but this did not reduce womens’ housework, since both men and women did more of it. If women were actually doing more housework in 2008 than in 1998, how did their participation in paid work rise ?

Because they worked longer paid hours too!

So men doing more housework only frees women of it, if the total amount of housework remains constant.

 

Table 5: Relative rates of exploitation of Men and Women in Canada 2011. s/v indicates rate of surplus value. Data derived from Statistics Canada, Income and Expenditure Tables, Statistics Canada, Labour Force Survey, and Figure 2.

 

(1) (2) (3) (4) (5) (6) (7)
(2)/(1) Av Av Av Av
wages surplus s/v Male wage Female wage Both value created
$ 766B $ 497B 0.65 $ 25.03 $ 21.85 $ 23.48 $ 38.72
s/v 0.55 0.77 0.65

References

[Delphy(1980)]
Christine Delphy. The main enemy. Gender Issues, 1 (1): 23-40, 1980.

[Delphy and Leonard(1984)]
Christine Delphy and Diana Leonard. Close to home: A materialist analysis of women’s oppression. Hutchinson, 1984.

[Engels and Hunt(2010)]
Friedrich Engels and Tristram Hunt. The origin of the family, private property and the state. Penguin UK, 2010.

[Kuczynski(1946)]
Jürgen Kuczynski. Labour conditions in Great Britain, 1750 to the present. International Publishers, 1946.

[Lenin(1965)]
Vladimir Ilyich Lenin. The tax in kind. Collected Works, 32: 329-365, 1965.

[Marx(1887)]
K. Marx. Capital, Vol. 1. The process of production of capital. Trans. S. Moore and E. Aveling, Ed. F. Engels. Moscow: Progress Publishers. URL (accessed December 2007): Marx/Engels Internet Archive http://www. marxists. org/archive/marx/works/1867-c1, 1887.

[Meillassoux(1981)]
Claude Meillassoux. Maidens, meal and money: Capitalism and the domestic community. Cambridge University Press, 1981.

[Michael J. Kendzia(2012)]
Klaus F. Zimmermann Michael J. Kendzia. Celebrating 150 Years of Analyzing Fertility Trends in Germany. Forschungsinstitut zur Zukunft der Arbeit, 2012.

[Morgan(1907)]
Lewis Henry Morgan. Ancient society; or, researches in the lines of human progress from savagery, through barbarism to civilization. H. Holt, 1907.

[Morissette et al.(2013)Morissette, Picot, and Lu]
René Morissette, Garnett Picot, and Yuqian Lu. The Evolution of Canadian Wages over the Last Three Decades. Statistics Canada, 2013.

[Rey(1973)]
Pierre Philippe Rey. Les alliances de classes: Sur l’articulation des modes de production: Suivi de Matérialisme historique et luttes de classes. F. Maspero, 1973.

[Ryan and Jethá(2012)]
Christopher Ryan and Cacilda Jethá. Sex at dawn: How we mate, why we stray, and what it means for modern relationships. Harper Collins, 2012.

[Sahlins and Economics(1972)]
Marshall Sahlins and Stone Age Economics. London, 1972.

Footnotes:

1http://www.canadianwomen.org/facts-about-the-gender-wage-gap-in-canada


File translated from TEX by TTH, version 4.08.

Critique of ‘the social construction of sex’

March 31, 2017

1  Introduction

There has been a controversy  on Facebook recently over whether sexual dimorphism is a conserved mamalian trait or a specific social construct in contemporary human society.

Those arguing that it is a social construct cited [Brown(2014)] as an authority. I will in what follow briefly critique the contents of the paper, but first one may ask why bother to deal with this argument at all?

Surely its basic claim is so at variance with the biological sciences that it can be ignored. That would be the case were left wing publications not taking this type of argument seriously. Misunderstandings on these issues have consequences in terms of how marxists frame long term political programmes about the future organisation of society. They also express the ideologies, social being and contemporary interests, of particular groups in in society whose social position inhibits them from being able to put forward a general programme for the progressive restructuring of family relations and family forms. So in a second section I will touch on these topics.

Another reason to deal with it though is to illustrate just how remarkably low the scientific standards of what can now pass as marxist social theory are. The contrast between the standards of evidence that Brown aduces to back a case, and those that were used by Marx, Lenin or Kautsky is striking.

2  The critique

2.1  Brown’s argument

Brown set out to critique the concept that there exists a socially constructed system of male and female gender superimposed on an underlying biological distinction between males and females. Brown wants to argue against the academic view that

Sex, on the other hand, is claimed to be innate, based on immutable biological factors. This view still upholds an essential maleness  and  femaleness  Males have penises, females have vaginas, females develop breasts and the ability to bear children, males do not, or so it goes, but it is acknowledged that gender expression may not be tied to these characteristics in a rigid way.

In evidence against this Brown says that of the methods used by the medical profession to determine sex : chromosomes, genitals, gonads, hormones and secondary sexual characteristics, all show some variation within each given sex. And that because of this variation, the distinction between male and female is, Brown claims, invalid and purely a social convention.

When we consider all five of these criteria, it becomes clear that a majority of humanity does not fit neatly into the  male  and  female  classifications.

2.2  Weaknesses of the case

Brown’s conclusion is not backed up by any statistical evidence from epidemiological or demographic papers to support this surprising claim that the majority of the population are neither male nor female. To make a valid claim Brown should have been explicit about the calculation procedure used.

The most charitable interpretation is that the conclusion is based on an underlying misunderstanding of how sex classification works. When Brown concludes that : ‘majority of humanity does not fit neatly into the male and female classifications’, the assumption is being made that to be classified as female a baby would have to have XX chromosomes, a characteristically female hormonal balance, ovaries and clearly female genitalia. Let pf be the probability that a baby fits neatly into the female classification and let ph be the probability that the hormonal test succeeds for femaleness, pg, the genital test, po the ovary test, pc the chromosome test. Brown’s hypothesis appears to be that the classification process is multiplicative thus:

pf=ph×pg×po ×pc

and that the 4 tests are statistically uncorrelated. Given the m/f sex ratio for infants is about 51/49 each of these tests would have an expected value close to [1/2] , so under these assumptions pf = [1/2]4=[1/16] and similarly for males, which would lead to the conclusion that only [1/8] of the population were clearly male or female; which would be compatible with Brown’s claim.

But of course the tests are not uncorrelated. The traits are highly correlated so it is adequate in the great majority of cases to simply carry out a genital examination.

Existing census and birth certificate data is based on nothing more elaborate than this. Using such data the literature shows that the incidence of infertility in women so classified is of the order of 10% and among men slightly less [Thonneau et al.(1991)Thonneau, Marchand, Tallec, Ferial, Ducot, Lansac, Lopes, Tabaste, and Spira]. Incidences of infertility vary geographically, for example areas where sexually transmitted diseases have a high prevalence can be significantly greater but in such areas availability of modern medicine is able to bring the rate down[Belsey(1976)]. Note that the incidence of infertility given is for all sources, genetic causes, effects of STDs, and cultural factors like the postponement of childbearing until later in life. So even on the most stringent definition of what it is to be a man or a woman : being able to either father or bear children, 90% are not only sexually differentiated but are reproductively competent.

The rest of Brown’s argument concerns the process by which male or female identity is assigned to babies with rare genetic abnormalities. XXY and XYY abnormalities occur at less than one in a thousand births[Hamerton et al.(1972)Hamerton, Ray, Abbott, Williamson, and Ducasse,Jacobs et al.(1992)Jacobs, Browne, Gregson, Joyce, and White]. It is reasonable to accept that in this, very small, congenitally reproductively incompetent population the assignment of sex as male or female is an entirely social construct. But to generalise from this clearly unrepresentative sample to the whole population would violate all normal scientific sampling procedures.

Brown’s hypothesis, that sex in humans is socially determined, although currently unsupported, is in principle testable. One could randomly select a group of neonates and perform a blinded categorisation of them as male or female. That is to say, the categoriser would be denied all knowledge of the infants’ genital morphology. They could then be brought up from birth so that they were consistently treated as belonging to their blind-assigned sex. If Brown is right, on maturity about 90% of the blind assigned females would have grown up to be reproductively competent women capable of giving birth to live offspring.

The stringent isolation and control that such an experiment would require are reminiscent of that of James IV who isolated infants on Inchkeith to see what language they would naturally speak:

The king gart tak ane dum woman and pat hir in Inchekeytht and gaif hir tua zoung bairnes in companie witht hir and gart furnische them of all necessar thingis pertening to their nurischment that is to say, meit, drink, fyre and candell, claithis, witht all wther kynds of necessaris quhilk (is) requyrit to man or woman desyrand the effect hierof to come to knaw quhat langage thir bairnes walk speik quhene they come to lauchful aige. Sum sayis they spak goode hebrew bot as to myself I knaw not bot be the authoris reherse. (Robert Lindsay cited in [Campbell and Grieve(1982)])

I do however suspect that anyone attempting to test Brown’s hypothesis would encounter difficulties with a modern scientific ethics committee.

3  The implications

Towards the end of the article Brown remarks

Readers may note that thus far, there has not been anything particularly Marxist about our analysis.

This is somewhat of an understatement. This reader noted not only that there was nothing Marxist about the analysis, there was nothing remotely scientific about it. If one looks at works of classical Marxism [Marx(1887),Engels and Hunt(2010),Lenin(1964),Lenin(1999),Kautsky(2014)] one sees clear testable propositions, explicit maths, extensive use of evidence, either original statistical ones or historical ones and scrupulous reference to these sources. These are all a standard part of scientific argument, but are missing from Brown’s paper.

Why does this matter?

First because it makes the left look silly and credulous if it accepts extraordinary propositions without strong supporting evidence. We know that humans are placentals mammals and that all such are characterised by sexual reproduction with two sexes, internal fertilisation, and lactation in females. In all placentals the same basic genetic sex determination process occurs[Ferguson-Smith(2006)]. It would be quite surprising were this to have suddenly changed in the short evolutionary span that separates us from our closest relatives. To prove this you would need a huge mass of data or a really crucial experiment.

Secondly because in the absence of scientific investigation ideology steps in instead, in this case the ideology of the transsexual community. The substitution of ideology for science is bad enough, but the substitution of the ideology of a non-reproductive group in society for Marxist analysis of gender relations is detrimental to the development of a communist programme for the transformation of family relations.

References

[Belsey(1976)]
Mark A Belsey. The epidemiology of infertility: a review with particular reference to sub-saharan africa. Bulletin of the World Health Organization, 54 (3): 319, 1976.

[Brown(2014)]
Freya Brown. The social construction of sex, 2014. URL https://anti-imperialism.com/2014/02/24/on-the-social-construction-of-sex-part-1/.

[Campbell and Grieve(1982)]
Robin N Campbell and Robert Grieve. Royal investigations of the origin of language. Historiographia Linguistica, 9 (1-2): 43-74, 1982.

[Engels and Hunt(2010)]
Friedrich Engels and Tristram Hunt. The origin of the family, private property and the state. Penguin UK, 2010.

[Ferguson-Smith(2006)]
M Ferguson-Smith. The evolution of sex chromosomes and sex determination in vertebrates and the key role of dmrt1. Sexual Development, 1 (1): 2-11, 2006.

[Hamerton et al.(1972)Hamerton, Ray, Abbott, Williamson, and Ducasse]
John L Hamerton, Manoranjan Ray, Johanna Abbott, Christiane Williamson, and G Clement Ducasse. Chromosome studies in a neonatal population. Canadian Medical Association Journal, 106 (7): 776, 1972.

[Jacobs et al.(1992)Jacobs, Browne, Gregson, Joyce, and White]
Patricia A Jacobs, Caroline Browne, Nina Gregson, Christine Joyce, and Helen White. Estimates of the frequency of chromosome abnormalities detectable in unselected newborns using moderate levels of banding. Journal of medical genetics, 29 (2): 103-108, 1992.

[Kautsky(2014)]
Karl Kautsky. Foundations of Christianity (Routledge Revivals): A Study in Christian Origins. Routledge, 2014.

[Lenin(1964)]
Vladimir Ilʹich Lenin. The development of capitalism in Russia, volume 3. Progress Publishers Moscow, 1964.

[Lenin(1999)]
Vladimir Ilʹich Lenin. Imperialism: The highest stage of capitalism. Resistance Books, 1999.

[Marx(1887)]
K. Marx. Capital, Vol. 1. The process of production of capital. Trans. S. Moore and E. Aveling, Ed. F. Engels. Moscow: Progress Publishers. URL (accessed December 2007): Marx/Engels Internet Archive http://www. marxists. org/archive/marx/works/1867-c1, 1887.

[Thonneau et al.(1991)Thonneau, Marchand, Tallec, Ferial, Ducot, Lansac, Lopes, Tabaste, and Spira]
Patrick Thonneau, Sophie Marchand, Anne Tallec, Marie-Laure Ferial, Béatrice Ducot, Jacques Lansac, Patrice Lopes, Jean-Marie Tabaste, and Alfred Spira. Incidence and main causes of infertility in a resident population (1 850 000) of three french regions (1988-1989)*. Human Reproduction, 6 (6): 811-816, 1991.

 

Defence against Vault 7 attacks

March 13, 2017

In the past cyber attacks were largely carried out by amateurs or criminal gangs. Recent releases of information from Wikileaks have made it clear that a whole range of digital devices have been subverted by intelligence agencies.

More recently they have been commercialised with a market existing in the development and detection of ‘exploits’ or weaknesses. Firms advertise on their websites that they have hacks that allow them to control computers running web browsers such as the latest versions of Internet Explorer or Google Chrome.

Companies that develop these exploits then market them to NATO approved defence and intelligence agencies. In the light of the Snowden revelations it is reasonable to fear that some of the Endpoint attacks exploits in widely used products originating from big US companies like Microsoft, Apple or Google may have been developed on the basis of inside knowledge. Either they are deliberately introduced into the software, or information about the weaknesses may leak to the exploits contractors prior to their being fixed in a subsequent software release.

Government agencies like the UK GCHQ and the US NSA systematically tap communications lines and hack into Internet switches to divert data.

 Historic examples

There is of course a long history of deliberate interception of digital information by intelligence agencies. In the early 20th century the British government operated the ‘red net’, the network of British owned undersea cables connecting the world. It was labeled ‘red’ as the British Empire was marked red on the map. As telegraph and telex information passed through British territories they were systematically copied and decrypted by the intelligence service.

This control of data flows was of decisive importance to British strategic objectives. The first act of hostilities in the First World War was the dredging up and cutting of German controlled sub-sea cables. This occurred with hours of war breaking out. In consequence German diplomatic correspondence had to be encrypted and sent via neutral Holland and then through London to the rest of the world. Using this the British were able to obtain the text of the proposed secret treaty between Germany and Mexico to divide American territory in the even of war. Publication of this treaty in the American newspapers led to the USA declaring war in Germany in 1917.

Later the leaking of secret Commintern telegrams suggesting that the Commintern should support the Labour Party, were used to precipitate the fall of the first Labour Government.

Britain remains a hub for undersea cables, now fibre optic rather than electrical.

Edward Snowden has revealed that all internet communications passing from Europe to North America and on from there are systematically tapped by GCHQ. The revelation that German and other EU communications are still tapped by the UK government caused some controversy when it was revealed by Snowden.

Edward Snowden revealed that within the USA data centers and Internet hubs are linked to the NSA which carries out diversion of information flows similar to GCHQ.

The precautionary principle suggests that chat services like Facebook, Google and Skype can be assumed to be tapped at the premises of the companies running these services.

It is perhaps significant that after Microsoft took over Skype it switched the system to a server based rather than peer to peer based making it easier to tap. Peer to peer traffic does not go through a single server making tapping harder.

From the documents released by Wikileaks it has become clear that the actual encryption algorithms are still secure, but the endpoints are easily compromised. This is one of the motivations behind our proposal: if both endpoints engaging in encrypted communication are secure, it is currently impossible to decrypt the communication.

Traditional viruses  

These install themselves and then propagate copies either by email or external storage media contact ( USB sticks, SD cards, ebook readers etc ). Once installed, what they do is up to the writer of the virus.

The most sinister recent example was the Stuxnet virus, which damaged the equipment in the Iranian gas centrifuge plant. This showed evidence of having been expertly and deliberately constructed in order to produce damage, but not to the computer on which it was run, but to industrial equipment controlled by the computer.

  • The virus was transmitted via USB sticks, copying itself onto any USB sticks inserted in the machine, and copying itself from any USB stick into all machines that the stick was placed in.
  • It specifically targeted a particular type of industrial control software. If the computer it infected had no industrial control equipment it was benign.
  • If it found the equipment, the virus made equipment operate outside safe parameters. It was particularly targeted at centrifuges processing uranium hexaflouride, which were made to run slightly faster than they should, so that they would rapidly wear out.

Although it can not be proven, it is generally assumed that the virus was developed by either Israeli or US stage agencies as part of an attempt to sabotage the Iranian nuclear power programme. It is viewed by commentators as part of an ongoing covert operation that has also involved targeted assassinations of Iranian physicists.

Buffer overflow attacks  

These rely on badly written programmes running on computer A that allow messages sent from computer B to overwrite part of the subroutine linkage area in the data memory of computer A.

  • When this happens the overwriting code gains control over computer A and can install malware. The malware may be activated at some later time to produce effects similar to those due to a virus.
  • Such attacks can be launched from malicious websites.
  • Secuirty exploits in discovered popular web browsers or display programmes such as Adobe Acrobat can take this form.
  • It is important to note that a buffer overflow is a weakness even without injection of code: a buffer overflows can crash e.g. an ssh server, thus effectively resulting in Denial of Service.

Homeric Attacks  

These rely on software that is apparently benign and useful, but which may contain secret malware. They are modelled on Homer’s myth of the giant horse built by the Greeks as a gift to the King of Troy. Typically the malware then copies confidential information from the infected computer to computers controlled by the producer of the malware.

  • The most notorious source of these are freely down-loadable utilities or apparent utilities that the user is induced to deliberately run on their computer.
  • But should government A be able to obtain collaboration from major software companies, it would be possible to introduce Trojan horse software into widely used utilities such as Email readers, word processors, PDF file readers, spreadheets etc. If these were then used by countries B and C in their government offices, then government A might be privy to the confidential reports of governments B and C.
  • In principle, it is possible to guard against this type of attack by stopping the process from communicating over the network, and many firewall products have this ability. However, in practice this is difficult because many applications exchange information with their software company to check for updates, and by blocking the communication, one stops vulnerabilities from being fixed.
  • With our proposed approach however, the need for updates largely disappears as there is much less scope for exploiting vulnerabilities.

Targets

Telephone or internet switching points. These systems fail more gracefully than power networks, but a sufficiently widespread virus attack on switching points could cause significant interruptions to traffic. Air traffic control systems

The use of malware for espionage is an obvious danger, but one has to assume that the Stuxnet virus is just one currently known exemplar of a range of similar designs that have either already been, or could soon be, developed by state cyberwar departments. These would have a wide range of possible infrastructure targets:

  • Modern atomic power stations 1. The Chernobyl accident showed that operation of nuclear power stations outside their design parameters may lead to significant adverse effects.
  • National power grids. Experience in the USA has shown that accidental overloading of a few switching points can lead to cascading failure: safety cut-outs come into operation redirecting current, causing more overloading and further cut-outs. Such cutouts induced by single accident points have led to blackouts lasting hours over substantial parts of the USA and Canada.
  • Telephone or internet switching points. These systems fail more gracefully than power networks, but a sufficiently widespread virus attack on switching points could cause significant interruptions to traffic.
  • Air traffic control systems and air defence radar systems, insofar as these have been upgraded to use modern commodity brand PCs. The hazards here are obvious.

The term ‘computer virus’ is a borrowing from medical terminology. Indeed the very idea of creating computer viruses came from a deliberate copying of biological ideas. It is not surprising that the first technical fix: anti-virus software, also borrowed from biology.

This works on the model of the vertebrate acquired immune system.

Our immune system learns to recognise pathogens and then produces antibodies to them. Our immune system learns to recognise specific amino acid sequences, or motifs, in proteins as belonging to hostile organisms, and produces anti-bodies which bind to and neutralise these proteins.

On first encounter with a new virus we have no defence ( SARS, Ebola etc). Whole races can be wiped out on contact with unfamiliar new viruses: experience of New World and island tribes on exposure to Old World viruses like colds, flu, smallpox.

Likewise, antivirus software relies on the providers of the software recognising motifs in the malicious code and thus identifying it. A software motif is a sequence of bytes invariably found in the code of a particular virus.

A brand new virus will not be detected unless it shares motifs with previous versions.

Monocultures are vulnerable  

 corn_fields blight
Healthy Blighted

Figure Monocultures are vulnerable

All organisms in a monoculture have similar genetic structure if a virus can infect one it can infect all. This is why food crops, where a single species dominates, are particularly vulnerable to infection.

A natural grassland will contain dozens of species, and the ecosystem as a whole is robust against the attack of individual microbial pathogens. A giant field of corn is vulnerable.

   Computer system monocultures

Windows PCs and Android mobile phones are two examples computer system monocultures. The equivalent to the Genome of plants in the cyber environment is the machine code of the microprocessors.

Microprocessors with the same machine code and same operating software can be infected by the same malware. But binary malware for machine code X will not infect a computer with machine code Y.

An machine code is a list of numbers with special meaning to the computer for example

code meaning
0 Load
1 Store
2 ADD
3 SUBTRACT
4 JUMP

Machines can typically recognise hundreds of such codes. Android recognises 256. All programmes run on the system rely on having a standard interpretation of these codes. The meaning of these codes is normally fixed by the electrical circuit of the computer.

In the early days of microprocessors there were many competing code schemes from different manufacturers: Intel, Motorola, Hitatchi, National Semiconductor, Zilog etc all had their own proprietary codes. The process of concentration and monopolisation in the computer industry means that now that computers, tablets and mobile phones nearly all use just two designs of machine code: the US Intel code and the code developed by the UK ARM company. Each of these software companies has licensed their codes to chip manufacturers in other countries, who in turn sell the chips to electronics manufacturers producing final consumer and industrial products.

  • Windows, Apple and Linux computers all use the Intel machine code.
  • Nearly all smartphones and tablets use the ARM machine code.

  Virtual machine codes

Not all programmes depend directly on the raw machine code. Some use a virtual machine code that is interpreted by software rather than hardware. Some widely used virtual machine codes are those from the following US companies :

Oracle:
the JVM into which Java programmes are translated.
Google:
the Dalvik code that is used for Android apps.
Adobe:
the Postscript and subsequent PDF codes used in printers and document viewers.
Microsoft:
the Macro code used in Word documents and Excel spreadsheets.

Whilst the existence of many hardware machine codes protects the computer ecosystem against virus spread, the proliferation of popular virtual codes makes it easier for viruses to spread.

This is because a single computer can now be infected by viruses adapted to several different codes. An Intel PC with virtual machines from Oracle, Microsoft and Adobe installed provides 4 different targets for viruses to infect.

Permuted systems

The basic approach to protecting computer ecosystems should be to create a diversity of machine codes. But this runs up against the high cost of designing computers. A country could not afford to design and build hundreds of completely different microprocessor architectures. The contemporary cheapness of computers is due to millions of identical microprocessors produced by what amounts to a sophisticated printing technology.

We propose to retain this manufacturing advantage, but to introduce as part of the hardware a  permutation unit that shuffles the machine code just before it is executed.

Permuting means re-ordering or shuffling things.

If you construct an chip device with a permuted set of meanings for its machine code no software designed for a standard chip will run on it.

code meaning Permuted meaning
0 Load JUMP
1 Store ADD
2 ADD Load
3 SUBTRACT Store
4 JUMP SUBTRACT

Thus no malware designed for the standard chip machine code will run on it.

It is in principle relatively easy to modify the design of a processor chip so that it incorporates a permutation unit that permutes the machine code. A sensible place to put the permutation unit is between main memory and the instruction cache, meaning that the circuit delay for permutation is only met on loading the cache rather than each time an instruction is executed.

 permuteunit

Figure Permute unit

Suppose you have a machine whose 32 bit codewords looked like this:

field Opcode r1 r2 offset
bits 8 4 4 16

One could use two alternative permutation techniques.

  1. The simplest is to permute the order of the meanings of the opcode field as shown in our previous example. The machine has 256 possible opcodes, so a 256 element permutation table would be needed. This allows 256! different possible unique designs of machine code.
  2. Alternatively one could permute or shuffle the bits in the whole instruction words. Since there are 32 bits, this would allow 32! factorial different codes.

Clearly the first alternative is much better. Each chip would have its unique permutation table stored in non-volatile memory, allowing the permutations to be loaded as a final manufacturing step on chips that were otherwise architecturally identical, and thus run unique machine codes on each of chips coming off the production line. One might allow a facility of field programmability of the permutation table.

Suppose that such chips were available and incorporated into PCs, tablets etc. For markets where there was no particular security problem one could use devices with a null permutation. These would run the native, unpermuted machine code supported by the hardware, but would run the risk of malware infestation.

Suppose the governments of countries B and C want to secure their government ecosystem against viruses, what do they need to do?

  1. Assume that they each settle upon a specific version of Linux for their machines. Country B uses Debian and Country C Ubuntu. Each country has a server for distributing approved copies of Linux to government machines.
  2. Each country maintains a secret database that associates with a identifier of every computer it uses a unique permutation table. The unique id can be conveniently calculated as a hash function of the permutation table.
  3. When the government in country C buys a new computer it sends the machine to a depot containing ServerC . Staff at this depot construct two files: a permutation table, and a boot disk image containing a permuted copy of Linux.
  4. The permutation table is burned into a ROM on the machine and the boot disk installed in the machine.

A binary to binary translator on the server would convert the raw public Linux software to a permuted version able run on a machine with a particular permuted instructionset. A similar binary translation process would be used to provide periodic software upgrades. In this case it would be necessary for the client machine to send its unique identifier when requesting a software upgrade.

Summary

  • ‘Species barriers’ prevent the spread of viruses among the machines of either country B or country C.
  • Buffer overflow attacks launched from country A against either B or C will fail as the introduced malware would not be a valid programme and so would cause an immediate crash on visiting the malicious website in country A. To guard against buffer overflow attacks that could bring down the entire system, the communication stack will be implemented in hardware.
  • Homeric attacks would only be possible if malware was introduced into the source code of the Linux images used by the servers in B and C. The governments would have to insist that software was only mounted on the servers whose source code was:
    • Openly available
    • Had been subjected to inspection to attempt to detect obfuscated malware. This route could not be completely closed, but the ease by which such homeric attacks could be carried out would be much less.
    • Did not contain interpretive code. This is harder to ensure since so many contemporary Linux utilities depend on interpretive code. The consequence would be that the range of software supported on these machines would be strictly limited to a relatively small range of essential utilities.
  • It is not difficult to envisage a similar schema being applied to a range of smart phones which could be distributed with an appropriate permuted operating system.

Why law of value really applies in socialist economies

March 5, 2017

The term law of value has exoteric and esoteric meanings. The exoteric or superficial meaning is that in capitalist type economy, relative labour values will act as an attractor for relative prices. The more esoteric meaning is that the distribution relations in all societies are constrained by the distribution of labour. In a capitalist economy the great branches of production subsist by trade and their respective revenues have at least to be roughly proportional to the populations that they support.

New Harmony Utopian community designed by Owen

New Harmony Utopian community designed by Owen

 

Although in a socialist economy the great bulk of the economy is publicly run, the distribution of the population accross sectors of the economy continues to exert an influence as does the fact that the population still live in households. This may seem an unexceptional observation, but communist organisations that grew up within previous class societies dispensed with the household as an institution. Think of a monastic community or Owen’s New Harmony. In such householdless communities there would be no personal property as opposed to community property. Food preparation, was communal, and childcare was either abolished as in monastic orders, or carried out communally. But if you have households then private property of the household is distinct from community property. Since the composition and consumption needs of households differ, it is impractical to give all households a uniform ration of goods. An old couple would have little need for children’s shoes or toys, for example. So a socialist economy with households has to allow some flexibilty in consumption, which they have achieved by distributing a portion of people’s income in money. In principle they could have used something other than coins and notes. They could have kept social credit accounts or labour accounts for people, but in all cases, many goods for household consumption would have something very like a price.

In a socialist society then, with households, how does the esoteric aspect of the law of value, the underlying constraint posed by the social division of labour, express itself?

1.1  Intersectoral relations

I shall divide the socialist economy into three sectors

  1. The production of means of production.
  2. The production of articles of personal consumption that are distributed for sale or charge to individual workers’ families. At this point it makes no difference whether the articles are sold for actual money, or against the debit of a labour account.
  3. The provision of uncharged services such as education, healthcare, defence, and public infrasctucture. This is not to say that being conscripted into the army is not a charge on the conscript, but that they do not individually have to pay in cash or labour credits for their military service. Similarly education costs adult society time and resources, and costs the pupils their play time, but it is assumed that there are no school fees.

I will use the subscripts 1,2,3 to denote these sectors. Sectors 1 and 2 produce physical outputs, that is to say they are materially productive in the sense of Adam Smith’s use of the term productive. I will call the output of sector 1 machines, though it also includes all other means of production, and will use the symbol m, in lowercase to indicate a flow, for the gross output of machines and the stock of machinery and equipment used in the sectors as M1,M2,M3.

Machines wear out. I assume that a fraction δ of them wear out each year. So for the sectors the flow of new machines needed to simply stand still is given as δM1,δM2,δM3. If the economy is growing there will be some surplus flow of machinery over wear and tear, set asside for growth, which I will call mg.

mg = m −( δM1+δM2+δM3)
(1)

I will assume that the working population is P divided into P1,P2,P3 working in the three sectors, and that for each year of work the government credits a person with a wage of w either by paying them cash or by recording some units into their personal consumption account in a database. The state also, for budgetary purposes has to account for the usage of machinery and equipment in different sectors right down to the individual factories, hospitals etc. The accounting unit for such charging is assumed to be the same, either money, labour hours, concievably energy, as is used for personal consumption accounts. I will use c for the charging rate for a machine. This then gives the current accounting costs Ci of each sector, assuming that the government does not charge itself interest, of

C1=cδM1+wP1
(2)

 

C2=cδM2+wP2
(3)

 

C3=cδM3+wP3
(4)

The accounting costs of each sector are made up of the charge for the use of publicly owned machinery , and the payments to the people working there. The first is a charge internal to the public sector but the government has to carry out such sectoral charging if it is to make overall budgetary decisions about the scale of the sectors. The only point at which an actual sale, with change of ownership, happens is when the output of the consumer goods industry is sold to the working population. I will call this the bread or baking industry and label the total output of the industry b and the price of bread p. If we assume for the moment that there is no mechanism by which the working population can save, then we have

pb=w(P1+P2+P3)(1−t)
(5)

where t is the income tax rate. That is to say, the price of bread times the bread output equals the after tax income that the working population gets. This is their money wage but in addition they consume a social wage of education, healthcare etc provided by public sector 3. Equation 5 gives the price of bread as a function of the money wage.

It is not so obvious how the government should set the charge for machinery used by the public sector but one obvious way is to set the charge for machines at their imputed cost of production

c=C1/m
(6)

The tax revenue plus any profit on sales of consumer goods is then used to cover the cost of the free public services and the net accumulation of new machinery

cmg+C3=tw(P1+P2+P3)+pb−C2
(7)

We have 7 equations 1 to 7 with 8 unbound variables mg,c,w,t,p ,C1,C2,C3. I assume that m, b, M1,M2,M3, P1,P2,P3, δ are fixed by the actual structure of activity so in principle the government could fix either the tax rate or the wage rate, but having done that, all the other variables are constrained. Let us look at options.

I will present a simple example and compare the effect of different wage and tax policies.

Sector P M output
1 4000000 250000 100000
2 6000000 250000 1000000000
3 5000000 250000 no physical output
  1. The wage is fixed at 1, this ends up equivalent to valuing things at labour values, no profit is made on the sale of consumer goods and income taxes are adjusted to meet the cost of the public services and accumulation. We end up with
    p c t income tax rev turnover tax rev
    0.0073 53.3 51% 7666570 0
  2. In this scenario income tax is held low at 10% and the price of the consumer goods have to rise to cover the shortfall in government revenue. Given that the physical output of consumer goods stays the same, the only effect of reducing income tax is to increase prices. The net effect is that the goverment raises most of its income from what can either be viewed as a tax on consumer goods, or on the profits of nationalised industry. Wages turn out to be the same, as does the charge for means of production, but consumer goods cost almost twice as much.
    p c t income tax rev turnover tax rev
    0.0135 53.3 10% 1500000 6166666

    The relative prices of machinery and bread now diverge significantly from labour values, with bread being sold at a premium due to the tax being levied on it.

The conclusion is that the extent to which a socialist government can disregard labour values is constrained by the level of income tax that they levy. If they rely on income tax for public revenue, then sectoral prices will be proportional to labour values. If they attempt to curtail income tax to a level too low to support public services, then the price of consumer goods has to be raised in what amounts to a sales tax to prevent the accumulation of purchasing power in the hands of the public, and thus suppressed inflation.

1.2   Intra sectional constraints

Even if you assume that the number of people allocated to make consumption goods does not change, that still leaves considerable flexibility in what consumer goods are made. Asume the intention is to adjust output to consumer wants as expressed by the goods they chose to spend their social credits on. What does this imply for the relative prices of goods?

Should these relative prices correspond to relative labour values?

Yes they must, for it is only under this condition that the attempted adjustments people make in their consumption will be compatible with the pre-determined number of people working making consumer goods. Suppose that one group of goods – say furniture is systematically undervalued compared to another group of goods, let us say clothes. Suppose clothes are priced at par for labour values and furniture is sold at a 50% discount with respect to its labour value. Note that it does not matter if the social credits are measured in hours or in some arbitrary currency units, there will always be some quantity of the currency that, averaged accross all prices, represents an hour of embodied labour. Consumers then attempt to shift part of their clothes consumption to furniture. Suppose they cut clothes consumption by the equivalent of 100 million hours of credits, and switch these credits to furniture. Since the furniture is being marked at a 50% discount, these 100 million hours of credits switched from clothing appear to be enough to buy furniture that took 200 million hours to make. Even if the workers who in the past worked the 100 million hours in the clothing industry were shifted to make furniture, that would not provide enough additional labour to make 200 million hour’s worth of chairs, tables etc.

More generally, if prices are not proportional to labour values, then shifts in purchases from one good to another will lead either to patterns of demand that to big to be met with the existing workforce, or if the demand shift goes from undervalued to overvalued goods, to unemployment and short time working in the consumer goods industry.

Socialism capitalism and population

February 10, 2017

We are now approaching a social revolution in which the economic foundations of monogamy as they have existed hitherto will disappear just as surely as those of its complement-prostitution. Monogamy arose from the concentration of considerable wealth in the hands of a single individuals man-and from the need to bequeath this wealth to the children of that man and of no other. For this purpose, the monogamy of the woman was required, not that of the man, so this monogamy of the woman did not in any way interfere with open or concealed polygamy on the part of the man. But by transforming by far the greater portion, at any rate, of permanent, heritable wealth – the means of production – into social property, the coming social revolution will reduce to a minimum all this anxiety about bequeathing and inheriting. Having arisen from economic causes, will monogamy then disappear when these causes disappear?
One might answer, not without reason: far from disappearing, it will, on the contrary, be realized completely. For with the transformation of the means of production into social property there will disappear also wage-labor, the proletariat, and therefore the necessity for a certain – statistically calculable- number of women to surrender themselves for money. Prostitution disappears; monogamy, instead of collapsing, at last becomes a reality – also for men. ( [Engels and Hunt, 2010])

Societies have characteristic family ideologies and family laws structured by their economies. This was a basic thesis of [Engels and Hunt, 2010], who used this premise to try to predict how the family would change in a post capitalist society. The nice point is that this theory of the history of the family then itself became part of the ideological foundation of socialist family relations.
The professed aim of the Communists was to reform the relations between the sexes along the lines advocated by Engels. The universal participation of women in public industry would have as a consequence the abolition of the monogamous family as the basic economic unit of society. Private household work would be transformed into a social industry and society as a whole would take responsibility for the care and education of all children whether born in or out of marriage.
With considerations of property removed, marriage would be based on mutual love alone. Arranged marriage would vanish. We tend to think of arranged marriages as something oriental, but the underlying principle, of the marriage being a matter of passing down and accumulating property was widespread. Even in the 19th century England, marriages among the upper class centered on the property motive:

It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife. ([Austen, 1994] )

Only the poor, Engels maintained, could afford to marry for love. But in the socialist future, love would become the sole basis for marriage.

Under the influence of radical legal theorists[Pashukanis, 1989], the Soviets at first envisaged that marriage law, like other contractual law would be phased out in socialist society. The only interest the state would have in people’s cohabitation was to register it for statistical purposes along with births and deaths[Berman, 1946]; so the RSFSR 1926 Family Code treated sex, marriage and divorce as a private matter in which the state did not interfere. This liberal attitude extended to not prohibiting incest, bigamy, homosexuality or or marriage with post puberty minors. Bigamy or polygamy though not prohibited in marriage law, insofar as they involved economic exploitation of women could be criminally prosecuted under the heading of exploitation. Whilst contemporary Western commentators largely approve of the liberal attitude of the early Soviet state to homosexuality, they are more silent on its liberalism towards incest, bigamy etc.

In 1920 free abortion had been introduced, which produced a rapid decline in the birth rate in urban areas. Over the 1920s the Moscow birth rate fell from 30.6/1000 to 21.7/1000, while abortions rose from 5.7/1000 to 35.2/1000[Berman, 1946]. Given that the overall death rate in the mid 1920s for the RSFSR was 21/1000 this appeared to represent a potential fall to below replacement birth rates[Engelman, 1932]. The birth rate in Moscow was unrepresentative. In rural areas where state hospitals providing abortion did not exist, ie, for the majority of Russia, the birth rate was much higher 44/1000 for the Great Russian population. Clearly there was no general threat to reproduction in the 20s, but projecting forward for a rapidly urban population in the mid 30s or a population vastly depleted by war in the mid 40s the outlook may have seemed different. That failed to take into account the fall in the death rate that could be anticipated to follow rising living standards. On the other hand given the international environment, a sharp rise in deaths due to enemy action may have been anticipated. The subsequent 1936 Law severely restricted abortion to cases of danger maternal health or genetic disorder, and at the same time very introduced substantial subsidies to women with large families. For the 6th and each subsequent child a stipend of 2000 rubles a year, equivalent at the official exchange rate to $2300 was introduced. Given that the average annual wage at that time was 2,700 rubles[Petroff, Feb 1938] this was a large benefit. Paid maternity leave of 112 days was introduced along with birth benefits. One could either see these measures as natalist, or alternatively as measures to protect mothers and children. They introduced, albeit very partially, the principle Engels had advocated: that the cost of raising children should be born by society as a whole. Partial because even as late as 1960 the regular child benefit was paid only to unmarried mothers or mothers with large families[Lantsev, 1962]. The principle that children were to be supported by the joint earnings of the parents for smaller families was thus not questioned, and marriage continued, to have an economic role even before the division of domestic labour between husband and wife was taken into account.

The German Soviet war of 1941 to 1945 caused a huge demographic shortfall – initially of the order of 40 million, rising to around 70 million by the end of the Soviet period (Figure 0.2). But throughout the Soviet period the population continued to grow.
russianbirthrate
Figure 1: Evolution of Russian birth and death rates in Soviet and post-Glasnost periods. Bezier plot.Shaded area post-Glasnost. Source [Pockney, 1991] and UN Demographic Yearbooks.

The USSR underwent its primary demographic transition between the late 30s and late 50s. The main component of this was a shift from the high infant mortality rate of around 200 per 1000 live births at the end of the 30s to around 50 in the late 1950s and down to 25 in the mid 1960s[Shkolnikov and Meslé, 1996]. The decline was largely due to reductions in infectious diseases, particularly food and water born infections. As a result life expectancy at birth rose by 24 years in males and 27 years in females between the end of the 30s and the mid 1960s. Overall birthrates and deathrates declined sharply during the transition, reaching a minimum for death-rate in the mid 1960s, and for birth-rate around 1970 ( Figure 0.1). After that both rates increased. [Allen, 2003] argues that the fall in the birthrate was critical to ensuring that food production per head rose, and that the growth in population was actually significantly slower than would normally have been expected in an industrialising country.

The increase in death rate from the 1970s was most marked in men. It was largely due to a rise in heart disease, accidents, suicide and interpersonal violence. A factor producing the minimum in male death rate in the late 60s was that during the 50s and 60s the age structure of the population was skewed towards younger men. So many who reached maturity in the 30s and early 40s had been war casualties that the number reaching the age when heart diseases strike was unusually low.

The birth rate remained well in excess of deaths throughout the first demographic transition giving a steady increase in population.
sovpop
Figure 2: Soviet population suffered a huge demographic setback due to the German Soviet war of 1941-45. Source [Pockney, 1991].

easteurope
Figure 3: The whole socialist area of Europe experienced steady population growth until the transition to capitalism, after which population declined sharply. Calculated from the UN World Population Spreadsheet 2015 edition.

The transition from socialism to capitalism in the USSR in the late 80s early 90s induced a second far more drastic demographic transition. The birth rate fell sharply into the range typical for developed capitalist countries. But while in many capitalist countries the birth rate falls below the death rate, both are normally on a downward trend. In Russia the death rate rose sharply: Figure 0.1 . A rise of this scale in peace was at the time unprecedented in a developed country. Those without university education[Shkolnikov et al., 2006]: that is to say the manual workers and farmers, suffered increased mortality. The intelligentsia experienced no decline in mortality. Subsequently [Case and Deaton, 2015] have pointed out that a similar thing has been happening to white working class men in the USA, with similar causes: mass unemployment and de-industrialisation[Stuckler et al., 2009]. As Figure 0.3 this demographic crisis was a general phenomenon affecting the ex socialist countries. The onset of capitalism and the deterioration of social conditions that followed, meant that the region as a whole went into demographic decline.

The contrast between capitalist and socialist family policy is best illustrated by a comparison of East and West Germany. Both Germanies experienced declines in fertility following the availablity of modern contraceptive technology in the 1960s. By the early 70s it had fallen below replacement levels in both East and West (Figure 0.4). But the birthrate in East Germany recovered to around replacement level by the late 1970s following the 1976 introduction of policies to socialise a considerable part of the burden of child raising[Salles, 2006]. Single mothers had priority access to kindergarten places. If no place was available they could go on sick leave at half pay, with the return of their job guaranteed as soon as a place became available. One year of paid parental leave was available for single women on birth of their first child. For married women this was available only for subsequent children. Along with free nursery schools, birth bonuses, workplace childcare and workplace canteens all helped parents.

The overall effect of these policies was to increase the birthrate in the East above the contemporary rate in the West. The availability of maternal benefits to single mothers increased the proportion of babies born to them, and led to greater social acceptance of their situation. Rents were low, but waiting lists for flats gave priority to single mothers and married couples. A common family pattern emerged of women having their first child before marrying and a second one after marriage[Salles, 2006].
germanies
Figure 4: German total fertility in children per woman. Federal statistical office.

With the union with West Germany, this benefit system was withdrawn and the consequent demographic shock led to East German fertility rates falling as low as 0.7 before converging on the all German average of 1.4. This of course is still well below replacement level.
The combination of capitalist and domestic economies is antagonistic. Capitalist mass production replaces one economic function of the household after another: spinning, weaving, growing food, sewing clothes, baking, etc. The demand for skilled and educated adult workers converted children from being part of the domestic labour force to economic dependents, creating an incentive to limit family size. The development, by the chemical industry, of contraceptive technology then made this possible. The continuing demand for more labour then drew an increasing fraction of women into capitalist employment, which for a few decades allowed the workforce to go on growing. It then became necessary for both parents to work. The cost of private childcare then becomes more of a disincentive to have large families or even have families at all. Socialist states have had the aim of improving the status of women through their participation in the social economy. As such they could have been faced with the same tendency towards sub-replacement fertility. They avoided this because women’s participation in the socialist sector went alongside a deliberate policy of socialization on childcare.
References

[Allen 2003] Robert Allen. Farm to factory: A reinterpretation of the Soviet industrial revolution. Princeton University Press, 2003.
[Austen 1994]Jane Austen. Pride and prejudice. 1813. Project Gutenberg, 1994.
[Berman 1946]Harold J Berman. Soviet family law in the light of russian history and marxist theory. The Yale Law Journal, 56 (1): 26-57, 1946.
[Case and Deaton 2015]Anne Case and Angus Deaton. Rising morbidity and mortality in midlife among white non-hispanic americans in the 21st century. Proceedings of the National Academy of Sciences, 112 (49): 15078-15083, 2015.
[Engelman 1932]Uriah Z Engelman. Vital statistics in the soviet union in 1926. American Journal of Sociology, pages 437-440, 1932.
[Engels and Hunt 2010]Friedrich Engels and Tristram Hunt. The origin of the family, private property and the state. ePenguin, 2010.
[Lantsev 1962]MS Lantsev. Social security in the ussr. Int’l Lab. Rev., 86: 453, 1962.
[Pashukanis 1989]E. B. Pashukanis. Law and Marxism: A General Theory Towards a Critique of the Fundamenta Juridical Concepts. Pluto Publishing, Worcester, 1989.
[Petroff Feb 1938]Peter Petroff. The soviet wages system. Labour, pages 141-2, Feb 1938.
[Pockney 1991]Bertram Patrick Pockney. Soviet statistics since 1950. Aldershot (UK) Dartmouth, 1991.
[Salles 2006]Anne Salles. Les effets de la politique familiale de l’ex-rda sur la nuptialité et les naissances hors mariage. Population, 61 (1): 141-152, 2006.
[Shkolnikov and Meslé 1996]Vladimir M Shkolnikov and France Meslé. The russian epidemiological crisis as mirrored by mortality trends. 1996.
[Shkolnikov et al. 2006]Vladimir M Shkolnikov, Evgueni M Andreev, Domantas Jasilionis, Mall Leinsalu, Olga I Antonova, and Martin McKee. The changing relation between education and life expectancy in central and eastern europe in the 1990s. Journal of Epidemiology and Community Health, 60 (10): 875-881, 2006.
[Stuckler et al. 2009]David Stuckler, Lawrence King, and Martin McKee. Mass privatisation and the post-communist mortality crisis: a cross-national analysis. The Lancet, 373 (9661): 399-407, 2009.

Socialism and direct democracy

February 3, 2017

It is a commonplace enough observation that hithertoo existing socialisms suffered from a lack of democracy, but in the sense that the word democracy is commonly understood, the observation is misleading. For the assumption is that more democracy, as commonly understood, would have been a good thing.

From the standpoint of liberal opinion there is nothing problematic about it. Liberals, quite rightly, saw that the adoption of western style democratic institutions would be the quickest way to get rid of socialism. Historical experience shows that they were dead right. As soon as multi-party elections were instated, pro-capitalist governments came to power.

Faced with this there are various possible responses:

  1. From the Blairite left, the response was welcome an unalloyed triumph for democracy. Good riddance to all that nonsense about a planned economy. We had a historic breakthrough which allowed us in New Labour to become intensely relaxed about the filthy rich.
  2. A relic Communist left, insignificant in Europe, but obviously of much greater significance in East Asia, concluded that it was a big mistake to have ever allowed multi-candidate or multi-party elections in East Europe and the USSR. So socialism was to be preserved by the only way they knew: continued Communist Party monopoly.
  3. Trotskyist left and their sympathisers in the Labour party the responded that what the USSR had actually needed was a revival of Soviet Democracy not ‘bourgeois democracy’.
  4. A final response about which I shall leave you in suspense until I have addressed the others.

Table 1: Excess deaths consequent the introduction of ‘democracy’ in Russia.

 
Year Thousand deaths Excess relative to 1986
1986 1498 0
1987 1531 33
1988 1569 71
1989 1583 85
1990 1656 158
1991 1690 192
1992 1807 309
1993 2129 631
1994 2301 803
1995 2203 705
1996 2082 584
1997 2105 607
1998 1988 490
1999 2144 646
2000 2225 727
2001 2251 753
2002 2332 834
2003 2365 867
2004 2295 797
2005 2303 805
2006 2166 668
2007 2080 582
2008 2075 577
2009 2010 512
total 48388 12436
 

What was presented by liberals and Blairites as a great triumph of democracy was viewed by millions who lived through it as a great catastrophe. The collapse of the Soviet and later the Russian economy under Gorbachov and then Yeltsin was an economic disaster that was otherwise unprecedented in time of peace. The world’s second super-power was reduced to the status of a minor bankrupt economy with a huge decline in industrial production and in living standards. Nothing brings out the scale of the catastrophe than the demographic data which show a huge rise in the mortality rate brought about by poverty, hunger, homelessness and the alcoholism that these brought in their wake (Table 1). A discipline less sure of itself than economics, might question its starting hypothesis when an experiment went so drastically wrong.

Liberal theory held that once enterprises were free from the state, the `magic of the market’ would ensure that they would interact productively and efficiently for the public good. But this vision of the economy greatly overstated the role of markets. Even in so called market economies, markets of the sort described in economics textbooks are the exception restricted to specialist areas like the world oil and currency markets. The main industrial structure of an economy depends on a complex interlinked system of regular producer/consumer relationships in which the same suppliers make regular deliveries to the same customers week in week out.

In the USSR this interlinked system stretched across two continents, and drew into its network other economies: East Europe, Cuba, North Vietnam. Enterprises depended on regular state orders, the contents of which might be dispatched to other enterprises thousands of miles away. Whole towns and communities across the wilds of Siberia relied on these regular orders for their economic survival. Once the state was too bankrupt to continue making these orders, once it could no longer afford to pay wages, and once the planning network which had coordinated these orders was removed, what occurred was not the spontaneous self organisation of the economy promised by liberal theory, but a domino process of collapse.

Without any orders, factories engaged in primary industries closed down. Without deliveries of components and supplies secondary industries could no longer continue production, so they too closed. In a rapid and destructive cascade, industry after industry closed down. The process was made far worse by the way the unitary USSR split into a dozen different countries all with their own separate economies. The industrial system had been designed to work as an integrated whole, split up by national barriers it lay in ruins.

The figures in Table 2 show how far the economy had regressed. These figures show how little recovery there had been, even after 13 years of operation of the free market.

Table 2: Output of Selected Branches of Industry in Russia in 2003 Compared to 1990 (1990 = 100)Source: Goskomstat, 2004, Table 14.3.

Total Industry 66
Electric power 77
Gas 97
Oil extraction 94
Oil refining 70
Ferrous metallurgy 79
Non-ferrous metallurgy 80
Chemicals and petrochemicals 67
Machine building 54
Wood and paper 48
Building materials 42
Light industry 15
Food 67

If the economy had continued to grow even at the modest rate of the later Brezhnev years ( say 2.5%) then industrial production would, on this scale have stood at 140% of 1990 levels. The net effect of 13 years of capitalism was to leave Russia with half the industrial capacity that could have been expected even from the poorest performing years of the socialist economy.

It is no wonder that Communist Parties in Asia took this as an awful experiment not to be repeated. The lesson that they took from it was that the political dominance of the Communist Party was essential, and that any concession to political liberalism would be disastrous. Economically and socially they were willing to concede all sorts of things: foreign investment, private business within the country, freedom to leave the country and study abroad. Officially Marxism remains the ideology in China, all students have to study some variant of it, but the actual ideological spectrum in debate, on the internet, and in academic journals runs the gamut from neo-Maoism, via orthodox Marxism, to social democracy, liberalism and neo- Confucianism [1]. If you establish a mixed economy with contesting classes then you will get mixed and contending ideologies. Within of this structure the ideologies which represent the interests of those who do best out of the social order will become more and more influential, by the same mechanisms that have always operated in socially stratified societies – the differential access to education of different social classes, and the tendency of the educated to express both their own particular interests and those of the groups with whom they seek favour.

Given this gradual ideological shift it becomes a moot point to decide what the CP monopoly achieves in the long run, apart, that is, from the obvious : rapidly rising living standards, high speed trains, peace, longer life expectancy and social stability

Reg: All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh-water system, and public health, what have the Romans ever done for us?

PFJ Member: Brought peace?

Reg: Oh, peace? SHUT UP!

([2] )

.

Western Leftist groups look at China, see the widespread corruption, exploitation of workers by private capital, the strike militancy of the workers and conclude that what you need to defend the gains of the workers there is old style Soviet Democracy.

From the liberal left we have a remedy that leads directly to the abolition of socialism and economic catastrophe. From the Chinese we have the advocacy of a political form that is at least known to be practical for three quarters of a century, but which has led to growing social inequality. From the Trotskyist left we have the advocacy of a form which leads dialectically to the very condition whose remedy it is supposed to be.

What the Western far left fails to recognize is that:

  1. The constitutions of both the USSR and the PRC were based on exactly the structure of hierarchical indirect elections that the Western Left hold up as the ideal of Soviet Democracy.
  2. That such a system of indirect election is tailor made for one party rule.
  3. That elections are anyway more an aristocratic than a democratic institution.

Indirect election has, since the days of slave society, been a system prefered by aristocrats. It should be obvious after the 2016 election in the US, that the institution of the Electoral College was tailor made to allow the popular vote to be over-ridden. The US college system only has one level of indirection, and elects only a President and vice President. The Soviet system, and the Chinese system which copied it, have multiple levels of indirection.

In China the president is elected by the National People’s Congress Chinese constitution article 79..

The National People s Congress is composed of deputies elected from the provinces, autonomous regions, municipalities directly under the Central Government, and special administrative regions, and of deputies elected from the armed forces Chinese constitution article 59..

The National deputies are elected by the Local People’s Congresses. Deputies to the people s congresses of provinces, municipalities directly under the Central Government and cities divided into districts are elected by the people s congresses at the next lower level; deputies to the people s congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships, and towns are elected directly by their constituencies Chinese constitution article 97..

At each level of the council/congress system there is a standing committee/presidium which exercises day to day power.

There are at least 4 macro levels of indirection here, 7 if you allow for the effects of the presidia, quite enough to ensure that once one political party takes hold of such a state machine it becomes almost impossible to shift it from dominance. Since the highest level congress, soviet or council has the power to amend the constitution, the party dominating it is free to adjust the constitution in such a way as to cement its rule. It can write itself into the constitution, as the 1977 Soviet constitution did with the CPSU, or it can simply rely on the indirect election system to ensure control.

I was going to write that clearly it is a non-starter to advocate a system of Soviet democracy as a remedy to the ills of China or the old USSR, since the advocated system is no different from what it is supposed to replace. But for some reason this remains obscure rather than clear. Perhaps it is because few on the left bother to look at constitutions.

The great strength of the Soviet and Chinese systems was that they allowed a revolutionary aristocracy to assume absolute power, and use that power to radically transform social relations. The weakness is that of all aristocracies, their tendency to degenerate into self serving oligarchies.

So what is left if we exclude parliamentary democracy and soviet democracy?

Well there is what people now call participatory or direct democracy, but these are misnomers. In the original meaning of democracy, there was no other kind. The democratic form of rule involved direct votes by the entire citizen body. Day to day decisions were relegated to councils chosen by a lottery process. In its original sense, the word democracy did not just mean rule by the poor, the term demos meant something closer to plebs, it meant rule by the plebs, rule by the working classes. It dispensed with professional politicians and handed all decisions over to the common people.

It is clear that neither parliamentary constitutions developed in the West, or the various Soviet/Council/Congress constitutions used in socialist countries were democracies in this sense. They all involved the election of a political elite who took the decisions on behalf of the people. In contrast to this ideas of direct democracy are slowly gaining credibility, most notably in the more frequent calling of referenda. It is in the interests of a modern socialist movement to fight for the extension of such institutions: the right of citizens to call referendum votes once sufficient signatures are collected is one aspect. Other aspects are the replacement of elected parliaments by citizen assemblies, or at the very least ensuring that a majority the parliament is made up of of citizens selected by lot.

Only selection by lot can overcome the huge built in bias that the electoral system has against people of low social status. Whatever the cause, whether the low status is because of class, sex or race, you can see that very few low status people ever get into a parliament. In consequence all parliaments are grossly unrepresentative in class and sex terms. In racially mixed societies they tend to be unrepresentative on race grounds as well.

An assembly selected by lot will be a representative sample of the different classes in society. The elites are invariably suspiscious of direct democracy. They complain that the general public are too ignorant and prejudiced to make decisions on their own behalf – far better to leave decisions to educated and cultured people. But the obvious point is that the educated and cultured will look out for themselves and can certainly not be trusted to have the interests of the poor and less educated at heart. The old 19th century socialist movements knew this and advocated direct popular legislation – an idea that was disliked by the Socialist Party leaderships even then.

Modern technology makes it much easier to hold popular votes. Almost everyone has a mobile phone, and secure, anonymous and verifiable voting can be done this way As an example the Handivote system[4,3] allows voting by SMS with people being able to check that their votes are correctly tallied..

Such digital systems can be easily extended to allow the citizens at large to make the sorts of major strategic choices needed for socialist planning. Planning is only democratic if at least the big ticket headings: health, education, investment are settled by popular decision. It is possible for voters to make numerical choices about levels of public resources. Suppose there are 3 telephone numbers that you can text for a vote on health expenditure:

xxx xxx0 means reduce it by 5%,

xxx xxx1 means leave it unchanged and

xxx xxx2 means increase it by 5%

It is clear that by averaging the votes casy you can get percentage change in health expenditure. The result is the average of what the voters want. This will, in our case, be bounded by -5% to +5%, but these bounds could be varied by those setting the vote, and, at the cost of some slight increase in complexity, a broader range of numbers to dial could be provided without changing the basic procedure.

Now suppose that there are three items to be decided on: income tax, school expenditure and health expenditure. A simple extension would be to set up 9 phone numbers for voting as follows

xxx xx00 Income tax down 5%

xxx xx01 Income tax leave as is

xxx xx02 Income tax up 5%

xxx xx10 Health down 5%

xxx xx11 Health leave as is

xxx xx12 Health up 5%

xxx xx20 Schools down 5%

xxx xx21 Schools leave as is

xxx xx22 Schools up 5%

People could then text in to express their personal decisions. The result would be to obtain an average percentage change for each particular heading. As long as sufficient people vote on each individual issue, the law of large numbers means that will get a reasonably accurate estimate of public opinion on that topic. [5] shows that an opinion aggregated from many non-experts is usually superior to that of a few experts.

2017-01-30

#1 Simultaneously voting on expenditure and taxation.

The obvious danger is that everyone votes for more expenditure and less taxation, but there are easy ways round this. Suppose that the average vote was [4, 2] indicating a 4% increase in school expenditure and only a 2% increase in taxes to cover it (let us make the simplifying assumption for now that schools are the sole form of expenditure). Figure 0.1 shows the average vote at position [4,2] and also a diagonal line representing the feasible combinations of expenditure and tax. The best choice given the constraints is labeled compromise Geometrically, the compromise is the closest point on the feasible combination line to the average vote. It is the choice which minimises voter dissatisfaction..

From a socialist standpoint it is very important that any form of participatory budgeting vote simultaneously on both expenditure and taxation. The right is willing to introduce participatory budgeting provided that it votes only on taxation since they hope, by this, to create a constant downward pressure on taxes and thus on expenditure for public services. By allowing people to simulataneously vote for increases in services and computing the compromise position you stand a good chance of preventing this.

Summary

The combination of labour value accounting, payment in labour credits, computerised planning, markets only in consumption goods, direct democracy and planned economy constitute a feasible new socialist model that builds on the experience of the past without repeating past mistakes.

The practical question is how society could move towards that. It is here that one must take seriously, but in an updated form, the old Lenin criticism of economism. The central point of that critique was that focussing on economic issues was not enough, to build a revolutionary movement it was necessary to bring to the fore the political struggle for democracy. In the context of Czarist Russia that was seen as the struggle for a republican constitution – but one still seen as parliamentary representation with universal adult suffrage. Today the struggle for democracy still has to be in the first place, but the aim has to be to overthrow existing constitutions and replace them with direct democracy.

By consistently advocating this, it should be possible for socialists to mobilise behind us people who may not share our socialist goals, but who are still still hostile to elite domination.

Once a genuinely democratic republic is established, without professional politicians, we would have the best possible environment to win support for a radical transformation of property relations.

References

[1]
William Paul Cockshott. Comments on the “China model”. International Critical Thought, 1(2):148-157, 2011.

[2]
Terry Jones, Graham Chapman, John Cleese, Terry Gilliam, Eric Idle, and Michael Palin. Monty Python’s life of Brian. Hand Made Films, 1979.

[3]
Karen Renaud and Paul Cockshott. Handivote: simple, anonymous, and auditable electronic voting. Journal of Information Technology & Politics, 6(1):60-80, 2009.

[4]
Karen Renaud and WP Cockshott. Electronic plebiscites. 2007.

[5]
J. Surowiecki, M.P. Silverman, et al. The wisdom of crowds. American Journal of Physics, 75:190, 2007.

File translated from TEX by TTH, version 4.08.

No True Scotsman theory of socialism

February 1, 2017

After posting my last article I got the following comment from Marco Procaccini:

The term “socialism,” as defined by Marxist and pre-Marxist, as well as anarchist activists going back to the French Revolution, has always been applied to any economic practice or development generally based on:

democratic control of the means of production and governance by working people and their communities, free association, production for practical use, mutual satisfaction of self-interest via cooperation, etc.–essentially a stateless classless free cooperative society based on “the free development of each as the free development of all.”. This is why socialist economists, including Marx and Engels, often used terms like “socialism” and “communism” interchangeably.

At NO TIME in history has the term defined corporate central planning or state capitalism of any kind.

This is a pretty classic example of the Alibi or No True Scotsman(NTS)1 theory of socialism popular with the American and European far left. Perhaps it is my being a true Scotsman that means I have little truck with it. The problem is that it involves a whole series of falsehoods. Marco’s version of the NTS theory has the advantage of being a reductio ad absurdam of the whole approach.

Firstly he says that at no time in history has socialism refered to central planning or state capitalism. The problem with this is that this is exactly what it has meant for almost the entire history of the socialist movement – provided that is that we assume that his derogatory term ‘state capitalism’ is intended by him to refer to nationalised industry.

He is exhibiting an extraordinary historical amnesia if he has forgotten that throughout the period from the Russian revolution down to the present, the Communist Parties world wide have used the term Socialism to refer to nationalisation of the means of production along with greater or lesser degrees of central planning. But apparently the Communist movement did not exist in historical time, or perhaps for him, history does not include the history of China, India, Vietnam, Korea etc?

Even if we take his implicit Euro-centrism seriously his claims are unfounded. It is impossible to support Marco’s view if we make reference to the programmes of real socialist parties. Let’s ignore the 20th century Communist Parties there and just look at 19th century Communism and 19th and 20th century Socialist Parties, we see that nationalisation and central planning actually represent a relatively extreme position within these parties. Many, like the Scandinavian ones, saw socialism almost exclusively in terms of providing comprehensive welfare systems, and a solidaristic wages policy[4] – ie, setting national wage rates that applied irrespective of company situation.

If we look at Socialism in Britain and France, the Labour Party and French Socialists had as explicit policies the nationalisation of industry. Each Labour Party member had the following written on their card as the party’s aim:

To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.2

There is some ambiguity of the card as to what the best obtainable system of public administration would be, the practical policy of the party was to set up national boards to run industries, and these boards were answerable to what was taken to be a democratically elected Labour government. The French Socialists also advocated extensive nationalisation[5, Part II, Chap II].

Dans le secteur bancaire et financier, la nationalisation concernera l’ensemble du secteur

Dans l’industrie, un seuil minimum d’extension du sectur public et nationalise sera atteint par les mesures suivantes :

—La nationalisation des secturs suivants:

a) Dans leur ensemble: resources du sous-sol, armament, industrie spatiale et aéronautique, industrie nucléarie, industrie pharmaceutique;

b) Danls leur plus grande partie : industrie électronique (ordinateurs), industrie chimique.

And if we go right back into the 19th century we find that the very first communist programme[2] had the nationalisation of industry as one of its immediate objectives:

The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible.

5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

6. Centralisation of the means of communication and transport in the hands of the State.

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.

The policies of both socialist and communist parties in the 20th century with respect to nationalisation were probably strongly influenced by this early document.

So we have established that both 19th and 20th century communism and 20th century socialism advocated state ownership in their party programmes. What about taxation?

Marco writes :

Finally, it needs to be pointed out specifically that tradition state ownership and taxation have NOTHING to do with Marxism–as Marx, Engels and legions of their contemporaries wrote.

The problem is that when Marx wrote party programmes, or commented on them, he said exactly the opposite. He consistently advocated an income tax [213]. When one reads how people like Marco so misrepresent him, one understands why he remarked he himself was ’pas marxiste’.

References

[1]   K. Marx. Marginal Notes to the Programme of the German Workers’ Party [Critique of the Gotha Programme]. Marx and Engels Selected Works, 3, 1970.

[2]   Karl Marx and Friederick Engels. Manifesto of the Communist Party, trans. S. Moore. Moscow: Progress.(First published 1848.), 1977.

[3]   Karl Marx and Jules Guesde. The programme of the parti ouvrier, 1880.

[4]   Rudolf Meidner. Why did the swedish model fail? Socialist Register, 29(29), 1993.

[5]   Parti Socialiste and François Mitterrand. Changer la vie: programme de gouvernement du Parti Socialiste. Flammarion, 1972.

Real problems of socialism and some answers

January 31, 2017

In the post Soviet Period the left lost confidence in socialism. This was partly a response to the immediate situation, but partly a realisation that socialist economies had real problems. Since socialists themselves had not come up with any real answers to these problems, and Western socialists never went beyond platitudes here, the arguments of Friedman and Hayek seemed to gain credibility. I will look at some of these real problems and what the potential solutions are.

 Coordination

The main criticism levelled at the socialist economies was that a planned economy was inherently less efficient than a market one, due to the sheer scale of the bureaucratic task involved with planning a major economy. If there are hundreds of thousands, or perhaps millions, of distinct products, no central planning authority could hope to keep track of them all. Instead they were forced to set gross targets for the outputs of different industries. For some industries like gas or electric power, this was not a problem. Electricity and gas are undifferentiated, a kilowatt is a kilowatt – no argument. But even for another bulk industry like steel, there was a wide variety of different rolled plate and bars, different grades of steel with different tensile strength etc. If the planners could not keep track of all these different varieties and just set rolling mills targets in tons, the mills would maximize their tonnage of whatever variety was easiest to produce.

The steel example is a little forced, that degree of differentiation was still fairly readily handled by conventional administrative means. Tonnage targets could still be set in terms of distinct types of steel. But when you turn to consumer goods: clothes, crockery etc the range of products was too big and targets were started to be set in terms of monetary output.

The plan would specify a growth in the value of output of clothing, furniture etc. What this translated into then depended on the price structure. In order to prevent other forms of gaming the plan by enterprises it was important the the prices were economically realistic. If the price for chairs is set too high compared to tables, it becomes rational for factories to concentrate on chair production.

By resorting to monetary targets, the socialist economies were already conceding part of Mises’s argument. They were resorting to the monetary calculation that he had declared to be vital to any economic rationality. Liberal economists argue that it was impossible for planners to come up with a rational set of prices, only the competitive market could do so. Planning required aggregation. Aggregation implied monetary targets. Monetary targets required rational prices. Rational prices required the market. But if you had the market you could dispense with planning. Planning dialectically implied the super-cession of planning.

It is worth noting that this is a largely theoretical argument. It was, in late Soviet days backed up with lots of anecdotal evidence, but empirical evidence for the greater macro-economic efficiency of markets even when compared to classical Soviet planning is much thinner on the ground. As Allen, [2003] shows, the only capitalist economy whose long term growth rate exceeded that of the USSR was Japan, whose own model was some way from unplanned capitalism. Compared to other countries starting out at the same economic level in the 1920s, the USSR grew considerably faster. One could argue that this was due to marcro-economic advantages of planning: that, by removing uncertainty about future market demand, it encouraged a higher level of investment. It is possible that this macro-economic advantage outweighed any micro-economic inefficiency associated with plans.

The strongest evidence that markets may perform better than plans would come from China, and that certainly the orthodox Chinese view. Their claim is that a socialist market economy avoids the macro-economic instability of capitalism whilst harnessing the micro-economic efficiency of the market. As evidence they cite a higher rate of growth after Deng’s restructuring. But China since Deng has followed a mercantilist road. It has the effect of relatively beggaring the workers of China whose products are exported to the US in return for US paper. The latter is of no benefit for the Chinese workers, though it does enable private Chinese companies to buy up assets in the US. From the standpoint of the Chinese state it is a more nuanced issue. On the one hand Chinese state companies too, can buy up overseas firms, but whether this is a long term advantage is a moot point since real goods which could have been used to improve the Chinese economy and living standards have been sacrificed.

Historically the process of having an export led economy allowed China to avoid the technology bans that the West imposed on the USSR, allowing rapid catch-up in manufacturing techniques. Now that China is overtaking the US in some areas of mass production, that advantage is less clear, and a shift towards higher domestic consumption and higher wages makes sense, and is indeed being followed in China unlike Germany. It could be that the growth advantage that China experienced post-Deng owed a lot to a new ability to import the latest productive techniques instead of micro-economic efficiency. But what is abundantly clear is that the pro-market restructuring had the effect of drastically widening economic inequalities and giving rise to a new domestic billionaire class. This in turn produces political pressure to extend private ownership and undermine the still dominant position of state industry.

So the question arises, could a planning system work in a modern economy with a highly diversified product range, and how would it overcome the socialist calculation argument of Mises. I and others have since the late 80s1 been arguing that the answer is yes.

The Mises critique of socialism focused on the need to compare the costs of alternative ways of making things. Unless you can do that you can not chose the most efficient. Our response has been not only that labour time in principle an alternative, which Mises conceded, but that with modern computer technology it is perfectly possible to maintain up to date figures for the labour cost of each input to the production process. Using these, workplaces will have data that are as good as prices for choosing between techniques.

There are limitations to labour values as there are to any scalar measure like price, since the constraints on production are multifactorial. Not only labour power, but also natural resources and ecological considerations constrain what we can make. No single scalar measure can handle this. But the problem of how to deal with multiple constraints like this was already solved by socialist economics way back in the 30s. Kantorovich came up with a completely general technique for how to meet a socialist plan subject to constraints additional to labour time2. Kantorovich’s method is an form of calculation in-kind, ie non-monetary. It was not practical to use it at the level of the whole Soviet economy during his lifetime as the computing resources were too poor, but by the 1990s computers were up to the job. You can get a good lay-person’s introduction to it in the novel Red Plenty by Francis Spufford.

So the basic problem of socialist economic calculation without money had been solved since Mises wrote. It was impractical in the USSR for two reasons: a) the computer technology was not there; b) it would have involved replacing money calculation and payment with non transferable labour accounts. This would have been a radical step towards greater social equality.

Equality

Labour time accounting demystifies or de-fetishizes social relations. Rather than relations appearing to be between people and an objective `thing’ called money, they make it evident that what is involved are people’s lives. If I get with 1 hour of social credit for each hour I work, and can for this credit acquire goods which themselves took an hour to make, then it is clear that I am participating as an equal in social exchange. If, instead, I am only credited with 40mins time for working an hour, it is clear that there is something odd going on. If the difference is made of a 33% income tax that I had a chance to vote on, that is one thing. If instead I see that someone else is getting credited with more than an hour for each hour that they work, I am going to be asking some hard questions.

Labour time accounting has a presumption of equality and equity. If one person gets credited more than they actually work, the a-priori implication is that there is something dodgy about it. Its adoption would thus involve a big pressure towards levelling. Levelling between different categories of work, and levelling between men and women. It of course eliminates completely the possibility of unearned capital income. It makes the moral presumption that labour is the only legitimate source of income. Any other income, to the old, the sick, to families with children has to be an explicit voluntary deduction from the incomes of those who work.

The significance of labour tokens is that they establish the obligation on all to work by abolishing unearned incomes; they make the economic relations between people transparently obvious; and they are egalitarian, ensuring that all labour is counted as equal. It is the last point that ensured that they were never adopted under the bureaucratic state socialisms of the twentieth century. What ruler or manager was willing to see his work as equal to that of a mere labourer?

There is nothing terribly original in this scheme: set out briefly here, but in much more detail in our other articles. It is simply a detailed and literal elaboration of the proposals Marx made in his comments on the draft of the 1875 program of the German Socialists.

The assumption is that people would have electronic labour credit cards whose credits could only be cancelled out not circulated3. You could not pay credits into somebody else’s account but you could get things form communal stores. This completely eliminates the possibility of a black market.

It is absolutely essential that distribution labour values of goods be realistic. A socialist government must avoid the temptation to undervalue necessities in the communal stores. If they are undervalued, there will be excess purchasing power in terms of labour credits. If bread used 300 million person hours to make but was sold for 100 million hours, an excess of 200 million credits would have been issued to the bakers, millers, farmers etc. Such undervaluation, we know from bitter experience, just leads to queues and apparent shortages.

If prices are equal to labour content, then deviations of sales from actual production can be used to adjust plan targets on a real time basis, reallocating labour from products whose demand falls short of production to those that are selling out.

Deviations from of distribution price from labour content would, however, still occur in a planned economy for environmental reasons. If the planning system had a constraint that total production of fossil fuel had to decline by 2% a year, then the planning authorities would be forced either to raise the distribution price of fuel above its labour content, or to ration petrol. If petrol was distributed at a premium, goods which did not contain fossil fuels would have to be distributed to consumers at a discount. There might be a case for the environmental premiums or discounts being displayed on the label.

Free communist distribution of goods and services is only viable for those goods or services for which certain special conditions are met:

  1. The actual allocation can be rationed by deliberate decisions or by queues – this is how the NHS is able to function. You can get free treatment but only if a doctor decides you need it, and you are willing to wait your turn. This rules out, for example, resources being wasted on penis or breast enlargement surgery.
  2. Where the actual usage is easily pre-calculable. We know that demand for primary schooling is set by the number of children reaching school age. Making schools free increased demand up to this limit and no further.
  3. The resources being used would otherwise go to waste. Examples are the free district heating provided in the USSR from waste heat of power stations; providing free travel to pensioners outside of rush hours; free use of Internet once the basic infrastructure has been installed.

Surplus

Socialist planned economy has a distinct form of surplus extraction. The magnitude of the surplus is determined by the planned allocation of labour between that devoted to the reproduction of the working population versus other activities. This is the inverse of the mechanism that operates under capitalism where the monetary division of the value added between wages and profits comes first. In a capitalist economy the allocation of labour between reproduction and other activities occurs as a second order effect when the wages and profits are spent. In a socialist economy it is the allocation of labour that comes first.

If the socialist country retains money, but delivers many services free, has to balance the monetary demand in the hands of workers from their wages with the amount of social labour going into consumer commodities. Since a part of the social working day had been allocated to producing free goods and services, and another part to the accumulation of new buildings, infrastructure and machinery, the disposable income of the working class had to be limited to the money equivalent of the number of hours spent making consumer commodities.

There are a number of ways this could in principle be done:

  1. By selling consumer goods at a mark-up or profit. This profit, since it accrues to state factories, can then become government revenue and be used to fund free services, accumulation etc. In the USSR this was formalized as a turnover tax levied on all government factories.
  2. By levying a sales tax, ie, one that is raised as a percentage of the selling price like VAT4. Both this and the turnover tax are indirect taxation, they differ in where they are collected: at production or at sale.
  3. By levying an income tax or poll tax on employees. This was the consistent policy advocated by Marx5.

I think that there are strong arguments to favour the last option. It may initially have been politically popular to claim that under socialism there was no need for income tax, but that is dishonest, since indirect taxation remained. Wages were still held down to a level that would allow the turnover tax to fund government services, so in terms of take home pay people were no better off. A direct deduction of income tax is more visible, but the converse of that is that something visible is easier to understand, and as a result easier to make open democratic decisions about6.

But more serious than this, the policy of holding down wages and funding public services out of profits had adverse effects on economic efficiency. Suppose that 40% of labour goes on accumulation, 30% on free services and 30% on consumer goods. It follows that the wage has to be only 30% of the real value of labour. The average wage for a 40hr week would only be the monetary equivalent of 12 hours. This made labour appear to be artificially cheap. If machinery was priced at full value, a rational factory management would use 4 workers instead of one machine and 1 worker if the depreciation of the machine amounted to 40 hours a week.

Mechanized production cost mis-valued at : 40 for machine + 12 for labour = 52

Manual production cost mis-valued at : 48 for labour

but the true relative costs of the techniques are reversed

Mechanized production true value : 40 for machine + 40 direct labour = 80

Manual production cost 4 x 40 hrs = 160 hours

So a manual process that was really twice as costly to society would be preferred to a mechanized one. Use of direct labour time calculation would of course have revealed the right answer.

The Soviet solution of a turnover tax was short term populism that hampered efficiency.

References

[Allen 2003]
Robert Allen. Farm to factory: A reinterpretation of the Soviet industrial revolution. Princeton University Press, 2003.

[Cockshott and Cottrell 1989]
Paul Cockshott and Allin Cottrell. Labour value and socialist economic calculation. Economy and Society, 18 (1): 71-99, 1989.

[Cockshott and Renaud 2010]
Paul Cockshott and Karen Renaud. Extending handivote to handle digital economic decisions. In Proceedings of the 2010 ACM-BCS Visions of Computer Science Conference, page 5. British Computer Society, 2010.

[Cockshott 2006]
W Paul Cockshott. Von mises, kantorovich and in-natura calculation. Intervention. European Journal of Economics and Economic Policies, 7 (1): 167-199, 2006.

[Cockshott and Zachriah 2012]
W Paul Cockshott and D Zachriah. Arguments for socialism. 2012.

[Cockshott 2011]
William Paul Cockshott. Comments on the “China model”. International Critical Thought, 1 (2): 148-157, 2011.

[Cottrell and Cockshott 1993a]
AF Cottrell and WP Cockshott. Towards a new socialism. Spokesman Books, 1993a.

[Cottrell and Cockshott 1993b]
Allin Cottrell and W Paul Cockshott. Socialist planning after the collapse of the Soviet Union. Revue européenne des sciences sociales, pages 167-185, 1993b.

[Cottrell et al. 2009]
Allin Cottrell, WP Cockshott, and Greg Michaelson. Cantor diagononlalisation and planning. Journal of Unconventional Computing, 5 (3-4): 223-236, 2009.

[Jones et al. 1979]
Terry Jones, Graham Chapman, John Cleese, Terry Gilliam, Eric Idle, and Michael Palin. Monty Python’s life of Brian. Hand Made Films, 1979.

[Kantorovich 1960]
L.V. Kantorovich. Mathematical Methods of Organizing and Planning Production. Management Science, 6 (4): 366-422, 1960.

[Marx 1970]
K. Marx. Marginal Notes to the Programme of the German Workers’ Party [Critique of the Gotha Programme]. Marx and Engels Selected Works, 3, 1970.

[Marx and Engels 1977]
Karl Marx and Friederick Engels. Manifesto of the Communist Party, trans. S. Moore. Moscow: Progress.(First published 1848.), 1977.

[Marx and Guesde 1880]
Karl Marx and Jules Guesde. The programme of the parti ouvrier. tomado de: http://www.marxists.org/archive/marx/works/1880/05/parti-ouvrier.htm, revisado el, 2, 1880.

[Peters 2000]
A. Peters. Computersozialismus:Gespräche mit Konrad Zuse. Vaduz, 2000.

[Renaud and Cockshott 2009]
Karen Renaud and Paul Cockshott. Handivote: simple, anonymous, and auditable electronic voting. Journal of Information Technology & Politics, 6 (1): 60-80, 2009.

[Renaud and Cockshott 2007]
Karen Renaud and WP Cockshott. Electronic plebiscites. 2007.

[Surowiecki et al. 2007]
J. Surowiecki, M.P. Silverman, et al. The wisdom of crowds. American Journal of Physics, 75: 190, 2007.

Footnotes:

Cockshott and Cottrell [1989], Cottrell and Cockshott [1993b], Cottrell et al. [2009], Cottrell and Cockshott [1993a],Peters [2000].

2 The original paper was Kantorovich [1960], I explained for a modern readership how his technique worked in Cockshott [2006].
3 For a rather old fashioned idea of how this might work read Bellamy’s utopian socialist novel Looking Backward(1888). He invented the whole idea of credit cards. His cards were based on good 19th century punched card technology. You got a new card each month, and for each purchase from a social store an appropriate number of credits were punched out from your card. The store was envisaged as a cross between Argos and Amazon.
You selected goods from a catalogue at the store, and then they were delivered direct to your house by a system of pneumatic tubes.

4 Note that the EU mandated VAT is in German mehrwertsteuer, literally surplus value tax.
5 See Marx and Engels [1977], Marx [1970], Marx and Guesde [1880]
6 How to carry out such democratic budgeting is beyond the scope of this paper but is a topic of our book- Cockshott and Zachriah [2012] and of papers including Cockshott and Renaud [2010].

What is wrong with the idea of basic income

January 25, 2017

The left movement is still stuck in a post-Soviet conjuncture. For the last 25 years it has been in an ideological hiatus, lacking any clear conception of what an actual socialist economy would be. The defeat of hitherto existing socialism in Europe obviously paralyzed the communist and social democratic parties. Each abandoned their visions of socialism and one way or another adapted to capitalism.

That fatalism seemed in the 1990s or early 2000s to have history on its side. Then came 2008, discrediting such accommodation in the eyes of a new generation. Such left revivals as have arisen since then Occupy, Podemos, Syriza the left turn in the Labour Party are, if anything, even more disoriented by the continuing post-Soviet ideological conjuncture, than the Blairites were.

Successful politics needs political economy for guidance. The old social democratic movement had Marxist economics, and then from the 40s Keynesian theory. Gordon Brown at least had his post neoclassical endogenous growth theory. What has the contemporary left got?

Academic Marxism has not been much help. Only a minority of them focus on political economy. Within that minority the focus is more on `critique’ than political economy. At best they study contemporary capitalism, but have nothing positive to say about what should replace it.

Instead we either have a series of regressions: back to Keynesianism, to a nostalgic Stalinism, or going even further back to to Trotsky, Kautsky, Marx. Even worse, we see the adoption of Hayekian doctrines like the citizen’s income.

Value form theory

I wrote earlier that academic Marxism has been of little use to the political left since it has concerned itself little with political economy. Whilst empirical economic research has been undertaken, it mainly stays at the level of interpreting the capitalist economy rather than explaining how to change it into a socialist one. If you are going to seek change, you need to study not only the institutions of capitalism but also to try and learn lessons from previous struggles to replace it. It is all well and good to have theories about capitalist price systems and the rate of profit, but if you have no theory of socialist political economy you are restricted to protest politics rather than putting forward programmes for economic change.

There is a relapse into an entirely academic ‘Marxology’, becoming expert in interpreting what Marx meant. By itself this would be a harmless, if useless, pursuit, having no more impact on politics than a life devoted to the study of Hegel or Kant. What makes it postively noxious, is that the interpretations channel as Marx by way of Hayek. The German New Marx Reading, explicitly attempts to wrench Marxist theory from its position as an ideology of the Communist movement. A key part of these positions has been a critique of what they describe as the objectivist interpretation of value, and the theory that there is a general tendency for the rate of profit to fall1. They argue that value can not exist indepently of money, that there is no value without prices, and that abstract labour is something specific to capitalist society2.

They accept on the surface, Marx’s idea that value is abstract labour time, but divorce this from the actual division of labour in production. Instead labour becomes abstract by being represented as money when a commodity is sold. In effect this removes the worker and the labour process from being the cause of value, and makes the market the cause. Abstract social labour is brought into being, in this interpretation, by the act of sale. This has certain logical consequences:

  • Labour values can never be known or determined outside of the market.
  • There is no abstract labour without a market.
  • There is therefore no abstract labour in socialist society.

This is all nice and critical, but critically it leaves value theorists theoretically defenceless if faced with the von Mises critique of socialism. He had argued that without money it was impossible to make any rational economic choices, and, in consequence a socialist economy which abolished money would degenerate into a morass of inefficiency. The only alternative to money he said, was the use of labour time, since, like money, that would allow the relative cost of two alternative ways of making something to be compared.

the labor theory of value is inherently necessary for the supporters of socialist production in a sense other than that usually intended. In the main socialist production might only appear rationally realizable, if it provided an objectively recognizable unit of value, which would permit of economic calculation in an economy where neither money nor exchange were present. And only labor can conceivably be considered as such. (von Mises, [1935] )

But labour time, Mises argued suffered from two fatal defects. On the one hand it fails to take into account natural resources, on the other it faces insuperable problems with reducing complex labour to simple labour. As such Mises rules out labour time as a basis for calculation. Let us for now ignore Mises first argument about natural resources, since we know that in practice the market economy he championed, itself leads to wholesale destruction of natural resources. If we focus on the second we see that leading value form theorists argue that only in market exchange can complex labour be reduced to simple labourHeinrich and Locascio, [2012, page 52]. So the logic of Heinrich’s position too, is that without a commodity market, there is no reduction to a single scalar measure of effort, and thus no rational economic calculation. Even the most eminent Marxist commentator implicitly lines up behind the Thatcher’s old TINA slogan ( There Is No Alternative – to the market).

Citizens income theory

Abandoning the idea of radical change in property relations, some on the left are picking up an old right wing idea that the state should pay everyone a basic survival allowance. When I was an economics student at Manchester University in the early 70s we were taught this doctrine by the monetarist Professor Laidler. The idea was popular with people like Hayek and Friedman. The argument for it was that the existing welfare state, by paying means tested benefits created a disincentive to take up low paid jobs. The answer they said, was to abolish all welfare benefits, abolish free education, and instead pay a small state stipend to everyone to enable them to survive at a bare minimum level. Parents would be given either additional cash or vouchers to pay for educating their children in privatised schools.

As far as I know, the first Marxist to endorse this approach, was another Manchester professor Dianne Elson3 (Elson, [1988,Elson, [2009]). It has subsequently been widely discussed. But from a socialist standpoint basic income is a poor policy. We will start by giving some concrete figures for what a citizen or basic income would involve today in the UK. Then we will go on to look at its effect on the class distribution of income. Finally we will contrast this neo-liberal policy to the historic aim of the socialist movement.

I make the starting assumption that the basic citizen income could not be lower than the state pension. It is proposed to abolish all other benefits including the state pension, so to prevent a deterioration in pensioners living standards this sets a floor of £150 per week. We need to work out what this would imply for tax rates.

Our initial assumption is that for a person on an average salary there should be no change to their take home pay as a result of the citizen income, that what they gained in citizen income they would pay in extra tax, whilst those on below average salary would be better off. We also assume that the threshold of £11,000 at which people start paying income tax does not change, and the £43,000 threshold at which they pay higher rate tax also stays the same.

In addition to paying income tax people have to

income tax Nat ins
First estimate Calc Calc
Average UK salary in 2016 £27,500.00
threshold £11,000.00 £8060
high rate threshold £43,000.00
Taxable £16,500.00 £19,440.00
Base rate 20% 12%
Current tax or NI paid £3,300.00 £2,332.80
Citizens income per week £150.00
per year £7,800.00
New pre tax income £35,300.00
New taxable income £24,300.00

Assume that average earner just breaks even on the citizens income. They are getting an additional £7,800 and must pay an equivalent in extra tax. We have to work out by how much the income tax rate would have to go up to take an additional £7,800 out of their new taxable pay of £24,000. They currently pay £3,300 income tax, afterwards they will have to pay £11,100.

Tax NI
Additional tax £7,800.00
Total income tax £11,100.00
New base rate of tax 46% 12%
New higher rate 66% 12%

The base rate of income tax has to go up from 20% to 46%. If we include the effect of national insurance, someone on average wages would be paying a marginal rate of income tax plus national insurance of 58%, if you add in the national average rate of occupational pension deduction of 5% you find that the marginal deduction rate on average pay would be 63%.

But what we have up to now is only a rough estimate. It is an underestimate since it fails to account for those in the working age population who are economically inactive due to child care, sickness or unemployment. I leave out pensioners here, since their £150 a week pension is already being met out of exisiting National Insurance. Currently 21.7% of working age adults are not in employment, 78.3% are in employment. So each working age adult will have to meet the citizens income of [21.7/78.3]=0.28 of an inactive person’s citizen income.

We can scale this down due to the effect of Employment Support Allowance, which is already paid to the ill or disabled, and the Job Seekers Allowance going to the unemployed. Advocates of citizen income assume that these would be abolished. So the average employed person will have to pay the difference between ESA and the new citizen income for these people.

Total employed 31500000
Total on ESA 1320000
Economically inactive 8729885
% inactive on ESA 15.12 %
% inactive who get new money 84.88 %

Adjusting for the effects of ESA and JSA gives us :

Tax NI
Inactive per worker 0.28
Fraction that is new money due to ESA 0.2352344463
which is £1,834.83
% unemployed 0.048
JSA 78
increase for each unemployed £3,744.00
Number of unemployed per employed 0.061
Cost per employed £229.52
So total additional tax £9,864.35
Total tax £13,164.35
New Tax rate 54.2% 12%
total marginal tax+ni 66.2%
Allowing for 5% occupational pension 71.2%
New upper tax rate 77.2% 12%
New upper marginal rate tax +NI 89.2%
Allowing for 5% occupational pension 94.2%

Using this we can compute the breakeven point for who will gain or loose from the scheme. Anyone with an income above £26,000 would loose.

Note that the upper deduction rate of 94% will cut in at a salary of £35,200.00. This amounts to what is effectively a confiscatory tax rate above £35K. It is clearly not worth calculating the effect of the Additional Rate which is currently at 45% on income over £150K. This would rise to 94.2% and allowing for pension deductions, deduction would be effectively 100% on salary income over £142,200. So a side effect of the citizen income is to introduce a maximum salary of around this level.

This may well be desirable on grounds of equity and social justice. It is the effects on people lower in the class structure that are more significant.

The take home pay now of a single person on average wage is £20,492. After introducing the citizen income the take home pay with citizens income and higher tax will be £17,052; clearly a substantial reduction.

A couple with both partners earning average wages would also loose out by about £6,000 a year. On the other hand, for a husband and wife in a rather traditional family arrangement, with only one partner working, there would be a £4,360 improvement in real income. It is debateable whether an income structure that incentivises women to stay at home would be a good thing.

Whilst the average wage earner will be worse off, the median wage earner will be slightly better off, by £16 a week. Recall that 50% earn below the median wage is the wage; a slight majority of wage earners would be better off.

But the political acceptability of the program is debatable. Consider pensioners first, the largest group currently relying on state benefits. The important point to recognize is the for them the citizen income simply replaces the pension on a £ for £ basis. They may well feel that having contributed National Insurance all their life, they are implicitly loosing out if every adult under retirement age gets the equivalent of their pension. It will do nothing to benefit somebody on the existing state pension, and will disadvantage all those pensioners with an occupational pension above £3,200 who will be paying the new much higher rate of income tax on their pension. Whereas a wage earner on median income £22K would be slightly better off, any pensioner whose state pension plus occupational pension was more than £11K, half median income, would be worse of. So pensioners, a group with very high voter turnout, have no reason to favor it, and a good reason to vote against it.

Next consider the impact on workers in full time employment. With a break even threshold of £26K or £500 a week, we need to see what fraction of employees would benefit and what fraction loose. We know that the median worker will benefit slightly, so that means at least 50% will gain. The latest Annual Earnings Survey for 2016 indicates that 40% of employees earn more than £516 a week, so slightly over 40% of employees will loose out. At best, it would be in the interest of a bare majority of those at work to support the measure.

The group who would clearly stand to gain are those who are of working age, but not employed. They would see a clear improvement in their income. This includes the unemployed, the disabled, and those, in the main women, who are at home looking after children.

There are 9.2 million pensioners who would be against, 9.4 million economically inactive who stand to gain and 33.6 million workers who might split something like 55/45 for versus against. On simple calculations of economic self interest a small majority 27.9 million against 24.3 million would be winners. But if one takes the differences in voter turnout – higher for pensioners than for the economically inactive, higher for the better paid than the lower paid, it is doubtful that the proposers of such a measure could pass it even in a referendum. In June last year, a considerably more generous citizens income proposal of more than £400 a week was overwhelmingly voted down in a Swiss referendum, with only 23% voting yes.

This overwhelming rejection must in part be attributed to the strong moral feeling that most workers feel against people getting something for nothing. Even if they might gain marginally, they will oppose the idea that people who do nothing will gain much more. This is a sentiment that, in the past, the socialist movement cultivated. Socialists argued that it was unjust that a few idle rich shareholders, should be paid out of the work done by others. They argued that there should be special benefits for those in need – child benefits, sickness benefit, free treatment for the sick. These arguments chimed with existing moral sentiments.

The original philosophy behind basic income proposals was the complete reverse. It came from neo-liberal economists who where absolutely fine with people getting unearned income. Their entire system of economics was a justification for unearned interest, profit and rent. They were also dead against people getting needs based benefits. The basic income proposal was a wedge to be used to destroy the existing welfare state, and the moral principles on which it stood. Once it was in place, they would go ahead with charging for all sorts of things which were now distributed according to need, and cancel existing needs based benefits. Give people enough cash to barely survive, and then leave the rest to the magic of the market. Minimum wage legislation would go, as would unemployment benefits. Since people would not loose any benefits by going to work, and since their survival was already largely subsidized by the state they would be willing to take on work for lower wages. It would be the ideal support for the gig economy of micro-jobs.

There would be a downward pressure on the lower end of the labour market. The net effect on the class distribution of income would be that those on slightly above average wages subsidize low wages, whilst low wage employers reap the benefit, something which already happened with Gordon Brown’s tax credit scheme.

There would also be a downward pressure on production, since the very high marginal rate of wage taxation needed to fund the citizen income creates a strong incentive to work shorter hours. People on part time work generally benefit, but a lot of people in full time work loose out, so they are incentivized to work part time. Combine this with economic backwardness and inefficiency that always accompany low pay rates, and you have a structure of incentives that penalizes economic growth and efficiency. Hours worked will fall, whilst productivity stagnates. Remember, it is high wages that incentivize firms to improve labour productivity. Any measure that holds down wages slows down productivity growth.

It may be objected that my entire costing has been based on two assumptions:

  1. That the cost of the citizen income must be fully funded by taxation.
  2. That the tax will be raised in the form of income tax.

Were the first criterion not met, the result would be seriously inflationary, so that is not controversial. But could the cost not be met, at least in part, out of taxes on companies, or taxes on property?

In principle yes, but in practice no. Taxes are paid by the working class, the middle class and the modestly rich, but not the super-rich. Men like Trump do not pay tax. As the evidence collected by Winters, [2011] and Piketty, [2014] make clear, in a capitalist economy wealth flows to the top, and the oligarchs are able to so write the tax rules that they pay little or no tax. They can afford to hire sufficient tax advisors, accountants and lawyers to avoid any tax net that the state tries to throw over them. Only wars and revolutions threaten their wealth.

There is a striking contrast between the basic income proposal, which aims to retain the capitalist economy, simply streamlining the welfare system, and the traditional aims of socialists:

The liberation of labor demands the transformation of the means of production into the common property of society and the associative regulation of the collective labor with general employment and just distribution of the proceeds of labor.4

The private ownership of the means of production, once the means for securing for the producer the ownership of his product, has today become the means for expropriating farmers, artisans, and small merchants, and for putting the non-workers capitalists, large landowners into possession of the product of the workers. Only the transformation of the capitalist private ownership of the means of production land and soil, pits and mines, raw materials, tools, machines, means of transportation into social property and the transformation of the production of goods into socialist production carried on by and for society can cause the large enterprise and the constantly growing productivity of social labor to change for the hitherto exploited classes from a source of misery and oppression into a source of the greatest welfare and universal, harmonious perfection. 5

The UK left are all familiar with :

To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.6

which expressed, more concisely, basically the same goals as German Socialism. The key goal was the abolition of exploitation by the abolition of the capitalist system of private ownership. Rather than redistributing income within the working classes, they aimed to abolish all property income so that the whole net product would go to the working classes.

References

[Cockshott 2013]
Paul Cockshott. Heinrich’s idea of abstract labour. Critique, 41 (2): 287-297, 2013.

[Elson 1979]
Diane Elson. Value: The Representation of Labour in Capitalim. CSE Books, 1979.

[Elson 1988]
Diane Elson. Market socialism or socialization of the market? New Left Review, (172): 3, 1988.

[Elson 2009]
Diane Elson. Socialized markets, not market socialism. Socialist register, 36 (36), 2009.

[Heinrich and Locascio 2012]
Michael Heinrich and Alex Locascio. An introduction to the three volumes of Karl Marx’s Capital. NYU Press, 2012.

[Piketty 2014]
Thomas Piketty. Capital in the 21st century. 2014.

[von Mises 1935]
L. von Mises. Economic calculation in the socialist commonwealth. In F A Hayek, editor, Collectivist Economic Planning. Routledge and Kegan Paul, London, 1935.

[Winters 2011]
Jeffrey A Winters. Oligarchy. Wiley Online Library, 2011.

Footnotes:

1Michael Roberts has a good rebutal of the argument on the rate of profit here : https://critiqueofcrisistheory.wordpress.com/michael-heinrichs-new-reading-of-marx-a-critique-pt-1/

2For an argument against their idea of abstract labour see Cockshott, [2013].

3Also a early value form theorist : Elson, [1979].

4Socialist Workers’ Party of Germany, Program,1875.

5Minutes of the Party Congress of the Social Democratic Party of Germany,1891.

6British Labour Party Constitution, 1918.


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