Revolutionary Flows of Value in the Macroeconomy
In continuation from the last two essays looking at the macroeconomics of class struggle (#1) (#2) we will try to describe the process of revolution within the framework as developed so far.
The old acrimonious accusations between so-called “Reformist” and so-called “Revolutionary” positions are counter productive.
The reformist strives to improve certain conditions within the current society. A revolutionary strives for a complete transformation of society. In the context of the struggle against economic exploitation, a reformist fights for wages and benefits by organizing collectively and politically against capital, while the revolutionary organizes collectively and politically towards to abolition of capitalism.
Reformists argue the revolutionaries are unrealistic and divisive, while revolutionaries consider the reformists delusional and as simply serving to preserve capitalism.
In many cases, both are right.
Utopianism (#3 #4) is rampant among reformists, making& much of what is proposed among proponents of so-called “Alternative Economics” utterly nonsensical.
However, one must differentiate among those engaging in direct struggle for wages and benefits, that is, those who recognize and acknowledge class conflict, and those who, as Marx wrote, “want to improve the condition of every member of society, even that of the most favored. Hence, they habitually appeal to society at large, without distinction of class; nay, by preference, to the ruling class. For how can people, when once they understand their system, fail to see it in the best possible plan of the best possible state of society?” That is, those that “reject all political, and especially all revolutionary, action; they wish to attain their ends by peaceful means, and endeavor, by small experiments, necessarily doomed to failure.”
And conversely, certain kinds of nihilism and disassociation are rampant among revolutionaries. A tendency to mock and often even hold in contempt all those who are actively trying to improve the conditions of life within capitalism, sometimes with the extremely vulgar belief that to abolish capitalism we must not improve the conditions of life within it, or even actually celebrate its further decline, for only when the conditions become so miserable that they become unbearable will the masses rise up and abolish capitalism!
Thus, those trying to improve the conditions of life are actually counter-revolutionaries, and those remaining aloof and inactive are the true revolutionaries!
Just as much as Utopianism is to be rejected, this view, what we might call “Cataclysmism” must likewise be rejected.
Neither waiting for the collapse of the ruling class, nor appealing for their mercy will lead to communism. Social collapse is much more likely to lead to despotism and fascism than communism. Appeals will fail because the ruling class is compelled to protect their privilege by any means necessary, just as the workers are compelled to keep working. If they fail to do so, they lose their privilege, not to the working classes, but to competing elites.
Any realistic path to overcoming economic exploitation requires both reform and revolution.
Which brings us back to Macronomic Identities.
Our capacity to change society begins with what I have described as “The social capacity of workers to invest” and identified macroenomically as Iw.
If Iw is zero, we can not change society at all, because we are not able to retain any more wealth than is required for our own subsistence. Thus we would have no wealth available to apply towards organizing collectively or politically towards anything at all, only just enough to toil another day.
The working of the capitalist labour market will always push Iw toward zero, thus only through political struggle is Iw kept above zero. Our revolutionary capacity depends on pushing for as much reform as possible, whatever serves to increase wage levels and benefits gives us more left over to invest towards revolutionary aims.
However, such reforms will not serve our purposes unless they come with revolutionary aims. Increases in wages and benefits are easily absorbed in capitalist consumption, often simply in increased rents, if not intentionally intvested in worker’s productive capacity.
We can understand flows between modes of production similar to the way that imports and exports are understood.
Returning to our basic macroeconomic identity, W + P = C + I, if we want to factor in imports and exports we can say that W + P = C + I + N, wages plus profits are equal to Consumption plus Investment plus net exports, that us exports minus imports. This allows us to look at the macroeconomy of one country within a global context that includes other countries.
A country can increase it’s wages and profit above what it’s own consumption and investment can fund when it has a trade surplus because the consumption from other countries are funding wages and profits within the country. However, at the global level net exports must always be zero, so a trade surplus in one country implies a trade deficit elsewhere.
When a country has a trade deficit then N is negative, meaning that the country’s total wages and profits are below it’s consumption and investment. This naturally means that the country is building debt and thus, such a situation is not normally sustainable. The economy of the country with a trade deficit is shrinking relative to the economy of the country with the trade surplus.
We can look at intermodal economic flows in the same way.
We can define the capitalist sector of the economy with P + Wm = Cm + Ip + Nm, or profits plus wages of workers working for capital equals consumption of the output of capital (market consumption) plus investment derived from profit plus net intermodal consumption. That is, the “exports” from the capitalist sector to the communist sector minus the “imports” from the communist sector to the capitalist sector.
Whenever money earned in the capitalist sector is used to consume wealth produced in the communist sector, the net effect is that the capitalist sector shrinks relative to the communist sector, and vice versa.
Conversely, we can define the communist economy as Wc = Cc + Iw + Nc, that is wages of commons-based producers are equal to commons based consumption plus workers’ investment plus net intermodal consumption.
Of course, Nm + Nc = Zero.
Thus, economic reformism is only to be dismissed with it simply increases Cm and thereby does not change the balance of economic power, while a revolutionary must strive to push Nc above zero, for if it can be sustained as such then this means the inevitable disappearance of the capitalist sector.
To abolish capitalism and replace it with a commons based economy we need to build an intermodal trade surplus.
I’ll be at Stammtisch as usual at 9pm (#5). Please come!