A Critique Of "Under-Consumption Theories"
3. Workers Under Other Capital
(workers as the sellers and purchasers of commodities)
One reason that the theory of underconsumption can appear to be correct is that for capital (a given capitalist or company), the expansion of the consumption of those workers under other capital is a preferable situation since it expands the market. The spread of the Communist Party's silly fantasy is based on this hypothesis.
For capital, the worker as a seller of a commodity and as a purchaser of a commodity are two completely different phenomenon. The worker as a seller of a commodity receives money (wage) with which to buy commodities. This sort of worker is important to capital as the seller of commodities since it means demand. On the other hand, in the case of the worker as the seller of labor power, the capitalist wants to control and restrict the price of the commodity (the wage) as much as possible because lower wages mean higher profits, and higher wages mean lower profits. The Communist Party is completely unable to understand this contradiction, or the confrontational nature of the wage system.
Marx wrote that the capitalist (especially those producing consumption goods) sees the workers under other capitalists as purchasers or consumers of his own products, and thus as being outside the capital/wage labor relation. The expansion of consumption (i.e. increased wages) appears to be beneficial. However, essentially this is a fantasy and the capitalist becomes aware of this during a crisis. The Communist Party's idea that a crisis can be overcome through increased consumption (increasing the workers' wages) is based on an absolute fantasy. Increasing wages would certainly directly increase demand for the consumption goods capitalist. However, for the individual capitalists or capital in general, increasing wages would lower the rate of exploitation and profits, and since this would in fact intensify the crisis, this is a cure (solution) that would kill the patient.
Capitalists take seriously and make a fuss over the consumption of millions of workers because they see an enormous demand. Capitalists who produce consumption goods are directly, and capitalists who produce production goods indirectly, interested in the expansion of this demand since they see this as an expansion of the market for their own products (in a sense they are correct). Ultimately, however, it is a fantasy to think that the expansion of workers' consumption (increased wages) is in the interest of capital. This is because at his own point of production the capitalist is engaged in a directly confrontational relation with the worker. In this relation (i.e. capital/wage relation), the capitalist cannot casually think that since higher wages which increase consumption is in his interest. The reality of capitalist society directly appears here in the opposition between capital and wage labor. This confrontational relationship penetrates each self. The essence of capitalist society is the opposition between capital and wage labor, not their common interest. Clearly the capitalist's hope for workers consumption is nothing but a temporary illusion, and he will soon wake up, and indeed must wake up, from this sweet daydream. Only foolish reformists, liberals, syndicalists and the JCP pick up the fantasy of the capitalists and (mis)use it for their opportunism and class collaboration.
Certainly in capitalist society the working class is an enormous power and a consumer class. Unlike slaves, the workers are formally (legally) an "economic" class (i.e. exchangers) equal to the bourgeoisie. Once outside of the employee relationship, the workers appear as the "citizen" independent of the capitalist class, or as the purchaser of capital's commodities (capital's beloved customer). Moreover, in capitalists society the working class as consumers are flattered with all sorts of words, and flooded with advertisements to tempt them to increase their consumption. It is plain to see that workers who appear on the market with money earned from the sale of their labor power form a massive demand, and that this consumption has important meaning for capitalistic prosperity. The weakening of working class consumption is considered one of the decisive causes of capitalistic depression. However, this is simply incorrect.
This is merely a concept that comes from a capitalist looking at the relationship between another capitalist and his workers. If seen from the real oppositional class relation between capitalists and workers this is nothing but a utopian concept or a fantasy. Marx discussed how this fantasy did not grasp the essential or internal relationship between capital and labor in the following way:
"Actually, the relation of one capitalist to the workers of another capitalist is none of our concern here. It only shows every capitalist's illusion, but alters nothing in the relation of capital in general to labour. Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity. But this is just how the illusion arises-true for the individual capitalist as distinct from all the others-that apart from his workers the whole remaining working class confronts him as consumer and participant in exchange, as money-spender, and not as worker." (Grundrisse, Penguin Classics p.420)
Marx next discusses the relation between the limits of consumption and crisis:
"It is forgotten, that, as Malthus says, 'the very existence of a profit upon any commodity pre-supposes a demand exterior to that of the labourer who has produced it', and hence the demand of the labourer himself can never be an adequate demand. Since one production sets the other into motion and hence creates consumers for itself is an 'adequate demand'. On one side, this demand which production itself posits drives it forward, and must drive it forward beyond the proportion in which it would have to produce with regard to the workers; on the other side, if the demand exterior to the demand of the labourer himself disappears or shrinks up, then the collapse occurs. Capital itself then regards demand by the worker-i.e. the payment of the wages on which this demand rests-not as a gain but as a loss. I.e. the immanent relation between capital and labour asserts itself. Here again it is the competition among capitals, their indifference to and independence of one another, which brings it about that the individual capital relates to the workers of the entire remaining capital not as to workers: hence is driven beyond the right proportion. What precisely distinguishes capital from the master-servant relation is that the worker confronts him as consumer and possessor of exchange values, and that in the form of the possessor of money, in the form of money he becomes a simple centre of circulation-one of its infinitely many centres, in which his specificity as worker is extinguished." (Ibid pp. 420-1)
Outside of production relations, in the sphere of circulation and the market, the relationship between the capitalist and the worker appears as a relation of mutually equal "citizens" with independent rights, and a mutual relation between a seller of a commodity and a purchaser. The essential 'internal' relation between capitalist and workers (master-servant relation) is thus abstracted and forgotten. The worker as "one centre of circulation' also has an important "social role"-the JCP has actually earnestly used such an expression-to play in this society of capital. I.e. through increased consumption the worker can make an important contribution towards overcoming the difficulties of a crisis. For the individual capitalist, other capitalist's workers are not workers but merely possessors of money, purchasers, or "citizens" who represent demand. Moreover, since every bourgeois regards the worker not as a worker whose consumption is narrowly limited by class relations, but merely as a possessor of money and consumer, and under this presupposition because production is strengthened, production easily exceeds demand and must do so. If the bourgeoisie were able to evaluate the worker "rationally" or from the total social relations, they would not view the worker simply as a consumer, and they would know that within confrontational class relations their consumption is necessarily limited. However, this rational understanding is impossible for them because they are limited by their narrow-minded class-based perspective.
If a crisis arrives, however, the brutal reality of class society immediately shakes the bourgeoisie free from all fantasies. They come to think of ideas such as the decisive importance for profits of raising workers wages or the expansion of consumption through higher wages, as optimistic foolishness or complete drivel. In other words, Marx's so-called 'immanent relations' penetrate them.
The individual bourgeois sees the workers of other capitalists as simply purchasers or customers for his own commodities. Therefore, he reasons that a raise in their income would mean increased demand for his commodities, and so he hopes for an increase in their wages and thinks that this will increase consumption and demand. However, once a depression worsens, and begins to have a direct effect on this capitalist, his fantasy that an increase in wages will expand demand is blown to shreds. Furthermore, in place of this fantasy the immanent truth of capitalism, its essential relations, are deeply felt, i.e. the truth of the opposition between the interests of capital and labor, how a rise in wages means a decrease in profit, how if this rise progresses without limit it would mean the collapse and end of capitalism. The view that a rise in wages means an expansion of consumption and demand provides no comfort because if there is no profit, it becomes impossible for capital to exist as capital. The essence of capital is production for profit, definitely not production which aims for the consumption of the mass of workers and producers. In other words, capitalism is capitalism, not socialism.
Marx's view is important since this fantasy is not only common within the bourgeoisie, but has in fact been widely circulated not only within the leftwing parties, but also within the leadership of the labor unions. They insist that the increased consumption of the workers would expand the market and is thus one important-if not the only-means of overcoming a crisis. By emphasizing the expansion of consumption would also benefit capital through the expansion of the market, they pursue collaboration with capital and speak for the common interests of capital and the workers. While berating the bourgeoisie for not being wise enough pursue a policy of common interest between all people (classes), they completely ignore the confrontational class relationship between the bourgeoisie and the working class. In fact, there is nothing more convenient for collaborationists than the fantasy that crisis can be overcome through increased consumption. This is the idea that the only thing obstructing this fabulous "win-win" policy for everyone which would overcome the crisis for the bourgeoisie and ensure wage increases for the workers, is the foolishness and stupidity of the bourgeoisie.
The SP, JCP and labor unionists should seriously ponder why the bourgeoisie wouldn't happily carry out this sort of policy if it is indeed in their own interests. In fact, the reason is not the stupidity of the bourgeoisie or their superficial understanding. The nonsensical argument advanced that chance, misunderstanding or stupidity would prevent a policy that would be rooted in the interests of all classes and control their fate is a far cry from scientific thinking (even though the expression "scientific" socialism is often uttered by the Communist Party).
The Communist Party fails to understand the essential point that the "system of consumption" has an immanent necessity for capitalism, and this cannot be removed through reforms. The attempts to change this are complete nonsense and bring about no results (in the case of the attempt to overcome a recession this effort produces the "opposite result"). The expansion of consumption of the masses is thus a dilemma for capital. Even though this is intended to overcome the recession (through the expansion of the market for capital), this is a policy which would deepen and expand the recession (because the expansion of consumption through a wage increase would decrease profits for capitalists). Marx clearly recognized that limited consumption itself (i.e. the greatest possible limitation of consumption; that is, the greatest possible exploitation of the workers) is the basis of and starting point for large profits and thus capitalist prosperity.
An increase in workers consumption means a decrease in profit. Therefore, the dilemma is that an expansion of the workers' consumption would mean a loss of the (most important) basis of capital's prosperity, and the conditions for the development of a crisis would become greater. The Communist Party has been completely unable to "solve" this practical contradiction thus far, and will be unable to do so in the future.
The Communist Party has been unable to understand that the idea that a rise in wages could expand the market and play a role in "reviving the economy" is nothing but a simple fantasy, a mistaken one-sided view within the bourgeoisie. If a crisis deepens the bourgeoisie will immediately listen to "reason" and drop this fantasy under the pressure of reality, but the foolish petty bourgeoisie (i.e. JCP) scramble to pick up this discarded illusion.
The idea that the market can be expanded through increased wages and thus a crisis-the concentrated expression of the contradictions of capitalistic production-can be combated is a bourgeois viewpoint, and moreover a temporary and superficial viewpoint.
If it were in fact possible under capitalism for the people's consumption to be enlarged to the point where profits were zero, then certainly all "insufficient consumption" could be eliminated and all crisis and depression would be finished. However, this in fact cannot and will not occur. The basis of the Communist Party's politics is the incredibly sweet fantasy (suitable for the petty bourgeoisie) regarding the capitalist mode of production which lacks an awareness that the "system of consumption" which signifies the exploitation of workers is necessary for capitalism and that essentially this base of capital cannot be alleviated.
Certainly if it were possible to expand the workers' consumption with no regard for profit, then it could be said that "insufficient consumption" in every sense could be eliminated, and capitalist recession could be solved. In that case the sublation of profit would mean that capitalism had ceased to be capitalism. However, before this stage could be reached, capital surely would have begun to counterattack. It is certainly impossible for wages to be raised to the point where the consumption limits of the workers were decisively eliminated. For this to happen the rule of capital would have to be abolished. Workers should never forget for a moment the essential limits of capital, i.e. capitalism is production for profit, not for the consumption.
The fantasy of the JCP in the end revolves around the idea that capitalism is not capitalism, and production is not for profit, but directly for consumption. As a result of this fantasy, they replace the class struggles of the workers with collaboration with the bourgeoisie and the attempt to convince the bourgeoisie to eliminate the contradictions of capitalism and to work together to obtain capitalist prosperity. In other words, raising the wages of the workers would be in the interest not only of the workers but also the bourgeoisie because the increased consumption would expand the market and thus be the path towards eliminating overproduction and overcoming the economic recession; as a result this would be a policy that would be good for all of the people. The reason why the bourgeoisie would not be aware of such a terrific position can only be explained by saying that they are dim-witted. They believe that this dogma is the truth, and that society can be saved by convincing the bourgeoisie of this. In fact, however, they don't understand the reality of capitalism and have lost all class-based perspective, and only spend their time babbling away inside their fantasy world. Their policy would never succeed because it lacks (or has "overcome") the awareness of the truth of class division and class struggle in capitalist society. Consequently, the "practice" of the JCP which is isolated from reality will inevitably collapse.
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