The Case for Participatory Socialism

The material conditions that shape political consciousness are changing. Despite the Tory election victory, politics is catching up with economics with increasing numbers disillusioned with the political system & capitalist exploitation. People no longer expect to see their standard of living improve & the younger generation are consider lucky if they have a job & a home. The system is failing increasing numbers. More than ever we need an alternative & if we present the case well we really can change the world.

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The Material Conditions

Firstly, we need to understand the economics if we want to understand the politics. Finance capital is in a precarious position. For at least the last four decades it has reigned supreme with its neo-liberal ideology based on the free movement of capital & privatisation. The problem is it has been based upon debt, & this debt has now reached unsustainable levels. The crash of 2008 showed us its fragile nature. It is once again heading for a fall.

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The Trouble With Pigs

The pigs I am referring to are the pigs of George Orwell’s Animal Farm: the Communists. The animals that think they are ‘more equal’ than others. As a ‘pig’ myself, this is not an argument against pigs. Rather, I seek to answer the problem thrown up by ‘uneven consciousness’: how to give these people the organisation structure to intervene effectively in the class struggle & to spread their revolutionary class consciousness without them becoming a class in themselves?

Pigs

As many are aware, this subject has a long history. The debate has centred upon the role of a workers’ state & the internal organisation of revolutionaries. The Paris Commune of 1871 was arguably the first ‘workers’ state’. Today revolutionary groups do not define themselves by it, but they still do in regards to the Soviet Union. For Stalinists it was a workers’ state, for many Trotskyists it was a ‘degenerated workers’ state’, for Anarchists is was a ‘coordinator class state’, for others it was a form of ‘state-capitalism’. Did the Soviet Union act in the interests of working class or not? This is an important question, but more than a quarter of a century after the fall of the Berlin Wall & almost a century after the Russian Revolution, it should surely not be a reason for revolutionaries to organising themselves in separate groups.

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Crisis Theory: Keynesians

We constantly hear the cry ‘lack of demand’. The economic crisis is ‘caused’ by a demand shortage & the ‘solution’ is more demand has to be ‘created’. Furthermore, we are in a ‘liquidity trap’ so no matter how much interest rates are lowered, businesses still do not expect to get a profitable return of their investments. Their ‘animal spirits’ are so low that government intervention is required to stimulate the economy & restore their optimism. Then capitalism can carry on in its merry way & with the right kind of government intervention the economy can be stabilised & crises consigned to history.

Keynesian Economics - sharks

Keynesianism, like the rest of modern economics, is based upon marginalism. This is a subjective theory of value that says that the price of anything is due to its relative scarcity. The ‘price’ of money is the rate of interest (r). If the expected return from capital investment is lower than the cost of money capital (r) then there is no rational reason to invest. Keynes called the expected return from capital the marginal efficiency of capital (MEC); it is the same as the rate of profit. So for there to be profitable investment & economic growth, the MEC must be higher than r. The leaders of business, entrepreneurs, are a fickle bunch according to Keynes & are prone to bouts of pessimism about the future. Consequently the MEC falls, investment slows & a crisis ensues. Marginalism, being a subjective theory, resorts to psychology to explain crises. Is this the best it can do?

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Understanding Overproduction

The key to understanding the recurrent crises of capitalism is the term ‘overproduction’.

Moneycrisis

Capitalism produces not to meet human needs first & foremost, but to make a profit. It produces commodities to sell for more money than initially spent purchasing the required inputs. Money, at its core, is nothing more than that special commodity that acts as the universal equivalent. In otherwords, one particular commodity becomes the measure of value of all other commodities. Gold & silver have traditionally played the role of commodity money. There isn’t just commodity money though; there’s also token money & credit money. Today’s notes & coins are token money, as are Bitcoins, & credit cards are the most obvious form of credit money. But to have a firm grasp on the nature of commodity production, let’s leave token & credit money to one side for the moment.

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Why Capitalism Cannot be Reformed

There are many people who regard themselves as left-wing who do not want to get rid of capitalism. Not only the right-wing of the Labour party, but also some who consider themselves to socialists. They believe capitalism can be made more equal through government action & that the post-war period demonstrates this. In my opinion, they fail to appreciate the material conditions.

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The post-war prosperity & the increasingly equality, exemplified in more equal access to health care & education, was possible due to a genuinely high rate of profit consequent upon the huge capital devaluation of the depression of the 1930’s, the capital destruction of WWII & huge increases in productivity thanks to the application of oil & gas. Unfortunately, to really grasp this point requires an understanding of how capitalism works & why it is prone to crisis. This isn’t an easy subject, but it’s worth the effort.

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