Supplement

No. 1January 25, 2019

Thoughts on the Imperialist Economy
and Its Recurring Crises and Wars

- K.C. Adams -

The aim of the imperialist economy to produce maximum private profit for the financial oligarchy generates recurring economic crises and wars. The aim is based on private ownership and control of competing parts of the economy. The socialized nature of the economy, which demands cooperation, a planned direction and modern aim, constantly rebels against the imperialist control and aim. The anarchy and competition of an imperialist economy divided into competing parts under the control of the financial oligarchy do not allow cooperation and planning to happen nor a new pro-social aim and direction for the economy to emerge and take hold.

The Constant Battle of the Working Class and
Socialized Economy Against Imperialist Control

A conflict exists in the division of the value of the social product between those who produce it, the working class, and those who own and control it, the financial oligarchy. The working class and socialized economy are in constant rebellion against the financial oligarchy over the division of the new value workers produce. The economy and the working class and their claim on the new value workers produce rebel against the expropriation of added-value by the financial oligarchy. The working class claims what belongs to it by right, and the socialized economy demands the value it needs for extended reproduction and a new direction without crises.

The imperialist economy produces for exchange-value not use-value. Social product must be sold to satisfy the aim of the financial oligarchy for maximum profit. But who is to buy the commodities when the buying power of the majority of the population is constantly restricted and the value of social programs and public services is mostly obscured and unrealized. The imperialist aim of maximum profit requires its opposite, maximum impoverishment. The working class and economy are in constant rebellion against the aim and control of the financial oligarchy.

All commodities have prices of production. The market prices for commodities must approximate their prices of production. The produced commodities must be realized (sold) so that the value contained within them can satisfy the aim for maximum profit. The division of the new value must be such that the imperialist aim is satisfied. But the aim restricts the buying power of the working people who in the final analysis must be able to realize (buy) the majority of commodities without interruption. The aim does not allow this to happen and even with unprecedented levels of individual borrowing and debt, economic crises eventually ensue such as in 2008.[1]

Division of the New Value Workers Produce

An examination of the imperialist economy reveals that the main buyers of commodities, the working people, receive in return for the sale of their capacity to work to the financial oligarchy only a portion of the new value they produce called reproduced-value. This reproduced-value, as a portion of the total value of what they produce, is insufficient to realize the majority of commodities. How is the mass of commodities and its value to be realized when the main buyers receive only a portion of that value from the sale of their capacity to work?[2]

Those who own and control the economy, the financial oligarchy, expropriate the other portion of new value called added-value. Together, reproduced-value and added-value make up the new value in commodities. The relation between the two is in constant flux depending on the organized strength of the working class movement to defend its rights and claims on what belongs to workers by right and for democratic renewal. The level of the productive forces and the international situation also play a role.

The new value along with the already-produced old value from machinery and material that has been transferred into the social product approximate the price of production. The old value consists of fixed transferred-value (the value of the consumed portion of machinery, buildings, vehicles, equipment, tools etc) and circulating transferred-value (the value of consumed material such as iron ore, copper, electricity, fuel etc).

Driven by their aim for maximum profit, the oligarchs are in a constant battle to reduce the reproduced-value the working class claims making the problem of realization of social product worse. This constant downward pressure on the total reproduced-value reduces its size in relation to new value and the total of prices of production. The downward pressure is on both individual reproduced-value such as wages and benefits, and on social reproduced-value such as free universal social programs and public services, including public health care and education, government guaranteed defined-benefit pensions, and compensation for unemployed and sick and injured workers etc.

This creates a dilemma. How can the portion called reproduced-value, which the working class claims, purchase the majority of social product? The aggregate reproduced-value in the imperialist economy is less than the aggregate new value and prices of production. The reproduced-value that the working class claims from selling its capacity to work is always less than the aggregate market prices needed to realize the aggregate production in the economy. What portion of the social product the reproduced-value can realize is something of a crapshoot and always under pressure, an aspect of the economic anarchy that exists under imperialism. The financial oligarchy and its expropriated added-value have to make up the difference if all social product is to be realized but this is not possible for many reasons that can be elaborated.

The difference between the aggregate reproduced-value and market prices is one cause of recurring crises and subsequent destruction of productive forces. This contradiction, compounded by reckless money lending, exploded into a major global economic crisis in 2008 and all signs point to another one occurring in the near future.

The imperialist economy is incapable of realizing the aggregate production of goods and services. The financial oligarchy confronts the problem in its inimitable way by trying to profit from it through reckless lending of money to individuals and business. This may postpone the crisis somewhat but in doing so makes it that much worse when it happens causing widespread destruction of the productive forces.

Why Are Economic Crises Always a Threat and
Seemingly Impossible to Avoid?

The problem arises firstly because ownership is private while the economy is socialized. The actual producers are deprived of the control they require to bring the modern economy of industrial mass production under conscious control of the human factor/social consciousness to benefit the people and their society.

The private owners expropriate as private profit as much of the new value as they can. The private owners amass this social wealth and do with it what they want in contradiction with the needs of the people and the socialized economy. Taking this added-value workers produce out of the economy denies the economy the ability to realize production, meet the claims of the working people from birth to passing away, engage in uninterrupted extended reproduction and provide the resources necessary to solve social and other problems.

The amount of value left in the economy is less than the amount needed to realize all production, a factor for recurring crises and destruction of the productive forces. The control of the financial oligarchy also denies the working class the opportunity to break with the old and move the economy in a new direction with an aim to produce goods and services to meet the needs and well-being of the people and humanize the social and natural environment.

Trend Towards a Lower Rate of Profit

Several factors aggravate the contradiction in the imperialist economy driving it towards crises. One is the trend towards a lower rate of profit due mainly to the improvement of scientific technique and productivity. Rate of profit is governed by the amount of already-produced value required to produce social product, the old value, in relation to the new value workers produce. With advances in productivity, the old value transferred from machines and material becomes a larger portion of the total value of the social product, its price of production, and larger in relation to new value.

The more machinery and material are used in production relative to the human factor, the lower the rate of profit. The financial oligarchs love new technique and productivity if they can drive competitors out of business and extend their private empires but the lower rate of profit drives them crazy and into anti-social campaigns to lower the claims of the working class for reproduced-value, reckless state-organized schemes to pay the rich and towards the parasitism and decay of constant circulation and seizure of already realized value through the selling and buying of stocks and other financial instruments and to wage war for world hegemony and control using an ever-expanding war economy.

The Anti-Social Offensive to Drive Down Reproduced-Value

The private owners of parts of the economy want to buy the capacity to work of their own workers at the lowest possible price. The owners do not consider the overall effect of this on the economy; they are mostly concerned with the part of the economy that they own and control. They do not want to know the damage they are doing to the economy as a whole. Coupled with this are their efforts to destroy their competitors through manipulation of prices and flooding the market with particular social product.

A similar issue arises with the broad anti-social offensive of the ruling elite to drive down the aggregate value available to the working class, which has been the case now for decades. The aggregate new value available to the working class is the sum of individual and social reproduced-value. The anti-social offensive seeks to reduce the social reproduced-value available through social programs and public services and transfer it to the financial oligarchy. The oligarchs do not want to see or know that free universal social programs to guarantee the rights of the people, including public health care and public education, state-guaranteed defined-benefit pensions and free public services such as mass transit, parks, recreation and youth programs bring an element of stability to the economy and are an antidote to economic crises as they are not dependent on the anarchy of the market. Those public programs, which meet a perceived need, anticipate a different kind of control and aim of the socialized economy where the actual producers plan production according to the needs of the people.

The financial oligarchy is adamant to retain its control over the economy regardless of the problems this creates. It refuses to have in existence any economic forms unless it can expropriate a portion of the new value as private profit. The oligarchs gauge the health and success of the economy not by any objective measure but from their own subjective outlook of whether the rich are becoming richer and their empires more powerful.

Unproductive Sectors and Removal of Value from the Economy

The financial oligarchy takes new value out of the economy leaving it starved, weak and prone to crisis. Stupendous amounts of value taken out of the economy go to feed the unproductive sectors such as the military and police. Much of this value comes from taxation on the working people through personal income tax, property tax and user fees of all kinds, further denying the working class the reproduced-value it needs to realize the majority of goods and services it produces, and denying society the new value it requires to solve its problems.

The problem under imperialism of realizing social product as exchange-value rather than organizing its direct distribution as use-value according to the needs of the people and society necessitates a vast retail and wholesale sector and advertising to sell commodities in the market. These sectors are necessary to turn the use-value of social product as itself into exchange-value represented as money before reforming itself as use-value.

The process has the appearance of being entirely necessary and the oligarchs declare it positive, allowing people an element of choice. Hidden behind the self-serving ideology of the financial oligarchy is the fact that the process is unproductive and to exist requires value to be transferred from the productive industries. The retail and wholesale sectors generally do not produce value and need a transfer of new value from the productive sectors to function. The retail and wholesale sectors drain new value from the productive industries with only some of it going to the retail working class for the sale of its capacity to work. Contrary to its stated purpose and appearance, the existence of the vast retail sector and advertising aggravates the difficulty of realizing and distributing social product because less value is available to do so; it also reduces the amount of value available to the people and society to solve their problems and is yet another factor causing the constant destruction of the productive forces and recurring economic crises.

Export of Social Wealth

The export of social wealth out of the economy is a prominent feature of imperialism. Social wealth under the control of the financial oligarchy seeks the greatest return, which can be anywhere in the world. Extended reproduction and stability of the economy where workers have produced the value is not the aim of the oligarchs in control of the social wealth. The ruling elite in control of the domestic and foreign-owned enterprises expropriate added-value and use it in ways that serve their private interests and empires. They have even seized control of the saved social wealth of the working class in pension, mutual and other funds and manipulate them as if they were their own to serve their narrow private interests.

The removal of value out of the economy can be particularly damaging in regions where the economy is dependent on a particular industry. The value workers produce is not used to diversify and stabilize the local and regional economy leaving it particularly vulnerable to crises in a specific industry such as oil and mineral production, forestry, manufacturing and even agricultural and fishing sectors.

The problem of value leaving the economy is growing with the use of newly developed scientific technique. Software companies centred mostly in the U.S., such as Uber and Lyft, are using applications to employ global workers in a growing number of fields or to traffic and contract out to other buyers their capacity to work. The money in payment for services or for a trafficked worker flows from a particular region to San Francisco or wherever the software company is located. Only a portion goes back as reproduced-value to the locale where the work was performed in payment for the capacity to work of the workers. In some cases this amount does not all go to the particular worker but to a worker trafficking or contract company, while certain amounts may go to pay for fixed and circulating transferred-value used during the work such as vehicles and fuel.

This practice directly drains value out of countries and regions and concentrates it in the hands of a few in the U.S. or wherever those companies are centred. The existence of these software application practices and others, such as contract companies trafficking workers even to public enterprises, trample on the rights of workers, exacerbate economic crises and reveal the absence of a public authority taking these issues seriously and acting in the people's interest. This reflects the reality that governments have become representatives of supranational private interests in opposition to the people and their economy.

The phenomenon of taking value out of the economy has reached unprecedented proportions for various reasons not the least of which is the parasitism and decay of the financial oligarchy and its schemes to extract money from every cell of the economy. The contradiction in the imperialist economy leading to recurring economic crises is compounded with the trend towards the concentration of social wealth in fewer and fewer hands of the financial oligarchy and the converse impoverishment of greater numbers of working people and their growing insecurity.

The Necessity for a New Aim and Direction for the Economy to
Serve the Well-being and Needs of the People and Society

A new aim and direction for the economy under the control of the actual producers would begin to solve the country's economic and social problems. This requires democratic renewal and the empowerment of the working people using new political and economic forms and institutions of their own creation.

The immediate aim of working people is to combat the anti-social offensive and downward pressure on reproduced-value and attacks on workers' rights. The working class demands increased investments in social programs and public services, a stop to paying the rich, a reversal of privatizations and a moratorium on servicing all public state debt.

The public authority must create universal free public health care, education, transit systems and other public services with public ownership and enterprise. The workers themselves in their public sectors must be in control with public ownership of all aspects of their operations from construction, supply of machines and material, including pharmaceuticals, maintenance and management. The workers themselves must assure the realization of the value they produce with value in exchange coming from the other sectors and enterprises in the economy that consume their social product, especially the increased value of educated and healthy workers. The workers themselves must decide what new investment is needed to satisfy the needs of the people for the social product they produce in consultation with others. Public enterprises should be created to build and maintain all necessary infrastructure with the goal of using machinery and material produced in the country.

The public authority must impose a moratorium on servicing the public state debt at all levels and investigate the legitimacy of any interest payments. All new public borrowing from private moneylenders should be forbidden. The state at all levels should borrow from itself with future production and social wealth as guarantor of payment of debt.

All state payments to the rich and their private enterprises should stop. All private enterprises must exist and sustain themselves on their own merits and meet their obligations to realize all value they consume, including from public infrastructure and the social reproduced-value of their employees. Any private enterprise central to the economy that is in financial trouble should be seized without compensation to ownership and turned into a public enterprise that meets all its obligations to its workers. All other bankrupt enterprises must, as a matter of course, first use whatever assets they have to meet their obligations to their workers.

No private enterprise should be allowed to take social wealth out of the country in any form. All payments for goods and services sold in the country must be transacted in the country and remain in the country. All goods and services sold on the Internet must first be situated in the country through international trade before being sold to individuals or enterprises. The wholesale sector must gradually come under the control of a public entity with prices objectively verified according to their prices of production. International trade must also come under a public authority with the goal to enforce all international trade according to the principles of mutual benefit and development and friendly relations among the peoples of the world.

All foreign military operations must cease with all troops and equipment returned to the country to be reorganized for defence against imperialist attacks. No public authority should be allowed to contract services with a private security, police or military enterprise. All military and police equipment must be made in the country through public enterprise.

All state attacks on the working class and its efforts to organize itself and defend its interests must stop.

Note 

1. A mitigating factor for economic crises in Canada is the more than 300,000 new immigrants arriving every year who mostly are at the peak of their working lives and often already highly trained with some bringing accumulated social wealth. They immediately need places to live and other already-produced social product to survive, which means they must buy available social product. As they are integrated into the working class they begin to produce value and claim reproduced-value in exchange for their capacity to work. The continuous increase in working-age workers through immigration, whom the Canadian economy in most cases has not had to nurture and educate since birth, appears to moderate somewhat the tendency towards broad general economic crises during this period, especially in the largest metropolitan centres of Toronto, Montreal and the BC lower mainland. This phenomenon has to be further investigated.

2. International trade does not help in this regard as Canada has consistently had an annual negative balance of trade since 2009. This means the value of social product imported into the country is greater than the value of social product leaving the country as exports.

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