Economic interest and politics

Up to this point, we have focused on the formation of conscious classes, classes aware of their position in an objective structure of production. The existence of classes that are aware of their collective condition is seen as a prerequisite to political action, thus to political economy.

In this section we consider three ways in which political economy can be discussed in the Marxian tradition: revolutionary politics, the politics of class compromise, or social democratic politics, and Marxian state theory. Each of these foci identifies a distinctive way in which politics and economics come together in Marxian theory.

Marxian theory is well known for its theory of revolutionary politics. The theoretical basis for this work is set out by Marx and Friedrich Engels in The Communist Manifesto (1848) and by Marx in Capital (1867). In these texts, Marx identified the conditions immanent in capitalism that would lead to a revolutionary consciousness among workers and lay the foundation for revolutionary actions that entail seizing and destroying state power.

In developing his theory, Marx attempted to explain revolution by refer­ence to the laws of motion of capitalism per se, independently of the particular histories, class situations, and political institutions of different countries. Starting from the same point - the analysis of market capitalism - Marx differed profoundly from the classical economists in his assessment of the durability and self-organizing character of capitalism. Not only were capitalist markets not self-organizing, they contained the very forces that would even­tually bring about their demise. These forces were identified and developed in “The General Law of Capitalist Accumulation” ([Capital, Vol. I, 1867], 1967a). The same forces that propelled capitalist development also prepared the way for labor’s revolutionary potential.

According to Marx, capitalist development involves the production of com­modities (goods exchanged on markets) whose value is enough to reproduce la­bor and capital in their original state (simple reproduction) and then some. The additional amount is surplus, which can be used in a number of ways, includ­ing additional investment in productive capital, that is, accumulation. In ad­dition to the expansion of capital, absolutely and relative to labor, capital also becomes more concentrated; that is, it resides in fewer and fewer economic units of a larger size. Marx summarizes the process this way:

The cheapness of commodities depends, ceteris paribus, on the productiveness of labor, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under normal conditions. The smaller capitals, therefore, crowd into spheres of production which modern industry has only spo­radically or incompletely got hold of.... It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish. (Marx, [1867], reprinted in Beer, 1955:76-7)

If the long-term tendency is for capital to increase, the consequences for labor are important. As capital advances, it displaces more and more workers, creating an “industrial reserve army” of labor. This reserve army continually bids down the wages of workers, since there are many willing to work for less wages than those employed. And, as capital becomes more concentrated, workers are drawn closer together in large factories and urban areas. This leads to a better collective understanding of their class situation and makes it easier to organize politically. We explore these points below.

According to Marx, the capitalist’s effort to increase his profit has additional and significant harmful effects on the ability of workers to satisfy their ma­terial interests.

The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labor, the greater is the industrial reserve army. The same causes which develop the expansive power of capital, develop also the labour-power at its disposal. The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army in proportion to the active labour­army, the greater is the mass of a consolidated surplus-population, whose misery is in inverse ratio to its torment of labour. The more extensive, finally, the lazarus- layers of the working class, and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation, (p. 644, italics in the original)

Marx goes on to claim that this “law” “establishes an accumulation of misery, corresponding with accumulation of capital. Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slav­ery, ignorance, brutality, mental degradation, at the opposite pole” (p. 645).

The accumulation of capital also affects the differences among workers.

Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. (Marx, 1967a:763)

To summarize, Marx’s theory of revolutionary politics provides an account based on capitalism’s internal laws - that is, laws that flow from the nature of capitalist economy itself. This account includes an explanation of why capital expands, how it concentrates in certain industries and firms, and how it displaces workers. On labor’s side, Marx explains unemployment, low wages, the doing away with differences among particular labors, and the coming together in cities and factories and the development of revolutionary consciousness.

Marxian economic theory provides at least an explanation of the revolu­tionary situation, if not the specific politics of revolutionary activity. Some “analytic Marxists” (or rational choice Marxists) see a collective action prob­lem in the revolutionary situation. They do not necessarily disagree with Marx’s explanation of why capitalism (that is, workers in the capitalist econ­omy) is ripe for revolt.

It is better for an individual worker not to participate in revolutionary activity while others do. The individual then free rides on the collective benefit, presuming there is one. It is true that revolutions are not spontaneous and that situations characterized by widespread grievances do not necessarily erupt into revolutionary violence. The debate over which model of revolu­tionary behavior to apply includes both individual rational choice models and models that rely on group identification and solidarity (see Booth, 1978; Roemer, 1978; Taylor, 1988). Marx’s main contribution is not in the area of the proximal causes of revolution, or the immediate factors facilitating (or obstructing) political organization. Instead, Marx tried to show how the conditions for revolution - polarized classes, concentration of capital, un­employed and low-paid workers - were endogenous to capitalist development.

Marxism and social democratic politics

To many who subscribe to Marx’s analysis of the laws of motion of capitalist economy, violent revolution is the inevitable outcome. Classes are irrecon­cilably opposed to one another and capitalist development “merely” accents these differences and renders them visible. To others, even some who sub­scribe to Marx’s theory of capitalist development, revolution is not the only possible outcome. Improvement of the workers’ lot could take place through social democratic methods. This strategy involves worker participation in interest groups, parties, and electoral-legislative processes. The goal is to alter the position of labor and capital from within, by using established institutions and practices of political democracy.

Social democracy differs from revolutionary politics in that it attempts to achieve its goals by peaceful rather than violent means and from within (in established “bourgeois” institutions) rather than without. The social dem­ocratic route does not provide an unequivocal answer to the issue of whether private property is to be supplanted by socialism through democratic means or whether the purpose of participation is simply to reform the system, to “use” it to extract a larger share of the benefits capitalism creates.

It is noteworthy that during the latter half of the nineteenth century and first part of the twentieth, many socialists believed their advent to power followed logically from the development of capitalism: The growth of capital and its technical sophistication assured that more workers would be thrown out of work than would be hired to tend new machinery. In other words, proletarianization was proceeding apace. As Przeworski puts it:

Those who led socialist parties into electoral battles believed that dominant classes can be “beaten at their own game.” Socialists were deeply persuaded that they would obtain for socialism the support of an overwhelming numerical majority. They put all of their hopes and their efforts into electoral competition because they were certain that electoral victory was within reach. Their strength was in numbers, and elections are an expression of electoral strength. Hence, universal suffrage seemed to guarantee socialist victory, if not immediately, then certainly within the near future. (1985a: 16­17)

While many socialists continued to believe in the inevitability of revolu­tionary change, others experimented with a different brand of social democ­racy, one where workers permanently accepted capitalism as the framework for economic action and confined their struggles to improvements within this system. The emphasis in this reformist strand of social democracy is on class action - in the workplace and electoral arenas - to garner a larger share of the product consistent with a large economic pie. Benefits pursued could include higher wages, job security, pensions, control of work, and so on.

In sum, social democracy avoids many difficult questions associated with violent revolutionary change, such as what happens apres la revolution. It also avoids problems inherent in radical redistributionist strategies, particularly the accumulation (investment) crises that such uses of the surplus foster (Weisskopf, Bowles, and Gordon, 1985). Workers may gain in the short run only to see the size of the economic pie dwindle in the long run. And one can question whether such strategies are available to labor in an increasingly open and competitive world economy, where, if workers in one country take a larger share, they will lose out to more abstemious rivals.

The main idea of the reformist social democratic approach is to foster the material interest of workers within the framework of capitalism and liberal democracy. Its attempt is to “tame” capitalism, to make it beneficial for more people, not just a narrow capitalist class. The core belief is that the welfare of citizens (workers and capitalists) can be advanced “by gradually ration­alizing the economy [so that] the state can turn capitalists into private func­tionaries of the public without altering the judicial status of private property” (Przeworski 1985ar40).

Marxian state theory

The third type of political economy we discuss centers on Marxian theories of the state. How does the state, considered as government or authority system, relate to the economy under capitalism? The Marxian interpretation of the state consists of a series of variations on a central theme: the necessity that social order (and cohesion) be maintained where the social conditions of persons set them into fundamental opposition. Classic statements of this theme appear in Friedrich Engels’s The Origin of the Family, Private Property and the State ([n.d.] 1984) and in V. I. Lenin’s State and Revolution (1932). Lenin sets out from the following formulation of Engels:

The state is... by no means a power imposed on society from the outside.... Rather, it is a product of society at a certain stage of development; it is the admission that this society has become entangled in an insoluble contradiction with itself, that it is cleft into irreconcilable contradictions which it is powerless to dispel. But in order that these antagonisms, classes with conflicting economic interests, may not consume themselves and society in sterile struggle, a power apparently standing above society becomes necessary, whose purpose is to moderate the conflict and keep it within the bounds of “order”; and this power arising out of society, but placing itself above it, and increasingly separating itself from it, is the state. (Quoted in Lenin, 1932:8)

We must bear in mind that the “order” that the state preserves, protects and corresponds to the interests of one class and thus denies and leaves vulnerable the interests of the other. By protecting a particular kind of order the state works for one class and against the other.

According to Marx, the state is an organ of class domination, an organ of oppression of one class by another; its aim is the creation of “order” which legalizes and per­petuates this oppression by moderating the collisions between classes. (Lenin, 1932:9)

To summarize:

1. Irreconcilable conflict exists between the economic interests of classes. This conflict arises within society and is based upon its defined social po­sitions.

2. This irreconcilable conflict threatens social order.

3. Social order means a social organization designed (so to speak) to work to satisfy the economic interests of one class and not the other.

4. Given irreconcilable conflict and the oppressive character of the social order, preservation of order is maintained against the interest of one class. Thus, the social order must oppress one of the two classes that compose it.

5. The state, or organ that maintains order, is an organ of class oppression.

A theory of the state that arrives at a conclusion such as this seems radically different from other theories of the state. Close examination indicates, how­ever, that the key difference has less to do with the way in which the state acts and much more to do with a different understanding of society. The pluralist theory would clearly break down in the face of a polarization of interest groups such as that suggested in the Marxian theory. Indeed, the idea of a repressive state can hardly be avoided once we grant that society consists of groups whose fundamental interests cannot be reconciled. In the Marxian theory, a world in which pluralism applies needs no state, “the state could neither arise nor main­tain itself if a reconciliation of classes were possible” (Lenin, 1932:9).

The Marxian formulation leads in the following direction. Objective di­visions in society define the agenda for, and the reason for the existence of, the state. The state is an organ that acts forcefully against a part of society; it is not equivalent to “government”; it does not calculate, aggregate, or transmit preferences. But, while the state works in the interest of part of society (one social class), it does not do so directly, as would be implied for example by the idea of the state as an “instrument” of class rule. Instead, the state works to maintain a defined social order that favors one class over another (see Poulantzas, 1973:50-4). Within that order, satisfying their in­terests is something the members of the favored class do on their own (at least under normal conditions). In principle (though not necessarily in all cases) one class does not use the state to oppress the other even though the state is an organ of class oppression. This may seem unnecessarily convoluted, but it is important to understand the way in which the state goes about its business and the specific sense of class oppression the Marxian theory con­nects to it. As one Marxist puts it:

A given kind of relations of production may be reproduced without the exploiting (dominant) class defined by them being in “control” of the government in any usual and reasonable sense of the word, even though the interventions of the state further and/or allow these relations of production to be reproduced. And yet the fact that a specific form of exploitation and domination is being reproduced, is an example of class rule and is an important aspect of power in society. (Therborn [1970] 1982:233, italics in original)

If we follow this interpretation, we cannot treat the state as an instrument of class rule for a striking reason. The capitalist class, partly for reasons discussed in the previous section, lacks an adequate sense of its unified interest to act as a single agent capable of using an instrumentalized state. As Therborn puts it, the capitalist class “is not a unified power subject” (p. 244). The inability of the capitalist class to find its unified interest means that a state, autonomous from the standpoint of individual capitalists or groups of capi­talists, must act for a class that cannot act for itself:

The bourgeoisie’s incapacity to raise itself to the strictly political level stems from its inability to achieve its own internal unity: it sinks into fractional struggles and is unable to realize its political unity on the basis of a politically conceived common interest....

What then is the role of the capitalist class state in this context? It can be stated as follows: it takes charge, as it were, of the bourgeoisie’s political interests and realizes the function of political hegemony which the bourgeoisie is unable to achieve. But, in order to do this, the capitalist state assumes a relative autonomy with regard to the bourgeoisie. (Poulantzas, 1973:284-5)

While the capitalists exist, as we have seen, implicitly as a class within society - their social condition defines a common purpose - they do not succeed in coalescing into a unified political force. In a sense, the capitalist class exists as a politically conscious agent only in the form of the capitalist state, which, however, is relatively autonomous with regard to that class. This can make it difficult for us to find the capitalist class as such and raises questions about the sense in which the capitalist class can be said to exist. If the capitalist class cannot define its agenda and establish itself as an agent outside the state, the state cannot be its instrument and cannot act according to the dictates of its private interest. The capitalist class does not tell the state how to define its agenda, how to define the “order” that the state protects. This means that the state must define and ensure this order. And this means that the state defines the political interests of the capitalist class whose interests determine state action and policy.

The Marxian approach to political economy, as we have characterized it, attempts to deal creatively with the relationship between the state and the economy. On the one side, it insists that the ends of the state have their roots in class (and thus private) interests. This insistence sustains the idea that the state works to perpetuate a social order based upon the exploitation of one class by another and in this sense works in the interests of a particular class. This makes the economy dominant. At the same time, the Marxian approach maintains that the interest protected by the state is not that of any one capitalist (for example, in enhancing the profitability of his own enterprise), but that of the capitalist class, that this interest might not be recognized by the capitalists involved, and that its defense might even adversely affect the profitability of some individual capitalists. What the state does to defend the interest of the capitalist class might even affect adversely the material con­dition of capitalists and benefit workers. As Poulantzas puts it:

[The] state, by its very structure, gives to the economic interests of certain dominated classes guarantees which may even be contrary to the short-term economic interests of the dominant classes, but which are compatible with their political interests and their hegemonic domination.... this simply shows that the state is not a class in­strument, but rather the state of a society divided into classes. (1973:190-1; see also pp. 283, 301)

Understood in this way the class interest defended by the state is not, at least in the first instance, a material (or narrowly economic) interest. This means that when the state acts as agent of a class in this sense it represents the political rather than material interests of that class. We can, then, understand Marxian political economy in the following terms. The political institution or agent (in this case the state) defines and protects the political interests of a class and it does so on its own initiative, not as an “instrument.” This means, more concretely, that the state defines and defends a social order including a set of “rules of the game” for the pursuit of private interest. Within these rules, the interests of the dominant class (for example, in private wealth accumulation) are protected in principle, though not necessarily in every case. Conversely, the system of private relations (the economy) per­petuates a definite set of objective social positions (classes), certain of which are favored by the prevailing rules of the game. The implicit interest of those in such positions is to perpetuate the rules of the game and, in this sense, the political interest defined and defended by the state can also be said to originate in society.

The relation between economy and state becomes complicated in this way for the following reason. It is in the nature of a privatized economy to focus the attention of agents on their private circumstances and to impede their development of an interest beyond the narrowly material. Thus, the economic life of the agent tends to deny him an adequate understanding of his own political interest (even though that political interest has economic roots). If this is the case, economic and political interests tend to repel each other, and social order will require a force working against this repulsion. Antonio Gramsci identifies this force in the “educative and formative role of the state” (1971:242).

According to Gramsci, the aim of the state is always that of creating new and higher types of civilization; of adapting the “civilization” and the morality of the broadest popular masses to the necessities of the continuous devel­opment of the economic apparatus of production, hence of evolving even physically new types of humanity (1971:242: see also pp. 246-7). And, fur­ther on:

In my opinion, the most reasonable and concrete thing that can be said about the ethical State is this: every State is ethical in as much as one of its most important functions is to raise the great mass of the population to a particular cultural and moral level, a level (or type) which corresponds to the needs of the productive forces for development, and hence to the interests of the ruling class, (pp. 258-9)

According to Marx, the state is part of the superstructure, the political shell of capitalism that is ultimately responsive to economic forces. Contem­porary Marxian theory, particularly structural Marxism (see Carnoy, 1984:ch. 4), makes the relation between the state and the capitalist class a more com­plicated matter. A key idea of structural Marxism is that the state may act “on behalf of’ the capitalist class even if not necessarily “at its behest.” By so doing, structural Marxism severs the tie between an agent-oriented view (at least one based on acting out preferences) and the interests of capitalists, or more broadly, capitalism.

Still, how one accounts for the existence of politicians motivated to preserve and enhance capitalism while (many) capitalists are not is a troubling issue. Nevertheless, we argue that this paradox can tell us something. Perhaps part of the paradox emerges as a result of a conflict between the short-term and long-term interests of capital, between individual capitalists and capitalists as a class, or between proximal interests of capitalists (profits, market shares) and systemic interests (property rights, competitive environment). Structural and analytical Marxists are working on these issues, if in very different ways.