Understanding Socialism, Affluence and Inefficiency

Excerpts from a lecture by Dr. Vivek Monteiro


After 1917, socialism wasno longer a theoretical concept. It became a practical reality in the USSR. It showed to the world, for the first time, that basic needs for every citizen,  housing, food security, universal free education, free medical facilities was possible. At the same time when the capitalist world was hit by severe unemployment, in socialist USSR, unemployment was completely eliminated. The USSR showed that the socialist worker’s state could defend itself against all attacks, though sometimes at a great price.
Dr. Ambedkarwanted a socialist constitutionfor India. Thisis  sharplyoutlined in his monograph ‘States and Minorities’, published in early 1949 as a draft constitution for India. Here he proposes State socialism, along with Parliamentary democracy, protected as a fundamental right. In defence of this radical proposal, he writes :
The soul of Democracy is the doctrine of one man, one value.
Unfortunately, Democracy has attempted to give effect to this doctrine only so far as the political structure is concerned by adopting the rule of one man, one vote which is supposed to translate into fact the doctrine of one man, one value. It has left the economic structure to take the shape given to it by those who are in a position to mould it. This has happened because Constitutional Lawyers ….have never advanced to the conception that the Constitutional Law of Democracy must go beyond Adult Suffrage and Fundamental Rights… (they) believed that the scope and function of Constitutional Law was to prescribe the shape and form of the political structure of society. They never realised that it was equally essential to prescribe the shape and form of the economic structure of society, if Democracy is to live up to its principle of one man, one value.
Time has come to take a bold step and define both the economic structure as well as the political structure of society by the Law of the Constitution.
The Constitution of India that was finally drafted with Dr. Ambedkar as Chairman was a document of consensus and compromise. Many of Dr. Ambedkar’s concerns about economic democracy found their place not as fundamental rights but as Directive principles. The socialist concept of a welfare state and public ownership of natural resources found expression in articles 38 and 39. The right to work, education, health facilities, a living wage, and social security in times of old age and incapacitation in articles 41 to 43 A.
But on certain fundamental principles there was no compromise- such as the principle of secularism, and freedom of religion. In States and Minorities, these are expressed succinctly and unambiguously;
The State shall not recognise any religion as State religion…..Every religious association shall be free to regulate and administer its affairs, within the limits of the laws applicable to all.
The other basic principle on which Ambedkar refused to compromise was the principle of one man, one vote irrespective of class, caste, creed or gender.
Apart from being the leader of the fight against caste discrimination and untouchability, Ambedkar was also an important labour leader .Of course he had serious ideological differences with the red flag leaders. These centered around the issue of methods and values in the political struggle.  Ambedkar also felt that the red flag unions neglected issues of social inequality, neglected to pay attention to the elimination of caste based exclusions within the workers such as existed in the textile mills. Ambedkar had opposed the historic 1928 textile strike of the GirniKamgar Union. But in 1938, both Ambedkar and the communists came together to organize a general strike against the Industrial Disputes Bill, which sought to make strike illegal.
On one important issue there was no difference- the necessity of trade unions to have a political agenda.  In an address to workers Ambedkar states:
“to protect purely trade union interests cannot be the only reason, why trade unions must enter politics. To confine your attention to trade unionism is to mistake the immediate task forthe ultimate goal; it is to assure that slaving for others is a destiny which the labouring classes cannot escape. On the contrary, your aim should be to replace this system of wage slavery by a system which will recognize the principles of liberty, equality and fraternity. This means rebuilding of society.’
The Constitution of India confers democratic rights to citizens which go well beyond what was demanded by the Chartists. All adult Indian citizens have the right to vote. There are no property qualifications on suffrage.  Workers can stand for elections…
The working people in the unorganized and organized sectors comprise the vast majority of Indian citizens. Why have they repeatedly elected to power capitalist governments? Why is it that they have not yet voted to establish a working class government of their own? These are simple but basic questions that have to be raised and examined scientifically.
Can the working class shape politics?
The October revolution whose centenary we will observe this year is of course a definite answer to that question. But if we ask it as a scientific question we are compelled to ask more questions, for example:
Why has there been no workers’ revolution in Europe or North America thereafter? Why is the working class party so weak in the   world’s most advanced capitalist nation? Why did such a large section of working people vote for a capitalist billionaire like Donald Trump?
The task for Marxism, understood as the scientific method, is not only to analyse working class revolutions, but also to understand and contend with conservatism in the working class.
An important development not anticipated in the Communist manifesto is the development of what Eric Hobsbawm calls a ‘realm of affluence’ in developed capitalism. Instead of the general pauperization  of the proletariat predicted by the Manifesto, what is observed in these countries is the phenomenon of a large section of the working class achieving a  ‘middle class’ standard of living. Engels uses the term “labouraristocracy’’. Lenin argues that Imperialism engenders “super profit” for the capitalist class of a nation, which in turn allows giving the workers a petty bourgeois standard of living. Baran and Sweezy in their analysis of ‘monopoly capital’ attribute super profits to monopoly of the market by the big corporations.
I would like to examine the phenomenon of ‘the realm of affluence’ – from a different angle.
There has been much talk about the ‘increase in GDP growth rate’ under neoliberal economic policies. This is attributed to a supposed “greater economic efficiency” achieved due to these policies. In fact, capitalist development is characterized by growing mechanization of the production process. This results in a reduction of costs due to increase in output per unit of labour employed.
However, if we calculate the output per unit of energy expended in the production process, a different picture emerges, as the following few examples show.
Which is more efficient- a handloom or a powerloom? A handloom weaver produces about 6-8 metres of cloth in a day. A powerloom weaver produces about 72-80 metres of cloth in a day, tending four looms.  Each loom consumes about 5 kwh of electric energy.
The manual work humans perform can also be measured in units of energy. A human can do manual work continuously over 8 hours with a power output of about 30 watts. This means than in a day of 8-10 hours of manual labour, the human being  can perform about 240-300 watt-hours of work. One manday thusis equivalent to ¼ to 1/3rd kwh of energy.
What the above figures indicate is that in handloom production about 20-25 metres of cloth is produced per kwh of energy expended. In powerloom production, about 4 metres of cloth is produced per kwh of energy expended (80 metres/20 kwh) . If we measure output per unit of energy expended, powerloom is about five to six times less efficient than handloom.
A similar comparison can be made between cycle transport and motorcycle, or, in earth moving between manual digging and a mechanized shovel. In each case, machine powered production process is much less efficient than manual work, when we measure output per unit of energy expended.
We can also compare the energy contents of food and fossil fuels by converting kilocalories into kwh, as shown in the following table:
Petrol            13 kwh/kg
Diesel            13.3
LPG               12.8
Ethanol           8.5
Methanol        5.5
LNG               15
Veg oil           10.5
Cereals          4.2 
Coal               8.3
According to David Pimentel, each year the USA uses about 200 million tonnes of oil to produce and consume 100 million tonnes of foodgrains. That is 2 kg of fossil fuels to produce and consume 1 kg of food grains or about 6.5 kwh of fossil fuel energy to produce and consume 1 kwh of food energy.
If the human digestive system could have digested hydrocarbons the way it digests carbohydrates, it would be irrational to do capitalist agriculture. Pumping and eating hydrocarbons would be less irrational.
The belief in capitalist efficiency is created because we measure cost in financial terms. Finance is a social construct arising in the context of exchange value .In financial terms, human-power energy is not cheap. If we assume a minimum wage of Rs 400 per day, human-power energy costs aboutRs 1600 per kwh. By contrast, petrol costs Rs 6 per kwh. Coal is even cheaper- about Rs 1.50 per kwh.  Electricity costs about Rs 5 per kwh.
In financial terms, human-power energy costs about 300 to 1000 times the cost of fossil fuel energy, and this is what capitalism is all about, replacing human-power energy with ‘cheaper’ fossil fuel energy through mechanization.
Why is fossil fuel cheap? This is only because of an irrational pricing convention. There is extensive literature on the subject of pricing of non-renewable resources in capitalist economic theory, all essentially based on a 1930 paper by Hoteling. Capitalistic pricing of fossil fuels is based on the cost of extraction, refining and transportation plus a profit mark-up. . This is as rational as  fixing the price of  a bag of foodgrains in a godown  as the cost of its transportation  from the godown to the point of use plus a profit mark-up, say about five rupees for  a 50 kg bag. With this method of pricing it is cheaper to produce wheat by burning wheat in steam engine tractors, rather than growing wheat with only manual labour. Capitalist pricing of fossil fuels thus obscurantist, because it obscures the real inefficiency of automotive machines.
With this flawed and irrational method of costing it costs less money per unit output to deploy machines rather than humans, though energetically speaking, machines are generally less efficient than humans. An important factor for both profit and super profit is this contrived and notional ‘machine productivity’.  A higher margin of profit can be earned by producing at a money cost less than the social average money cost of production, by replacing human labour by machines.
Increasing mechanization and automation, which is at the core of ‘technological upgradation’, results in higher margin of profit in the short run. It also lowers the average social money cost of production in the longer run.  This results in a constant lowering of the margin of profit as more and more units mechanize their production process..

When we measure production costs in  terms of energy, i.e. output per kwh of energy expended, it turns out that capitalism is intrinsically inefficient, perhaps the most inefficient mode of production in human history. The ‘realm of affluence’ is based on “off balance sheet creative accounting”, on fossil fuel  energy subsidy, on deprivation of our grandchildren and future generations of their entitlement in the finite stock of  non-renewable resources of the earth. The present ‘realm of affluence’ is thus predicated on a ‘realm of scarcity and hunger’ for the future. If the previous calculations are correct, and they can all be verified, capitalism is not freedom, as ideologists like Milton Friedman have tried to argue. Capitalism is a form of social vandalism based on obscurantist mumbo jumbo of bourgeois economics, a rapacious trade off of our children’s survival for  the petty consumerism of the present.

Also Read
— Can the working class shape politics?
— Human Activity and Social History: Understanding Politics and the Concept of Equality



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