Capitalism: Heading For a Reckoning

While technological innovations are continually advancing, so-called "social and economic progress" is retreating. The globalisation of markets has led to the worsening – after a short period of productive “development” – of working and living conditions for hundreds of millions of proletarians in the world, with a slow but inexorable decline in large concentrations of labour in particular industrial sectors, and the now steady growth of the unemployed or underemployed army in many places. The former assembly lines and division of labour have been gradually removed by the advance of microelectronics, telecommunications and biotechnologies, which have invaded every sector of production, from cars to televisions and household appliances, from the mechanical to the chemical, pharmaceutical, textiles, manufacturing and food industries. Microprocessors, with their repetitive pre-ordered actions and the computer programming language, lead to a progressive reduction of workers, as well as allowing capital to benefit from reduced stockpiles and production calibrated to orders (just-in-time), in addition to continuous diversification of models and products.

Decades ago, large amounts of capital were invested in computer technologies (from the integrated circuit to system software) which revolutionised Silicon Valley plants and the entire hi-tech sector in the United States. American super profits (in other words, the average rate) thus initially offset the "decline" that occurred in other industrial sectors as technological innovation spread. Since then their application has reached very high levels, first lowering employment in manufacturing, and now services. It is calculated that 7,000,000 jobs have been lost in the US over the last 4 decades; despite this, the volume of goods produced has grown year after year, ending up clogging the markets and forcing – in some cases – the remaining employees to work more hours at greater intensity (time and motion).

The effect on the organic composition of capital was massive. Marx made it clear (Capital, Volume 3, Law of the Tendential Fall in the Rate of Profit) that the productivity of labour increases through the development of technology. The result is the growth of the organic composition of capital (the relationship in value terms between the means of production or "constant capital" and labour or "variable capital"), and consequently the decrease in the rate of profit (the ratio between surplus value and the total capital invested). For those who insist on not wanting to understand this law, we repeat for the umpteenth time as the inclusion in the production processes of ever more advanced technologies, increases – yes – labour productivity but expands the part of the working day in which the worker creates the (relative) surplus value pocketed by the capitalist, and at the same time the part that is remunerated by a wage is reduced. This however, until the "physical" limits are reached (restricted and in any case always dependent on the number of workers employed) which allow this advantage to the capital. Finally, the goods must be sold – we repeat this against all those that emphasise technological modernisation and its consequent productivity increases – if the sale of goods does not grow, the "wage earners" tend to decrease in number because production follows competitive strategies, mainly aiming at a reduced use of living labour.

There is no shortage of examples to illustrate this dramatic picture for those who have a job – wage reductions, increases in direct and indirect taxation, as well as cuts in public spending (pensions, education and health). An unstoppable "crackdown" that tightens the chains that strangle hundreds of millions of men and women the world over. The bourgeoisie stimulates the increase in productivity achieved with automated machines and technologies, but at the same time sees the sale of goods slowing down. And we return to the sore point: as the use of human labour is reduced, the crisis of capitalism worsens. Robots are not paid a wage (they are machines whose cost will be mortgaged over a certain number of years) and have the defect of not buying goods, they are not "consumers". Their productive capacities create a mass of goods that cannot find solvent buyers. Bourgeois economists speak of "good capitalism" because it creates wealth, but then it becomes "bad" because that wealth can only be enjoyed by the few... In the world there is a vast and urgent need for useful products, but hundreds of millions of men and women have no means to buy such commodities. Credit via the financial system can only provide a partial demand for goods, but then this helps plunge the whole capitalist system into an even more serious and deep crisis, where it is drowning in public and private debt. Production is constrained not only by national, but above all international competition, where competitive strength is fortified by the reduction of "labour costs".

Automation and Robots

A robot produces goods faster than a number of workers, but because it does not buy goods, it prevents capital from realising the surplus value (profit) that the commodity bears and expresses in its selling price. Even if this price decreases, the "paying consumers" are absent. "Redundant" workers are on the rise and due to robots (it is calculated that on a global scale there are almost three million...) and software, millions more will join them, and not just in industry. The automation invasion is already taking place in supermarkets and call centres, automatic teller machines in banks, computers will drive trucks and buses, robots will prepare food and take over administrative offices: everywhere staff will suffer drastic reductions. The same goes for half the tasks of computer programmers and computer network builders, rendered superfluous by automated technologies making innovations in the field of information technology and electronics. It has been empirically demonstrated that the increase in the organic composition of capital is a decisive aspect of capitalist development, while at the same time bringing about crises, as the profit rate decreases in relation to investment in both industrial and commercial sectors. The contrast between the development of the material productive forces of society and the existing relations of production, i.e. private property relations, worsens.

Capitalism "Rationalises" Itself

"Industrial Revolution 4.0" will be another leap forward in the process of automation, perfecting digital technologies and speeding up the pace of work. Errors and times lost will be minimised with the (illusory) goal of producing the maximum of "added value". Numerical control machines are a fading memory: with flexible automation the models and the products change directly on the assembly lines, reprogrammable in response to the demands – in real time – of the markets. The organisational "rationalisation" of resources eliminates waste and stocks. Research by the World Economic Forum shows that the advance of robots and intelligent programmes will impact all occupational levels. According to the “Technology at Work Reports – V2.0”, as many as 35% of workers in Britain, 47% in the USA and 57% on average in OECD countries could be replaced by automation by 2025. In China the percentages will be even higher. Overall, in the global industrial sector robots will eliminate about 60 million jobs: those currently used in assembly lines in Japanese car companies work for a minimum of 30 days without any maintenance. Robotic arms will be imposed on production lines: few people are needed to supervise the automatic operations, in turn controlled by computers. And the cost of robots is in sharp decline: personal service robots cost less than 25,000 dollars in the US; in China and Japan, home cleaning robots have low prices. In industry, the cost of a robot is less than a few hundred thousand dollars, while the "creation" of a "living" job would require an investment of over half a million dollars. Sales of computers, 3D printers, numerically controlled machine tools (with electronic brains), etc., are everywhere. Also, in agriculture the use of automatic seed drills and harvesters is on the rise; they are even guided by satellites. Finally, coffee machines, electronic kiosks for selling food, books and gadgets, automatic collection services by means of bank cards, etc., are spreading in commercial activities. And this is just the beginning: Chinese "capitalist-socialism" is taking the lead, with strong investments in automatic and robotic technology; it is currently the most important world market for industrial robots, computers and other complex autopilot machinery. By number of robots used, South Korea, Japan and Germany follow. Those parts of a "living mechanism" which for capital are the workers, and as such uses them, are now replaced by "a dead mechanism independent of them, and the workers are incorporated as human appendages". (Marx, Capital).

Unstoppable Technological Progress

Microchips double in speed every two years; software, computers and robots improve artificial intelligence. Software is advancing to replace tens of thousands of workers of a few years ago. And now we have the fear, in the so-called "clerical" sectors, of the threat of an invasion of algorithms that will appropriate data analysis, develop procedures, make decisions. They will increase productivity and save "costs" by doing away with accountants and lawyers, insurers, bank officials, directors, financial analysts, journalists, etc. Globally, the robotics market is expanding year on year by tens of billions of dollars. The blow to employment will be tremendous, despite the "hope" for new sectors and new professional roles to appear these are bound to be small-scale.

The expansion of interaction between robots, artificial intelligence and human beings should also be highlighted, invading not only industrial production but also all areas of daily life in contemporary society. The effects on the labour market are more than worrying. And again: the McKinsey report (January 2017) indicated the automation, within a decade, of 50% of current "paid" activities. A more recent analysis by Boston Consulting Group confirms this reduction of workers – mentioned above – with peaks in Asia (China, Japan, Korea). In Europe, this real "earthquake" will be led by Germany, but even in Italy the installation of robots in industry proceeds by thousands per year. We should also mention optical fibres, standard interface for application programming, system integration, with a single language and maximum digitisation. Constant capital (machines, energy, raw materials and semi-finished components) is growing, and variable capital decreases proportionately. The problem arises again: each unit of product contains less and less surplus value and therefore a greater quantity of goods must be produced (and sold) in order to obtain as much surplus value as possible.

We have already said how computer science and complex algorithms will reduce the number of "brain workers"; as will the growing replacement of millions of civil servants in state administration, by digital computerisation, spread redundancies everywhere. Integrated computer systems (with electrons and light quanta) automate most bureaucratic-administrative services; a few analysts replace hundreds of workers. So-called “cognitive work”, until recently emphasised, is being mechanised. Repetitive and supportive jobs will be wiped out and everywhere technological unemployment will be unstoppable; full automation will bring the desertification of factories and offices. Remember the Keynesian recipe: "dig holes and then fill them", just to keep the unemployed busy? Certainly, today we could not do that, given that the same operations can be done with some mechanical mole, some engineer and a few hundred people. The fable of new productive sectors in which the excess population "freed" from other sectors and production processes that have become obsolete should be poured, has also been reduced to the offer of "alternative" low skill, low salary, highly volatile jobs. Soon, they will be replaced by robots, all made and in turn produced by other robots! And while over 50% of those employed in sectors of the "advanced" tertiary sector are also threatened, even sectors of social services such as personal care, environmental protection, collective transport, health itself, etc., are all being considered as "costs to be reduced" and soon will be reduced.

The forms and content of many occupations (tangible and intangible) thus tend to move further and further away from a minimum of social relations, overwhelmed by a technological development that involves a deepening of the processes of alienation into which humanity risks sinking, not only materially but also... spiritually. This technological development, which in the hands of capitalism and the prevailing relations in bourgeois society worsens both the forms and the conditions with which the purchase – ever less necessary – of the commodity of labour-power takes place. If capital does not derive surplus value from the exploitation of labour power, the army of the unemployed expands. Under capitalism, the burden is placed on the remaining workers in production and we hear complaints about the “excessive rigidity” of the regulation of labour relations that hinder the competitiveness of the national economy (the national cost of labour power compared to the lower one of other nations...). And the employed are thus subject to blackmail, under threat of being replaced by the unemployed willing to sell themselves at a lower price.

An Unstoppable Process

Even in finance (banking, administration and accounting, with operations also performed automatically in stock exchange deals) the spread of microcomputers is widening day by day, causing unstoppable reductions in personnel. Likewise, in commercial activities in the process of becoming electronic, and in all the various sectors of the tertiary sector: the applications of microelectronics and optical reading replace thousands of operators in retail sales networks (cash desks in supermarkets) and in the use of automatic equipment that encourages self-service. Integrated computer systems automate most bureaucratic-administrative services; a few analysts replace hundreds of workers. In the US, the 71-billion-dollar robotics market of 2015 rose to 91 billion in 2016 and is expected to reach more than 187 billion in 2020. A huge accumulation of machines that must produce 24 hours a day, 7 days a week, in order to pay for themselves. Moreover, the speed and power of microchips doubles every two years, increasing the power of software, computers and robots. The McKinsey Global Institute has estimated that robots could perform 45% of all jobs that are currently performed by humans: capitalism would "save" total annual salaries calculated to be at least $16,000 billion. In Italy alone there are almost 12 million workers who will remain unemployed and without pay. How will they buy goods, and with the relative surplus value the goods contain not realised, would capitalism thus be on the ropes? In addition to the undeniable fact that the exchange value of these goods has been reduced since technical and scientific innovations have ended up reducing it for every single item... Even Italy occupies an important position in the European robot market and in the ranking worldwide for industrial robot installations: there are more than 155 robots per 10,000 employees in manufacturing industry. However, there is always the problem of the markets in which to sell the products in the midst of savage competition.

The greater flexibility granted by microelectronic technology has surpassed Fordism, Taylorism, Toyotism, Ohnism, Volvoism, and every other management system for the production of goods, allowing both speed and tight control of both time and quality. The same goes for new applications (three-dimensional printing, nanotechnology and knowledge technology). Capitalism is now undergoing a technological and scientific modernisation that is becoming a bomb ready to blow up the whole system. In addition to all other issues, it is forced to submit to the categorical imperative of maintaining a continuous cycle of production of goods, in order to afford the "payment" both for machines and plant, and the general expenses necessary to keep the system alive. This technological and scientific modernisation has, as its sole objective, overcoming an obvious saturation of the markets and certainly not satisfying the needs of most of suffering and desperate humanity. Humanity finds itself swept along in a vortex of technological innovations and automation which – under the command of capital – make work processes, their organisation and production cycles highly flexible, separable and subject to all kinds of adaptation. Both the production and the movement of goods is speeded up to the maximum thus demanding shifts and rhythms of work that are often unsustainable and exhausting. And "added value" is reduced: both in the so-called "mature sectors" (steel industry, means of transport, machine tools, food processing, etc.) as well as in telecommunications, biotechnology and pharmaceuticals, aeronautics and civilian drones. New materials and alternative energies are also introduced with the aim of raising "added value". But – with the inevitable fall in the average rate of profit – the value of commodities is reduced! As a result, the desperate search to revive profit margins by all means and extends – where the opportunity presents itself – even to the bestial exploitation even of child labour. More than 165 million children are enslaved by capital across the world!

But if all the production of goods depended on robots, capitalism would die. In fact, how could surplus value be created and allow capitalism to realise the profit which for it is a matter of life or death? Since there is no longer a sufficiently large number of workers who provide surplus-labour and therefore surplus value, receiving in exchange a cash salary to buy a (minimal) part of what they produce, who would "buy" the goods? Workers would become a permanent "excess", no longer usable by capital for its own reproduction or even as a "reservoir of labour" for the future. The increase in productivity, which has become an imperative for capital, has made the use of much labour power superfluous (with the development of science and technology). In addition, with the mechanisation and reorganisation of production processes, in addition to betting everything on relative surplus value, each capital pursues greater competitiveness through wage containment and reductions, increases in labour intensity (absolute surplus value) and overtime for those who are still in its employ. But in the end, capital no longer finds opportunities for productive investment to absorb the supply of workers who crowd the so-called labour market. Where the proletariat is still active, it is to a large extent still trapped in the illusion of a "rationalisation" of the dynamics of work, ideologically subjugated by the demand for wage labour that keeps it under the dominion of capital. A demand that dramatically collapses in the face of the crisis of capitalism and its recent restructuring to survive as a mode of production and distribution. At the same time, we see a constant increase in the organic composition of productive capital, struggling with increasingly fierce international competition in trade . Our "primary natural and historically developed vital needs" have expanded in recent decades, but capitalism is now forced to deny them to hundreds of millions of human beings in every part of the world. The growth of fixed and constant capital has been such as to make it impossible to satisfy the frenetic demand for surplus value to meet the "needs" of capital. The organic composition of capital has undergone, and will continue to undergo, significant increases (both in constant capital and, above all, in fixed capital), while the number of productive employees will continue to decline, reducing the mass of surplus value that can be extracted from their labour power.

Scarcity of Surplus Value

Always observing the premise of the fundamental principle that machines – as Marx wrote in Capital – "never add more value than they lose through wear and tear", even with the introduction of automation, that is, machines that control themselves, under capitalism human social labour remains the only active element in the production of exchange value. And under capitalism, the activity of robots should – according to the apologists – serve to facilitate this purpose. But the greater the investments in constant capital with high technological and IT content, in addition to the necessary commercial investments for the distribution of the goods of the new economy, the more the centralisation of a colossal mass of capital increases, with financial groups in turn dependent on highly technological sectors, to the detriment of the number of workers employed.

The fall in the rate of profit becomes inevitable, hence the search for a completely abstract alternative in parasitic financial accumulation, partly diverted to stock market games. The movements of stocks, bonds and derivatives have replaced those of commodity production, ending up accentuating rather than reversing the slowdown in the accumulation rate. Only the mountain of so-called investment funds grows, but without their use for the realisation of surplus value in the industrial sector to produce goods (which must then be sold), the money received on loan stands still and however it is used does not generate that profit that should transform it from M to M'. Avoiding – by force of circumstance – industrial investment, everything is focused on money that yields more money from nothing, while with the surplus value produced by almost two billion workers (about another billion are employed in services) supports profits, interests, dividends, annuities, state taxes, wages of commercial and public employees, police and the armed forces, etc.

The Capitalisation of Surplus Value

The growth of capitalism is impossible without capital accumulation, for which a constant "extraction" of surplus value from the production of goods is necessary: the flow of surplus value must be incessant to allow a progressive expansion of investment. But if accompanied by a relative decrease in employment – as investments (following technological development) are increasingly made in fixed capital and machinery, and increasingly less in variable capital – accumulation faces crisis. The mass of extractable surplus value, which depends on the use/exploitation of living labour, does not increase sufficiently for the enhancement of the increased amount of invested capital. The number of workers, of the labour-power that produces goods, should expand rather than diminish, as happens with the increase in labour productivity, which is only valid up to a certain point. Furthermore, goods must be sold, and capital turnover times must be reduced, in an attempt to increase the annual rate of surplus value. Capital is therefore forced, by international competition, to reduce the time of circulation of goods, so that they do not remain in warehouses for long.

Rate of Profit

The use of machines causes, in addition to the fall in employment, the tendential fall in the rate of profit. This in turn necessitates a constant increase in the surplus value extorted from the working class where the latter remain in work. Now, the rate of profit is calculated by surplus value divided by the total invested capital, i.e. by adding together constant capital (investment in plant, machines, raw materials) and variable capital (investment in wages). If the numerator, surplus value, at a certain degree of development, stops increasing, while the denominator grows due to the increase in investments in robotics, this means that the profit rate inevitably begins to decline. Accumulation stops and a period of crisis begins. Capital tries in vain to mystify the productive increases – due to the application of science – as a productive force belonging to capital, not as a productive force of socialised labour. Indeed, this living labour, both manual and intellectual, is discarded and relegated to the side-lines, eliminated because it has become superfluous. Artificial intelligence software now operates in areas that up until a few years ago would have involved hundreds of thousands of workers. This is also true in "clerical" sectors, shaken by the threat of an invasion of algorithms that appropriate data analysis, develop procedures, and make decisions. Think of the future, of what will become of the "expanding middle class": accountants, lawyers, bank officials, directors, financial analysts, journalists, etc.: a tsunami of programmed applications, of integration of single language systems with maximum digitisation, will descend upon them. Meanwhile, in every part of the world the number of those sinking into poverty and hunger is growing, and in league with the wealthy, the "scientists" of capital are discussing hypotheses regarding the "right" balance between costs and selling prices of goods ("circular flow"). But if solvent "consumers", those who keep "circulation" going are absent, where would we find the general "mediator" between production and consumption? The pretence of making a profit that "regulates" the costs and revenues of each capital investment, becomes a devastating illusion for the system. As if that were not enough, our current bourgeois intellectuals even invent the disappearance of the proletariat because capitalism has integrated it, politically and ideologically. They seek to convince the proletariat that technology and capital are as one, "the only automatic subject" (as Marx called it), supporting capitalism and perfecting it for the good of all!

New Consumption?

The hazy minds of the "experts" speculate about phantasmagorical "new waves of mass consumption", with stacks of goods produced by "smart factories". They dream of sky-high profits. We will lose a few million jobs, and therefore "consumers" in various countries, but this is the price to pay for progress! That is, the apologists of capitalism are wandering around in a reality that sees the markets of goods and services increasingly in crisis, with the doors closed for at least half of humanity (now three and a half billion human beings!). Not only does unemployment grow, but most of those who still manage to sell their own labour-power to capital, go on to swell the ranks of another army, that of "poor workers" (the working poor) with wages below 60% of the average. And we have mountains of constant capital (machines, energy, raw materials and semi-finished components) while variable and productive capital is decreasing proportionally, with the direct consequence that each unit of product contains less and less surplus value, forcing capital to try to churn out (and sell) a greater quantity of goods.

Productivity, from a Positive to a Negative for Capitalism

The increase in productivity is necessary for capitalism since it affects goods only as exchange values that can be directly converted into money destined to become new capital. But there are stacks of commodity-products that no longer find buyers; we are not the only one to say so, bourgeois economists and political scientists mourn a world economy bogged down in "secular" stagnation. A worrisome “macroeconomic” situation marked by an initial inflation which then turned into deflation and is therefore "unbearable" for... the development of capitalism! The "formulae and mathematical models" go haywire as soon as they are unveiled, proving to be inapplicable in the reality of the present state of things where everything works contrary to the stated predictions.

Like the myth of a Keynesian solution (easy money, zero interest and fiscal spending), which collapsed with every partial attempt at application, now we face the mother of all crises, with a low profitability of capital, there is no longer any possibility for an economic recovery. To access markets today, continuous product innovations and strict control of both time and quality are needed. At this point capitalism is sitting on a series of mines ready to blow up the whole system. Both in the so-called "mature sectors" (steel industry, means of transport, machine tools, food processing, etc.) and in telecommunications, biotechnology and pharmaceuticals, aeronautics and civilian drones, and finally with new materials and alternative energy. There is only one goal: to increase "added value". But this latter – with the fall of the average rate of profit – actually becomes weaker! Even in finance (banking, administration and accounting, with operations also performed automatically in stock exchange negotiations) the spread of microcomputers leads to unstoppable reductions in personnel. The same goes for all the commercial activities that are becoming electronic operations, and for the entire tertiary sector. The evaluation of the coming years as a crucial period of technological innovations and an invasion of robots has been circulating among the critics (so to speak) of capitalism for some time now. Not only in manufacturing industries, but in all sectors: administrative and accounting offices, fast-food and call centres; wherever computer and intelligent programmes will replace the people in charge of collecting, analysing and using information (accountants, stock traders, lawyers, medical personnel, etc.). In infrastructure too the application of technology is widening; sensors, smart cities, IT highways and ultra-broadband are spreading. Under capitalism, "the machine starves and wears out workers": "this antagonism between the productive forces and the social relations of our age is a fact backed by overwhelming evidence that no one would dare refuse". In capitalist society "humanity’s own activity becomes a power foreign to it, that dominates it, which subjugates it, instead of being dominated by it". In this "personification of things and objectification of relations of production", both private and state capitalism have implemented a complete exploitation and domination of every living species on the planet. But precisely because the activity that valorises capital is labour power and when this is reduced – as Marx says – to "something infinitely small", in the product "any relationship disappears from the immediate need of the producer and therefore from its immediate use value". Capital "absorbs the accumulation of science and ability (general productive forces of the social brain) which thus, through work, are absorbed in capital". Here then "the worker is rendered superfluous, to the extent that his action is not conditioned by the need for capital. (...) Immediate work and its quantity disappear as a determinant principle of the production of goods". Work is reduced to a pure abstraction, to the surveillance of a production process that has lost its basis of value, with capital which, having reduced working time to a minimum, now contradictorily "cannot exploit any surplus product...". (from Marx's Grundrisse)

Technological Modernisation

What are the conclusions? In The German Ideology (1845), Marx wrote that the development of the productive forces give rise to other productive forces (machines) and expand the current medium of exchange (money). In this situation – Marx goes on – they become "destructive forces (machines and money)". This technological development leads to a constant decrease in that living labour time upon which capitalism bases the exploitation of the labour force. Living labour is for capitalism "the measure and source of wealth" which it appropriates. It therefore opposes – with all the (still enormous…) strength at its disposal – a rival social order that with the available productive forces could free the majority of the Earth's inhabitants from advancing impoverishment and barbarism. Capitalism, by continuing to establish itself as a socio-economic totality, weighs like a rock on the future of the human species itself. The productive and distributive "organisation" in force in bourgeois society, following the basic structures of the capitalist mode of production and observing its fundamental categories (value, wage labour, commodity and money), now exhibits clear signs of an irreversible decline. The categories that govern it are not eternal; they belong specifically to it and are – as Marx wrote – "forms of its being", determined by the everyday life of capitalism itself. All production is undertaken to service the needs of the process of capital growth and not the needs of humanity; capital becomes the "automatic subject" (Marx) of a process based on the valorisation of capital. Much of it becomes fictitious capital following a development of the productive forces solely for the satisfaction of capital’s interests. But for its global growth, capital must exploit human labour. If this fails, quantitatively, and precisely with the use of increasingly sophisticated technologies, a decrease in the general rate of profit is triggered. This contradiction can only be slowed down by the use of temporary palliatives, which are always inimicable to the working class. Increasing productivity means decreasing the work needed to produce ever greater quantities of goods; however, it means that the "creation" of the surplus value which the financial markets chase after is no longer sufficient – for the growth of capital. Moreover, the growth of the "surplus" population that can no longer be integrated into the productive system is out of control.