Theories of Thatcherism and Capitalist Decay - Peter Kennedy

'Fordism/Post-Fordism' cannot be used to understand Thatcherism. Marxism must come to terms with 'Labourism' which itself emerges out of a decaying form of capitalism and which extends capitalism's life beyond its years. The emergence of 'Thatcherism' served only to escalate capitalism's decay and so bring closer the day when workers must take democratic power into their own hands and conscious regulation of social labour becomes a political necessity.

Submitted by tolern on June 2, 2011


Making sense of 'Thatcherism' has preoccupied the Marxist left in Britain for the past decade or more. Much has been written on how 'Thatcherism's' 'authoritarian style populism' has swept the 'hegemonic' board in terms of ideology, politics and culture.[1] As Andrew Gamble observes:

The term 'Thatcherism' was widely adopted and used to indicate the style of Thatcher's political leadership, the new ideology which she endorsed, and the policies of the Thatcher Government. All these elements are important, but Thatcherism is best understood as a specific political project, not just of Thatcher herself, but of an important current within the Conservative Party.[2]

To Andrew Gamble's credit he has at least attempted to provide a structural explanation for the emergence of so called 'Thatcherism' (see A. Gamble 1990). As he acknowledges above, however, his concern has been primarily with a wholly politically based structural analysis. He has placed Thatcherism within the Right wing tendency which has emphasised the two-fold need for 'a free economy/strong state' and a rejection of 'collectivism' and 'social democracy'. At this political level, questions of what exactly constitutes a 'free economy' or 'collectivism' are never discussed. In other words a wholly political account generally rests upon the acceptance of the empirically given and so by-passes, or takes for granted, the all important social categories of explanation that could be provided by Marxism. In this sense a Marxist political economy of 'Thatcherism' is still required.

Marxist categories must surely be the basis upon which to construct theories of ideological and political hegemonies. More importantly, a Marxist political economy may well lead one to re-examine and place in a new context the whole concept of a 'Thatcherite hegemony'. Looked at from this point of view, it will hopefully become clear that present day Marxism has surely been running before it has learnt to walk. Confirmation that this is the case comes easily to hand. For example, we know that 'Thatcherism' emerged out of the ashes of 'Labourism' but Marxists have yet to explain the full implications of 'Labourism'. How then can they possibly offer an adequate explanation of 'Thatcherism'? Certainly, no one denies the link between the two.

There are two main strands to current Marxist theory on the subject of Labourism. On the one hand, Labourism is reduced to two amorphous concepts which have preoccupied the minds of the left: 'Fordism' and 'Keynesianism'. As such, Thatcherism then becomes aligned with the emergence of an equally ambiguous concept, 'Post-Fordism'. On the other hand, Labourism is linked to the failed project of halting capitalist decline. Thatcherism is then aligned with the emergence of a new capitalist strategy to halt the process of decline. The latter point of view offers most potential for both an understanding of Thatcherism and Labourism. However, to date, Marxists have failed to adequately explain what exactly capitalist decline means. These criticisms will be taken up further in section 1 below.

There it will be argued that the ambiguities of 'Fordism/Post-Fordism'" are so profound that they cannot be used as the political economic basis of either Labourism or Thatcherism. Following this, in section 2, a brief outline of Marx's labour theory of value is provided. Here the emphasis is placed on the contradiction within labour. It is this contradiction and more specifically, its negation, that lies at the heart of a Marxist understanding of Labourism and Thatcherism. This latter claim will be taken up and expanded on in section 3. In section 3 we are specifically interested with the emergence of "Labourism" and 'Thatcherism'; the article does not concern itself with a detailed analysis of the two social categories once consolidated. To understand why they emerged is the key to understanding the nature of capitalist decay in Britain, which is really the central concern of this article. The argument in this section is as follows. Firstly, Marxism must come to terms with 'Labourism' as a social category which itself emerges out of a decaying form of capitalism and which extends capitalism's life beyond its years. Secondly, the emergence of 'Thatcherism', for all its minor successes, has served only to escalate capitalism's decay and so bring closer the day when workers must take democratic power into their own hands, as capital wanes and conscious regulation of social labour becomes a political necessity. The subjective factor now becomes the important question.

For Stuart Hall, who has written extensively on the topic, "Thatcherism's project can be understood as operating on the ground of longer, deeper, more profound movements of change".[3] These longer deeper, more profound movements turn out to be a loose ensemble of technical changes all and sundry have termed 'Post-Fordism'. Given 'Post-Fordism's' apparent importance for understanding 'Thatcherism', it is essential to define it. Unfortunately 'Post-Fordism' has evaded all attempted explanation. As such it has remained a catch-all phrase for every passing flight of fancy in society in the past 15 years. Hall and most others who adhere to this ambiguous concept are at least certain about one thing: 'Post-Fordism' is no "epochal shift, of the order of the famous transition from feudalism to capitalism"; it is merely another onward and upward phase in the life of capitalism, or, as Hall puts it: the transition "from one regime of accumulation to another, within capitalism".[4]

According to Hall anyone expecting a precise definition of such an important social category is simply misguided. As Hall would have it, "This stand and deliver way of assessing things may itself be the product of an earlier type of totalising logic which is beginning to be superseded. In a permanently transitional age we must expect unevenness, contradictory outcomes, disjunctures, delays, contingencies, uncompleted projects overlapping emergent ones".[5] One response to this might well be to ask why one should give the status of a totalising concept such as Post-Fordism' to what Hall admits is an ensemble of accidents. Firstly, as noted, he informs us that 'Thatcherism' is the product of something 'deeper' and 'more profound', namely Post-Fordism; then we are told 'Post-Fordism' is part of a set of 'contradictory outcomes' and 'uncompleted projects'. So which is it to be? Of course, tendentially, they can be both, however Hall does not explain why or how this could be so. This is not just Hall's problem, but a problem for a whole epoch of 'Marxisms'.

The lack of clarity is to be expected due to the fact that 'Post-Fordism' itself is the amorphous offspring of that reified concept 'Fordism': reify 'Fordism' and one reifies 'Post-Fordism'. The theory of 'Fordism' was, it has to be said, a gross reification of capitalist social development. Its history is a long one, however, for Marxists, 'Fordism' came to prominence with the 'french regulation school' of Marxism. Basically Fordism, as conceived by the 'regulation school', is an 'ideal-type' concept in the best tradition of Weberian sociology and the worst traditions of Marxism. A technically determined capitalist historical development is invoked, in which two distinct capitalist stages follow, one after the other, in chronological time.

The first stage was characterised by absolute surplus value extraction (extensive accumulation) and an unstructured distribution/consumption sphere (competitive regulation). The second stage was relative surplus extraction (intensive accumulation, or 'Fordism') and a structured/managed distribution/consumption sphere. The reason for the change from one to the other had little to do with the specifically capitalist valorisation process and Capital-Labour contradiction. Instead the change was said to be a product of the mismatch between production Departments 'one' and 'two' which was, in turn, exacerbated by a lack of consumer demand for final products.

The movement from stage one to stage two of capitalist development sought the resolution of, what was effectively claimed to be, a realisation problem. This was to be accomplished by the management of consumer demand via Keynesian inspired fiscal policy. However, no sooner had 'Fordism' resolved the contradiction than it began to falter under yet another value realisation problem as consumer demand failed to keep up with accumulation once again. This gave birth to the next stage in capitalism's apparent quest to regulate production with consumption - 'Post-Fordism'.

Here it is argued 'Fordism' - characterised by relative surplus value extraction, monopoly capitalism, the standardised product and worker - had given way to a Post-Fordist' world, characterised by the break up of monopoly, product differentiation and the flexible, privatised worker. This is not to suggest these tendencies within modern capitalist relations do not exist. However the nature of such changes are only superficially understood within a 'Fordist-to-Post Fordist' paradigm.

As Brenner has pointed out[6] the whole foundation of 'Fordism/Post-Fordism' is profoundly ahistoric, depicting as it does a linear path of ever higher stages of capitalist development. It is also technologically deterministic, in that each stage is a particular type of productive technique driven by the mismatch within the mode of distributing the final product. It is fair to comment that the social contradiction between Capital and Labour never gets beyond a cameo part in the whole proceedings. Because of this, such paradigms cannot explain why Labourism had to be dissolved. Surely the whole point of the regulation theory approach to capitalist development is to stress capitalism's ability to regulate the turnover of commodities in production with the realisation of their values in the act of exchange? If this follows, then the regulation of production and consumption must still remain of paramount importance to capitalism. As such, one would expect the 'Post-Fordist' transition would be towards greater regulation, perhaps an increased dosage of Labourism? Yet the new 'mode of regulation' - 'Post-Fordism' - has brought deregulation of patterns of consumption, the removal of Labourism, and a further uncoupling of finance capital vis-a-vis productive capital. This latter dominance of circulatory capital over its fixed nature in production is intimately linked with the emergence of Thatcherism. However, 'Post-Fordism' and 'regulation theory' has had little of real relevance to say on this matter. On the whole it has to be said that 'Post-Fordism' is more a category of the mind than a real abstraction from reality. As such it is hardly the sort of stuff on which to base an understanding of 'Thatcherism'. But what of that other category which has been used as a basis of explanation for the emergence of 'Thatcherism' - capitalist decline? The chief problem here is that Marxism has failed to adequately explain what exactly it is about capitalism that is in decline. Some of the Marxist offerings in this are critically assessed below.

Given the 'twilight state' of capitalist social relations in Britain, one might think that Marxists would have developed a clear analysis of what exactly is in decline. Unfortunately this has not been the case. Of course there has been no shortage of theory which puts class struggle at centre stage of enquiry into decline. The problem is most of it is intra capitalist class struggle and hardly any concerns itself with the Capital-Labour conflict. In this respect much Marxist analysis of British capitalism has pumped out a surplus of theory depicting the intra class rivalry between finance capital and industrial capital. Some, like Coakley and Harris (1983), are concerned to reveal the institutional intricacies of the 'City', and the conflict of interest which emerges between this financial network and industry over the allocation of money capital (see also G. Ingham, for the more intricate analysis of commercial capital). Others (Anderson 1964,1987: Overbeek 1990) have sought to emphasise the political conflict within factions of capital. Their stress is on the 'hegemonic block' which one faction (finance) has held over the British economy.

P. Anderson (1964,1987) has argued that the source of decline has nothing to do "with factors internal to the capitalist social relation". His basic argument is as follows: Despite the fact that 'the present crisis is a malady of the whole society", it has had nothing to do with the working class or production relations. This class has "achieved no victories, but its defeats were astonishing", claims Anderson. Outmanoeuvred in the 1832 reform movement by industrial capital; its political economy of 'Owenism' defeated by 1836; its Chartist alliance crushed by 1848; politically decapitated by Fabianism and patronised by a labourist elite; the working class had, according to Anderson, become acquiescent and conservative and remains so to this day. The problem of decline, then, for Anderson, has nothing to do with labour. In fact it has nothing essentially to do with the capitalist class! The problem, we are told, is outside the internal relations of capitalism, it is in fact pre-capitalist in nature. Apparently a landed aristocratic elite have never relinquished state power and are thus able to block the road to capitalist development by stifling the entrepreneurial spirit with traditional aristocratic values of immediate gratification and abhorrence of thrift.[7]

Another important study of British decline has been G. Ingham's Capitalism Divided (1984). Ingham's stated task was to go beyond Anderson's 'anti-industrial capitalist aristocratic hegemony" thesis, not so much to reject it, on the basis that Anderson sought to explain capitalism's decline via social groups outwith the capital-labour relation, but to theorise it more deeply by breaking down the distinct features and functions of 'money capital' and its dominance over 'productive capital'. Ingham, like Anderson, rejects the explanatory power of the labour theory of value and takes the next logical step of rejecting the applicability of Marxist historical materialism to an analysis of British capitalism. This is because, for him also, decline is perceived as the product of something external to the capital-labour production relation. The external factor being the hegemonic stranglehold that commercial money capital has held since at least as far back as the restoration of the Monarchy in 1688. In this latter period commercial capital bailed out the State; constituted the Bank of England in its own interests; and, through the nexus of City-Treasury links, systematically sacrificed the interests of capitalism proper (productive capital) to the more lucrative commercial laundering of money via the matrix of 'Bills of Exchange' on the world market. As Ingham explains in a quite sophisticated manner, commercial capital ruled in this way throughout the 18th and 19th century and continues to do so in the 20th century, predominantly through the euro-money markets established post world war two. There cannot be many Marxists that doubt this is the case. The essential question is why? This is what Ingham fails to explain adequately.

The important point here is that Ingham ignores the more substantial source of decline in the social form of production. In doing so he ignores the valorisation process. The result of this omission is critical because production from then on in becomes a material technical arena for the production of use-values In turn the essential relation between Capital and Labour becomes displaced as a class struggle over the finished product; and the 'money form', so central to Ingham's analysis, loses its conceptual weight and owes more to Weber and neoclassical economics than Marx. Given this, it is little wonder Ingham views historical materialism as being economic determinism and so of little use in understanding the trajectory of British capitalist social relations. This leaves him only one recourse: an empirically based historical explanation.

Ingham proceeds to glean, from a historical enquiry of British capitalism, that financial concerns appear to be consistently at the expense of productive capitalism; that the state bureaucratic institutions have a separate rational calculating relation which fosters the practice of 'sound money" and so inadvertently promotes financial interests; and from this that 'Capitalism Divided' is the source of decline and not the Capital-Labour value relation. As Longstreth (1979) has pointed out, if the sterling lobby or the Treasury dominated economic policy, it was because there was no serious opposition to the policies they put forward and not because the triad of City-Treasury-Bank of England forced their interests upon the policy makers. Longstreth pointed out in 1979 that the picture of banking capital forcing through policy measures 'in the teeth of strident opposition is indeed a false one'. If it was false in 1979 it is certainly false today after 15 years of Thatcherism wherein the CBI has remained muted, offering in some cases encouragement from the sidelines, whilst the devalorisation of the British economy deepened. In other words industrial capital has also had an interest in deciding the trajectory British capitalist social relations have taken. The essential questions then became: What is the nature of that interest? Why did it manifest? And, how has it developed?

A number of other studies appear to take a similar route. For example, the extensive work by H. Overbeek (1990). In Overbeek's case the 'divide-equals-decline' syndrome takes on different aspects. It becomes one between 'concepts of control', namely: the 'money concept' versus the 'productive concept' and how each in turn strive for control of the state and the nation's economic course of development. The study offers a useful empirical and historical overview of the development of British Capital and decline. Unfortunately in no manner of understanding can it be classed a Marxist offering, for it too neglects the Capital-Labour conflict in favour of the well worn Capital-Capital conflict.

All these theories have singularly failed to answer the fundamental question: what exactly is it about capitalism that is in decline? Instead the tendency has been to jump immediately to phenomena which lie outside capitalist production; for example, within the circulation of capital (see G. Ingham 1984), or, in the so called 'superstructure' (see P. Anderson 1964, 1987). Decline theses soon become engrossed in the measurement of a phenomena Marxists have singularly failed to get to the heart of. In this respect analysis, unable to penetrate deeper into the social form of production, becomes entranced with comparative studies of decline between Britain and other western capitalist nations. Inadequate theory, of course, soon leads to reactionary practice as some Marxists, bereft of a grounding in Marxist categories, align themselves with 'De-industrialisation' theory. They then proceed to support bourgeois policy designed to curb Britain's 'De-industrialisation' by controlling 'the city of London' and so place 'Britain' back on the rails of an 'ideal-typical capitalism' such as Germany.

This has a highly debilitating effect on Marxism's approach to the political economy of the Thatcher years. The essential problem here is that Marx's categories such as 'abstract labour', 'value', 'fixed' and 'circulating' capital have either been ignored, seen as a 'Hegelian detour', of no relevance to the 20th century, or else reified into a quantitative 'law of value'; seen as a useful analytical tool, or else as a backdrop to 'crisis theory". The 'law' of value then arises intact and phoenix like from the ashes of every capitalist crisis.

This failure to make use of Marx's central categories in the spirit with which he himself made use of them, has had one result: the Marxist understanding of so called 'Thatcherism' has had to make do with that vacuous category 'Post-Fordism'. How else is one to speak of a category which is so ambiguous and devoid of class content that it can be used to 'prove' two entirely opposite theses? For example, for some 'Post-Fordism' bears witness' to the rejuvenating ability of capitalism (S. Hall, 1990); for others 'Post-Fordism' is the product of capitalism in decline (H. Overbeek, 1990)! An explanatory category that cannot distinguish whether an entity such as capitalism is flourishing or decaying is of little use to Marxists wishing to come to terms with the so called 'Thatcher era'. The most fruitful route is that taken by 'decline' theorists, yet they either leave out, or, just as bad, reify the central categories of a Marxist explanation - abstract labour, value, fixed and circulating capital, the formal and real subsumption of labour etc... In the third section of this article I bring these categories back to centre stage of enquiry and use them to analyze capitalist decline in Britain. By doing so I lay the basis for a Marxist understanding of the present epoch (so called 'Thatcherism'). Before this, section two will briefly outline the essence of Marx's 'value theory of labour'.

For Marx an acknowledgment of 'The two-fold character of labour' was pivotal for a 'clear comprehension' of capitalism. [8] As capitalism is still with us, albeit in a seriously sclerotic form, then any Marxist notions of capitalist decay must expose the development and decay of this two-fold character. Indeed, as will be made clear, the contradiction within labour and its dialectical process of a development and decay are the roots out of which firstly Labourism and then Thatcherism grew. It therefore, becomes vital to the flow of the argument here that we briefly emphasise the essential aspects of Marx's 'value theory of labour'. As will become clear, it is primarily an ontological statement about the contradiction between the forms of labour in capitalism - on the one hand, concrete, useful, need satisfying labour; on the other hand, abstract, value creating labour. After detailing this contradiction, we then link its development tendencies to its highest form of expression - 'money capital' and the accumulation process.

In doing so, the contradictions internal to capitalism, which negates the contradiction within labour will be all the more clearly exposed (to be developed in section 3). Also in section 3 a tentative 'dialectical history of capitalist decay in Britain' will be offered concerning the effects that the negation of the contradiction within labour has had on the formation of the working class and the ruling class in Britain. Firstly, then, a brief outline of Marx's 'value theory of labour'.

As stressed above, the value theory of labour Marx offers is primarily an ontological statement concerning the essential social production relations endured within capitalism. In capitalist society labour is divorced from the means of production and must sell only its own labour power, which now stands opposed to it in the form of capital. This simple fact has important ramifications, for, if one considers that it is through productive activity that labourers are associated, then it is obvious that divorcing labour from the means of production atomises every individual labourer, one from another.

Additionally, the owners and controllers of capital also stand atomised from each other. Therefore, all become commodity owners. The above form is the basis of the contradiction within labour: as individuals with use value needs and 'bearers of the exchange value producing process'. For example, labourers own their own capacity to labour, a useful activity which must become an exchange value creating activity if the capacity is to be realised. Capitalists, having realised labour's capacity by exchanging it for a wage and uniting it with the means of production, are also commodity owners of many potential use-values at the end of the production process.

However, like the worker's labour power, commodities remain only potential use values until they are exchanged. In this way the capitalist too is the bearer of a particular part of the universal value relation. Clearly, the 'ideal' for capitalism is to have no directly social production relation between individuals (whether intra or inter class). Social relations outwith, such as feudal, are crushed under the 'juggernaut of expanding capital', to paraphrase Marx; until individuals are of necessity mediated by exchange at every turn. It is at this point that one has the ontological basis for the rise of the value form and its dominance over society. Stated simply, capitalist society, as an organic whole, expends and distributes social labour, however its essential social relations atomise individuals. This ontological fact poses the real ontological problem of how individual private concrete labour (whether it is the worker offering his commodity labour power or the capitalist with a factory full of potential use-values worked up by concrete labour) is to be socially sanctioned in such a manner as to reveal its expenditure and distribution as socially necessary.

Clearly it is through market exchange of commodities and so the 'price mechanism', that this ontological problem is resolved. For Marx, commodity exchange, as its hold deepened on society, was, stripped of all unessential content becomes nothing other than the social process between individuals which has reduced their holdings of concrete private labour to abstract social labour. This social valuation of private labour is achieved through the exchange of commodities. In this manner, as Marx remarked constantly, our social relations take the form of things because things take the social form of value relations. As our social exchange relations develop so too does the expression of value, and as such, abstract labour. Eventually the social practice of abstracting value creating labour develops out of itself a universal equivalent: money gold and, at a more concrete level, the world currencies that at different periods of capitalism's history act 'as good as gold', namely: Sterling and latterly the Dollar in a more brutalised form.

The point is the universal equivalent is universal because it is an active reflection of capitalism's growing potential to realise its ideal of totally atomising individuals as mere commodities and so functions of capital expansion. This is why the universal equivalent, or, 'money capital' is the value relations most developed form. As such it is abstract social labour's most attainable bodily form. In effect, it is the material realisation of the contradiction within labour; the material embodiment of a social relation.

One side of the contradiction - abstract universal labour in the value or money capital form - allows the other side of the contradiction - concrete individual labour - and every other particular commodity, to express their exchange value and the value relation between people more adequately. It is a situation wherein the particular expresses its existence as a universal.

Following this, the changes taking place in production, namely, increases in productivity, leading to less socially necessary labour time; become transmitted via the exchange of commodities for money, which, as abstract social labour, is the bodily form of value and as such reveals to the commodity its new value. It is this social ontology which the more concrete price mechanism of supply and demand reflect. The whole drive behind such social relations of course evolves out of the capitalist's need to extract a surplus from labour. This brief excursion into the basic ontology of Marx's Labour Theory of Values leaves one with these initial conclusions: the contradiction within labour is that between concrete useful labour and abstract labour; abstract labour is the basis of value and value is the basis of 'money capital'.

The above describes capital's 'ideal', it is also clear that a Marxist understanding of capitalism in decay must encapsulate that process whereby the dual nature of labour begins to disintegrate along with the contradiction between use and exchange value. In as much as this is the case, decay is a positive progressive category to use, because it explains how, with the demise of abstract social labour, concrete social labour, orientated toward useful needs, eventually dominates productive intercourse between people. Below we develop our understanding of the process of decay by considering 'money capital' the general form of capital and as such the highest manifestation of capital as circulation capital. Specifically, we develop an understanding of the contradictions which build up as capital, in order to expand value, has to assume particular forms which become increasingly alien to it. The alien forms spoken of are fixed capital and eventually even its life blood - variable capital. The latter is the real source of capitalist decay.

Below the word 'decay' refers to the decay of the contradiction within labour mentioned above and expresses two meanings, the one negative the other positive. On the one hand it refers to a negative decomposition of labour's dual nature: negative in the sense that, without communism the concrete, use value, need fulfilling character of labour becomes decomposed, or, bureaucratised (the example of health care provision these past decades being a case in point). On the other hand, it refers to the more positive Latin meaning 'decadere', or, literally, 'falling away'; in this case it is positive decay and signifies the 'falling away" of the alienating character of labour - its value creating abstract side. This, then, is the dual meaning of decay emphasised here. To provide a detailed account of this process is beyond the scope of this article. At this point I wish no more than to intimate how capitalist decay is generated by the contradiction internal to the capitalist accumulation process.

A theory of capitalist decay must start from the recognition that capital must of necessity accumulate surplus value in order to survive. We know from the above that value's substance is abstract labour and that abstract labour, the product of the value relation between Capital and Labour, takes as its highest material form money capital. Money capital is the highest material form because it best reflects capital's essence as being above all circulating capital. Hence here we refer to circulation in its widest sense covering production, exchange and distribution of value. Capital, in order that it accumulate surplus value, must perpetually circulate, must maintain itself in a form which allows it to be value as a process of expansion. In this sense, money capital is the general form of capital which allows this. The problem for capitalists is that to accumulate, capital must relinquish its general universal form and assume particular forms such as variable capital or labour power. In order to exist of course, capital must appropriate variable capital or labour power. However, all these particular forms exhibit the potential for fixity which is alien to capital as circulating capital.

Capitals ideal state is to be a concrete universal, these particulars deny this: they fix this social relation. It is the process from potential fixity to actual fixity which underlies the negation of the contradiction within labour and so underlies capitalist decay. Let us consider the matter more closely.

In essence capital is circulating capital. However there is a contradiction at the heart of its circulatory nature. The contradiction for capital is this: within its more 'highly developed determination as circulation for the expansion of value' (to paraphrase Marx),[9] there is a contradictory unity between its more concrete determinations; namely, production and circulation. Ideally, for 'capital as such', i.e. circulatory value expanding capital, the process of production should eventually reflect the process of circulation. This ideal relationship was emphasised by Marx in Capital (Volume Two). Specifically, he points out how capital requires three interrelated forms in its overall circuit: money capital, commodity capital and productive capital. As Marx explains: "Capital describes its circuit normally only so long as its various phases pass uninterruptedly into one another". This requires that production turnover (circulation) become as quick and efficient as possible. When capital achieves this then, "money capital, commodity capital and productive capital do not therefore designate independent kinds of capital".

This is the 'ideal', however, as Marx also points out: "it is in the nature of things that the circuit itself necessitates the fixation of capital for certain lengths of time in its various phases".[11] It is this necessitation which systematically develops and 'designates' the potential for 'independence' between two kinds of capital; namely, fixed and circulating[12]. These two categories of 'capital as such' contain a contradictory unity which in specific conditions threatens to breach commodity production and the contradiction within labour. Specifically, the contradiction which appears as the opposition between fixed and circulating capital intensifies the rift between the two polar opposites of commodity production - exchange value and use value; abstract labour and concrete labour. In section 3 below we discuss how aspects of this have developed in Britain, the immediate task is to review this developing contradiction as a law of capitalist decay.

Examining this dialect more closely, we note that, having entered the production process and feeling the competitive pressure from other capitals, capital is compelled to make the particular individual concrete labour it exploits as close to abstract socially necessary labour, or better still, below abstract socially necessary labour as possible. In capital's attempts to realise this goal, it is compelled to assume an increasingly fixed form in production. This fixity expresses capital's development from its formal subsumption of labour to its real subsumption of labour. Formal subsumption refers to the fact that when capitalist social relations initially takes over a society's political economy it does so in a formal sense, that is, it leaves the old ways of material production relatively untouched. Under these formal conditions capitalist social relations are expressed, of course, by the wage-labour relation and the predominance of absolute surplus value extraction. That is to say, capital accumulates and circulates via a production process constituted by artisan crafts of a heterogeneous nature, all with their own controls and restrictions on the process of valorisation.

I take capital's real subsumption to mean the compulsion to break down labour heterogeneity and fixity under the driving whip of capitalist competition to increase the rate of exploitation. This compulsion saw the movement toward the creation of a labour process more in keeping with capital's value expanding essence. That is, it saw the movement towards a labour process occupied by increasingly abstract homogeneous labour; a 'labour' more adequate to capital because more adaptable to a speedy circulation through the labour process.

The attempt to reduce labour craft fixity and control over the flow of production (the latent abstraction of labour in production) leads to the simultaneous growth of capital's fixity in the production process, in the material form of concentrated machinery (fixed capital). So, the drive to accumulate, compels the capitalist system to increase the abstraction of labour, but in the process this requires a greater level of fixity on capital's part; a fixity which hinders capital's ability to circulate and accumulate! This process may increase the mass and rate of profit, but it also heralds a vicious spiral of decline for capitalism. Capitalism begins to 'dig its own grave' due to the fact that the same process foists upon capital another, all consuming, contradiction - an increasingly socialised labour which threatens to negate its value form of existence as abstract labour. [13]

It is this contradiction which is embedded within the heart of capitalism. On the one hand, in order to expand, capital has of necessity to reduce the fixity of craft type labour and expand the proportions of its form as fixed capital. As such capital is compelled to expand in a form which can only circulate value in slow seepages over many turnovers. Exactly how many turnovers will depend on the size of fixed capital, a particular capital's position in the commodity market and capital's ability to control an increasingly socialised workforce. On the other hand capital has to reduce all the fixity building up within the production process to socially necessary abstract labour, by dissolving itself once more into its general money capital form. It must do this if value is to circulate and realise the expansion occurring in the production process. The contradiction is an acute one for the capitalist class. As Marx noted:

As long as it is tied up in the process of production, it is incapable of circulation, and hence is virtually devalued. As long as it is tied up in circulation, it is incapable of production, posits no surplus value, is not capital in process.[14]

As Marx implies in the above quote, and building on what has been suggested above, any 'bottle necks' in the production sphere must act as a drag on capitalist circulation and, as such, act as an effective devaluation of capital.

This contradiction becomes more critical when one bears in mind two interrelated facts which interweave with the above problems for capitalism. Firstly, fixed capital is prone to increasing rates of moral depreciation of the value imparted to commodities due to the intensity of competitive accumulation between capitals. Because of this, productive time becomes of the essence. This fact intensifies the imperative for production, as valorisation process, to occur as smoothly and as quickly as possible.

Secondly, we have the major obstacle to this endeavour because higher levels of fixed capital bring on to the historical stage a higher concentration of directly socially combined living labour, which, increasingly, through emerging economic and political organisation, act as a barrier to capital's exploitation of labour and so a barrier to the smooth efficient use of fixed capital.

As the degree of fixed forms of capital develop, both moral depreciation of capital and increased socialisation of labour develop the contradictions within the capital value relation. Eventually, for the larger dominant capitals which emerge in each industry, the atmosphere in the production process becomes unconducive to the risking of large amounts of money capital in large scale investments of fixed capital. This becomes the case whether the investment is by private capitalist or joint stock companies.

To briefly recapitulate, I have argued that, due to the competitive compulsion to expand value, capital must increasingly forgo its essential nature as circulation capital and develop two contradictions, the one debilitates its further expansionary tendencies - greater concentrations of fixed capital - the other threatens capital's very existence - the greater socialisation of labour. This latter aspect forms the focal point of capitalist decay. For in as much as capital is expanding value and the substance of value is abstract labour and the greater is the emergent socialisation to negate abstract labour; then we can say the process described above heralds the decay of the contradiction within labour in its positive meaning - the falling away of the value form of production which alienates human labour.

The reaction of capital is two-fold - on the one hand it retards the productive forces and adopts bureaucratic forms of conscious regulation of production and markets to secure monopoly profits and bureaucratise the commodity status of labour; on the other hand, following a path closer to its nature, it reverts to type and becomes parasitic. That is to say, capital takes flight back into its circulatory form; only this time, due to the socialisation of labour and negation of its essence - 'abstract labour', capital's flight into circulation takes an essentially parasitic form. The latter aspect of capital is simultaneously capitalism's highest attainment (the money form) and its most decadent (a money form without any substance). It is this form that then begins to sublate and so dominate other forms of capital (eg productive capital) by controlling the rate and nature of investments internationally.[15] This brings us to 'decay' in its negative connotation. For, as capital decays and takes flight into parasitic activity, ie, 'earning' interest by circulating within itself, then the use value nature of production asserts itself increasingly. However, without a political transformation on the part of the emerging socialised labour, the use value nature of production, and so the provision of needs, becomes bureaucratically controlled by an ailing capital faced with the breakdown of the value relation. This situation potentially opens up room for a new social category to emerge within the decaying form of capitalism, as the contradiction within labour between its concrete and abstract form becomes mediated by a bureaucratic regulation of production. If this potential becomes actual then the further abstraction of labour in production can recommence, relatively safe in the knowledge that the socialised labour which emerges to negate capitalism, becomes transformed and re-atomised via a bureaucratic regulation of labour in both an economic and political sense. However even if this solution works, it does so only initially, for it is at great cost to capital in general. It allows workers institutional links with the state, through which rank and file struggle can be channelled to great effect. It also means the beginning of a bureaucratic regulation of abstract labour formation which seriously restricts the valorisation process. Looking ahead slightly we can say this potential negative effect for capital did actualise itself in Britain throughout the 1960s and 1970s, when profit rates declined and worker militancy became a major problem for the ruling class.

The potential bureaucratic solution has of course realised itself in the historical process. It is what has often been referred to as 'Labourism'. Traditionally, one only refers to 'Labourism' as a political phenomenon with contradictory 'Left' and 'Right' political manifestations. The argument here, however, is that it must be given further recognition as a socio-economic production category which bureaucratically regulates and atomises the labour process and in so doing allows the further latent abstraction of labour. In section 3 below a preliminary outline is given of the historical dialectic of this process in Britain. After which a preliminary contribution to a political economy of so called 'Thatcherism' will be given.

We become historically dialectic and so more concrete specific by taking the above genetical treatment of capitalism and its emergent decaying forms and relating them to a specific capitalist entity, in our case Britain.

With regard to Britain, the further expansion of capital from the late 19th century onward served to develop the contradiction within labour to the point where it began to decay. That is, capitalist expansion served to develop the socialisation of labour in its drive to create every commodity on the basis of abstract socially necessary labour. This emergence of socialised labour heralded the point of dissolution of commodity fetishism, ie, that contradiction within labour between its useful form and its value form of existence. Empirically this revealed itself in the labour movement's growing clamour for the social regulation of their own labour and productive forces. Some of the dominant ideologies workers became drawn to, as their capacity to socialise grew, were 'Ricardian Socialism', 'Municipal Socialism' and 'Syndicalism'. It was through these versions of 'socialism' that workers began to organise and advance their political demands for socialism.

The grip of an emerging finance capital over and above domestic productive capital in Britain also revealed itself in this late 19th century early 20th century period. It can be said to mirror the polar grip that militancy and socialism was having on dominant sections of the labour movement. History shows that finance capital in Britain emerges from the fragmented country banking system and quite rapidly (approximately between 1870 to 1920) centralises and concentrates its holding of money capital in the 'City of London'. Finance capital does this to escape the parochial and restrictive connection with industry. At first finance capital's predominant form is imperialism, or, corporate finance capital. That is to say, finance capital, through the 'City' orients itself as world capital along the lines of the fusion of banking and industry outlined by Hilferding, and later, Lenin. Its other, higher, development - parasitical capital - is held in check in this period, by the imperialist mode. More specifically, the clearing banks were increasingly drawn into the web of commercial money laundering and the short-termist philosophy of merchant banking. Drawn in, it should be noted, by the Bank of England and Treasury. Below is an attempt to flesh out the process a little more, by, very briefly, itemising, firstly, some occurrences which suggest labour's growing strength and secondly, some occurrences which suggest capital's waning powers.

In the first two decades of the 20th century independent working class collectivity reached new heights which have never been attained since. Syndicalist ideas of socialism had gripped the most politically advanced sections of labour. The main thrust of its practical politics was that trade unions were to become the vehicle for achieving socialism and the General Strike was to be the main weapon in the trade union arsenal. The militant sections of collective labour were concentrated in Coalmining, Docks and Railway industries. Throughout this period, especially 1910-14, strike waves deepened and often brought whole cities to a standstill. The state had increasingly to resort to sending in police and troops in an attempt to regain control; this was the case in, for example, Hull, Manchester, Salford, Liverpool and Glasgow.[16]

The period 1910 to 1921 saw the development of worker 'trades councils' and 'cooperatives', alongside the development of 'councils of action' throughout the country, which were responsible, among other things, for the 'Hands Off Soviet Workers' campaign. Also in this period, the increasing tendency of trade unions from different sectors of the labour process to act together, irrespective of craft division, began to reveal itself.

As the Minister of Labour lamented in 1920.

What is called 'class consciousness' is obliterating the distinction between those who follow different occupations. [17]

In this period the rank and file workers' movement was still, in large measure, autonomous from the rigid policing role of trade union bureaucrat, who, particularly during the first world war, was seen as an accomplice to state inspired working class oppression. According to the British labour historian J. E. Cronin, it was this period when 'technical, social and economic processes' were at work combining to internally homogenise the working class and cause it to be 'less sharply divided within itself. Increases in the numbers of unskilled and semi-skilled workers was the objective basis upon which political collectivity began to be formed.

Within the cities a distinct working class culture was emerging, which allowed the point of production struggles to spill over into political struggle. Cronin again notes how

The militancy of 1917-20 transcended the issues of wages, prices and dillusion and even war itself. It was, more than any previous or subsequent unrest, a mobilisation of the working class as a class and of their institutions and neighbourhoods.[19]

There is a tendency to scoff at such optimism that the working class in Britain were acting as a class, on the grounds that this optimism is born of an 'economistic' outlook. To some degree this may be justified, however, this attitude overstates the scepticism. It does so because the holder by and large looks at this period of British worker struggle through the distorting prism of Stalinism and Labourism and, as such, the hold these categories have exerted on worker politics. What we must not forget is that Stalinism had not yet developed and Labourism had still to gain a central place in the re-atomisation of the growing worker collectivities and had yet to stratify them into bourgeois collective bargaining groups.

Labour history is of course, full of such anecdotal evidence as that supplied above. What it has singularly failed to do is place the growing worker's movements within a theory of capitalism's decaying forms. The ground work for the surge in labour collectivity alluded to above had been laid in the last quarter of the 19th century. From 1873 to 1896, in the face of declining prices, real wage increases were successfully rested from capital. In the same period profits went into a spiral of decline.[20] Workers began to assert their political economy over and above that of capital: increasing use value acquisition and needs were to take precedence over surplus value creation. In effect the situation was one where workers increased their standard of living, whilst capital, unable to cope with an increasingly socialised workforce, had to accept the profit losses and begin its flight into finance capital.

Of course there was counter offensives by capital, from the turn of the century until 1914 real wages declined, but, one must stress, only at the cost of inflationary price rises. The latter being no less than the outcome of the pitched battle between labour and capital in this period. Objectively the battle was being won by labour, empirically this can be gauged by the massive decline in fixed capital formation, as capital reverted to its essential circulatory form. Feinstein[21] points out that in the period 1873-1913 productivity growth in Britain slowed to an average of 1% per year, whilst the USA, Germany and other developed capitalist economies exhibited averages of up to 2%. Fixed capital installation was older and less advanced, new industries were slower to develop and managerial strategies to control labour were lacking. The essential but simple fact was, capital was losing control over an increasingly collective labour. Throughout this period and until the late 1920s, the ruling class were in disarray, especially so when the influence of the Bolshevik revolution made its impact on the working class. Bentley captures the atmosphere in the ruling class camp in this period when he remarks how

The socialism which Lloyd George confronted after 1918 seemed to him something harder and colder...In the country he spoke not of socialism but of bolshevism (and) he wrote of 'the great struggle which is to come'.[22]

Until the Fabian/Labour Party and the TUC could effectively join forces with Conservative social chauvinists such as Chamberlain, to ensure a bureaucratic atomisation of the emerging socialised working class, it was the likes of Syndicalists, such as Tom Mann, who inspired the worker's movement politically. As a ruling class counter-weight it was the 'Anti-Socialist Movement', the 'Economic League' ideologues who inspired the capitalist counter-offensives. Up until that watershed in British working class formation, the 1926 general strike, the Labour Party and TUC, despite the state's careful nurturing, were essentially still on the side lines with respect to any hegemonic control over the working class.

Therefore, in this period, on the one hand, we had Syndicalism striving to breakdown the political divisions between workers. On the other hand, we had a Labourism attempting to consolidate its reason for existence by working flat out to deepen sectional divisions in the working class and deepen the divisions between the British working class and international labour via patriotism.

In this section a brief consideration will be given to the developmental tendencies towards a particular variant of finance capital in Britain. The 1870s to late 1920s was essentially a period of limbo for capitalism in Britain. The objective conditions for a transition to socialism were effectively being constructed, regardless of any subjective conclusions otherwise reached by the actors involved. Finance capital is predicated upon this . That is, finance capital emerges when the capitalist mode of production is in the netherworld of decay. There are a number of aspects to the way in which finance capital in Britain reacted to this transition period, where the contradiction within labour was being positively negated by an emerging social and collectively conscious labour movement. We note here only some of the essential ones.

As the contradiction developed between, on the one hand greater levels of fixed capital formation and intensified moral depreciation of its value holding capacity, and on the other hand the negation of commodity fetishism, or, the contradiction within labour; the ruling elements within capital ensured the easy passage for capital to revert to type, ie, circulation.

One notes in this respect the general trend away from capital's 'country banking' base to the 'City of London' from the 1870s, which quickened to a gallop as the century drew to a close. This was achieved primarily through a spate of mergers. By the early 1920s British finance capital had consolidated a remote central banking system operating out of the 'City* and had taken up full residence in the world of fictitious capital creation (secondary share exchanging and short term money market discounting etc). 'Over night' almost, the old 'country banking' network which 'lent long and encouraged a 'healthy' fusion with productive capital, had been sublated by the growth of parasitic bank branches - the tentacles of finance capital and main arteries through which circulatory capital could assert its parasitic dominance of productive capital.

Of course in the 'City' there had always been a number of avenues for capital to realise a return. The two basic distinctions of parasitic activity were between money market activity, which lent short to domestic productive capital and long to foreign Governments and/or high labour intensive, low wage, foreign, private industries. Within this configuration however, commercial trading in currencies, bonds, secondary share issues and bill discounting became ever more dominant. It is this latter faction of capital which eventually became the central focal point for a capital reacting to the loss of control over its productive base in the UK. The more the contradiction within labour became negated and so the collective strength of labour grew, the more deeply did this form of capital feel at home in its abstract, fictitious world of M-M1.

In its imperialist form, finance capital acted as world banker to all developing countries. By exporting capital it was able to replenish itself on the surplus value of other nation's labour. The problem was that the first world war, caused by this imperialist expansion, served, firstly, to bankrupt British finance capital (the celebrated foreign earnings of £4 billion by 1914 dissolved to nothing); secondly, served to block the flow of capital abroad, due to the restrictions imposed on foreign securities during and after the war. Such potential for international restrictions on the flow of capital and the growing class tensions within Britain, convinced the British ruling class that they must attempt to create favourable internal conditions for the return of inward capital investment. In other words finance capital had to exert short term discipline upon itself by allowing the state to act in its long run interests. The state as repository of finance capital's long term interests then sought, firstly to contain, then to incorporate and control the labour movement. The only lasting way to accomplish this was to firstly, crush the syndicalist influence and secondly, foster the growth of reformist elements within the Labour movement. From this point on the strategy of British finance capital was to encourage and foster the growth of Labourism within the ranks of the Labour movement. No one should doubt that finance capital had the necessary institutional links to carry through this policy.

Apart from the 'Economic League' and organisations like it, one also has the multitude of 'Employer Associations', the systematic interlocking of directorships which knits the circuit of capital together and sublates it under the influences of finance capital. On top of this one also has the persona of finance capitalist influence within the state directing planning committees, conciliatory procedures and controlling the Treasury Office and Bank of England. As John Scott has pointed out, finance capitalists in Britain for the past century have been in effect the controlling power elite out of a power bloc consisting of large scale industrial capitalists, commercial and landed interests. [23]

No doubt some historians may dispute the historical chronology or other particulars of the above. Arguments have raged amongst economic historians for years as to how one should characterise this period in British economic history. For some it was a period of 'retardation', for others, a period of 'restructuring' before the onset of the 'second industrial revolution'; others still, deny it as a period altogether, claiming it as simply part of the natural evolutionary process that all mature 'industrial societies' pass through. In this case Britain merely revealed to other nations a glimpse of their own de-industrialising future. It would appear that no matter how much one pours over the empirical data, there will always be those who will dispute your findings. It seems to me that what has been most needed is a theoretical basis upon which to investigate/understand the surplus of empirical data collected on the economic history of Britain in the period 1870-1930.

In applying Marxist categories this much has become clear: the emergence of finance capital occurred in Britain around the 1870s onward; predicated upon a temporarily defeated productive capital that could no longer secure control over workers to guarantee an efficient rate of accumulation. As the decades of the late 19th century gave way to the early 20th century, commodity fetishism, based on the contradiction within labour, began to break down. Objectively, then, the special interest given this period by historians is warranted, for it is the period which heralds the beginnings of the negation of capitalism.

In essence the period can be characterised as that period in British capitalism when the two poles of the commodity mode of production were becoming wrenched apart. On the one hand, an increasingly organised labour movement was advancing to assert the preeminence of useful production and need; on the other hand, a retreating finance capital was holding on to its fetishised value creating world via a parasitic 'money-go-round' called the 'City of London'. The intensification of this contradiction threatened the existence of commodity production. In this respect the emergence of Labourism was no accident.

Labourism can be said to be the development, within a decaying capitalist formation, of a new political economic category. Politically it sought to heal the rift between finance capital (the value form) with Labour (use value and need) via 'corporate compromise' at the level of the State. Specifically, Labour was to be given bureaucratically regulated use value provision through the construction of the welfare state. This was at great cost to capital, but was the only way of establishing the rule of the policemen of the labour movement - the TUC and Labour Party Bureaucracy. Alan Fox, like the majority of 'industrial relations' experts, views this period as the consolidation and integration of 'collective bargaining'. Whatever one chooses to call it he is surely correct when commenting thus about its substantive purpose

...when British ruling groups admitted to a recognised foothold in decision making such organisations as demonstrated their readiness to pursue their ends within established constitutional structures, they thereby created new allies in the defence of those structures.[24]

The 'new allies' were the Labour Party and the TUC, and 'those structures' refer to the growing society wide network of collective bargaining controls over labour. Taken as a whole it constitutes Labourism. Industrial relations theory never does get to the bottom of 'collective bargaining', a Marxist approach can.

Even more important was Labourism's economic/social dimension, because this was the basis for collective bargaining. Labourism can be said to be a social category which develops out of the decaying forms of capitalism. Its fundamental task being to act as a surrogate form of abstracting labour in production. As such, it bolstered the ailing value form's role in abstracting labour. By this it should be clear that it does not make value formation any more efficient, in fact quite the opposite; its chief purpose is to prolong the life of an ailing social relation. If we remember, the capitalist value form of labour abstraction brings with it an emerging socialised labour, this is one reason why Marx could say that capitalism 'digs its own grave'. The task of Labourism was to reverse this socialisation of labour via bureaucratic rules and procedures both in the labour process and wider society and state. In this way capital found the means for a reinvestment strategy in Britain from the late 1920s onward. Unlike the 'Fordist regulation' theory however this process is not evidence of capitalism's health, but rather, in line with the argument here, evidence of its decay.

One can point to many examples of the growth of this social category. One notes, as already mentioned above, the growing theory and practice of 'Industrial Relations'. This fetishistic preoccupation with a 'scientific' enquiry into 'employee/employer' relations has an inverse relation with the fortunes of capital, ie, as capitalism decays the academic industrial relations 'industry' thrives! From as early as 1868 and the Royal Commission on Trade Unions, there developed a labourist clique of reformers, full time trades union officials, employer associations. The gruesome combination of Fabian bureaucracy and right wing social chauvinism, became the bedrock upon which a philosophy of consensus industrial relations could emerge. The Whitley Committee created in 1916 was the first national vehicle for the institutionalisation of Labourism within the labour process.

From another angle, one can observe the importance of the merging conscious application of labour process strategies in the face of a declining commodity fetishism. This was particularly so in areas of industry where the reserve army of labour had 'dried up' and an internal bureaucratic regulation of the flow of labour to the needs of capital, had become the norm. Direct forms of labour control which shadowed the abstraction of labour achieved by capitalism, such as 'Taylorism' were introduced (and increasingly so after 1931). Along with 'Taylorism' other labour process controls became dominant such as 'human relations theory'. This offered a more 'responsive autonomy' method of control, according to Friedman.

Of course at the concrete level of British class struggle the Labourist incorporation of the working class was to be a protracted affair. In particular, its 'left' face had to be hammered out on the anvil of class struggle over many decades. Indeed it was not until the massive waves of labour unrest, which swept through Britain from the late 19th century to the 1920s, were finally defeated, culminating in the General Strike of 1926, that Labourism could take its place with any real success at the head of a depoliticised labour movement. In this respect two important phenomenon occur; firstly, it was only after 1926 that the Labour Party and TUC took firmer root in the social fabric of capitalism. Secondly, the successful depoliticisation of the working class heralded the break from the gold standard in 1931. As such it heralded a new era of capital and state investment on the basis of cheap money. More importantly it heralded the decay of a 'universal equivalent form' for capital, this itself the reflection of the deeper chasm developing within the form of labour.

This strategic retreat of parasitic finance capital was made more palatable by the opening of the 'sterling area'; a corridor which insulated sterling from the dollar's world hegemonic position as a surrogate universal equivalent abstract labour representative. Throughout the 'corridor', parasitic capital could repatriate surplus value, generated in the colonies Britain controlled, back to the 'City of London' for speculatory purposes. Meanwhile, with Labourism in place, the conditions for the 'corporate' side of British finance capital to reinvest in the domestic economy had been created. However the tension within capitalism to revert to its parasitic form and the ability of labour to counteract the bureaucratic mechanisms of Labourism such as collective bargaining, has meant that from 1929 to 1979 any moves towards the 'corporate' containment of either finance capital and labour could never develop. It is this schizophrenia of British finance capital which has characterised what in hindsight came to be seen as the consensus years and what I have referred to as the labourist bureaucratic control of the labour process. The period was to stretch from 1931 to approximately 1973. There are those on the left who have described this area as a peculiar kind of half hearted attempt at 'Fordist production regimes'. I have argued here that this 'Fordism' can be best understood as a social category which emerged to contain workers - Labourism. The reason as to why it was such a contradictory affair, or, 'half hearted', is wholly to do with the peculiar schizophrenic nature of British finance capital. On the one hand it has exhibited spasmodically its 'Hilferding type' form (note the corporate financial structure of Germany); whilst on the other hand it has been systematically pulled awry by its highest parasitic form via speculative activity in world money markets. A full appraisal of this must be the subject of another work. The point to be stressed here is that Labourism emerged to dominance in the late 1920s and became consolidated by the events of the post 1945 world order. It eventually began to wane, firstly, under its own internal contradictions. The chief contradiction was that working class rank and file organisations, bolstered by the promise of full employment, threatened the existence of Labourism. A second contradiction was the world capitalist slump, which began to assert itself in the late 1960s - early 1970s and brought an end to a rate of profit which could afford such a compromised value relation. It was out of the ashes of Labourism that so called 'Thatcherism' emerged.

The waves of growing working class militancy throughout the late 1960s and most of the 1970s are evidence of, by this time, an increasingly socialised production process facing a capitalist class increasingly bereft of its labourist support. Faced with a world slump, the costly bureaucratic compromise between labour and capital simply had to be removed. No matter the degree of apparent pragmatism at work in this period, the logic was clear: Labourism hindered valorisation; could no longer control the working class, therefore Labourism had to be removed! However, removed under conditions as favourable as was possible to a decaying capitalism.

The Thatcherite ruling class faction's onslaught post 1979 was no 'hegemonic victory. In its essence it was a set of pragmatic policies designed to carve out a breathing space for capitalism in the hope that, with the demise of Stalinism in the East, fortunes may change. In the short term the so called Thatcher 'strategy' was simply to break up the bureaucratic restrictions on valorisation, whilst also breaking up any socialising tendencies within the labour movement (clearly visible in the 1970s) which would occur once the Labourist regulation of workers had been removed.

This would stop a worker collectivity assuming political independence. Of course along with this breakup of socialising tendencies within the working class it also became necessary to free parasitic finance capital and allow it to circulate within itself, and/or take advantage of short term surplus value extraction in countries further afield with still undeveloped labour movements. Again the only long term rationale for the suicidal financial deregulation of the 1980s has to be a waiting game upon the fortunes of the disintegration of Eastern block economies. Without favourable conditions in the East, capital could not, in the 1980s, and still cannot today, invest massively in fixed capital and so earn fresh seams of surplus value. This was/is not an option for the simple reason that world wide organic composition of capital are far too high. Consequently, profit rates are far too low to consider it worth the risk of confronting organised labour at home.

These facts give us the root cause of what has been described in bourgeois economics as the process of 'de-industrialisation', the essence of which is to break up the socialising tendencies in the labour movement whilst intensifying the abstraction of labour in production and exchange. There are perhaps three broadly defined strategies which the 'Thatcherite' faction of finance capital adopted in order to secure this break up of socialised labour formation on terms most favourable to themselves. Firstly, de-industrialisation was achieved simply by closing the public sector purse strings, which effectively cut off the subsidisation of manufacturing industry. Financial deregulation followed. This allowed the development of unrestricted flows of capital out of the unprofitable parochial environment of British manufacturing and so the rise to dominance once more of the circulation form of capital over the fate of the whole economy.

Public Sector gross domestic capital formation from 1979-89 had fallen by some £4.5 billion (constant 1985 prices), or, put another way, 15% of capital formation.[26] In the late 1960s the Public Sector had contributed as much as 50%. In the capitalist sector gross domestic capital formation fell by 33% between 1979-83.[27] The money form has been used to dissolve the bureaucratic association that had ossified into the social fabric in the decades of Labourist dominance around the production of needs. This was done by imposing 'cash limits' on the public sector; and imposing 'merit pay' wage rises, awarded to workers on an individual basis. These particular strategies served to break the material basis of Labourism. In effect it left the mechanism of control such as collective bargaining in tact, but without any context. Basically, collective bargaining has been 'hollowed out' - only the framework survives, buttressed by so called 'Human Resource Management' goals (we return to this briefly below).

Secondly, the breaking up of large production units in the name of 'Post Fordism' and its derivative 'just-in-time production' occurred. In 1973-4 there were some 1018 workplaces employing a labour force of over one thousand; by 1982-3 this figure had almost halved to 5S9.[28] This particular strategy, as well as facilitating the break up of socialised labour and allowing abetter environment for the intensification of abstracting labour, (tendency towards the flexible worker, just-in-time production, labour surveillance..etc); also served another important purpose. It served to shift the burden that unproductive labour was exerting on profitability from the stronger capitalist to the weak. Thirdly, a collection of so-called 'supply-side' policies designed to recommodify the labour process. The chief policy being to whip the labour movement back into line by creating a large scale reserve army of unemployed. By the early 1980s that arch representative of capitalist interests, Nicholas Ridley, could assure his pay masters that "the high level of unemployment is evidence of the progress we are making".[29] One Employment Act after another has sought to achieve two interrelated goals, to break collective bargaining and re-commodify the supply and control of labour.

The essence of industrial relations in this period has been to atomise the firm from the economy and economy from state. Pre-1979 the institutional web of Labourism had ensnared all three spheres and increasingly restricted profit rates and acted as a battering ram for the working class's assault on the state. In this sense the policy of 'human resource management' (HRM), however pragmatic some of its elements are, has wider ramifications than those affecting the internal policy of a particular firm. HRM has spearheaded the wider policies of monetarism and privatisation. It is the chief strategy towards the re-commodification of labour within the workplace; the philosophical justification for increasing the abstraction of labour. There has been wide debate about the extent of HRM tactics in the workplace, however there can be little doubt of its increasing influence after the watershed defeat of Labourism and collective bargaining in the pitched battles of the mid 1980s: The Miners Strike; Wapping;..etc.

HRM has become a key focus around which capital has sought to break the official trade union movements, Labourist hold over the worker and weld the re-atomised workers loyalty to the firm. HRM emphasises the 'individual employee' and, via management counter offensive, attempts to squeeze out the 'collective worker' ethic. What sort of loyalty capitalists actually get from workers, when they cannot guarantee workers employment from one year to the next, is of course a totally different matter. The buzz words of the 1980s and 1990s such as 'functionally flexible workers'; the 'just-in-time producer'; the 'numerically flexible worker', are reified descriptions of real trends within capitalism to increase the abstraction of the worker. The current debate about how extensive such reified phenomenon have become in Britain, somewhat misses the point.

It is not a case of to what extent or otherwise such a policy exists; it is a case of this tendency being a necessary part of the capitalist social relation in decay. Therefore it is most important that Marxists understands its real nature. Of course, as Clarke observes, the Utopias of Post-Fordism and 'flexible specialisation' have no vision and 'serve to rationalise the complacent self-satisfaction of a small stratum trying to invent for itself an historical role'.[31] Nevertheless, it is incumbent on Marxists to extract from this mishmash the 'rational kernel' within.

The Thatcherite project to re-commodify workers has had very limited success. The main purpose was an impossible one to achieve the re-establishment of capitalism in its prime. For all the attempts to control labour via the re-imposition of the commodity form in workplace relations, there has been little capitalist regeneration of the economy. Capital has refused to invest on the scale required and so most of any increase in valorisation rates have come solely from the intensification of work. As the scale of de-industrialisation suggests, the relations of production stand opposed to the forces of production. Without the re-invigoration of the value form 'marketisation' of the public sector has been a bureaucratic sham. State regulation of such hybrids as British Gas, and the different 'Water Companies'...etc and 'contracting out' of Health and Education provision, has simply lead, contrary to ideology, to greater state regulation than ever before. The deregulation of finance capital has further retarded any attempts to re-commodify production relations in Britain. In the past 15 years the pace of the flight of capital away from Britain surprised many.

With its favoured long term options in Eastern Europe turning sour, its parasitic presence can only increase and increase the de-industrialisation trend in Britain. As for the changes that have confronted workers in the workplace, these too are fraught with long term difficulties for the ruling class of Britain. As Gough has explained, the high degree of interrelation of abstract workers implied by the fetishised forms of flexible functionalism and just-in-time-producing..etc, create the ground upon which the future strength of the working class can be built. In the sense that the process integrates workers across skill boundaries, whilst creating inflexibility for capital, especially with the commitment to 'core' worker status. A future article will deal with the contradictions of Thatcherism in some detail. The task here was to put in place the foundations of an understanding that stretches beyond the particular time period of Thatcherism' and situate it within a general theory of the decay of capitalist social relations of production in Britain.

This article has claimed that Marxists up to date have singularly failed to provide a political economy of what has, for convenience, been called Thatcherism'. It was pointed out that 'Post-Fordism' and 'Capitalist Decline' theses were inadequate to the task. The former because it was merely a Weberian 'ideal-type' concept held together by an eclectic series of empirical observations of conjunctural economic and social trends. The latter because it was ill-conceived, dealing only with intra capitalist struggle as a reason for decline. Nevertheless, as pointed out earlier, the concept of capitalist decline held out most promise in our quest to understand both 'Labourism' and 'Thatcherism'. As it stood however the category of decline had to be strengthened if it was to bear the weight of explanation assigned to it. This article has attempted to do this by transforming it into a category of capitalist decay. The decay, it was argued, resided in the contradiction within labour. Specifically, it was pointed out that decay referred to the falling away of labour's value form (abstract labour), or, rather, its negation into social collective labour. The drive for this transition rested with capital's insatiable desire to expand itself. In the process of expansion we described how contradictions emerge for capital; chiefly, increasing levels of fixed capital in a climate of increasing moral depreciation of capital and an increasingly collective and organised labour movement. As argued it is at this juncture that capital reverts to type, ie, circulation, and finance capital emerges. Labourism, it was argued, develops as a social category in capitalist decline, its functions being to rescue the labour process for a recalcitrant finance capital by re-atomising the socialised worker thus allowing capital to continue the valorisation of labour power. It was then argued that this Labourist solution for capitalism lasted in Britain from approximately 1931-73. After which time, and due mainly to the world slump, it declined rapidly. 'Thatcherism' emerged out of the ashes of 'Labourism'. As argued, with 'Labourism' gone any further abstraction of labour would lead only to the re-socialisation of labour, this was certainly occurring in the militant 1970s. In this respect it was claimed that 'Thatcherism' had two suicide missions; on the one hand the break up of socialised labour formation, hence of capitalism itself (de-industrialisation for the bourgeois mind). On the other hand the freeing of parasitic capital from production, to the promise land of the promissory bank note - the 'City[1] - where it could find short term security in speculative money dealing, in the long term hope of a move to the ex-Soviet block countries.

Of course the above strategy has failed and so called 'Thatcherism' lies in tatters. The bourgeois class have no all embracing strategies because they have no future. Everything achieved by 'Thatcherism' was negative; breaking up the forces of production, atomising workers with anti-trade union laws and unemployment and bolstering capitalists with the force of the state's coercive institutions; and then allowing both classes to fight it out, whilst freeing finance capital to hover over the bones. The future can only lie with the working class, the problem is they have to seize it by redefining once more, for themselves, a common politics.

The category socialised labour has a number of attributes which can be divided, for analytical purposes, into two levels of abstraction from the complexities of the capital relation. At a deeper level of abstraction one has socialised labours' genetic attributes, which are properties of the inner laws of capitals decay, whilst at a more concrete level of abstraction one has socialised labours' historical attributes, which are empirically verified trends within production and the labour market. Taking the historical attributes first, these manifested around the creation of internal labour markets and the increasingly relatively autonomous spheres of control in production, which the emerging socialised labourer forced capitalists to concede. The fact that in later decades, after the consolidation of Labourism, these became transformed as mechanisms of control over labour is beside the point. Initially they were capitalist concessions which cost capitalists dearly; raising labour costs, hindering technical change and deflating profit rates. The nuts and bolts of the matter are that the dominant capitalist enterprises internalise the employment relation: wages, work conditions and division of labour are fixed by internal administration, influenced by works councils and less by market forces.

Much has been written about the historical attributes, however little if anything has been written in the way of an explanation of the most crucial aspect of the emergent socialised labourer - its genetic attributes as a category of capitalist decay. This is a little surprising because the process is simple enough to understand. One reason why it has been ignored has much to do with methodology. When Marxism refrains from treating the law of value as if it were some timeless Kantian concept, the genetic attributes of socialised labour become central parts of our understanding of capitalism.

In an earlier section of the article it was explained that at the heart of the commodity form of production which defines capitalism, there is a dialectical contradiction - the contradiction between use value and exchange value. The dialectical contradiction revolves around the fact that they are opposing substances united in the one body. To add to this we also know that, for Marx, the most important commodity form was labour power. With this in mind, let us consider the commodity form more closely.

The commodity form is a unity of opposites: on one side of the contradiction there is concrete private labour, on the other side there is abstract social labour. As Marx was at pains to stress in Capital, for concrete private labour to be socially useful labour requires it take the form of abstract social labour. That is, labour must be valorised and exchanged with money capital in order that its social usefulness can be validated. The emergence of the socialised labourer effectively short circuits this contradiction and in so doing offers the potential ground through which the opposing forces of the commodity form of production can be abolished and communist social relations established. In what sense does the emergent socialised labourer short circuit the commodity form of production? Reverting back to the contradiction, the following process of negation occurs. From the concrete private labour side of the contradiction the socialised labourer develops the powers and complexities of concrete labour. From the abstract social labour side of the contradiction, the emergent socialised labour develops the inherently social attributes of labour. Combined, the social labourer extends and develops its productive activity on the basis of directly concrete social labour. In so doing the emergent socialised labourer's conscious inclination is to exert political pressure which ensures the use value need fulfilling aspect of production as a natural right over and above valorisation, which is increasingly perceived as a subordinate consideration. The vast empirical evidence of strikes, general labour unrest, intensifying community struggles and the growing appeal of socialist agitation, which occurred on an ever deepening trend from 1870s to approximately 1926, provide ample proof of the above.

In the Grundrisse Marx was quite specific about how and why the social labourer substantiates itself in production on the basis of concrete social labour; and how and why the value form becomes increasingly subordinated. Marx argued that under capitalism labour time is the ultimate source of wealth in the form of value. However capitalism faces an inescapable contradiction which eventually brings about its decay. For, as capitalism develops, so too does the social productive power of labour.

So much so that the product of labour bears less and less relation to labour time and so value creation. In other words commodities produced are substantiated more and more as use values and less and less as aliquots of value (Grundrisse p704-706). As labour power is a commodity, then this is happening to living labour activity itself; the two-fold contradiction within labour (Marx's most important discovery) is dissolving.

Marx is quite clear as to the cause of this tendency toward the negation of the commodity form of production - it is the emergence of the socialised labourer and its productive potential which outgrows its value form. As Marx argues with respect to the role of the emergent socialised labourer, in the above mentioned transformation -

It is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body - it is, in a word, the development of the social individual which appears as the great foundation stone of production and of wealth. The theft of alien labour time, on which the present wealth is based, appears as a miserable foundation in face of this new one As soon as labour in the direct form has ceased to be the great wellspring of wealth, labour time ceases and must cease to be its measure, and hence exchange value (must cease to be the measure) of use value With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis ' (ibid p705-706, my emphasis in bold).

Again the heart of the irreconcilable contradictions of capital when faced by the emerging socialised labour is never made more clearer by Marx than in the following statement -

On the one side, then, it (capital) calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as a measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations - two different sides of the development of the social individual - appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high (ibid p706). (From Critique no.26)

1 See in particular Marxism Today throughout the 1980s.

2 Social Studies Revue, VoI6 No3 Jan 1991, p 88.

3 S Hall and M Jaques, New Times, p126, 1990, Lawrence and Wishart 4 Ibid. p 127 (emphasis mine). 5 Ibid. 6 See R. Brenner's article, "The Regulation Approach: Theory and History", in New Left Review 188, Sept 1991.

7 Quotes and claims are to be found in Anderson's, "Origins of the Present Crisis", New Left Review, No23 Jan-Feb 1964, pp 49-53. 8 K. Marx, Capital Vol 1, p 49, Lawrence and Wishart, 1983.

9 See K. Marx in Marx and Engels Collected Works (MECW), No 29, p 9, (1857-61) Lawrence and Wishart.

10 K. Marx, Capital Vol 2 p 50, Lawrence and Wishart, 1974.

11 Ibid., my emphasis.

12 This fundamental contradiction between fixed and circulating capital has been largely ignored by Marxists engaged in developing a theory of Finance Capital. As far as I am aware Hillel Ticktin is the only Marxist to have made this connection. What follows has been influenced by aspects evoked by Ticktin's work in Critique Nos 16 and 17.

13 See appendix concerning the category of socialised labour.

14 MECW No 29, op.cit., p 9.

15 See Hillel Ticktin op.cit.

16 For a concise empirical history of the conflict between capital and labour in Britain see J. Sheldrake, Industrial Relations and Politics in Britain 1880-1989, Pinter Publishers, 1991.

17 The Minister of Labour 1920 was cited by J. Cronin in his, Labour and Society in Britain 1918-1979, p 22, Batsford, 1984.

18 Ibid., p 27.

19 Ibid., p 31.

20 See any number of economic history textbooks for this evidence. For example, A. E. Musson, The Growth of British Industry, pp 149-166, Batsford Academic, 1978.

21 See C. H. Feinstein's, "Slowing down and Falling Behind - Industrial Retardation in Britain After 1870", in New Directions in Economic and Social History, Vol 2, Anne Digby et al (eds), 1992.

22 M. Bentley, "The Liberal Response To Socialism", in, K. D. Brown, Essays in Anti-Labour History, p 49, MacMillan, 1974.

23 See his book, Who Rules Britain?, Polity Press, 1991. M. Useem, The Inner Circle, OUP, 1984, also describes how an "inner circle" (finance capitalists) have dictated the political agenda. 24 Alan Fox, History and Heritage, George Allen and Unwin, 1985 25 A. L. Friedman, Industry and Labour - Class Struggles At Work and Monopoly Capitalism, p 69, MacMillan Press, 1977.

26 Source, Central Statistical Office, Economic Trends, taken from, A. Griffith and S.Wall, Applied Economics, p 223, 1991.

27 Ibid.

28 Business Monitor 1974 and 1985, cited in, A. Callinicos and C. Harman, The Changing Working Class, p 57, 1987.

29 Quote taken from J. Eldridge et al, Industrial Sociology and Economic Crisis, p 32, 1991.

30 See the debate in Anna Pollert et al, Fordism and Flexibility, Macmillan, 1992.

31 Simon Clarke, ibid., p 28

P. Anderson 'Figures of Descent', New Left Revue 1987.

J. Coakley and L. Harris The City of Capital, 1983, Blackwell.

A. Gamble Britain in Decline, 1990, MacMillan Press.

G. Ingham Capitalism Divided? - The City and Industry in British Social Development, 1984, MacMillan Press.

H. Overbeek Global Capitalism and National Decline, 1990, Unwin.