It is now over a decade since John Saville’s survey of the Labour Party’s history led him to the view that ‘at least some things should become clearer as time moves along: that Labourism has nothing to do with Socialism: that the Labour Party has never been, nor is it capable of becoming, a vehicle for socialist advance; and that the destruction of the illusions of Labourism is a necessary step before the emergence of a socialist movement of any size and influence.’ Yet for all the vagaries of Labour Party history since, that view has never gone unchallenged. On the contrary, more and more socialists—and revolutionary socialists at that—have slipped back into the Labour Party of late, arguing instead that only through participation in its internal struggles can the cause of socialism be advanced significantly in Britain. So it is not surprising that when my argument appears in NLR 129 reasserting the need for independent socialist politics, questioning the adequacy of the ‘alternative economic strategy’ and doubting the capacity of any Labour Government to use that strategy as a stage in the transition to socialism, that other socialists should have felt the need to reply critically and quickly—as Tariq Ali and Quintin Hoare have done in NLR 132 and as has Geoff Hodgson in NLR 133.footnote footnote1 footnote2

The Hodgson critique is predominantly concerned with the existence or otherwise of a ‘space for reform’ in the transition to socialism. Tariq Ali and Quintin Hoare cast their net wider and offer a powerful and sophisticated defence of Labour Party membership in the pursuit of that space and that transition. Since both critiques raise important questions on the nature of the Labour Party and on the character of any move to socialism in Britain, they deserve a serious and considered reply; and since all three articles (including my original one) occupy well-established positions in a long-running debate, there is something to be said for relating that reply to the more general debate, in an attempt to clarify the nature of the political choices facing socialists in Britain today.

Geoff Hodgson’s critique turns in the main on his reading of my analysis of the crisis of British capitalism—an analysis of which he is particularly dismissive. My ‘political economy of the socialist transformation’ is apparently constructed on a flawed theory of capitalist decline, makes incorrect deductions from this flawed theory, and ‘ends up with a weak criticism of the reformism’ I am ‘so keen to dismiss’.footnote3 In particular, I am supposedly too prone to treat the tendency of the rate of profit to fall as an iron law and as a ‘convincing explanation of the crisis in Britain’, and too keen to ‘view the class struggle as a zero-sum game’ where ‘if the position of the workers is to rise, that of the capitalists must fall’.footnote4 As a result, I am guilty, we are told, of offering a ‘far too mechanical . . . conception of the capitalist economy’, and of failing to recognize, as ‘history indicates, that there is no period of capitalist development in which reforms cannot in principle be delivered’.footnote5 Their actual delivery, Hodgson tells us, ‘depends more on the state of the class struggle, and the relationship of forces between capital and labour, than (on) the economistic indicators of capitalist “decline” such as the share index or the rate of profit’.footnote6 So against my view—that at this stage of late capitalism it is not possible to implement a programme of democratic reforms whilst simultaneously reconstituting the growth rate and competitive strength of an economy still predominantly in capitalist hands—Geoff Hodgson argues that ‘the important consequence’ of his critique ‘for the transition to socialism is that sizeable increases in productivity cannot be ruled out; there is not a zero-sum tussle between wages and profits, and substantial reforms can be accommodated by increases in productivity in the transitional period’.footnote7 This is possible, he says, just so long as ‘substantially increased worker participation’footnote8 becomes a central feature of the alternative economic strategy. It is this, in his view, which will enlarge the space for reform which I am too ready to discount.

There are two general problems that arise in replying directly to all this. The first (and though personally significant, the least important) is that I don’t quite recognize my own argument in all its complexity as the Hodgson hammer starts to fall. This of course would be of no general significance were it not for the fact that important political points turn upon it, and for that reason only it might be worth discussing the distortion in detail in order to re-establish the validity of the political points in question. Geoff Hodgson’s critique builds on (and what I am supposed to have said is filtered through) a set of themes on which he has written before and for which he is well known in left-intellectual circles: the Trotskyist propensity for iron laws in political economy, problems of value theory, the particular course of the British crisis, the mobilizing potential of the alternative economic strategy, and the case for Labour Party membership.footnote9 That filtering gives his article a characteristic feel, but it also distorts the argument he is criticizing, and enables him to avoid the full force of the case being examined. As far as I can tell, and contrary to his description, I have argued consistently that capitalist crises are a result, not of a mechanistic tendency of the rate of profit to fall, but of ‘a perpetual race between the rising organic composition of capital (which erodes the rate of profit) and the rising rate of labour exploitation (which acts as a counter tendency to sustain it)’.footnote10 I have argued too that this race is ultimately determined ‘by the relative strength of capitalism’s two great classes, by the degree of working-class resistance and struggle’;footnote11 and as far as I can tell, to argue in this way is not, as Geoff Hodgson would have it, to ‘make an explanation based on Marx’s law of the falling rate of profit redundant’, but on the contrary is to show precisely how such a law relates to the contemporary development of the world capitalist crisis. Be that as it may, it is worth saying too that the analysis in Labour in Power? on which Geoff Hodgson draws was not presented merely to explain the crisis of British capitalism, but rather to constitute the basis of an explanation of the downturn of the world economy of which British capital is a part, and from which the limits of its freedom of manoeuvre ultimately derive. Of course the particular weakness of British capitalism has to be explained in other ways—and was,footnote12 and will be more fully, as Geoff Hodgson knows, in an article yet to come.footnote13

At no point was class struggle presented as always a zero-sum process. On the contrary, Labour in Power? argued just the reverse, that ‘in periods of economic upswing . . . the rate of capital accumulation, and the growth rate of total profits, will be more than sufficient to offset the tendency of the rate of profit to fall, and in this period employment will rise and real wages can increase whilst profit margins are still sustained’.footnote14 It is significant that all Geoff Hodgson’s examples of successful reforms come from such periods of capitalist expansion, at the start of long booms built on the preceding defeat of the working class. The issue before us is not that, but of whether that ‘space for reform’ still exists in the downturn of late capitalism and in the context of a competitively weak national capital. Tariq Ali and Quintin Hoare, amongst others, seem aware that the strength of the labour movement is a problem for capital at just that point; and so indeed does Geoff Hodgson elsewhere, when he explains dwindling profits not in terms of a changing organic composition of capital but in terms of class struggle.footnote15 What Geoff Hodgson has to demonstrate, and what he does not do in NLR 133, is that in such a context of national capitalist crisis there is space for ‘a large number of significant non-pecuniary reforms’ that will ease the transition to socialism by bolstering its popular appeal. And that argument is, of course, important politically, because if it is wrong, it then exposes a socialist government to the quick erosion of popular support as the error is experienced in practice, and squanders the opportunity to prepare the government’s supporters for the degree of struggle and material deprivation likely in the transition.footnote16

The second problem with replying to Geoff Hodgson’s critique grows out of this: that he builds into his argument concessions to the case that he is refuting and that I have just restated—concessions that are allowed only to be dismissed. So we are told that in the transition to socialism ‘resources to meet the demands of both investment and increased wages and social services are constrained’ and that ‘there is a probability of resistance by the capitalist class’;footnote17 or again that ‘the economic and political constraints are very real and we should not suggest that massive increases in real income are possible now, within a crisis ridden capitalism, or even immediately after the abolition of the dominant capitalist relations of production’.footnote18 Yet all this is circumvented, in Hodgson’s view, by the possibility of leaps in productivity through increased worker participation, enabling existing machinery to be run to much greater effect.

Now no one on the Left would presumably deny that in a post-revolutionary socialist society such a leap in productivity is to be expected; and it is significant that Hodgson draws many of his supporting examples from such societies: ‘Russia in 1917–18, Cuba since 1970, China since 1967 and Yugoslavia since the Second World War’.footnote19 But we are not faced with a post-revolutionary situation, but with the problem of transition in a beleaguered national capitalism—more parallel to his other awesome example, ‘Chile 1970–73’, than to the rest of the countries he cites. Moreover we face a ruling class that is already committed to a similar goal of greater productivity—not by increasing the stock of capital available to each worker, but by intensifying the rate of exploitation through a reduction in working-class power at the point of production. Geoff Hodgson’s throwaway line on Michael Edwardes is all the more amazing for that: ‘Neither is Michael Edwardes, with his authoritarian style of management at British Leyland, the personification of the solution to the problems of British capital’.footnote20 For in truth, to one section of British capital, he is—as Tariq Ali and Quintin Hoare rightly see.footnote21 Only by discounting Edwardes and the ruling-class strategy he represents is Geoff Hodgson able to dismiss the considerable capitalist reaction likely to confront any strategy aimed at increasing workers’ control. Only by failing to recognize that not only the monetarist but also the corporatist strategy for capitalist regeneration requires greater productivity through intensified work routines is he able to discount the danger that worker participation in a still predominantly capitalist society, and under the direction of a Labour Government of mixed political complexion, will have a high probability of quickly degenerating into just such a pursuit of intensified work routines and working-class restraint in the name of socialism.