The Full Fruits of their Industry

The Labour Party leadership has embarked on a course which it hopes will end in the abandonment of its Clause Four. Those in the Labour Party who see themselves as socialists are up in arms with the familiar chant of “betrayal”, but, what exactly is being betrayed?

Tony Blair’s campaign to get rid of Clause Four has had one unfortunate effect from his point of view: to initiate a discussion on what exactly it means, indeed on what Socialism is. The full version of the Clause has appeared a number of times on the front pages of the broadsheets. It reads:

 “To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that maybe possible upon the basis of the common ownership of the means of production. distribution and exchange and the best obtainable system of popular administration and control of each industry or service.”

As we have pointed out, if it wasn’t for the reference to the common ownership of the “means of exchange”, ie of banks and insurance companies (which, ironically, wasn’t in the original 1918 version), this would be a passable, if somewhat wordy definition of Socialism. Socialism does mean “the common ownership of the means of production” and it does mean “the best obtainable system of popular administration and control of each industry or service” But the reference to the means of exchange shows that the intention was not to commit the Labour Party to Socialism but only to establishing State Capitalism, or the nationalisation of capitalist industry which would continue to be run on capitalist lines only by a state-appointed board rather than by private capitalist firms.

In an article in the Independent (1 December) Andrew Marr submitted the Clause to a line-by-line analysis. Commenting on the opening passage about securing for the workers “the full fruits of their industry”, he wrote:

  “Full fruits implies hostility to all profits, indeed to joint-stock companies as such; it relies on Marx‘s discredited labour theory of value. ”

“Full fruits” does indeed imply hostility to all profits, seen as a deduction from what labour produces. But this view goes back well beyond Marx to . . . Adam Smith, who wrote that “labour is the real measure of the exchangeable value of all commodities” (Wealth of Nations, Book I, chapter V). Smith also wrote:

  “As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in selling to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials . . .  The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which one pay’s their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced” (Book I, chapter VI).

This is clear enough: in transforming raw materials into some commodity that can be sold, labour adds value to them; this value is the source of both the wages they are paid and the profits of their employer. Profits, in other words, are produced by labour. So said Adam Smith, the apostle of free-market capitalism, though this is so embarrassing to the fanatics of the Adam Smith Institute that they never mention it.

So the labour theory of value has a pedigree which ought to be unimpeachable for defenders of capitalism. It has to be said, however, that Adam Smith and his successors, precisely because they were supporters of capitalism, got themselves into all sorts of contradictions. They wanted to justify the capitalist profit system as the best possible, indeed as the only natural economic system, yet the labour theory of value which they accepted out of intellectual honesty implied that profits were a deduction from what labour produced and that capitalism was therefore based on the robbery of the producers.

There were only two ways out of this contradiction. One was to abandon the labour theory of value. The other was to accept that the capitalist system was based on the exploitation of labour and should therefore be abolished.Ending exploitation
Supporters of capitalism chose the first course, so that by the middle of the last century the labour theory of value had become “discredited” in respectable circles. Supporters of the workers — while Marx was still in short trousers — chose the second course. But they didn’t quite get it right. They argued that the alternative to capitalism was a system that would ensure that every individual worker got the “full product of their labour”; this was to be done by pricing goods according to the amount of labour-time required to produce them and giving the workers who produced them a quantity of labour notes that would enable them to acquire the full labour-time equivalent of what they had produced. Under this scheme there would be no profit; all that was produced would go, in one form or another, to the producers.

What Marr in his profound ignorance of Marx’s views is unaware of is that Marx is on record as attacking the idea that each worker could be ensured the “undiminished proceeds” of their labour. A whole section of his Critique of the Gotha Programme adopted by the German Social Democrats in 1875 was devoted to exposing the absurdity of the idea that each individual worker could be given the “full product” of his or her contribution to the co-operative labour of the whole labour force (even supposing this could be measured).

In a socialist society deductions from this would have to be made for such things as the resources to be devoted to the replacement and expansion of the means of production, the general administration of society and the maintenance of those unable to work because of youth, old age, sickness or disability.

The only context, in fact, in which the phrases “full fruits” or “full product” or “undiminished proceeds” make sense is that of the whole community enjoying the full fruits of the collective co-operative labour of its working members; which in practice means allowing every member of the community an equal right to satisfy their own personally-decided needs. And, to be fair to Clause Four, this is quite compatible with the phrase “full fruits of their labour and the most equitable distribution thereof’.

Blair of course is not in favour of the workers by hand and brain getting the full fruits of their industry, whether individually or collectively. He is all for profits as a deduction from what labour produces going to shareholders and other parasites. May we, then, suggest the following amendment to Clause Four to accommodate him:

 “To secure for the workers by hand or by brain only enough of the fruits of their industry to maintain their working skills in a fit state to continue producing profits for their employers . . . ”

Blair, however, has come up with his own new version, including an alternative theory as to how wealth is produced. His discussion document Labour’s Objects claims that “a competitive market economy, with a strong industrial and wealth-generating base is in the public interest”.

No Socialist could make such a statement but quite how the market can “generate wealth” is not explained. As far as we know, there is only one way in which wealth can be generated and that is by human beings applying their mental and physical energies to materials that originally came from nature.

Wealth is not created by market forces; at most it is only distributed by them — unequally and to the benefit of those who own the means of production If Marr — or Blair — think that this view of the origin of wealth is “discredited” let them explain precisely how. Let them offer a satisfactory alternative explanation. In the meantime the labour theory of value, and its corollary that profits result from exploitation, stands unrefuted.