‘Surplus Theory’ versus Marxian Theory

The work of Richard Wolff and Stephen Resnick contains some insights for socialists but it is not Marxian economics and is not socialist.

The late twentieth-century saw the demise of many governments that viewed themselves as heirs of the ideas of Karl Marx. The failure of these regimes was seen by their opponents as the triumph of capitalism and the death of socialism. With the rise of neoliberal economics in advanced industrial countries the future of the left did indeed seem bleak. The legacy of Karl Marx and Marxian socialism, however, was far from dead. As the current global recession shook the confidence of neoliberal prescriptions Marx’s economic ideas received renewed attention. We examine here the theories of Stephen Resnick and Richard Wolff in relation to class, surplus value, their definition of communism and how to achieve it. Richard Wolff in particular has gained much attention in light of the recession through his video When Capitalism Hits the Fan.

Reformist road to nowhere

The Socialist Party rejects the minority seizure of power or governing with a programme of reforms with the aim of achieving socialism at some point in the future. We argue that pursuing an objective of seizing power in the name of the working class or of a programme of reforms that aim at removing the worst excesses of capitalism do not move society any further towards socialism. Replacing the immediate objective of socialism with more immediate aims in effect removes the socialist objective altogether. Others, most others in fact, who have called themselves socialist or communist in the last century and today have rejected this approach. They have argued for the necessity of the seizure of state power by minority parties or, more often, have seen in the reform programmes of labour parties the hope of gradual socialist transformation. The experience of the twentieth century saw the failure of these approaches to transform society on socialist lines. What ensued was the collapse of confidence in the possibility of socialism and indeed in the belief that there was any alternative to capitalism.

If it was assumed that various governments had been or were in fact variants of socialism or communism then it is quite understandable that confidence in that political outlook would either diminish or that a reworking of assumptions would occur, given that the populations of these ‘socialist’ countries appeared to prefer capitalism. Marxism or ‘socialism’ could either be discarded or the understanding of them reassessed. Stephen Resnick and Richard Wolff are in the latter category and have reworked Marxian economics into ‘surplus theory’, which attempts to reinterpret Marxian economics in the light of the failure of so-called ‘socialist’ and ‘communist’ governments to arrive at their declared communist objective.

To their credit they do not define the former USSR, China, Cuba, etc. as socialist but as state-capitalist. Likewise they acknowledge that the various attempts to regulate or reform capitalism in the name of socialism resulted in merely more regulated capitalism rather than something different to capitalism. In fact, Wolff and Resnick describe quite nicely the swings, often in response to economic crises, between relatively less or relatively more regulated capitalism in the last century or so. They reject the idea of socialism as it is commonly misunderstood – as state ownership and planned production as against capitalist private ownership and production for the market. At the root of their argument is the understanding that private or state capitalism merely changes the exploiter and does not remove the exploitation. However, their understanding of the root of the exploitation of the working class is at odds with the arguments developed by most Marxian socialists who regard the former USSR and other such regimes as state capitalist.

Russian state capitalism

For us in the Socialist Party capitalism remained intact in the USSR because buying and selling, commodities, value, prices and profit continued. The employers, ceased to be private individuals owning capital and became instead the state, which owned and controlled the large scale means of production and received the surplus value produced. In place of a narrow elite of private owners of the means of production emerged a narrow social elite who controlled the state. The fundamentally exploitative relationship between capital and labour remained intact with the continued existence of money, wages, commodities, exchange, prices and the growth of a bureaucratic and brutal state. We argue that the disappearance of all of these facets of capitalist society would in fact be necessary before a socialist society could be argued to exist.

For Resnick and Wolff on the other hand capitalism remained intact because the mere legal transfer of private to state property and the shift of power from private capitalists to the state did not produce change at the enterprise level. The workers, the producers of surplus value, they argue, must also become the appropriators of surplus value. Their definition of communism is a society where those who produce the surplus in a given enterprise are the same people who own it and control its distribution. Their argument is the result of the application of their ‘surplus theory’, which condenses the three volumes of Capital into saying that Marx was essentially analysing past and present societies according to who appropriates and distributes the surplus produced in a given society. In this way their ‘surplus theory’ can be applied to areas like the family, where it is argued that men have historically extracted surplus labour from women in the home.

Conflict over surplus

Whilst Resnick and Wolff promote their analysis as Marxian, it is in fact a simplified departure from classical Marxian ideas that would have Marx turning in his grave. Marx and Engels and many subsequent socialists considered socialism to be a society which transcends wage-labour and money. ‘Surplus theory’, by contrast, sees no problem with the continuance of money, wages, commodities, exchange, prices and the state. From its perspective, as long as the productive workers obtain the surplus-value of their work and control its distribution then society is communist.

There is a thorny issue for ‘surplus theory’ to deal with in the relationship between ‘productive’ and ‘unproductive’ workers. This is a distinction between those workers in capitalist societies who produce surplus value (e.g. factory workers) and those workers who do not (civil servants, sales staff, security guards, etc.). Of course the one cannot exist without the other and in socialism, according to our definition, there would no longer be such a distinction as there would be no surplus value (although there would be a surplus of goods, of use-values). However, in a socialist society as defined by Resnick and Wolff there would be a tension between those who produced the surplus value and those that drew from it without contributing to it. They get around this by suggesting job-rotation and other practicable but pointless solutions.

The whole concept of ‘surplus theory’ is simplistic and misleading. Wolff and Resnick describe a process within capitalism where capitalists appropriate surplus value and then redistribute portions of it in order to reproduce the process. These payments are termed ‘subsumed class payments’ and include such things as taxes, wages to ‘unproductive’ employees, rent, interest, advertising, etc. In practice capitalists do not immediately appropriate surplus value but rather the products of the labour of their employees which they hope to sell on the market as commodities at a price that will provide them with a profit (the realisation of surplus value as money). It is not possible to distinguish the appropriation of surplus from the distribution of it as ‘subsumed class payments’ since the process is simultaneous and mostly determined behind the backs of those involved as market transactions (although boards do deliberate on how to distribute accumulated surplus value as cash reserves). Capitalism is an anarchic system of social production in which the capitalist class as a whole appropriates surplus value from the working class as a whole and cannot be understood adequately at the level of the individual enterprise.

What is class?

The use of ‘surplus theory’ can be confusing because it is written in terms familiar to Marxian socialists but with a quite different meaning. When they discuss class, for example, they define it by relationship to surplus value and reject definitions based on power, property or consciousness. For them, your place in capitalism is defined by whether you produce surplus value, derive your wages from surplus value (both working class according to our definition) or whether you appropriate the surplus value and control its distribution (the capitalist class). All processes which do not relate to the direct production of ‘surplus value’ are classified as ‘non-class processes’, such as education, culture and even politics. Their philosophical concept of over-determination (see http://www.worldsocialism.org/spgb/education/study-guides/overdetermination-and-marxian-theory-socialist-view-work-richard-wolff-and-st ) comes into play again because class is also argued to be no more important than non-class aspects of society – it is argued that that would be reductionism. By this reasoning if you change the class relationship, if you change the ownership and control of surplus value, other changes (at this point unknowable) will follow as class relates dialectically to all other areas of life.

This is a deliberate attempt to try to keep ‘surplus theory’ clear of issues of ownership or power. Socialism has failed to date, Resnick and Wolff argue, because socialism has been defined according to who owns the means of production and/or who controls them. This has led to various governments being called socialist because some of the means of production have passed into state ownership and, if enough of the means of production have been transferred, a large measure of social and political power is likewise conferred. This leads to their abstruse and obfuscating ‘surplus theory’ in which ‘communism’ according to their definition can exist in an economy with state ownership or private ownership and with state planning or markets or a blend of all of these features.

However, capitalism is a system of social production in which private property and the state developed to enable and maintain the expropriation of surplus value via wage-labour. Class (in the classical Marxian sense of the relation of the individual to the means of production) is, of course, not the only or necessarily the most important relation in a given identity or event – it does not determine our lives in any mechanical way. It does, though, suffuse our social experience and shapes and limits our individual and social possibilities. The position of the Socialist Party is at odds with Resnick and Wolff‘s ‘surplus theory.’ Socialism, for us, entails a working-class consciousness of the basis of our exploitation and the necessity of political action to gain control of the state as part of a revolutionary process in which common ownership and democratic control of the means of production would replace capitalism, the private or state ownership of the means of production. Our understanding of class involves awareness of the importance not just of the appropriation of surplus value but its mutual dependence on property relations and the state as well as, crucially, the developed political consciousness of the capitalist class and the currently limited political consciousness of the working class.

Worker co-operatives

So, after all their work developing the theories of over-determination and ‘surplus theory’ what are the practical solutions offered up by Wolff and Resnick. How are the working class to advance towards a world in which they appropriate and distribute their own surplus? Wolff in particular promotes a strategy to achieve social change around the concept of Workers Self Directed Enterprises (WSDEs). These are, despite Wolff’s efforts to argue that they are something new, essentially worker’s co-operatives. These, it is argued, combined with activism to promote democracy and gain political support could be the basis for achieving social transformation. Here we are on familiar and not new ground. Wolff’s argument is similar to that of Eduard Bernstein who argued over a century ago that worker’s co-operatives were transforming capitalism from within, obviating the need for social revolution. Rosa Luxemburg countered then, as we do now, that workers forming a co-operative “are obliged to take toward themselves the role of capitalist entrepreneur – a contradiction that accounts for the usual failure of production co-operatives which either become pure capitalist enterprises or, if the workers’ interests continue to predominate, end by dissolving.” To achieve meaningful change through WSDEs would require massive social and political struggle with the end being a form of capitalism in which workers collectively exploit themselves.

Leave a Reply