Do markets have memory? No, according to a basic tenet of market fundamentalism, the philosophy of the rich and powerful which is endorsed by their high priests, the professors of neoclassical economics. Markets, they contend, are forward looking and respond only to changes in prospects, not past events. This is why they are beyond challenge. They reflect the future and condition what is possible in the present. Furthermore, in the case of financial markets, they respond instantaneously – the so called ‘efficient market hypothesis’. Thus news that Tesco was being pursued through the conciliation service ACAS by the law firm Leigh Day over an equal pay claim that could cost Tesco £4 billion may have dented Tesco’s share price to the extent that investors thought it likely to succeed, but there was no question of customers having to pay for the £4 billion settlement, should it succeed, with higher prices. Future prices would be affected, according to this theory, only to the extent that the average cost of employing staff in future increases.
For communists, two issues arise here.
- While we agree that markets don’t have memory, the economy we actually experience is one of State Monopoly Capitalism in which institutional pressures are brought to bear to protect capital, including that invested in Tesco. To understand this economy, we need to begin our analysis not, where the neoclassical economists begin, with market prices, efficient or otherwise, and work backwards but with production, labour and the creation of value by workers and work forward, identifying with whom this created value ends up. It doesn’t end up with workers, whether shop floor or warehouse, male or female. After workers receive enough to survive and replicate (assuming their offspring are still needed), it ends up with those who own the capital – the 1% and the 0.1%.
- While communists fully support equal pay for equal work claims such as that against Tesco, we recognise that capitalism is incapable of achieving this except in the very limited case of a single workplace – and even then it is hard enough to achieve and sustain. Equal pay for equal work across an entire economy is the defining condition of socialism, which Marx defined as from each according to their means to each according to their work. That is not something that social democracy can, or even wishes, to deliver as, it would rent asunder our existing institutions (on which they, themselves, depend) and replace them with the more democratic framework needed for building communism with its ultimate aim of from each according to their means to each according to their need.