In the Morning Star yesterday, (Tuesday, 28 March), Nigel Flanagan, Senior Organiser for the UNI Global Union, warned of the potential for intelligence robots to replace workers on a global scale. The appropriate response, he argued, should be to build a global union system to negotiate and bargain with the global companies that will own and operate these intelligent robots.

But is this a sufficient response? The UNI Global Union is merely a confederation of some 900 affiliated unions from 140 countries. These unions represent 20 million workers; but with a global workforce, according to ILO estimates, of 3 billion workers, the employers will not be trembling with fear. The UNI Global Union may represent a start in organising workers globally, but it has a long way to go and, even if it succeeds, much more is required than mere global Mondism.

The continual replacement of workers by machines lies at the heart of Marx’s Labour Theory of Value. His conclusion that it would lead to the collapse of capitalism – unless that collapse was first triggered by some other constraint to the development of productive forces that capitalism was unable to surmount – is the conclusion to his masterwork, Capital. At the start of the 21st Century we now recognise global warming caused by CO2 emission to be such a constraint. With both robotization and global warming increasingly emergent, the issue now is is how these two death knells for capitalism will interact and what consequences they will have on what replaces capitalism.

For communists, the struggle is about hastening capitalism’s demise and ensuring that it is replaced by communism – by which we mean a classless society in which the abundance made possible by advanced technology, including intelligent robots, is shared by all. As Marx recognised, and a brilliant little book by Peter Frase, Four Futures – visions of the world after capitalism (Verso, 2016) discusses, other post-capitalist societies are possible; and they are all much less desirable. If workers are largely replaced by intelligent robots, who owns those robots is crucial. If they are owned by the former capitalists, the elite, a society based on rentism could emerge in which a tiny ruling elite live off the rents from licensed technology and the largely unemployed workers subsist on menial tasks and handouts. The other possible outcome with a hierarchical society suggested by Frase is even more scarey: if the elite don’t need 3 billion workers, it would be in their interests to exterminate them.

Frase has some interesting ideas about extreme global warming. He suggests that it’s now inevitable and the real issue now is how we survive it. This could be relatively easy for the global elite, but very difficult for the rest of us. Climate change deniers, he suggests, no longer sincerely doubt the evidence; they simply think that their class can survive it, and very comfortably, thank you. These and other contentious issues will be discussed at Croydon TUC on 11 May when a speaker from the Campaign against Climate Change has been invited. Note it in your diary and make sure you are there!

The Property Ladder

Walking around Croydon it’s obvious that there are a lot of home extensions being built by owner occupiers. This is hardly surprising. Homes are seen by owner occupiers as a form of saving – often their primary form – and a recent report by LSE Professor Paul Cheshire forecasts that house prices will double by 2030. This would represent a tax free return on investment of 4.6 per cent a year. It could be even higher: according to the Office of National Statistics house prices have grown on average by 8.75% per annum over the past 47 years. That is much higher than the return on bank deposits and comparable with long run returns on equity investment – especially so as tax is paid on interest, dividends and capital gains on shares but not on your primary home.

Many extensions have the effect of shifting what in many cases would be affordable homes for first time buyers into a more expensive category. They do, however, represent a great investment opportunity for owner occupiers already fortunate enough to be on the so called ‘property ladder’. Not only will the new investment increase in value in line with the original investment but there is also an immediate tax free capital gain to be enjoyed. As rule of thumb, it’s generally thought that £20,000 of building work, providing it’s not totally unsuitable, should add more than £50,000 in property value.

What’s going on here? There are a number of economic and socio-political forces at play. First, we need to ask what is the source of this exceptional high return to owner occupiers. The answer is straightforward: it is a transfer from those who don’t own homes to those who do. Many in the fortunate latter group think it’s an entitlement justified by their hard work paying off their mortgage and they have a right to pass it on to their kids. The fact that these kids may themselves be unable to get on the “property ladder”, or, on the other hand, may already be much better off than those without homes is overlooked. Also overlooked is the risk that predatory care home operators lie in wait for owner occupiers with every intention of appropriating the bulk of their investment. There is also the consideration that banks do very nicely in providing mortgage finance. Banks are essential to modern capitalism and, as the government’s austerity programme demonstrates, nothing must stand in the way of their profits.

Another interesting question is what is the source of the capital gain when an extension is built. According to neo-classical economic theory – the type they teach in universities, award Nobel Prizes for and regurgitate on the BBC and in the capitalist press – market should respond to eliminate all such predictable gains. They call this ‘arbitrage theory’. Marxist economist, on the other hand, recognise that building workers, like every other worker in productive industries, sell their labour for less than the value it creates. It’s this surplus value that accounts for the average capital gain on building extensions. If building workers were to received the full value of the labour power they sold to owner occupiers, on average there would be no capital gain from building extensions. But then if all workers could do this, capitalism would grind to a halt nd we would be forced to begin constructing a socialist society in which, initially, operate on the principle of from each according to their means to each according to their work*.

The underlying issue here is that, according to neo-classical economic theory, value is created when a commodity (including a house) is sold, or merely revalued in a market. Value is created out of thin air in the form of a “consumer surplus” because the seller and buyer have different subjective valuations. Marxist economists, on the other hand, take a more objective view. They consider that value cannot, on average, be created by exchange or shifting market prices. Exchange is a zero sum game – the buyer’s gain is the seller’s loss and vice versa. These are two fundamentally different ways of looking at how markets work in capitalist societies. It’s a theme we hope to explore when the Communist University in South London is relaunched shortly. Watch this space for news of this development.

* Only under a fully developed communist society would we attain the position of to each according to their need

Communist University in South London update

CUiSL is taking its summer break in August. The next class will be on Tuesday, 2 September, 7 pm, at Ruskin House, 23 Coombe Road, Croydon CR0 1BD when we will be studying what how socialism might look like in its early stage of development.

In July we studied the Labour Theory of Value. See the paper written and presented by Nigel Green at http://communistuniversity.wordpress.com/