Aug 07

The Iron Heel

The Iron Heel
by Jack London
ebook, 1st Edition, 186 pages
Published May 3rd 2006 by Project Gutenberg (first published 1907)
url http://www.gutenberg.org/ebooks/1164

The Iron Heel, Jack London’s political allegory. Horrible writing to get across a largely true idea, which is yet flawed in a crucial way. The true and the valuable consists in clarity of the language and in the wonderful way complicated concepts are made coherent.  See the part on surplus value:

Here is a shoe factory. This factory takes leather and makes it into shoes. Here is one hundred dollars’ worth of leather. It goes through the factory and comes out in the form of shoes, worth, let us say, two hundred dollars. What has happened? One hundred dollars has been added to the value of the leather. How was it added? Let us see.

Capital and labor added this value of one hundred dollars. Capital furnished the factory, the machines, and paid all the expenses. Labor furnished labor. By the joint effort of capital and labor one hundred dollars of value was added.

Labor and capital having produced this one hundred dollars, now proceed to divide it. The statistics of this division are fractional; so let us, for the sake of convenience, make them roughly approximate. Capital takes fifty dollars as its share, and labor gets in wages fifty dollars as its share. We will not enter into the squabbling over the division. No matter how much squabbling takes place, in one percentage or another the division is arranged. And take notice here, that what is true of this particular industrial process is true of all industrial processes.

Now, suppose labor, having received its fifty dollars, wanted to buy back shoes. It could only buy back fifty dollars’ worth.

And now we shift from this particular process to the sum total of all industrial processes in the United States, which includes the leather itself, raw material, transportation, selling, everything. We will say, for the sake of round figures, that the total production of wealth in the United States is one year is four billion dollars. Then labor has received in wages, during the same period, two billion dollars. Four billion dollars has been produced. How much of this can labor buy back? Two billions. There is no discussion of this, I am sure. For that matter, my percentages are mild. Because of a thousand capitalistic devices, labor cannot buy back even half of the total product.

But to return. We will say labor buys back two billions. Then it stands to reason that labor can consume only two billions. There are still two billions to be accounted for, which labor cannot buy back and consume.

Two billions are left to capital. After it has paid its expenses, does it consume the remainder? Does capital consume all of its two billions?

If capital consumed its share, the sum total of capital could not increase. It would remain constant. If you will look at the economic history of the United States, you will see that the sum total of capital has continually increased. Therefore capital does not consume its share. Do you remember when England owned so much of our railroad bonds? As the years went by, we bought back those bonds. What does that mean? That part of capital’s unconsumed share bought back the bonds. What is the meaning of the fact that to-day the capitalists of the United States own hundreds and hundreds of millions of dollars of Mexican bonds, Russian bonds, Italian bonds, Grecian bonds? The meaning is that those hundreds and hundreds of millions were part of capital’s share which capital did not consume. Furthermore, from the very beginning of the capitalist system, capital has never consumed all of its share.

And now we come to the point. Four billion dollars of wealth is produced in one year in the United States. Labor buys back and consumes two billions. Capital does not consume the remaining two billions. There is a large balance left over unconsumed. What is done with this balance? What can be done with it? Labor cannot consume any of it, for labor has already spent all its wages. Capital will not consume this balance, because, already, according to its nature, it has consumed all it can. And still remains the balance. What can be done with it? What is done with it?

Because of this balance arises our need for a foreign market. This is sold abroad. It has to be sold abroad. There is no other way of getting rid of it. And that unconsumed surplus, sold abroad, becomes what we call our favorable balance of trade.

The United States is a capitalist country that has developed its resources. According to its capitalist system of industry, it has an unconsumed surplus that must be got rid of, and that must be got rid of abroad. What is true of the United States is true of every other capitalist country with developed resources. Every one of such countries has an unconsumed surplus. Don’t forget that they have already traded with one another, and that these surpluses yet remain. Labor in all these countries has spent its wages, and cannot buy any of the surpluses. Capital in all these countries has already consumed all it is able according to its nature. And still remain the surpluses. They cannot dispose of these surpluses to one another. How are they going to get rid of them?

Sell them to countries with undeveloped resources.

Suppose the United States disposes of its surplus to a country with undeveloped resources like, say, Brazil. Remember this surplus is over and above trade, which articles of trade have been consumed. What, then, does the United States get in return from Brazil?

From Brazil the United States, in return for her surplus, gets bonds and securities. And what does that mean? It means that the United States is coming to own railroads in Brazil, factories, mines, and lands in Brazil. And what is the meaning of that in turn?

It means that the resources of Brazil are being developed. And now, the next point. When Brazil, under the capitalist system, has developed her resources, she will herself have an unconsumed surplus. Can she get rid of this surplus to the United States? No, because the United States has herself a surplus. Can the United States do what she previously did—get rid of her surplus to Brazil? No, for Brazil now has a surplus, too.

What happens? The United States and Brazil must both seek out other countries with undeveloped resources, in order to unload the surpluses on them. But by the very process of unloading the surpluses, the resources of those countries are in turn developed. Soon they have surpluses, and are seeking other countries on which to unload.

The planet is only so large. There are only so many countries in the world. What will happen when every country in the world, down to the smallest and last, with a surplus in its hands, stands confronting every other country with surpluses in their hands?

London thinks that after the workers control the means of production, they will simply get paid 100% of their products’ value rather than half or less. But what happens when the whole world has such surpluses and a socialist planning bueracracy is not there to remedy the glut of crap no one wants or can afford? Plenty of these things can and do get bought by the government and dumped in the ocean, but what are the more general effects? I suppose this places a limit on the profits capitalists are able to earn, but more importantly, it places a limit on the need for labor. Some stasis is necessary so that the workers earn just enough to buy what is produced, but never so much that they would consider not working full time since their needs are already met. Perhaps the financial markets are the current outlet for extra surpluses, but then the huge amounts of money conjured up in the NYSE are patently a mirage, since they are tied to nothing tangible.

The flaw is a part of this same argument. It is inconceivable to Jack London that anyone would want to reverse the “evolution” which has led to greater efficiency in production, in fact he views the process as irreversible. It is self-evident to him that larger concerns are more efficient than smaller concerns, newer machines superior to older ways of producing things. As a result, his solution is to simply take over the wonderful machines that are presently in the hands of capitalists, and to give them to the workers themselves. Everything will be better then. But the notion that such a thing as economies of scale exist is simply untrue, as per Newton’s laws of the conservation of energy and matter. Greater efficiency can at best be procured against future deficits, such as the petroleum-fueled boom we have been living in the midst of since before London’s times. The mechanical looms which replaced the cottage weaving industry of the 18th century were powered by coal or steam, and as such do not offer any advantages over the long run unless there is an infinite supply of fuel, which there isn’t (England was pretty much deforested by the early Industrial Age).

It seems to me that this should close the argument, with no need to even discuss the second fallacy in London’s description, which is that it is possible to just hand over the means of production to the workers and call that anything other than the same thing that you started with. As Marshall McLuhan suggested and Fredy Perlman clearly saw, the medium (factories and machines, in this case) will dictate certain conditions of social reality irrespective of who owns or controls them.

Unless people manage to tap into a power source which is practically inexhaustible on a human scale (stuff like energy originating in stars), the whole argument is moot: we will be out of energy reserves shortly, and revert to a level of production which will make Feudalism seem futuristic, since we will have depleted all soils, bodies of water, and anything of any value or beauty by that point. The only upside  to the impending apocalypse may be that the mentality which has produced these evil stupid atavistic times will likely pass along with the times themselves: people living by the labor of their hands and the land can’t afford to pretend that they are all individuals with a god-granted right to ignore or exploit anyone and anything they come across.