Tuesday, September 30, 2008

Who needs finance?

Editorial from the October 2008 issue of the Socialist Standard

The downturn in the global economy appears to be broadening and deepening. The sub-prime slime has became the "Credit Crunch" in 2008, and last month heralded a further round of casualties on what some are starting to call "Manic Monday".

US house repossessions started it all off, followed by mortgage lenders and banks in Europe. But more recently the US government felt unable to allow their Freddie Mac and Fannie Mae (public mortgage lenders) go under, but stopped short of baling out Lehman Brothers.

The contagious fear of vanishing profits extended beyond mortgages to insurance giant AIG and beyond, and the geographical spread has widened to China and Japan.

Workers could be excused feeling some sort of schadenfreude at the news of a bank running out of money or an insurance company failing to manage risk and hedge their bets. Who can fail to smile as another financial institution is found to have ignored its own advice ("The value of your investment can go down as well as up. You may not get back the amount of money you invested and should only invest sums of money you are prepared to lose").

So there may be fewer stories in the news of £100 burgers in the bistros or £30,000 drinks bills in the restaurants of the City of London, but of course the economic downturn impacts more on the poor than the rich.

World socialists are opposed to capitalism – boom or bust. Recession just helps throw into sharp relief the logic of the market system. It does however also provide a good opportunity to highlight some important differences between capitalism, and socialism – where money and wages would not exist and production of wealth would be based on meeting real human needs.

Firstly of course inside socialism there will be no work at all for the whole financial sector that is under such pressure at present. Pensions advisors, insurance salespersons, "independent" financial advisers, mortgage brokers, fund managers: all of these jobs are essential to the smooth operation of capitalism, but are socially-useless and would have no place in a socialist society.

Over 1 million people in the UK – 4 percent of the workforce – are engaged in such activities which are wholly useless. When you factor in related jobs such as accountancy, real estate, and ancillary financial services the numbers mount up. Socialism will really make these positions redundant, but with the pay-off that people will be free to engage in work that is genuinely productive and socially useful.

The market system is an incredibly wasteful mechanism for organising the production of wealth. It prevents people’s power over production. Interest rates rise in the US, and a hospital gets mothballed in the UK? The oil price rises and thousands of holidaymakers get stranded in a foreign country? The need for constant minute-by-minute re-evaluations of cashflow projections or return on investment expectations, for every project, every industry, every product results in a colossal waste of the planet's resources and humanity's energy and ingenuity.

Saturday, September 27, 2008

We are all socialists now

From the Marx and Coca Cola blog

A long time ago Milton Friedman asked Richard Nixon why he never took his economic advice to which Tricky Dick replied "We are all Keynesians now". Less than ten years later Ronald Reagan would declare "Government is not the solution to our problem. Government is the problem.", and we were all Reaganomists now. At least until last week.

What makes this economic downturn different from the other recessions post-1980 is not so much the size, but the reaction of the powers that be. While Treasury Secretary Lex Luther wanted a 700 billion dollar blank check that "may not be reviewed by any court of law or any administrative agency." (a plan referred to as an economic PATRIOT ACT), the usually spineless Democrats have actually said no. They have plans of their own. The most likely of these to pass is Chris Dodd's (D-CT) which would cap CEO pay, include foreclosure relief, and give the government a share in the profits the bailed out firms. Peter DeFazio (D-OR) is floating an idea to put a tax on stock transactions. Getting a lot of ink on the Internet is Debbsian socialist Bernie Sanders' (I-VT) four point plan which includes a wealth surtax, increased regulation, increased social spending, and busting up the big financial firms. None of this is really socialism, but everything's been laissez-faire so long it looks like the Paris Commune in comparison. While this kind of faux-populism is to be expected during an election year crisis other less than expected critics are questioning the status quo.

From a Yahoo article entitled Many economists skeptical of bailout comes this quote from University of Chicago professor Luigi Zingales:

"For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of a few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists."

A capitalism without capitalists if you will. Eric D. Hovde, the CEO of Hovde Capital and Hovde Acquisitions, writing in an op-ed praises government regulation, and decries Wall Street's influence on government. Actually most of the op-ed is a concise and well written history of this mess that blames everyone who deserves it. For example:

"In an attempt to protect his legacy after the Internet-bubble collapse, [former Fed chairmen Alan] Greenspan provided unprecedented stimulus to re-inflate the economy and maintain his popularity with Wall Street. (Remember the "Greenspan put"?) But in doing so, he spawned the largest debt and asset bubble in U.S. history."

In case you couldn't tell Greenspan was a close personal friend of Ayn Rand. In putting the blame where it's due Hovde also gives what I think is the definition of capitalism:

And in my view, there's no need to look beyond Wall Street -- and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government's responsibility.

What was the great fraud of Reaganomics was the belief that the government and the free market are two totally different and opposing forces. The government was either well intentioned (or evil) but incompetent, and only interfered with the perfect, all wise free market. The events of the last week have shown that's to be bullshit. There is no such thing as a "free" market. During the good times the state is there to put a veneer of respectability on fraud and extortion. During the bad times it's the knife that cuts off a finger to save the hand, but it is always capitalism's co-conspirator. This current down turn will lead to the state taking a greater role in the economy, and we might even get some increase in social spending (a la the New Deal). Capitalism will be saved from itself, and inevitably when the economy gets better and we've all forgotten (remember the Glass-Steagall Act? Me neither) these reforms will be repealed; we'll be right back here. The bad times is also when we should push for a real change that scraps capitalism and it's good buddy: the state, not just make them nicer.

JM

Thursday, September 25, 2008

Council workers in strike action

From the Socialist Courier blog

Up to 150,000 council staff in Scotland staged the second 24-hour strike over pay in two months.

Schools, ferry services and rubbish collections are being disrupted as members of the Unite, Unison and GMB unions take part in the action.

It comes after the rejection of an amended offer from local authority umbrella group Cosla to change the 2.5% pay offer from three years to one year.

The unions are calling for a 5% increase in line with inflation.

Matt Smith, Unison's Scottish secretary, said he was impressed by the turnout for the strike and threatened more industrial action if the dispute continued.

Members of the Socialist Party participated in this walk out, just as ordinary workers who are union members.We reject any notions of wage increases 'ever' being the cause of inflation.Wages always play 'catch-up' with inflation.

There is over a century of socialist writing on this subject which can be accessed on the SPGB website, as this search will show.

Wednesday, September 24, 2008

Weekly Bulletin of The Socialist Party of Great Britain (65)

Dear Friends,

Welcome to the 65th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1352 friends!

Recent blogs:

  • All at sea
  • Exporting Crime
  • The end of capitalism -- or just of "neo-liberalism"?
  • Coming Events at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North):

    A Season of Free Film nights from Sunday 14th September to Sunday 23rd November at 52 Clapham High Street, London.


    All films start at 4 p.m.

    Sunday 28 September: Who Killed the Electric Car?

    Sunday 12 October: Judgement Day: Intelligent Design on trial

    Sunday 26 October:The Corporation

    Sunday 9 November: Zeitgeist

    Sunday 23 November: The War on Democracy

    Quote for the week:


    "Well you got me workin' boss man

    Workin' round the clock

    I wanna little drink of water

    But you won't let big Al stop

    Big boss man now can't you hear me when I call? All right

    I said you ain't so big, you know you're just tall that's all"


    As sang by Elvis Presley, 1967.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Saturday, September 20, 2008

    Questions of the Day - What Socialism Means

    Originally posted on the Ragged Trousered Philanthropist blog

    This excerpt was originally published in the Socialist Party of Great Britain pamphlet, Questions of the Day.

    Socialism is the only system within which the problems which now face workers can be solved; but what will it be like? Socialism is a system in which the means for producing and distributing wealth will be owned by society as a whole. Under capitalism the land, factories, offices, mines, railways and other instruments of production and distribution are monopolised by a section of society only, who thus form a privileged class. Socialism will end this, for, with the means of life ownedin common by the entire community, it will be a classless society in which the exploitation and oppression of man by man will have been abolished. All human beings will be social equals, freely able to co-operate in running social affairs.

    Drawing up a detailed blueprint for Socialism is premature, since the exact forms will depend upon the technical conditions and preferences of those who set up and live in Socialism; but we can broadly define the essential features of Socialism.

    Socialism can only be democratic. At one time Socialism was known also as 'social democracy', a phrase which shows well that democratic control would extend to all aspects of social affairs, including the production and distribution of wealth. There is an old socialist slogan which speaks of 'government over people' giving way 'to the administration of things'; meaning that the public power of coercion, and the government which operates it will have no place in Socialism. The State, which is an organisation composed of soldiers, policemen, judges and gaolers charged with enforcing the laws, is only needed in class society for in such societies there is no community of interest, only class conflict. The purpose of govenmeat is to maintain law and order in the interests of the dominant class. It is in fact an instrument of class oppression. In Socialism there will be no classes and no built-in class conflicts: everybody will have the same basic social interest. There will be genuine social harmony and community of interest. In these circumstances there is no need for any coercive machine to govern or rule over people. The phrase 'socialist government' is a contradiction in terms. Where there is Socialism there is no government and where there is government there is no Socialism.

    Those who wrongly assume that government and administration are one and the same will have some difficulty in imagining a society without government. A society without administration would indeed be impossible since 'society' implies that human beings organise themselves to provide for their needs. But a society without government is both possible and desirable. Socialism will in fact mean the extension of democratic administration to all aspects of social life on the basis of the common ownership of the means of production and distribution. There will be administrative centres which will be clearing-houses for settling social affairs by majority decision.

    But will not the administrators become the new ruling class? Democratic organisation does indeed involve the delegation of functions to groups and individuals. Such people will be charged by the community with organising necessary social functions. They will be chosen by the community and will be answerable to it. Those who perform the administrative functions in Socialism would be in no position to dominate. They will not be regarded as superior persons, as tends to be the case today, but as social equals doing an essential job. Nor will they have at their command armies and policemen to enforce their will. There will be no opportunity for bribery and corruption since everybody, including those in administrative jobs, will have free access to the stock of wealth set aside for individual consumption. The material conditions for the rise of a new ruling class would not exist.

    The purpose of socialist production will be simply and solely to satisfy human needs. Under present arrangements production is for the market with a view to profit. This will be replaced by production solely and directly for use. The production and distribution of sufficient wealth to meet the needs of the socialist community as individuals and as a community will be an administrative and organisational problem. It will be no small problem but the tools for solving it have already been created by capitalism.

    Capitalism has developed technology and social productivity to the point where plenty for all can be produced. A society of abundance has long been technically pcssible and it is this that is the material basis for Socialism. Capitalism, because it is a class society with production geared to profit-making rather than meeting human needs, cannot make full use of the world-wide productive system it has built up over the past two hundred or so years. Socialism, making full use of the developed methods of production, will alter the purpose of production. Men and women will be producing wealth solely to meet their needs, and not for the profit of a privileged few.

    Using techniques for predicting social wants (at present prostituted to the service of capital), a socialist society can work out how much and what sort of products and services will be needed over a given period. Men and women will be free to discuss what they would like to be produced. So with social research and after democratic discussion an estimate of what is needed can be made. The next problem is to arrange for these amounts to be produced. Capitalism, with its modern computing machines and input-output analysis, has developed the techniques which a socialist society can use.

    When the wealth has been produced, apart from that needed to renew and expand the means of production, all will freely take what they feel they need to live and enjoy life. This is what we mean by 'free access'. There will be no buying and selling, and hence no need for money. What communities and individuals want does not vary greatly except over long periods, and it will be a simple administrative task to see that the stores are well-stocked with what people need. If any shortages develop they will not last long. Planned reserves will be held as a safeguard agzins; unforeseen natural disasters.

    'From each according to his ability, to each according to his need' is another long-standing socialist principle. It means what it says: that men and women will freely take part in social production to the best of their abilities, and freely take from the fruits of their common labour whatever they need.

    Confronted for the first time with this proposal for free distribution according to need, many people are sceptical. What about the lazy man? Or the greedy man? Who will do the dirty work? What will be the incentive to work? These are objections socialists hear time and time again. These are perhaps understandable reactions to what seems, to those who have never thought about it, a startling proposition. As a matter of fact, behind these objections is a carefully cultivated popular prejudice as to what human nature is. We dealt with this earlier in the section on human nature. Suffice it to say here that biological and social science and anthropological research conclusively show that so-called human nature is not a barrier to the establishment of Socialism.

    Work, or the expenditure of energy, is both a biological and a social must for human beings. They must work to use up the energy generated by eating food. They must work also to provide the food, clothing and shelter they need to live. So in any society, be it feudal, capitalist or socialist, men and women must work. The point at issue is how that work should be organised. A very strong argument against capitalism is that it reduces so central a human activity as work to the drudgery it is for most people, instead of allowing it to provide the pleasure it could, and would in a socialist society.

    To suggest that work could be pleasant often raises a laugh; but this only shows how much capitalism has degraded human life. Most, but certainly not all work under capitalism is done in the service of an employer so that people almost without thinking identify work with employment. Working for an employer is always degrading, often boring and unpleasant and sometimes unhealthy and dangerous. But even under capitalism not all work, as we have defined it, is done in the course of employment. Men and women are working when they clean their cars, dig their gardens, or pursue their hobbies and enjoy themselves at the same time. So close is the misleading association of work with employment that many would not even regard such activities as work. They think that anything that is pleasant cannot by definition be work!

    There is no reason at all why the work of producing and distributing useful things cannot be as enjoyable as are leisure-time activities today. The physical conditions under which work is done can be vastly improved. So can the relationships between people at work. Human beings, as free and equal members of a socialist community, will no longer have to sell their mental and physical energies to an employer for a wage or salary. The degrading wages system will be abolished so that there will be no such thing as employment. Instead work will be done by free men and women co-operating and controlling their conditions of work, getting enjoyment from creating things and doing socially useful tasks.

    In a socialist society there will be no social stigma attaching to any kind of work. Nor will there be pressures, as exist at present (because they are cheap and therefore profitable to the capitalists) to continue industrial processes which are harmful or dangerous to those engaged in them. In any event, with human needs and enjoyment as the guiding principle, there will be no need for anybody to be tied to the same job continuously. The opportunities for men and women to develop and exercise their talents and to enjoy doing so will be immense.

    Finally, Socialism must be world-wide because the productive system which capitalism has built up and which a socialist society will take over is already international. There will be no frontiers and people will be free to travel over the whole earth. Socialism will mean an end to all national oppression - and, indeed, in its current political sense to all 'nations' — and to discriminations on the grounds of race and sex. All the people of the world, wherever they live, whatever their skin colour, whatever language they speak, really will be members of one vast human family. Socialism will at last realise the age-old dream of the Brotherhood of Man.

    Friday, September 19, 2008

    The end of capitalism - or just of "neo-liberalism"?

    From the Socialism Or Your Money Back blog

    In the 1980s, with Reagan in America and Thatcher in Britain, it became acceptable amongst the system’s supporters to use the word "capitalism" again. Before that if you used it you risked being called a "communist". But by capitalism they meant the ideology of free-market, private-enterprise capitalism, a capitalism with much less state intervention and regulation than up till then.

    The supporters of the old form of mixed private/state capitalism were appalled. They denounced the new form taken by capitalism as "neo-liberalism", using the term "liberal" in its 19th century sense when the Manchester cotton lords who wanted free trade were supporters of the old Liberal Party.

    Both supporters and opponents of free-market capitalism now seem agreed that the current financial and economic crisis represents a turning point. Even the free-marketeers recognise this, though they don't like it. "An historic turning point has been reached", wrote Anatole Kaletsky in the London Times (12 September) following the State take-over of the US mortgage companies, Freddie Mac and Fannie Mae, "the West is ditching its faith in free markets and private enterprise".

    The decision of the US State to let Lehman's go bankrupt revived their spirits a little. "What critics are too hasty to see as capitalism in crisis is, in fact, capitalism in action", the London Times editorialised on 17 September, explaining: "It might be brutal and unforgiving but this is how capitalism works. The market ensures that those who make mistakes are accountable for them". But that was before the US State intervened to try to save AIG, the insurance giant that sponsors Manchester United. Collapse of the stout party.

    On the same day the Guardian asked a number of well-known, self-proclaimed "anti-capitalists" -- among them Daniel Cohn-Bendit, Ken Livingstone, Tony Benn, George Galloway, George Monbiot and the leaders of the SWP -- for their views on the current crisis . None of them saw this as a final crisis of capitalism (as of course it isn't). Most of them called for an end to "neo-liberalism" and a return to the more state-regulated capitalism of previous decades. As if this hadn't proved a failure too from the point of view of meeting the needs of wage and salary workers and their families.

    Ken Livingstone put it this way: "Sadly, I don't think this will be the end of capitalism. But there is going to have to be a return to a much, much more interventionist state". 1968 students' leader and now a Green MEP Daniel Cohn Bendit followed suit: "It's not the end of capitalism because capitalism has always had the intelligence to reform itself. It will be the end of capitalism when it's incapable of reforming. However, the belief that the market is god is over. It must now be regulated". Fellow Green MEP Caroline Lucas, from the UK, agreed: "This is a defining moment; the end of the kind of unbridled, deregulated capitalism of the past few decades. We are going to have to return finance to its role as servant rather than master of the global economy".

    George Monbiot wanted to revive Keynes, the discredited 1930s economist: "A Keynesian solution along the lines of Roosevelt's New Deal could deliver many of the things the left is calling for -- more public spending, more training and education". Respect Party councillor, Salma Yaqoob, and Lindsey German of the SWP were more moderate. They called for just one reform measure. "Why not do something literally concrete on the ground and start building cheaper social housing?" said the one. "The left needs to put forward answers. People have the right to work; we have a housing crisis, so why not employ people to build more houses?" echoed the other. It's true that by concentrating on one reform such as housing these would-be vanguardists have a better chance of fooling people into following them than if they raised a demand for a "Keynesian solution". That wouldn’t "mobilise the masses" and would also expose them for the reformers of capitalism they are in practice.

    Chris Harman, Tony Cliff's successor as the SWP's theoretical guru replied, curiously: "This is a very, very serious crisis of capitalism: it has been the build-up of private borrowing that has kept the system going, and it's coming unstuck". Since when has capitalism been kept going by consumer spending, whether financed by borrowing or not? This is a new version of the SWP's old mistake of thinking that what kept capitalism going was arms spending (exposed as wrong when arms spending was cut and capitalism kept going).

    What keeps capitalism going as an economic system is the pursuit and attainment of profits. It falters when profits are not attained, though it can also be temporarily upset by a financial crisis. What also keeps capitalism going is of course, politically, the support or acquiescence of the vast majority of the population who see no alternative to the money-wages-profit system that is capitalism. Livingstone, Galloway, Benn, the SWP and the Greens, in only criticising "neo-liberalism" and advocating instead what might be called a "neo-statism", are not helping to dissipate this acceptance of some form of capitalism as the only possible way of organising the production and distribution of wealth.

    The only real alternative to capitalism, whether private enterprise or state capitalist or a mixture of the two, is a society based on the common ownership and democratic control of the means of production, with production to meet people's needs not to make profits and distribution on the principle of "from each according to ability, to each according to needs". A view the Guardian too omitted to mention.

    Adam Buick

    Wednesday, September 17, 2008

    Weekly Bulletin of The Socialist Party of Great Britain (64)

    Dear Friends,

    Welcome to the 64th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1336 friends!

    Recent blogs:

  • Capitalism: boom & bust
  • Is Obama a socialist?
  • Our peace policy
  • Coming Events at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North):


    Saturday 20 September, 6pm

    Which Way the Revolution - What are our differences?

    Ian Bone (Class War) and Howard Moss (Socialist Party)

    Forum followed by open discussion.

    Chair: Bill Martin (Socialist Party)


    A Season of Free Film nights from Sunday 14th September to Sunday 23rd November at 52 Clapham High Street, London.

    All films start at 4 p.m.

    Sunday 28 September:
    Who Killed the Electric Car?

    Sunday 12 October: Judgement Day: Intelligent Design on trial

    Sunday 26 October:The Corporation

    Sunday 9 November: Zeitgeist

    Sunday 23 November: The War on Democracy

    Quote for the week:


    "‘Rise like Lions after slumber

    In unvanquishable number—

    Shake your chains to earth like dew

    Which in sleep had fallen on you—Ye are many—they are few.’"


    Percy Bysshe Shelley, The Mask of Anarchy, 1819.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Tuesday, September 16, 2008

    Is Obama a socialist?

    From the World Socialist Party of the United States website

    We got a an e-mail recently from some right-wing blogger for the New York Times who asked if we considered Barak Obama a socialist and if we supported his tax plans. blah, blah, blah. We won’t pass judgement on an article which may or may not see the light of day. But most likely this was another piece attempting to get someone calling themselves socialist to endorse Obama or one of his policies. Once that confession is procured, it will be widely touted as proof of Obama being a socialist, an elitist, etc.

    But is Obama a socialist? OMFno-G no.

    Obama isn’t anymore a socialist than McCain is a fascist, a leprechaun or sincere. Sure, Obama wants more government control of economic matters. But as even Obama said if you put lipstick on a pig, it’s still a pig. Capitalism administered by the state is still capitalism. Duh.

    No one’s calling Bush a socialist because he nationalized Fannie Mae and Freddie Mac. Because it’s not socialism. So why call Obama a sociaiist?

    This election is all about two factions of capitalism competing for power with each-other.

    The methods each faction uses to mobilize the working class to support them says much about the lack of class-consciousness in the US today.

    The Democratic faction uses appeals for “justice” and “equality”, for tax breaks for workers even though most workers don’t “pay” enough taxes to make the breaks more than pavlovian whistles. Sure “equality” sounds nice, but it cannot happen in class society. The vast majority of people are workers for a reason - to create wealth for new rounds of capital growth. Those who benefit from that capital growth can be individual capitalists or state functionaries, but it’s workers who do the physical labor which creates the wealth. there can be no equality or justice in capitalism. Even if the capitalist class has now opened it’s membership roles to non-whites and females.

    For being so slavish to Christian zealots, one would think the Republicans would “render unto Caesar what is Caesar’s”. But being able to pay for such things as public infrastructure - ie highways, electric system, etc. takes a backseat to the accumulation of capital for massive investment in China, Mexico and India. So like the Democratic faction, they seek to slash public spending and taxes. Of course, underscoring their religious hypocracy, the Republicans have spent more than any other administration building US federal debts to record highs. It is fortunate that US federal bonds which pay for all that debt are held by those whose taxes were cut - the capitalists. Kaching! profit on both transactions!

    Monday, September 15, 2008

    All at sea

    From the September 2008 issue of the Socialist Standard

    The indications are that the economy is heading for a recession, which no government can prevent.

    The idea that the market economy can progress steadily, providing for ever-rising levels of growth, trade and employment, is a fantasy dreamt about by every Chancellor of the Exchequer and most politicians generally. This was never more the case than with the former Chancellor Gordon Brown who claimed repeatedly that year-on-year economic growth was the unique product of his prudent and circumspect economic management of British capitalism.

    The prudence of the erstwhile Chancellor – and now Prime Minister – is suddenly in doubt as the economy, according to most commentators and analysts, heads towards a recession his government seems powerless to prevent. No longer in command of everything he surveys, Brown’s frailties are suddenly all too apparent, even to many of his former supporters. Indeed, it is interesting that many of the commentators who saw little to question in Brown’s outlandish claims over the last ten years were also most often the cheerleaders for a housing market bubble they said would never burst, and which now provides them with endless column inches of hard-hitting prose now that it finally has.

    Before the housing market crash began and when the politicians and mainstream press were still in denial, we had, in the May 2007 Socialist Standard, a different perspective: ‘past history demonstrates that sooner or later, the current housing bubble will end in tears. When asset prices become completely disengaged from what is happening in the real economy where wealth is produced and value created, and are only sustained by ever increasing amounts of indebtedness, it cannot last – capitalism just does not work that way’. According to the Financial Times (9th August) this debt has now risen from 100 per cent to 170 per cent of household income under New Labour (the highest in the G7 countries) and 80 per cent of this has been secured on property, a perilous situation for the housing market in particular but also for the economy as a whole.

    Business cycle

    Growth in the market economy (in the housing sector and more generally) does not proceed in the manner of a straight upward line as imagined on a Treasury graph. Its general direction is upwards over the long-term, but growth tends to be uneven, unpredictable, and prone to periodic wild gyrations. For very good reasons this is the way it has always occurred in capitalism and there is nothing about the system, or the politicians who oversee it, to suggest it will happen any differently in future.

    In the nineteenth century the concept of capitalism’s ever-recurring trade cycle was well-known, the most coherent and in-depth analysis of it being developed by Karl Marx. As prescient now as it was then, Marx summarized his view in the following terms:

    ‘The factory system’s tremendous capacity for expanding with sudden immense leaps, and its dependence on the world market, necessarily give rise to the following cycle: feverish production, a consequent glut on the market, then a contraction of the market, which causes production to be crippled. The life of industry becomes a series of periods of moderate activity, prosperity, over-production, crisis and stagnation’ (Capital, Volume 1, p.580. Penguin Edition).

    There are two related factors which drive this boom/slump cycle. Firstly, the fact that production takes place with a view to realising a monetary profit. Without this prospect of profit, production will not take place. Needs without the ability to pay are left unrecognised, whether that be housing for those unable to get a mortgage or food for those unable to pay for it. Secondly, this profit-seeking is conducted by hundreds of thousands of competing enterprises whose ultimate aim is to increase market share, increase production, and through doing so increase profits. The problem is that the drive to compete for these enterprises is their only tangible reference point to one another. What they do is not co-ordinated and planned, and not linked to the demands of other companies and industries. Instead, there is an anarchy of production which periodically leads to key sectors of a booming economy over-expanding in relation to existing market demand.

    That this situation occurred in the US housing market from 2006 onwards, and has since been transmitted to many other property markets including that of the UK, is now obvious even to most of those who vehemently denied it would happen.

    Defining a recession

    The Treasury and Bank of England (along with their counter-parts in the United States) officially define a recession as ‘two consecutive negative quarters of economic growth’. By this they mean half a year of economic contraction. The way that statistics are necessarily compiled (especially considering the time-lag factor) it is not always evident that a recession has been happening until after the event. In 2001 it was assumed that the United States was in a recession, but after the event it turned out that this wasn’t (quite) so based on this definition.

    Marx claimed that for a recession (depression or slump – depending on your preferred terminology) to occur, overproduction for particular markets had to spread and ‘grip the principal articles of trade’ (Theories of Surplus Value, p.393). In practice, sometimes this generalisation of overproduction will occur through a ‘knock-on’ effect when there is clearly disproportionate growth and overproduction in some industries that spreads more widely, but at other times it doesn’t spread sufficiently to cause a noticeably wider downturn. Furthermore, even when it does spread there are usually industries that do well in an otherwise declining economy, as was the case in the major 1930s slump when motor car manufacturing, for instance, continued to grow while other industries contracted.

    There is little doubt that capitalism in most industrialised nations is long overdue a recession of sorts – the last widespread one was in 1990-92 and the boom since then has been far longer than the historic average. In this period capitalism has survived the Asian crisis of 1997, the collapse of the world’s biggest hedge fund a year later (the ironically named Long Term Capital Management), the spectacular bursting of the dot-com bubble with its various corporate scandals, the attacks on the World Trade Centre and other major political crises, and the massive 2000-2003 bear market in equities, all without officially entering recession in either the US or UK.

    This time there are two significant forces propelling it in the direction of recession, however: the aforementioned property market crash which has seen the biggest monthly house price falls in both the US and UK in history, and the serious ‘credit crunch’ that has developed from it. The latter has occurred because so many investment products have been based on low-grade (‘sub-prime’) housing debt and as the housing market falls and people cannot pay their mortgages much of this debt has to be written off. It was recently enough to turn what would have been a six monthly profit for the Royal Bank of Scotland of in excess of £5 billion into a loss of £691 million instead, and has led RBS and many other banks to re-capitalise themselves through issuing more shares; in the US it nearly led to the complete collapse of one of the largest investment banks, Bear Stearns.

    The main problem is that no-one, sometimes not even the banks themselves, know where all of these problematic sub-prime investments are or how much needs to be written off. It is this that famously led to an almost unprecedented reluctance among the banks to lend to one another last year as they did not trust what was on (or rather not on) each other’s balance sheets. Irrespective of what central banks have done with base interest rates, it has led to inter-bank lending rates being pushed up to comparative historic highs (the spike in LIBOR – the London Inter-bank Offered Rate – is what put paid to Northern Rock’s meteoric rise as it was hugely dependent on borrowing on the money-markets).

    The credit system and the money markets associated with it are what oil capitalism’s financial machine. When they become dysfunctional the entire system can suffer; banks are reluctant to lend either to industry or to individuals, lines of credit dry up and companies getting into difficulty find that their one possible lifeline has been cut off. Indeed, it is the credit system that tends to act as a key transmission mechanism spreading problems in some sectors of the economy to others.

    Lead indicators

    The extent to which the combined effects of the housing market crash and the resultant credit crunch will lead to a recession is currently hotly debated by analysts, though it clearly has the potential to be very serious indeed. Hard data in the coming months should prove conclusive one way or the other as, in truth, there are few genuine ‘lead indicators’ of a slump that can tell us definitively that one is about to happen, or how deep it will be. For example, production tends to fall most noticeably once the slump is already underway and unemployment is another lagging indicator, only rising when companies have started cutting back on staffing levels in response to difficult trading conditions.

    Falling stock markets are better lead indicators of a recession; this is because at the level of individual companies it is their interim and preliminary company results along with quarterly trading statements that typically give advance clues as to what is happening on the ground, and stock markets are usually quick to react, as they have been this time. Nearly all major stock markets have at some point fallen 20 per cent or more from their peaks since the credit crunch started, technically entering ‘bear market’ territory. The problem with stock markets, however, is that they can fall in the short-term for all sorts of other reasons too and also have a tendency to over-react to events. When UK shares lost about 50 per cent of their value in the 2000-3 bear market (and US shares almost as much) this reflected little that was happening in the real world of the underlying capitalist economy of production and trade.

    Some economists and analysts have argued that the best indicator of an impending recession is what is called an ‘inverted yield curve’ on the money markets. This means a situation whereby short-term interest rates are above long-term rates (the inverse of the usual relationship) and in these circumstances banks have little incentive to lend long-term to industry when selective short-term lending is both safer and more profitable. In practice, an inverted yield curve is indeed almost always a precursor of recessions. Unfortunately, like falling stock markets, inverted yield curves can happen at other times too (the US had a significantly inverted yield curve in 2000 and had a curve that flattened and threatened to invert in 1998, yet there was no recession on either occasion). This time around, the US yield curve inverted in 2006-7 and has since switched to being positive; the UK yield curve inverted in the wake of the credit crunch starting last summer, and has recently started to flatten out again.

    Mine’s A Baltic Dry

    Arguably the best lead indicator of a recession exists as a measurement of what is happening in the ‘real’ economy of production and trade in capitalism rather than its financial superstructure. This is a curious and little known gauge of economic activity called the Baltic Dry Index. It covers dry bulk shipping rates and is managed by the Baltic Exchange in the City of London.

    Each day the Baltic Exchange establishes average prices for shipping various cargoes around the world, whether it be 100,000 tones of iron ore from Brazil to the UK or 100,000 tons of soybeans from the US to India. Essentially, the index is a barometer of activity amongst shipbrokers involved in shipping those raw materials that are typically the precursors to production around the world, and it measures the demand for shipping capacity versus the supply of bulk carriers. It is a useful index because dry bulk mainly consists of commodities that act as raw material inputs into the production of other goods such as electricity, steel and food. Also, demand for these is variable and elastic whereas the supply of dry bulk shipping is inelastic, changing little in the short-term because of the length of time needed to build new tankers. This means changes in the index tend to principally reflect changes in demand. Fluctuations in the index have historically proved to be amongst the best lead indicators of economic activity in the market economy there is.

    This has been demonstrated over the last few years, when the Baltic Dry Index surged on the back of the booming global economy and the demand for industrial and agricultural commodities led by China, India, Brazil and other emerging markets. Interestingly, despite a continuation of much of this activity, the index has in more recent times faltered. From the beginning of 2005 until the start of 2008 the index more than doubled, but after some volatile movement has since fallen from a peak of nearly 11,800 reached in May to around 7,000 at the time of writing, a fall of around 40 per cent. If this fall continues into the autumn and beyond, then a widespread, serious recession is more than likely as it will be reflective of a massive decline in the demand for raw materials required for the world economy.

    Quite how severe the economic downturn proves to be is no small matter of interest as it will affect the lives of hundreds if millions across the globe, leading to falling production, falling property prices, rising unemployment and acute financial distress for many. And this is far more significant than the distress that is being caused for a Prime Minster in Britain who swore that this would never happen and who thought he could hold back the tide of capitalism’s business cycle through his financial management skills – a man who has been left looking ever more like King Canute instead, staring out to sea with the waves already lapping well above his ankles.

    Dave Perrin

    Thursday, September 11, 2008

    Machine, Heal Thyself

    The Pathfinders column from the September 2008 issue of the Socialist Standard

    Isn't it annoying when you approach a red traffic light and have to sit there waiting for it to turn green, despite the fact that there are obviously no other cars or pedestrians coming from any direction? What if the traffic light itself was equipped with a bit of intelligence and could decide to turn green if it was safe, all the while talking to its friends across town, collectively regulating traffic flow according to prevailing conditions? Apart from the shortening of journey times and the saving in carbon emissions, it would be an example of something we are likely to see more and more in the future, the self-configuring network.

    An engineered system implies by definition an engineer who entirely understands and controls that system, at least in its initial state. But relying on permanent factory settings in a dynamic system is almost never efficient, and today's production systems are so complex and involve so many parameters that engineers often have no idea what will happen if one detail is altered, or how best to solve a problem that arises. One approach to this problem of complexity is to get the system itself to devise its own solution. This may be more effective for the simple reason that machines don't rely on human intuition.

    Which would make for a quicker exit for a crowd of people, an open doorway or a doorway with a large obstruction in front of it? Perhaps surprisingly, it is the doorway with the obstruction. It turns out by experiment that with an open doorway everyone rushes at it in a mad stampede, whereas an obstruction regulates the flow, leading to a more orderly and efficient passage for everyone. In a similar way, there is a perceived inverse ratio between motorway traffic density and speed of throughput, but this can be wrong. As density increases, drivers change lanes less often, and throughput thereby actually increases rather than decreases. The point of this is that intuition can take you the wrong way when devising organised systems.

    In one car production system (New Scientist, Aug 9) efforts to assign assembly robots in the most efficient way failed, until the robots themselves were given the task of organising their own work via a bidding system. The result was an unpredictable and counter-intuitive ad-hoc schedule devised by the robots which was more efficient and saved $1m per year.

    There is an important principle here that socialists can use. One of the more ingenious arguments against socialist theory is that, without the mediating agency of money, a highly complex socialist production system would be hopelessly incomprehensible, involving so many parameters that no central plan or design could realistically manage it. Leaving aside the audacious hypocrisy of critics who are perfectly at home with the savage chaos of their own economic system, as well as their tendency to overstate the complications of a steady-state economy with no booms, busts or advertiser-driven consumer faddism, such complexity as would exist does not really present us with a problem. Just like an intelligent traffic flow system, we could devise a 'smart' resource system, using throughput, usage and energy information to optimise itself, reconfiguring whenever necessary. Thus, our answer to our critics' objection that we could never consciously regulate socialist production. We don't have to regulate it, so long as it regulates itself.

    How to drive in a competitive (w}edge

    In 2005 the Socialist Party produced a video entitled Capitalism and Other Kid's Stuff, in which the contention was made that if as an experiment you take a group of kindergarten kids and deprive all the children of their toys, giving everything to just one child, some very hostile and competitive behaviour will be the result. Though this was more argument by analogy than rigorous scientific hypothesis, a recent study appears to have confirmed
    this proposition by performing exactly this experiment, with the predicted consequence ('Who ever said that girls aren't competitive?' New Scientist, June 28). A group of pre-school boys and girls were observed, first with enough toys to go round, then with all the toys taken away so that only one child was left with any possessions. The objective of the experiment was to find out if girls would be as competitive as boys. The study showed that there was a marked increase in competitive behaviour in both gender groups, differing in expression between boys and girls yet equally aggressive in their own way. Boys tried to grab the toy, or chase the child with the toy, while girls punished the owner with more subtle ploys including social exclusion, whispering and hiding.

    What is curious about this experiment is not so much the result but the interpretation placed on it. The study focussed entirely on the gender characteristics of competitive behaviour without appearing to consider what caused it in the first place. It may be the fault of the journalistic news item rather than the study, but the impression created is that boys and girls are a priori competitive, not that boys and girls become competitive if you do unusually mean things to them. In this view, the experimenters actually created the very behaviour they thought they were 'discovering'. What is missing is any account of the children's behaviour before the toys are removed, but one can reasonably assume a greater level of cooperative play. Socialists would draw a quite different conclusion from all this. Instead of showing that girls are as competitive as boys (and why wouldn't they be?), the study demonstrates effectively that private property is a hugely divisive social factor, even among four-year olds. The significance of this can scarcely be overstated. In the one interpretation, we are innately and will always be competitive, implying the inevitability of social models built on that behaviour. In the other, such behaviour is provoked in us only when an outside agency actively dispossesses and disempowers us,implying the desirability of developing a social model which avoids doing this to us.

    In reality the kids gave the owner a hard time.

    Paddy Shannon

    Wednesday, September 10, 2008

    It’s the system, stupid

    From the September 2008 issue of the Socialist Standard

    “£1 a Litre? BASTARDS!” So reads a recent Class War sticker (well, actually, not so recent, as petrol is now well over a £1 a litre). Amusing but typical of the populism they go in for. People don’t like having to pay more for their petrol, so blame the petrol companies for putting up the price. It’s the same with their campaign against the estate agents, Foxtons. People don’t like estate agents, so let’s target the one with the worst reputation.

    But is this the message that people who are supposed to be against capitalism as a system should be wanting to get across? Calling the petrol companies “bastards” suggests that their decision to raise prices is a personal one on the part of those in charge of them; that they had some other choice, but deliberately chose this one. But did they? They are probably not very nice people (nobody who has clawed their way to the top of a corporate hierarchy is likely to be), but, whatever their personal traits or views, they are acting in this context as what Marx called “functionaries of capital”. As people in charge of capitalist corporations, they have to seek to maximise profits, in this case by fixing the price of petrol at what they judge the market will bear.

    What does Class War expect them to do – or rather, what is the interpretation those who see their sticker and share its sentiment are likely to give it? That it would be nice if the petrol companies sacrificed this chance of maximising their profits? That this is an option within the capitalist profit system? That it wouldn’t be such a bad system if only capitalist corporations wouldn’t behave as bastards?

    The campaign against Foxtons, too, gives a wrong message. Foxtons have acquired a reputation for sharp practice. Targetting them gives the impression that what is being criticised is not the capitalist system as such but only the excesses which some capitalist firms engage in. If these excesses were eliminated or suppressed then things would be OK.

    Both main parties have played this game, and still do. The Labour Party used to criticise certain capitalist firms for "profiteering”, i.e. making too much profit, being too ruthless in pursuing profits. Presumably if only they’d be satisfied with normal profits, that would be alright. And it’s what Ted Heath did when, as Tory Prime Minister, he described the behaviour of Tiny Rowlands – a particularly predatory capitalist – as the “unacceptable face of capitalism”. Which suggests that there is an acceptable face of capitalism. Which of course is what he believed – and which, unfortunately, is the same message that the Class War campaigns will convey to people.

    Robert Tressell got it right in The Ragged Trousered Philanthropists when he wrote:

    “They all hated and blamed Rushton. Yet if they had been in Rushton’s place they would have been compelled to adopt the same methods, or become bankrupt; for it is obvious that the only way to compete successfully against other employers who are sweaters is to be a sweater yourself. Therefore no one who is an upholder of the present system can consistently blame any of these men. Blame the system” (chapter 21).

    Weekly Bulletin of The Socialist Party of Great Britain (63)

    Dear Friends,

    Welcome to the 63rd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1333 friends!

    Recent blogs:

  • Freedom from profit
  • To Dream the Impossibilist Dream
  • News from Here
  • Coming Events at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North):


    Saturday 20 September, 6pm

    Which Way the Revolution - What are our differences?

    Ian Bone (Class War) and Howard Moss (Socialist Party)

    Forum followed by open discussion.

    Chair: Bill Martin (Socialist Party)


    A Season of Free Film nights from Sunday 14th September to Sunday 23rd November at 52 Clapham High Street, London.

    All films start at 4 p.m.

    Sunday 14 September: Animal Farm

    Sunday 28 September:
    Who Killed the Electric Car?

    Sunday 12 October: Judgement Day: Intelligent Design on trial

    Sunday 26 October:The Corporation

    Sunday 9 November: Zeitgeist

    Sunday 23 November: The War on Democracy

    Quote for the week:

    "This crippling of individuals I consider the worst evil of capitalism. ... An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career." Albert Einstien, in Why Socialism?, 1949.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Monday, September 8, 2008

    Only Inside Socialism?

    The Pieces Together column from the September 2008 issue of the Socialist Standard

    ONLY INSIDE SOCIALISM?

    "As we face $4.50 a gallon gas, we also know that alternative energy sources — coal, oil shale, ethanol, wind and ground-based solar — are either of limited potential, very expensive, require huge energy storage systems or harm the environment. There is, however, one potential future energy source that is environmentally friendly, has essentially unlimited potential and can be cost competitive with any renewable source: space solar power. Science fiction? Actually, no — the technology already exists. A space solar power system would involve building large solar energy collectors in orbit around the Earth. These panels would collect far more energy than land-based units, which are hampered by weather, low angles of the sun in northern climes and, of course, the darkness of night. Once collected, the solar energy would be safely beamed to Earth via wireless radio transmission, where it would be received by antennas near cities and other places where large amounts of power are used. The received energy would then be converted to electric power for distribution over the existing grid." (New York Times, 23 July)

    BEHIND THE BRAVADO

    "Washington - More than 22,000 veterans have sought help from a special suicide hot line in its first year, and 1,221 suicides have been averted, the government says. According to a recent RAND Corp. study, roughly one in five soldiers returning from Iraq and Afghanistan displays symptoms of post-traumatic stress disorder, putting them at a higher risk for suicide. Researchers at Portland State University found that male veterans are twice as likely to commit suicide than men who are not veterans. ...The VA (Veterans Affairs) estimates that every year 6,500 veterans take their own lives. The mental health director for the VA, Ira Katz, said in an e-mail last December that of the 18 veterans who commit suicide each day, four to five of them are under VA care, and 12,000 veterans under VA care are attempting suicide each year." (Yahoo News, 28 July)

    WHAT CREDIT CRUNCH?

    "A mysterious Russian billionaire has trumped his big-spending rivals and broken a world record by splashing out 500 million euros (£392 million) on one of the most sumptuous villas on the French Riveria." (London Times, 11 August)

    CALIFORNIAN NIGHTMARE

    "Stockton has become known as Foreclosure Town, USA. With 1 in 25 houses in foreclosure, there are more properties with mortgages in default here than anywhere in the country. And it is not as if there isn't some stiff competition for Stockton's dubious accolade in other corners of California, and indeed in the rest of America." (Observer, 10 August)

    Saturday, September 6, 2008

    The Cold War re-heats

    Editorial from the September 2008 issue of the Socialist Standard

    According to Clausewitz, the oft-quoted 19th century general and military strategist, war is "the continuation of policy by other means." The recent brief – if brutal – conflict in the Caucasus is yet another example of the everyday nature of capitalism continuing by other means.

    The conflict in South Ossetia and Abkhazia, which appears to have claimed thousands of lives has been a rare eruption, exposing the tectonic-like political and economic pressures shifting below the surface.

    These recent events have been a wake-up call to those still deluded into thinking that the ending of the cold war (which was never an ideological battleground anyway) would mean an end to stand-offs between superpowers, with the ultimate potential for World War 3.

    The Cold War has just been re-heated then: but this time round the battle-lines are clearly not drawn on grounds of some supposed ideological differences. There are no great ideological or moral issues at stake here. The protagonists (US and Russia) and their allies are simply rival capitalist economies, eager to secure strategic advantage, access to resources and regional influence.

    In particular, in attempting to diversify its oil sourcing away from troublesome regions such as the Middle East, the US is relying on a new pipeline via Georgia which taps into relatively secure sources in Central Asia while avoiding Russian territory.

    There are other considerations however. The failure of the centralised command economy version of capitalism as practised by the Soviet Union till its demise almost 20 years ago did not end the cold war, it merely changed the front. As the economic and political basis for the Warsaw Pact crumbled, the regional military pact NATO (the North Atlantic Treaty Organisation) has been expanding far beyond its original "north Atlantic" scope, with the states of the former Soviet Union strategically-attractive targets of its recent recruitment drive, as it expands its sphere of influence.

    Military conflict is an unavoidable consequence of the everyday conflict of property society. In capitalism all productive resources – most explicitly oil production and distribution – have to be owned and controlled by someone. Modern warfare – with all the waste, devastation and atrocities it brings in its wake – is a problem of capitalism. In contrast, in a moneyless, wageless, classless and stateless socialist society no-one will own any productive resource to the exclusion of anyone else. There will be no laws, rules or coercive forces to administer or police such monopolisation.

    The World Socialist Movement is unique as a political movement in clearly and consistently expressing its opposition to war throughout the last hundred years. This is not selective: we oppose all wars, and have done so from World War 1 to Gulf War 2. Our opposition has a simple basis: war is fought over issues of interest to employers, landlords and bosses – the capitalist class, in short – while it is workers, in uniform or civilian clothing, who are the cannon-fodder. The overwhelming majority, the members of the global working class – whether from Georgia (Caucasus) or Georgia (USA), have no interests at stake worth shedding a drop of blood over.

    Friday, September 5, 2008

    Our Opinion Of Marx (1972)

    From the May 1972 issue of the Socialist Standard

    Dear Sir,

    I am a Marxist, and interested in the problems and policies of the various anti-capitalist parties and organisations in this country. I would be grateful if I could have your opinion on some points of Marxist theory which appear to be in contradiction with your own policy.

    The Socialist Party of Great Britain believe in a society in which "from each according to his ability, to each according to his needs", is the outlook; in which the means of production and distribution are controlled by the whole population; in which the State as a means of class oppression (i.e., parliament, the armed forces, the police force, etc) no longer exists; in which money and all forms of similar exchange tokens have no place. This was undoubtedly the ultimate aim of Marx.

    However, Marx at no time said that the transfer from capitalist society to true communist should be immediate. He stated something very different, both in the Communist Manifesto and throughout his later works.

    In the Communist Manifesto, at the end of the chapter "Proletarians and Communists", he states measures which will be generally applicable to advanced countries. Among these are a graduated income tax, a national Bank in which all credit is controlled by the State, centralization of the means of communication in the hands of the State. The state referred to is the worker's state, an institution which is necessary and inevitable; the abolition of any form of state will come when all power is in the hands of the working class and when the forces of production have been raised and changed to working class rule. Only then will the dialectical process come to its final synthesis and completion; only then will, to use Marx's phrase, the State wither away.

    I have no desire to criticise or decry the Socialist Party of Great Britain, but I feel you interpreted Marxism wrongly.
    — Martin Allan, Edinburgh.

    REPLY:
    Our general attitude to Marx is that he was a pioneer Socialist, the one in fact who put socialist theory onto a scientific basis. We accept his labour theory of value, his materialist conception of history, and his view that Socialism must be the outcome of the political struggle of the working class to free itself from capitalist exploitation. We therefore sometimes call ourselves "Marxists", despite the shortcomings of this term (such as suggesting that we might regard Marx as some infallible source of wisdom who never made a mistake).

    But we are not committed to applying socialist principles in precisely the same way as Marx did a hundred years ago. This is because conditions have changed considerably since Marx's day. When he was politically active the workers were only just beginning to organise politically and industrially. He considered it his task to encourage this, even if the organisations the workers first formed were not explicitly socialist in character. He expected, somewhat overoptimistically as it has unfortunately turned out, that the workers would soon move on to become conscious Socialists.

    In Marx's days the world political scene too was different. Capitalist Europe (those countries in which the bourgeois revolution against the landed nobility had taken place) was threatened by reactionary feudal powers, especially Tsarist Russia. Opposition to Tsarist Russia became something of an obsession with Marx and led him to take up positions, such as supporting the British-French-Turkish side in the Crimean War, which we have no hesitation in saying were wrong. Generally, what Marx favoured was the further development of capitalism since he knew that this would ultimately remove the threat the reactionary feudal powers posed.

    He was proved right in this. The first world war (aptly named as it marked the final triumph of capital¬ism as the dominant world system) saw the end of the last great dynastic empires of Europe, not just Tsarist Russia but Imperial Germany, Hapsburg Austria and Ottoman Turkey as well. Since then capitalism has clearly been the dominant world-system so there is no further argument for socialists to favour capitalist development in order to undermine feudal-based regimes. This has been done, and Socialists can now concentrate exclusively on undermining capitalism by build¬ing a world-wide movement for Socialism. In this sense developments since Marx's death have made his tactics (but not his principles) outdated.

    These same developments have also made it possible to establish a society of abundance, with from each according to his ability to each according to his needs, now without any transition period while "the forces of production are raised". The forces of production have already been raised immensely since Marx's day: Why, Marx lived in the age when road transport was still by horse and carriage and before the electrification of industry, let alone the discovery and application of electronics and nuclear power! The wonder of his age was "the electric telegraph" while we are now only a few decades away from the peaceful use of nuclear fusion which would give mankind an almost unlimited supply of energy which could be used to produce wealth in abundance.

    To be fair to Marx though, he would have been the first to admit this. As he and Engels wrote in a preface to the 1872 German edition of the Communist Manifesto:
    "The practical application of the principles will depend, as the manifesto itself states, everywhere and at all times, on the historical conditions for the time being existing, and, for that reason, no special stress is laid on the revolutionary measures proposed at the end of Section II. That passage would, in many respects, be very differently worded today."

    They went on to say that in view of "the gigantic strides of Modern Industry since 1848, and of the accompanying improved and extended organisation of the working class", and in view of the experience of the Paris Commune of 1871, "this programme has in some details become antiquated". If these measures were antiquated 100 years ago, they must be prehistoric today!

    Marx, incidentally, never spoke of a "workers' state" and it was Engels who wrote of the withering away of the State. Marx himself preferred to talk about the abolition of the State. The political and economic developments listed above made Marx's formulations more appropriate than Engels' — though of course the abolition of the State will still be a consequence of the change in the mode of production.
    EDITORIAL COMMITTEE

    The Scottish Question

    From the September 2008 issue of the Socialist Standard

    The SNP’s victory in the Glasgow East by-election has kept this irrelevant pot boiling.

    The Labour Party has always claimed to represent the interest of the worse off majority but now finds itself deeply unpopular to the point of facing a crisis. Labour has had untrammelled power for over ten years, and yet now finds itself rejected because it has failed so spectacularly. Bernard Shaw once wrote that any government that robs Peter to pay Paul can count on the support of Paul. Labour has failed to achieve even this modest level of vote buying.

    Part of their problem was that Peter is just too strong to let himself be robbed – the organised ranks of capital and the disorganised might of the market are strong enough to see off any challenge that doesn’t seek to remove them entirely from the picture. Labour tried to accommodate itself with business in order to achieve modest social goals – but this simply left it prey to the mood swings of the market, with Paul’s position unchanged.

    One noticeable change Labour did manage to get through was devolution. We’ve discussed in these pages before how this was as much jobs for the boys and girls – as well as providing a handy redoubt for Labour forces for when they would eventually lose Downing Street. Their colossal votes in Scotland and Wales would make them the permanent natural party of government in those areas, and would allow them to circumvent to rock solid Tory core in the English south east. It would, they hoped, stymie the challenge from Welsh and Scottish nationalists to their dominance in those areas.

    After all, they believed that the desire for the retention of the United Kingdom is strong. Hence why Gordon Brown has tried to wrap himself in Britishness – a neat bit of stealing Tory clothes to win their supporters over, while his own supporters have nowhere else to go. At least, that’s the theory. The problem is, however they were wrong about the Nationalists – the voters found they could go to them.

    In 2007 Labour lost control of the Scottish parliament. They had never had a full majority there (the proportional electoral system they introduced makes that an unlikely event) but they had been the biggest party. It was a close run thing, but they were beaten into second place by one seat (and about 20,000 votes). Not only that, but a new PR system for local government meant the smashing of the old Labour family run fiefdoms throughout Scotland, with almost all councils falling to no overall control.

    A part of all that was the demise of the Scottish “Socialist” Party, one of the most successful leftist parties of the last fifty years. It had had six seats in the Scottish Parliament, before it had imploded over the behaviour of its charismatic leader Tommy Sheridan suing the News of the World over allegations on his private life (plus a touch of SWP skulduggery). It had latched on to regional nationalism, as a successful means to electoral success.

    The Scottish Nationalists had tacked left, making social democrat noises to pick off Labour supporters. There is nothing intrinsically left-wing about nationalism. Being a nationalist does not necessarily commit a person to any particular reforms or economic principles. Indeed, technically, the SNP is a one-issue party – for an independent Scotland. Their history, though, is marked by debates between the minority of hardliners wanting to stand for nothing but independence, and the dominant pragmatists who want to win political power by offering to administer the current situation, and knocking the maximum demand into the long grass. This allows people to safely vote for the party of independence without necessarily voting for independence. In truth, they stand for no principle different than the other parties, offering to represent and work hard for “you”.

    Having formed a minority government, they plan to use events in their favour. Just as Labour’s first British government dressed up in Ruritanian Privy Councillor’s costumes to prove that they weren’t revolutionists, so too the Nationalists have accepted political responsibility within the Union to try to show that they are trustworthy and to win people to their cause while in power. Of course, they generate heated debates between themselves and Westminster, and try to provoke controversy. Of course, they intend to legislate for a referendum on independence – but only after they have been in office some while. So, even if that is rejected, they have a fair chance of holding onto their jobs.

    What some commentators look to, though, is after the next UK election. It seems increasingly likely the Tories will end up ahead of Labour. It is even possible, after the Glasgow East by-election result, that the SNP could take a majority of Scottish seats. Following the death of John MacDougall Labour MP for the Fife town of Glenrothes there will be another by-election in the autumn. This is another Labour safe seat, and losing again may be fatal for Gordon Brown’s premiership – and spell almost certain disaster at the next general election.

    David Cameron has announced that he believes that Scottish MPs should not be able to vote on legislation in England just as English MPs cannot vote on Scottish issues (because those matters are devolved to the Scottish parliament). Considering that his party won a majority of English seats at the last election, he would say that. If Scotland breaks away this would make Labour’s return to power in Westminster that much harder, and the SNP would have their cherished dream.

    The indications are, though, that Scottish voters will not opt for independence. At heart, then, the SNP, like Labour, has achieved political success at the expense of its core project. At heart, in both cases this is because they have sought power by telling people they agree with what they think, rather than trying to change minds. The quick route to power is to buy people’s votes with popular policies – but the danger in that is that you attract people who support those policies, but not necessarily your wider aims. They’ll simply up and leave when someone offers them something better. Political time, effort and consciousness are wasted arguing to and fro on such nonsense.

    Ultimately, such baubles are thrown around by the political hacks in order to win for themselves the major prizes. Workers have nothing to gain from the redrawing of the boundaries, but regional entrepreneurs and bureaucrats certainly do have a chance of making good if only they can persuade the electorate to back them. Capitalism knows no boundaries, money has no accent. Yet the Scottish question continues to play a major part in the ongoing passing show of UK politics.

    Pik Smeet

    Wednesday, September 3, 2008

    Weekly Bulletin of The Socialist Party of Great Britain (62)

    Dear Friends,

    Welcome to the 62nd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1322 friends!

    Recent blogs:

  • How we could feed the world
  • Capitalism or Socialism?
  • Are you an abstainer?
  • Coming Events at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North):


    Saturday 20 September, 6pm

    Which Way the Revolution - What are our differences?

    Ian Bone (Class War) and Howard Moss (Socialist Party)

    Forum followed by open discussion.

    Chair: Bill Martin (Socialist Party)


    A Season of Free Film nights from Sunday 14th September to Sunday 23rd November at 52 Clapham High Street, London.

    All films start at 4 p.m.

    Sunday 14 September: Animal Farm

    Sunday 28 September:
    Who Killed the Electric Car?

    Sunday 12 October: Judgement Day: Intelligent Design on trial

    Sunday 26 October:The Corporation

    Sunday 9 November: Zeitgeist

    Sunday 23 November: The War on Democracy

    Quote for the week:

    "To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system." Marx, Value, Price and Profit, 1865.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Tuesday, September 2, 2008

    The Case for and against Reformism (1986)

    From the January 1986 issue of the Socialist Standard

    The case for reformism
    I think I'll become a reformist. Change society a bit at a time. Erode the edifice of social misery, gradually but surely, and make the world a better place to live in.

    It's all very well these revolutionary socialists telling me that the only way to end working-class problems is to abolish the whole system of world capitalism and introduce socialism, but I can't wait for that. Something needs to be done now. If we sit around trying to persuade workers of the need to abolish the cause of their suffering it could take ages. No, I want action now. Tomorrow morning I'm going to sign up in the heroic struggle to reform this evil system.

    What shall I start with? I know, I'll begin by dealing with the worst problems and then work my way down the list to the little insignificant ones. My task for the time to come is to deal with the real biggies. War. Mass starvation. I might even deal with the homeless and slum-dwellers if I've got a bit of spare time. And the Third World - I'd better lend a hand in supporting them. Oh, and I almost forgot about pollution, I must make sure that something is done about that. Good. Now I know what my immediate aims are all I need to do is get on with the action.

    Right, war. What is the practical way for us reformists to end war? Well, let's be pragmatic - we won't end all wars, but we shall certainly abolish all nuclear weapons. How? To begin with we shall establish a mass movement made up of people who think that nuclear weapons are "a bad thing". Then the government will be forced to listen. True, such a movement has existed in Britain since the late 1950s and it is now larger than ever and the governments have not been forced to accept our demands and most of our members voted to elect the governments which have not accepted our demands, but that must not dispirit us. Having built our mass movement we shall unleash our unstoppable tactic: we shall have a march every year from Hyde Park to Trafalgar Square and we shall shout slogans (very loudly) like "Ban the Bomb" or "Jobs Not Bombs". Let them try to ignore that! Well, yes, they have ignored that in the past, but that is quite evidently because there weren't enough of us marching. In addition to that tactic, which will leave us all feeling like a big movement which cannot be ignored, we shall do other practical things like holding hands around Greenham Common and sitting down in the middle of the road in Hampstead. Of course, we must be pragmatic about abolishing nuclear weapons: we would be prepared to settle for a nuclear freeze, I suppose. That means that they keep all the nuclear weapons which exist in the world today (enough to blow us all up several times), but no more can be produced. That would be an achievement. True, there have been more people killed in the non-nuclear war in Iran and Iraq than were killed in Hiroshima, but we must not allow ourselves to be diverted into side-issues. We reformists like to deal with the big issues, like the possibility of a nuclear war in the future, rather than these petty wars which are going on now. (Although I have made a note in my diary to join a campaign to deal with Iran and Iraq - and Ireland - and Israel and the Lebanon - and Afghanistan - and Central America -just as soon as I've solved this nuclear problem.)

    After all, the danger of a nuclear war is by far the greatest problem facing humanity today. Admittedly, Oxfam does claim that thirty million people are dying now as a result of starvation every year. And hundreds of millions of people are living in conditions of hunger and diseases caused by malnutrition. There is the equivalent of one Hiroshima every two days as a result of world hunger. Come to think of it, that problem is at least as important as nuclear war. I agree with Bob Geldof: "something" must be done now. What we need is a mass movement made up of people who oppose world hunger. We can appeal to the consciences of the leaders who hold the purse strings. After all, we elect them. And we must organise collections for the benefit of those who are starving. Just think, if every person in Britain gave a fiver each that would amount to £300 million. That would give £10 to each of the people Oxfam says starve to death each year. But then, what about people living in poverty in Britain? They can't afford to donate £5; according to the Child Poverty Action Group one in four children in this country are living under the official poverty line. We shall need to do something about that. I'll join a campaign to make sure the government doubles family allowances. After all, who can be more important than the children? Well, yes, there are the elderly as well: I shan't forget to do my bit for them. I shall join another cam­paign, such as Help The Aged, which will demand that the government taxes the rich so that pensions are increased. Then there are the disabled. And drug addicts. And victims of domestic violence. I shall need to join a separate campaign to see that each of them gets a fair deal. Then, of course, I shall be joining with my sisters to fight for sexual equality. And I shall also join a separate organisation to demand racial equality. And one more to call for compassion for criminals who ought not to face barbaric penal ties just because society has turned them to crime. And I really ought to join with the Women Against Rape who want rapists to be castrated. It wasn't until I decided to be come a reformist that I decided quite how much action I had to do.

    Well, I have been working at cutting down the list of organisations to join, so that I don't commit myself to too much. There are the anti-war (sorry, anti-nuclear war) ones: CND, END and the Peace Pledge Union. Then the anti-hunger ones: War On Want, Band Aid, Oxfam. Then the CPAG, Help the Aged, Shelter, London Against Racism, the local feminist collective (they won't let me join, so fortunately I'll have one Tuesday evening free every fourth week) and the campaign for "fair trials" for the miners. And I almost forgot Greenpeace. And, of course, Friends of the Earth. And the Troops Out Movement. Paying the subscriptions will present a few problems. And I'll need a diary with whole pages for each day so that I can remember which problem I'm solving when. I mean, I'd look a bit daft sitting in an anti-nuclear war meeting talking about the need for a march against unemployment, wouldn't I?

    Once joined, the action really starts. We shall pass resolutions which will be sent to progressive" MPs. And we shall organise petitions. It is surprising how willing people are to sign them. True, they are usually filed away in some civil servant's waste paper basket, but at least it's action. Then there are the marches. And it's surprising how many people you meet on one march who you know from the others. Then there's the odd battle for the leadership. Somewhat time-wasting, I admit, but it is all part of practical politics. To be perfectly honest, I have my hopes to become Badge Organiser for Islington Save The Whale. But, of course, I'll have to spend a few nights canvassing support otherwise the post will go to one of those terrible Trots who use reformist organisations by doing all the donkey work.

    So, I am in on the action. Unlike those revolutionaries from The Socialist Party, who insist that you cannot eradicate the symptoms without destroying the disease, I am applying many bottles of medicine to the contaminated anatomy of the capitalist system. True, the pills and potions have never been successful in the past. But I have faith. And you need it if you think that reformism is the solution to the horror epic of this problem-packed society.
    Steve Coleman


    The case against reformism.
    Back in the 1970s Italy was struck by a plague of snakes. These poisonous vipers were such a menace, particularly to holiday makers, that some resort areas decided to do something about them. At first they offered a bounty for every dead snake produced but, inevitably, some smart operators hit on the idea of breeding the snakes and made a substantial profit until the authorities realised they had been outsmarted.

    Next, they heard that the number of snakes increased because their natural enemy, the porcupine, was extinct in Italy. Porcupines were acquired from Yugoslavia and let loose in areas infested by snakes. Sadly, word quickly spread among the local hunters that roasted porcupine was delicious and soon the fate of that animal in Italy was sealed once again.

    Finally, it was decided that the Italian turkey, with its quickness and sharp beak, would be more than a match for the snakes. Five hundred were ordered but, as their intended use was not specified, the shipper assumed they were destined for the dinner table and clipped their beaks to prevent them damaging one another in transit. In the circumstances the dinner table was where they ended up. So far as we know the problem of Italy's surplus snakes remains unsolved because somehow or other all the plans made to deal with them always went wrong.

    All of this is reminiscent of the efforts made by politicians of left, right and centre to reform away capitalism's plague of problems such as war, poverty, racism, crime and unemployment. They forever plan reforms which they fondly imagine will solve all the problems but, just as with the snakes in Italy, the plans never seem to work out in the intended way.

    Experience shows that reforms rarely achieve what their supporters hoped they would. For a start, no matter how closely thought out and worded, every reform contains loopholes which will be found by those looking for them. The Equal Pay Act, for example, was supposed to bring women workers the same earnings as men for doing the same job, but many employers found ways of getting around it. They can either slightly lessen the amount of work a woman is to perform or reduce the hours worked by women so that they are classified as part-time workers, a category not covered by the Act. One way and another, the Act has not lessened the gap between what women are paid in relation to men for doing the same work. Indeed the gap has increased. In 1977 women earned on average around three quarters of what men get, but by 1983, the last year for which figures are available, women's comparative earnings are down to around two thirds.

    The laws passed to outlaw racial discrimination in employment don't seem to have had any more success. Despite the existence of the Committee for Racial Equality and the passing of the Race Relations Act there is still widespread discrimination against black job applicants. The Policy Studies Institute reported recently that ". . . employers continue to hire people on the basis of the colour of their skin" (Guardian, 26 September). The report adds that breaches of the law by employers are usually invisible to black applicants, who are told that the job has gone to someone better qualified.

    Nor has the Incitement to Hatred Act reduced racial violence and abuse. The evidence is that not only are these increasing but they are becoming more respectable and have spread from the inner cities to the suburbs. The reason why reforms fail to deal with this problem isn't hard to find. Racial antagonism is the product of capitalism's competitiveness and insecurity and the fears these characteristics arouse. In this case it is the fears of white workers that blacks and Asians will take their jobs and get preference in the allocation of council housing or, if they are suburban owner-occupiers, that the presence of ethnic minorities in their area will reduce property values. These fears go hand in hand with capitalism's tensions and cannot be simply legislated out of existence.


    Besides rarely having the desired effect, reforms often have unexpected and unpleasant side-effects. The policy of rent control adopted by the wartime coalition and postwar Labour and Tory governments was aimed at holding down wage demands in a period of full employment but some of its supporters justified the policy on the grounds that it would protect tenants from greedy landlords. This policy had considerable success on the first count and some on the second, but it also greatly reduced the amount of housing available as many land lords found that the artificially low rents they received didn't make it worthwhile to maintain their properties, which deteriorated so badly that they often had to be demolished.

    So in the long run rent control created a situation where rents just had to rise and the Tory Rent Act of 1957 began the process of de-control. But here, too, an unwanted side effect resulted because the act froze tenants' rents for fifteen months unless vacant pos session was obtained. This provoked some landlords, including the notorious Peter Rachman, to use violence and intimidation against tenants in order to get them out right away.


    Recent government legislation designed to move on young unemployed people living in digs after six weeks is another case in point. Intended to show that the government was determined to stop alleged abuse of DHSS payments by landladies, the measures didn't take into account that many of these youngsters have lived in institutions for much of their lives and are emotionally or mentally disturbed. For some, their digs are the only real home they have ever known and the thought of having to leave produced a spate of suicide attempts, some successful.

    Even when the reformists have achieved their objective, they may well face a struggle to prevent the legislation being reversed. Generations of Labourites put a great deal of time and effort into bringing about the National Health Service and the nationalised industries, which they imagined would introduce a golden age of medical care and full employment. Now they watch in dismay as the NHS is eroded and the nationalised in dustries are once again privatised.

    Were a future Labour government to restore the NHS to its pre-1979 condition and, however unlikely, re-nationalise whatever industries had been sold off, there would be no certainty that this would last. Govern ments must always be looking for ways to economise, even in boom conditions, but in the event of a future slump the government, of whatever complexion, will need to cut its expenditure and the NHS and re nationalised industries could be obvious targets, just as they are now.

    This much is certain: no programme of reforms can ever unite the whole working class. The reforms so earnestly sought by left wingers - such as positive discrimination in favour of ethnic minorities in housing and employment, the unification of Ireland, lower council house rents, the abolition of mortgage relief, and so on - will please some workers but enrage just as many more.

    The really vital reforms of capitalism were won a long time ago. The vote gave the working class the opportunity to take its fate into its own hands, and wider educational opportunities made it possible for workers to at least consider the socialist case. These gains, together with the fact that society's productive forces have been developed to the point where an abundance of wealth is now possible, make socialism a practical proposition now. The struggle for even more reforms is irrelevant and only gets in the way.
    Vic Vanni