Sunday, November 30, 2008

Lamont - When Cameron Got It Wrong (2008)

The Greasy Pole column from the November 2008 issue of the Socialist Standard

David Cameron is in the habit of sprinkling his speeches, like throwing stale currants into a stodgy spotted dick, with unfunny jokes intended to persuade us that a ruthlessly ambitious, manipulative politician can have a harmless sense of humour. Remember the crack in what was called his keynote speech at this year’s Tory Conference, that he respects entrepreneurs and he knows what he is talking about because he goes to bed with one every night and – in time to get the laughter rocking again – wakes up with the same person every morning. The eagerly tamed audience were enthralled as well as amused and Cameron was able to forget that his bedtime entrepreneur – who, for those who have not been paying attention is his wife Samantha – is a very rich one; her father is an Old Etonian stockbroker and 6th Baronet, her parents are divorced and her mother is now Viscountess Astor. Lucky Samantha showed she has the common touch when she said, in reply to a reporter’s question, that she lived “near Scunthorpe”; it would have gone some way to expunge the image of a blackened steel town summoned up by that misinformation if she had mentioned that the family’s home is Normansby Hall, a lush 300 acre estate which they have owned since the late 16th. Century. Clearly, the Cameron family’s bit of what the Tory leader calls “this broken society” is comfortingly intact.

In that same speech Cameron raised some embarrassed titters among the laughs when he shyly admitted to having been an adviser to Norman Lamont when he was Chancellor of the Exchequer. The Labour Party, he said, never let him forget this episode in his climb up the greasy pole. Quite right too – all Tories would like to forget Lamont, the memory of whose time in charge of the Treasury tends to undermine any theories about a Conservative government being inherently more able to tame capitalism’s crises than a Labour one. Lamont was at Cambridge with some rising stars of the Tory governments of the 1980s – Michael Howard, Kenneth Clarke, Leon Brittan John Gummer. How many fantasy careers, climaxing in occupancy of Number Ten, were sketched out on the backs of cafe menus in those impatient days? Lamont held a succession of jobs until the Men in Grey Suits did for Thatcher; as Major’s Chief Secretary to the Treasury he acquiesced in, and so had some responsibility for, the policy of Britain being part of the European Exchange Rate Mechanism (ERM). When Major put himself up in the contest to succeed Thatcher Lamont managed his campaign and he was then rewarded by Major with the Chancellorship.

Lament’s time as Chancellor was not noteworthy for its controlled tranquillity and optimism; indeed his public standing was so abysmally low that years later he recalled a London cabby telling him that one of his passengers, on seeing Lamont crossing the road, offered five hundred pounds to run him down. (He was not to know, of course, that it could be left to Lamont’s political friends to bloodlessly get rid of him later). He was associated with a recession rated in some quarters as the worst since the end of the war and his blithe assurance that it would be “short-lived and relatively shallow” did not inspire any more confidence than his later claim to descry “the green shoots of recovery” all around – although they were not apparent to his struggling colleagues. This fixation with mouthing statements so unwise that they could only haunt him throughout his career was typified by his telling the Commons, in May 1991, that “Rising unemployment and the recession have been the price that have had to pay to get inflation down. That price is well worth paying”. (He did not view his own projection into unemployment, when it came, in quite so positive a light).


The big crisis in Lamont’s time so near to the top of the greasy pole was “Black Wednesday”, that day in September 1992 when he oversaw Britain’s withdrawal from the ERM. This was especially embarrassing for him because only weeks before he had given a categorical assurance that nothing of the kind would happen: “There are going to be no devaluations, no leaving the ERM. We are absolutely committed to the ERM. It is at the centre of our policy” (26 August 1992). Little wonder that Lamont was looking so unkempt when, on 17 September 1992, he emerged into Downing Street to face the voraciously waiting hacks. Amid the panic that day interest rates were dizzyingly raised from 10 per cent to 12 per cent and 15 per cent, then brought back to 12 per cent. The Treasury was not alone in its panic; workers who were buying their homes through a mortgage were desperately worried about how they were to afford the higher payments and whether there were more, similarly chaotic, days to come. They were probably too anxious to notice on their TV screens, as Lamont came through the door of Number 11, that he was followed by a shadowy figure, caught briefly and fuzzily by the cameras. It was his “political adviser” – David Cameron, future Leader of the Opposition, who would one day bellow his scorn at Prime Minister Brown for floundering among the multi-crises of capitalism and who would then be anxious to conceal his association with the ludicrous failure who was once his boss.

Habitual optimists may rejoice that a new age of transparency and candour has dawned with Cameron’s confessed embarrassment at the memory of his time with Lamont. But forgetting a fretful past has been developed to a very fine art by suitably ambitious politicians. There would be, after all, an awful lot of embarrassment for them to misremember. Judge for yourself if this is likely to happen or whether they will continue to see their future as survival through concealment and deceit.

Thursday, November 27, 2008

“Commerce is more sovereign than the sovereign” (Karl Marx)

From the Socialism Or Your Money Back blog

While the Chancellor of the Exchequer was making his pre-budget announcement based on the mere hope that recovery would begin in 2010, Gordon Brown was addressing a meeting of the employers’ organisation, the CBI. If he stuck to pre-released text of his speech he said:

“We have seen in previous recessions how a failure to take action at the start of a downturn has increased both the length and depth of the recession. That was the mistake made in the recessions of the 1980s and early 1990s. To fail to act now would be not only a failure of economic policy, but a failure of leadership” (London Times, 24 October).

He was being rather selective in his choice of historical precedents. He forgot to mention what happened in the mid-1970s when the then Labour government did try, as his Labour government is trying today, to spend its was out of that recession – and failed. To such an extent that the Prime Minister James Callaghan had to confess to the 1976 Labour Party Conference:

“We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour, that that option no longer exists and that in so far as it ever did exist, it only worked on each occasion since the war by injecting bigger doses of inflation into the economy, followed by higher levels of unemployment” (London Times, 29 September 1976).

But Brown also forgot that an attempt was made to try the spend the way out of the 1980s recession. Not in Britain but in France, following the election as President of Labour-type reformist François Mitterrand in May 1981 and his party’s victory in the general election that followed in June. One of their election promises was to abandon the austerity approach of the previous conservative government in favour of:

“a relaunch of economic activity by an increase in the purchasing power of the most disadvantaged and so by a relaunch of consumer goods”.

Sound familiar?

And this is what they did, the first measure the new government took, in June 1981, being to increase the minimum wage, pensions, family allowance and housing benefits and to announce that 200,000 new government jobs were being created. Like Alistair Darling, the Minister of the Economy and Finance hoped to be saved by an early economic recovery:

“We are hoping to anticipate, but in a reasonable way, a recovery in the world economy”.

The world economy’s reply was to force a devaluation of the franc within four months, in October 1981. From then on it was downhill all the way. The following June the government had to devalue the franc a second time, the Prime Minister offering the pathetic explanation:

“the international recovery was not at the rendezvous”.

By October 1982 the Minister of Planning was admitting:

“We must not dream. The crisis we are going through is going to get worse”.

The Prime Minister continued with his inanities:

“The day will come when the recovery will be there”.

In December the Minister of the Economy and Finance confessed:

“It is not us who are the masters of the world. The world goes as it is, it is in the grip of forces that no one can master”.

Then after a third (yes!) devaluation in March 1983 he declared:

“We were banking on an economic growth of 3 percent, but the recovery didn’t come”.

In October 1984 the number of unemployed passed the peak of 3 million (it had only been 1.7 million when Mitterrand came into office).

This failure to shorten and lessen a slump by trying to relaunch popular spending is one of the most spectacular on record. No wonder Brown didn’t mention it.

Brown, Darling and the others may not be around to have to make the abject confessions of failure that Mitterrand’s ministers had to make. But they will have maintained Labour’s record of every Labour government leaving office with a greater number of unemployed than when they took over.

Adam Buick

Putting the rant into itinerant (2008)

From the November 2008 issue of the Socialist Standard. (Click on the image to enlarge.)

Wednesday, November 26, 2008

Weekly Bulletin of The Socialist Party of Great Britain (74)

Dear Friends,

Welcome to the 74th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1408 friends!

Recent blogs:

  • The Continuing Trade Cycle
  • The taxation myth
  • Reply to the BNP
  • Coming Events:


    Public Meeting followed by Social.

    Saturday 10 January, 6pm, at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North).

    Quote for the week:

    'Everything in the world is purchased by labour.' Hume, 'Of Commerce,' in Political Discourses, 1752.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    God and the Market (2008)

    The Cooking the Books column from the November 2008 issue of the Socialist Standard

    Commenting on the current world financial crisis former 1968 student leader and now a Green MEP, Daniel Cohn Bendit, said that “the belief that the market is god is over” (Guardian, 17 September). Someone who should know more about God, the Archbishop of Canterbury, hopes this is so as he thinks that the Market has become a rival to his god.

    In an article in the Spectator (26 September) Dr Rowan Williams in effect accused “market fundamentalists” of breaking the First Commandment – “Thou shalt have no other gods before me”. He even called in Marx to back up this charge of idol worship:
    “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves; he was right about that, if about little else. And ascribing independent reality to what you have in fact made yourself is a perfect definition of what the Jewish and Christian Scriptures call idolatry.”
    Dr Williams is said to be a learned man and he is right: Marx did see capital as the product of human labour which had come to dominate those who produced it (except that he saw this as applying to capitalism in general not just to “unbridled capitalism”).

    This was in fact his whole “critique of political economy” (the subtitle of Capital), that the economic laws of capitalism were not the natural laws that Adam Smith, David Ricardo, the Rev Thomas Malthus, John Stuart Mill and the others thought but forces that came into operation only because society was organised in a particular way. Market forces were the result of human activity which had escaped from human control and which had come to dominate them as if they were a natural force.

    Dr Williams may also be aware that here Marx was applying to economics the theory that Ludwig Feuerbach had applied to religion in his 1841 The Essence of Christianity. Feuerbach argued that, far from God making man in his own image, it was the other way round. Humans made God in their image and attributed to him the powers which they collectively possessed, and then bowed down and worshipped this figment of their imagination. If humans were to realise this and take their own destiny in hand there would be no need for God or religion. So, according to Feuerbach, the Archbishop’s god was also an idol.

    The Archbishop was getting a dig at Marx in when he said he said he was right about this “if about little else”. But Marx once made a harsh comment about the Church of England, writing in the Preface to the first edition of Capital, that it would “more readily pardon an attack on 38 of its 39 articles than on 1/39 of its income”.

    It is interesting to speculate what the one article it would keep might be. At one time it would have been obvious – Article 38 that “the riches and goods of Christians are not common, as touching the right, title, and possession of the same, as certain Anabaptists do falsely boast . . .” If he keeps on reading Marx maybe the Archbishop might be prepared to abandon this one too.

    Thursday, November 20, 2008

    Weekly Bulletin of The Socialist Party of Great Britain (73)

    Dear Friends,

    Welcome to the 73rd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1402 friends!

    Recent blogs:

  • Good Cap, Bad Cap
  • Why not socialism now?
  • Another Winter of Discontent?
  • Coming Events:

    Free Film night at SPGB Head Office,

    52 Clapham High St, London SW4 (nearest tube: Clapham North).

    Film starts at 4 p.m.

    Sunday 23 November: The War on Democracy

    "Have we evolved to make money?"

    Saturday, 22nd November at 6.00pm

    The Socialist Party debates with Dr.Terence Kealey (author of Sex, Science & Profits)

    Birkbeck College. (room 407), Malet Street, London. WC1, (nearest tubes: Goodge St & Russell Square)

    Quote for the week;

    "For nearly 40 years we have raised to prominence the idea of the class struggle as the immediate driving force of history, and particularly the class struggle between bourgeois and the proletariat as the great lever of the modern social revolution; ... At the founding of the International, we expressly formulated the battle cry: The emancipation of the working class must be the work of the working class itself." Marx and Engels, Strategy and Tactics of the Class Struggle (1879).

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Wednesday, November 19, 2008

    Have we evolved to make money?



    'Have we evolved to make money?'

    Bill Martin of the Socialist Party debates with Dr.Terence Kealey (Author of Sex, Science & Profits)

    BIRKBECK COLLEGE, (Room 407)

    Malet Street, London. WC1

    (nearest tubes: Goodge St & Russell Square)

    Crisis and Inflation: Back to the Future? (2008)

    From the November 2008 issue of the Socialist Standard
    Gordon Brown claimed that he had ended the boom and bust cycle. The current economic crisis demonstrates that normal service has been resumed.
    It is one of the ironies of our times that the election of ‘New Labour’ in 1997 was meant to have left ‘Old Labour’ and everything connected with it behind. The popular perception (first outside the Labour Party and then inside it) was that Old Labour meant nationalisation, inflation, labour unrest, and a host of other negative experiences that were associated with life in the 1970s. Gordon Brown was the New Labour ‘iron chancellor’ who had left all this behind, created a low inflation environment and abolished boom and bust.

    The current economic crisis has demonstrated that normal service has been resumed. Unemployment is on the up (no Labour government has ever left office with unemployment lower than when it was elected), the financial sector is in turmoil, price rises are at their highest level in years, and state sector wage restraint means that the unions are (understandably) grumbling.

    One of the interesting things about capitalism is the way in which when the economy is booming an economic consensus of sorts has a tendency to break out. The general support for Keynesian economics that developed during the long boom of the 1950s and 60s was famously labelled ‘Butskellism’ by the Economist after Tory Chancellor Rab Butler and his Labour shadow, Hugh Gaitskell. In recent years there has been a similar consensus of opinion even if the Labour and Tory parties don’t like to admit it explicitly – it is almost as if when the economy goes well they are afraid to do anything too different, lest they upset the magic formula in the process.

    Psychological blow
    What happens when an unexpected economic crisis breaks out is that politicians, central bankers and pundits all realise that perhaps the magic formula didn’t work after all. The realisation in the 1970s that Keynesian economics didn’t really work was a psychological and philosophical blow that some never recovered from, and its replacement by something loosely called ‘monetarism’ was never entirely accepted even by those on the political right who had been most well-disposed towards it.

    After a series of crises in the 1970s was followed by the big recession of the early 1980s, and then the recession of the early 1990s, another long boom occurred and with it the latest economic consensus. There was little if any new thinking to underpin it – it was merely a pragmatic amalgam of vague aspects of ‘monetarist’ practice with some left-over bits of Keynesian theory. For the politicians and economists, these had emerged by default because they were the bits of these two theories that hadn’t been transparently discredited to the satisfaction of all concerned by the preceding crises and recessions. There is no better example of this dubious consensus than current thinking on the (interlinked) issues of inflation and interest rates.

    The persistent rises in the price level that have occurred in the UK and most of the developed world since the Second World War have exercised the minds of politicians and economists in the decades since, and various explanations have been put forward to account for it: wage increases above rises in productivity, excessive government spending, high government borrowing, the expansion of credit, and many others besides. In the 1970s and 80s a highly contentious explanation for it was advanced by Professor Milton Friedman and was adopted by the Thatcher government in the UK: the aforementioned ‘monetarism’. Loosely, this was the view that inflation is caused by an overly rapid expansion of the money supply that increases monetary demand for goods and services in the economy and pulls up prices. It was often linked or integrated with other views, such as inflation being caused by government borrowing (with government borrowing and money supply expansion allegedly being correlated).

    The problem for the Thatcher government’s monetarist anti-inflation strategy was that the main definitions of the money supply chosen for the purposes of monitoring monetary expansion were erroneously based on bank deposits. And there was no reliable way they knew of to control their expansion and contraction anyway. Ironically for a Party concerned by government borrowing levels, one method they resorted to was ‘overfunding’, described by Thatcher as when ‘the Government sought to reduce private bank deposits . . . by selling greater amounts of public debt than were required merely to finance its own deficit’ (The Downing Street Years, p.695).

    When this and other anti-inflationary tactics didn’t work, the eventual method settled upon by Thatcher and her Chancellor Nigel Lawson was to use interest rates as a policy instrument. In her memoirs, Thatcher stated that in her view ‘the only effective way to control inflation is by using interest rates to control the money supply’ (p.690) and this was one of the main reasons Thatcher and Lawson famously disagreed towards the end of her reign, because he began to use interest rates as a means of tracking the Deutschmark in the European Exchange Rate Mechanism (ERM) instead.

    Brown follows Thatcher
    It is notable that interest rates have been used as the main policy instrument for controlling inflation ever since, by the governments of Major, Blair and now Brown. This is despite the fact that as a policy it not only arose by default, but has little to practically recommend it. The theory is that when interest rates rise, people borrow less and cut their spending. But this only takes into account one aspect of what happens. Interest rates are the price of borrowing and lending money and when interest rates rise, lenders are affected just as positively as borrowers are affected negatively. A movement in interest rates changes the terms of the relationship between borrowers and lenders in an economy and can create a short term economic disturbance, but it does not affect the level of purchasing power as a whole and can have no significant and persistent effect on the price level (for example, while those with mortgages and other loans are disadvantaged by higher interest rates, those with savings, interest-bearing investments, etc gain to a similar overall extent).

    That raising interest rates cannot halt inflation – or even slow its rate of growth – has been demonstrated by a close look at economic history. During the time when Thatcher was Prime Minister the Minimum Lending Rate (as it was then called) for the banks rose from 9 per cent in 1988 to 15 per cent in 1989 yet the Retail Price Index (RPI) increased considerably across the entire period, having an average annual rate of 4.1 per cent in 1987 that had become 9.5 per cent by 1990.

    If that was considered a ‘fluke’ it has just been repeated, as the UK economy under Gordon Brown has just experienced a similar situation. Base rates reached a recent low of 3.5 per cent in mid 2003 and were progressively raised to 5.75 per cent last year. Yet throughout this time, the RPI has crept up from a recent historic low of well under 2 per cent in 2002 to around 5 per cent now, the highest it has been since Thatcher left office in 1990.

    These two examples reflect what really happens when an economy experiences price rises – which is that instead of interest rates influencing price rises it is effectively the other way around. Banks make their profits generally by lending money out at a higher rate than they borrowed it at, being concerned with the ‘real rate of interest’ after inflation is taken into account – and rates tend to rise in order to protect these banking margins (the contrary idea of the ‘credit creationists’ that banks make profits not by doing this but by effectively creating money out of nothing instead, should never have been taken seriously, and is in present circumstances beyond risible)

    The current rise in the RPI in the UK coupled with the economic crisis has led some economists to argue that capitalism is about to be gripped by the kind of ‘stagflation’ that existed in the 1970s, so called because economic stagnation coincided with rising prices. With the credit crunch biting and the financial apparatus of capitalism in turmoil, unemployment is now on the rise and growth has come to a standstill, at best.

    In the nineteenth century, when the study of economics developed seriously and Karl Marx developed his critique of it, persistent inflation (and therefore the possibility of stagflation) hadn’t occurred at all after the Napoleonic War ended. Instead, prices generally tended to rise during booms and then fall away during slumps when demand was lower, and price charts from this period show the cyclical ebbs and flows quite clearly, both in Britain and abroad. By the start of the First World War in 1914, for instance, the overall price level was almost identical to what it had been in 1850.
    This general tendency for prices to rise during times of economic prosperity and then fall back when there is economic contraction is still evident today. However, it is disguised by something that only existed episodically before the Second World War, after which it has been a permanent feature – currency inflation.

    Since the beginning of the war, the price level has risen every single year and is well over 30 times its 1938 level. The cause of this persistent rise in the price level has been an excess issue of currency (specifically currency that is no longer convertible into an underlying commodity like gold). This is because while interest rates and movements in wages and profits, etc change the distribution of purchasing power in the economy, they do not – of themselves – increase the total amount. An excess issue of notes and coins in circulation does precisely this if it is over and above the amount needed to carry on production and trade.

    An over-issue of currency injects purchasing power into the economy which is not reflective of real wealth generation; put simply, it is too much money circulating given the level of production of goods and services (and the trade associated with buying and selling them). Before this truth was lost in a fog of now discredited economic theories, inflation was routinely called ‘currency inflation’, to reflect this. And on the occasions it occurred governments could – and did – put a stop to it, like when they withdrew the then significant sum of £66 million in notes and coins from circulation in 1920, which led to a fall in the general price level of around 30 per cent, before the return to the gold standard in 1925.

    Printing presses
    In 1938 there was £442 million in notes and coins outside of the Bank of England circulating in the UK economy. Economic growth since then has averaged around two and a half per cent a year (typically going up more than this in booms and down in slumps) yet the amount of notes and coins in circulation has persistently increased far beyond what has been needed for the purposes of production and trade. Today, according to the Bank of England, notes and coins in circulation stand at £50,370 million, up from £47,800 million a year earlier, as the inflationary process that started in the late 1930s has continued apace. This is why, unlike in the nineteenth century when slumps led to overall price declines, prices have risen every single year since the war whether the economy has been in boom or slump (because while slumps have put downward pressure on prices this has always been outweighed by the effects of the ongoing currency inflation).

    It is true that for some years prices rises in the UK and other countries – while still positive and persistent – haven’t been at quite the levels seen in the 1970s, 80s and early 90s. The main reason for this appears to have been the entry into the world market of vast amounts of low cost goods produced by the massive emerging market economies of the Far East, including China. As rising productivity lowers the amount of labour time necessary to produce goods, this phenomenon is to be expected, and its scale in recent years has been colossal with massive price falls in clothing and leisure goods like electricals according to the Office for National Statistics (prices of many goods have fallen by between a quarter and a half in the last 10 years). Without this effect, overall rises in the basket of goods that comprise the RPI measurement would have been higher still, as has been evidenced by the continuing big price increases of goods not directly affected by this phenomenon, such as fares, catering and leisure services.

    What’s happened over the last couple of years is that this low-cost goods effect has started to lessen because of the world economic boom that built up, especially in commodities like oil, metals, wheat, and so on. The persistent, ongoing currency inflation plus the effects of this well-documented commodities ‘bull market’ have meant large price rises are once more a major policy concern (in the 1970s, when price rises took off and peaked at nearly 27 per cent in 1976, this again was a combination of the background effect of currency inflation with a massive bull market in commodities like oil).

    One club golfers
    Here lies a big current problem for Gordon Brown and other world leaders, and in some cases the central bankers to whom they have devolved responsibility. Unaware of the real cause of inflation, which has been lost in the mists of time, they have reached a stage – more by default than design in some respects – whereby they have only one policy instrument to deal with inflationary pressures (raising interest rates) and one main policy instrument to deal with a declining economy drowning in debt (lowering interest rates). When asked to deal with the two problems simultaneously, they have only confusion, as the two solutions they would have proposed are mutually exclusive of one another.
    In reality, such have been the problems on the money markets and the declines in the stock markets in recent weeks – and such is the evidence that the credit crunch is now having a significant effect on the real economy – they have belatedly decided to lower central bank base rates as the lesser of the two evils.

    What is germane to this is that in the nineteenth century, Marx wrote that while the market economy’s periodic crises and convulsions cannot be eradicated through government policy, there are occasions when it can make matters worse (he cited, in particular, the 1844 Bank Act which kept interest rates abnormally high). This is in some respects the history of recent times too, as after the credit crunch began last summer base rates have been higher than they might have been because of the view of governments and central bankers that high rates were needed to stave off inflationary pressures.

    During any slump, interest rates tend to fall away from their peak reached at the end of the boom as the demand for money capital eases, this being one of the many conditions for an eventual improvement in production and trade, but on this occasion it has been slow happening (especially given the severity of the housing bust and the associated financial crisis). The irony now is that such is the magnitude of this crisis, with a major bank filing for bankruptcy or being rescued almost literally every week (Bear Stearns, Lehman Brothers, Wachovia, Fortis, Bradford and Bingley, HBOS, the entire Icelandic banking system, etc) that wherever central banks decide to pitch base rates, these are being effectively ignored by the banking system as a whole, where the key London Inter-Bank Offered Rate (‘Libor’) is still nearly two per cent above base rates with the credit markets locked into a state of fear-driven paralysis.

    The severity of the current crisis, with big falls in demand in the economy and increasing unemployment, may well lead to pressure on retail prices easing somewhat despite the government’s continuing recourse to the printing presses. But whether this happens or not, there is a sense of real danger and panic in the market economy at the moment as the lubrication that keeps the capitalist machine running – the money markets – are dysfunctional.

    So, with inflation concerns (and no clue how to handle them), the effects of a recent oil price spike, stock market crashes, soaring unemployment, the most significant financial crisis in most people’s lifetimes, and the return of nationalisation as a means of propping-up failing businesses, it is certainly a case of ‘back to the future’ for Britain’s Labour government.

    Most market commentators don’t know whether the most appropriate comparison is with the 1930s slump after the Wall Street Crash or the 1973-4 UK secondary banking crisis and bear market which followed the ‘Barber Boom’ and housing bubble. While capitalism never repeats its history precisely, it may be an especially severe dose of the latter rather than the former . . . nevertheless, given the general panic and helplessness of recent weeks, you wouldn’t want to bet your Collateralised Debt Obligations on it.
    Dave Perrin

    Sunday, November 16, 2008

    The New Offices (1923)

    From the December 1923 issue of the Socialist Standard

    "No, Jack! I shall not join just yet. Your Party is right, your position sound, and your arguments conclusive. I admit all that, but I don't think the time is ripe. When that time comes, Jack, 'You may count on me.”

    "And when do you think the time will be ripe, as you call it?"

    "I haven't a ghost of a notion. But I'd like to see the workers wake up a bit , first. I'd like to see your Party bigger, more active, you know what I mean - more prominent.”

    "So would I, friend. But apparently you have not seen our new headquarters, I can hear."

    "New headquarters? I -"

    "Listen! It is neither a pretentious, nor a massive building. We are not building it for posterity; we shall not need it long. Immediately to the right of the entrance hall, there is a book saloon wherein any work helpful to the furtherance of Socialism may be procured or consulted. Most of the leading periodicals are represented on the reading stands. To the left are the editorial offices, where the three official journals and numbers of pamphlets are produced"

    "Three official journals? I –“

    "Wait a minute. There is the Socialist Standard, now enlarged to forty pages, still appearing monthly and having all the characteristics of a first-class political review. There is the Socialist Tribune, a weekly summary of a more topical character. It focuses the reader's attention upon events whilst they are still current, and picks out the thread of history whilst it is being made. The Socialist News appears daily, and, I say it without boasting, is unique in the world's journalism. Not an advertisement appears in it. It is thus entirely free from subsidised matter, and is independent of any attempt at a capitalist boycott. It is smaller in size than the usual capitalist rag, but it is all meat. Its editorial and contributory staffs are well grounded in Marxian economics and their historical application. Its daily articles are the despair of the few remaining capitalist sheets, for the latter's long reliance upon reiterated lies and mass suggestion has broken down in face of hard economic facts. You cannot convince a man who is going down for the third time that he is not drowning by bawling through a megaphone fifteen times that all is for the best. And the workers were no longer convinced that capitalism was the only possible system, when they remembered the hard times before the war, the little glimpse of better times during the war's progress, and the return to bad times again afterwards. But I am digressing. There is a dispatch department at the back, and that about completes the ground floor. Upstairs there are writing rooms, studies, classrooms and committee rooms. There is a good-sized hall for lectures and public meetings, and there is even an information bureau, where anyone with a difficulty may seek Socialist 'counsel's opinion'. The most interesting perhaps ate the organiser's room, where information, facts and figures are compiled for the use of our staff of speakers and propagandists. There are other details you would find interesting, and even stimulating, but I think I have said enough to set you wondering."

    "You have, Jack! I have been wondering where these premises are situated."

    "There now! If you, a convinced Socialist, were only in the movement, you would know as much as I about it."

    "Yes! But tell me, Jack, where are these new headquarters?"

    "Well! At the moment, they are in my mind's eye. All we are waiting for is for you, and many others like you, to leave off waiting for the time to be ripe, and to come and help ripen it. We shall get our new offices and our new journals, when we get the funds. We shall get the funds when we get the members. We shall get the members when you leave off waiting, as I said just now, and start working. Then will follow, not merely new offices and journals, but, greater than all else, a new social system -Socialism. Join up!"
    W.T. Hopley

    Saturday, November 15, 2008

    Good Cap, Bad Cap (2008)

    From the November 2008 issue of the Socialist Standard
    The credit crisis has tarnished the image of capitalism but its defenders may help it live on by pinning all of the blame on financiers.
    Investment bankers have gone in the past few months from being the “masters of the universe” to the object of universal scorn. Across the political spectrum in the United States, particularly at the fraying ends of its two main political parties, criticism of Wall Street can be heard. Even McCain and Obama – whose presidential campaigns have been generously funded by Wall Street – have had to make half-hearted statements about how “greed is, um, bad.”

    This criticism is richly deserved, of course, but many of the harshest critics of speculators are fond of capitalism itself and take a rather benevolent view towards other types of capitalists. Greedy bankers and stockbrokers are lambasted, but in the next breath the capitalists involved in the actual production and sale of commodities are portrayed as unfortunate victims of the credit crisis. This one-sided criticism suits the capitalist class as a whole just fine.

    Now that capitalists themselves are at least exposing some of the high crimes and low comedy connected to their own financial system, and so much popular attention is focused on the role of money capitalists, it seems particularly necessary for us to attack the false notion that there are “good” and “bad” capitalists; and that crisis could be avoided and capitalism perfected if the bad ones could be kept under control or swept away.

    Den of thieves
    This idea that bankers – particularly investment bankers – are any worse than other types of capitalists is not convincing to anyone aware that the revenue of all capitalists flows from same source: the exploitation of labour. The dirty little secret of capitalism is that the capitalist class as a whole, and all of the individual capitalists, enrich themselves thanks to workers adding more new value to the commodities they produce than the value of the wages received as payment for their labour-power.

    Any party to this exploitation of labour – whether the capitalist who advances the investment funds, the capitalist who supervises the commodity production process, or the capitalist who is tasked with selling the commodities – is entitled to a piece of the action and merits an equal share of the blame. It is nonsense to argue that one type of capitalist is more or less culpable than the others.

    The relations between capitalists are very much like those between a group of thieves, who cooperate to pull off a heist and then divide the loot among themselves. Conflicts easily arise from such an arrangement: as a bigger share for one means a smaller share for the others. Such squabbles, however, are of little concern to the person who has been robbed. Likewise, for workers, divisions within the capitalist class should be of secondary interest to the more fundamental conflict between the exploiters and the exploited.

    Yet we need to do more than simply prove that the idea of “good” and “bad” capitalists is wrong: it is also necessary to explain how this false ideology has a basis in reality that makes it seem plausible to many. That basis, as just touched on, is the antagonism that actually exists between different types of capitalists with regard to how surplus-value is divided between them. This fosters the notion that fundamental differences exist between capitalists and that some are more deserving of their revenue – an impression that is further deepened by the fact that revenue takes different forms that appear to be independent of each other.

    This means that we can better understand why money capitalists and industrial capitalists tend to be viewed differently by examining the division of surplus-value between them and the specific forms of their revenue. Marx does this in Volume 3 of Capital, where he examines “interest” and “profit of “enterprise” – the former being the revenue that the money capitalist is entitled for loaning capital to the industrial capitalist, while the latter is the profit the industrial capitalist receives after paying that interest to the money-capitalist.

    Marx’s discussion of “interest” and “profit of enterprise” is not directly related to the economic activities of the now-disgraced stockbrokers, as they have made money in more imaginative ways than simply earning interest, yet his observations reveal why it is so easy for bankers to be cast in the role of villains, while those capitalists owning actual means of production appear in a more favourable light.

    Magical money
    We can begin by looking at interest – or “interest-bearing capital,” to be more exact. The loaning of money to function as capital is the first step in the overall circuit of capital, M–C– M´; and that money (M) is then used to purchase the labour-power and materials of production needed to produce commodities (C), which embody more value than the value of those inputs, making it possible to sell them for a greater sum of money (M´) than initially invested. Part of this surplus in value generated through production is paid to the money capitalist in the form of interest.

    With the form of “interest-bearing capital,” however, we only the two extremes of the circuit above, or: M–M´. In other words, nothing more than the money capitalist loaning out money that returns eventually in a greater amount. Money seems to have the magical power to breed more money. Overlooked is the intervening process of production, which is the actual source of the interest earned. As long as interest successfully flows back to the money capitalist, whatever happens between M and M´ is a matter of indifference. It thus appears at first glance – to this capitalist and others – that profits can emerge regardless of production.

    This illusion is reinforced by the fact that individual money owners can indeed loan money for non-productive uses. Everyone knows, for instance, that credit card companies make huge profits by charging ordinary “consumers” usurious interest rates. Yet that freedom to direct money towards non-productive sectors, or to engage in speculation on fictitious forms of capital, only holds true for individual capitalists. If a large portion of the industrial capitalists were to withdraw from production, so as to become money capitalists, the ultimate source of profit would quickly dry up and the rate of interest would plummet.

    Nevertheless, if we view the capitalist world from the perspective of the individual interest-bearing capital, it seems that profits can materialize out of thin air, without actual production. Marx thus calls interest-bearing capital the “most superficial and fetishized form” of the capital relationship, where capital “appears as a mysterious and self-creating source of interest, of its own increase.” Instead of appearing to be one part of the total surplus-value, interest seems to arise from an inherent property of capital itself, so that any owner of it is entitled to interest.

    With interest, we are one step removed from the actual process of production; and from the exploitation of labour that occurs within that process. This fact is at the root of the tendency for people to view money capitalists – and for them to view themselves – as inhabiting in a rarefied world where it is not necessary to get one’s hands dirty. The money capitalists who engage in this mysterious process, whereby money is able to breed more money, both dazzle and disgust those who must earn a living in more pedestrian ways.

    Capitalist workers?
    If the interest that the money capitalists earns seems to spring out of thin air, the industrial capitalists, in contrast, seem to earn their profits from the sweat of their brow. Their “profit of enterprise” – which is what remains after they pay money capitalists interest – appears to be the fruit of functioning capital, rather than the fruit of owning capital. Just as there is an abstraction from the actual production (= exploitation) process in the case of interest-bearing capital, in the case of profit of enterprise the production process is separated from capital itself, so that it appears merely to be labour process. Profit seems to accrue to industrial capitalists as payment for a useful function performed in that labour process.

    There is in fact an important role played by the industrial capitalist, and that is to ensure that the production process is carried out in a manner that facilitates the greatest extraction of surplus-value from workers. Not exactly a noble calling, but exceedingly necessary under the class-divided capitalist system. The profit of the industrial capitalist thus seems to be a “wage” received for this supervision of labour. It appears, as Marx wittily put it, that the “labour of exploiting and the labour exploited are identical, both being labour.” If the former receives far better wages for that labour, it is said to be compensation for its more “complex” character.

    This false impression that the industrial capitalist is a sort of worker seems plausible because the act of supervision, necessary in any class-divided society, is confused with the coordination function necessary when numerous workers engage in production together. We need to distinguish between the supervision needed to extract surplus-value from wage-slaves, and the coordination necessary in the case of combined or social labour. In the latter case, the workers themselves can quite easily work things out for themselves and determine the most appropriate way to combine their labour – there is no need for the menacing supervisor. Under capitalism, however, there is a blurring of the two functions, so that it seems as if capitalists (or whoever is hired by them to supervise workers) are performing a necessary function that is intrinsic to the labour process itself.

    The fact that industrial capitalists play an active role in the production process, however reactionary it may be in fact, provides a basis for the claim that they are preferable to the money capitalists who do nothing more than provide the investment. Yet even in the case of the industrial capitalists, who are disguised as wage-workers, the labour process is simply a means to an end. It is only because that process is the direct source of their profits that industrial capitalists take such a keen interest in it.

    The real task
    Strange things occur when surplus-value is divided up among different types of capitalists, taking the form of different types of revenue. It seems that each form exists independently and has a separate origin – with none of them traceable to the exploitation of labour. With this quantitative division of surplus-value, as Marx notes, “it is forgotten that both [interest and profit of enterprise] are simply parts of surplus-value and that such a division can in no way change its nature, its origin, and its conditions of existence.”

    The theory of surplus-value brings to light the connections that actually exist between capitalists, by revealing the ultimate source of capitalist wealth, but that theory itself can be hard to grasp precisely because of the existence of those different revenue forms. Once we take those forms as fixed premises, without considering their origin, it seems natural to judge some capitalists more harshly or kindly than others.

    If workers end up concentrating narrowly on the antagonisms between capitalists, it becomes harder to see the more fundamental conflict between wage-labour and capital; and harder to see the real solution to the problems faced. Here we have the old “divide and conquer” approach with a new twist: instead of dividing the working class, the internal divisions of the capitalist class are emphasized to deflect attention from the class divide.

    The criticism of Wall Street today that is being voiced by defenders of capitalism is one example of that divide-and-confuse method in action. The current crisis is framed in terms of “Wall Street vs. Main Street” or “the financial world vs. the real economy” – never as a manifestation of the contradictions of class-divided capitalism. With so many criticizing the financial world, while singing the praises of good old commodity production and the capitalists in charge of it, we need to remind ourselves that the production process under capitalism is a process of labour exploitation, a means of generating profits for capitalists.

    The task for socialists is not to drive out speculators from capitalism, so as to somehow perfect the system, but to move beyond a world where production is merely a means of capital accumulation. So yes – by all means – let’s chomp down hard on the middle finger Wall Street has been pointing at us all these years, but we should also keep an eye on the hand that robs workers every day on the job.
    Michael Schauerte

    Thursday, November 13, 2008

    Weekly Bulletin of The Socialist Party of Great Britain (72)

    Dear Friends,

    Welcome to the 72nd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1381 friends!

    Recent blogs:

  • The call of the patriot
  • Democracy - and 'democracy'
  • Obama wins
  • Coming Socialist Party Events:

    Free Film nights at SPGB Head Office, 52 Clapham High St, London SW4 (nearest tube: Clapham North).

    All films start at 4 p.m.

    Sunday 23 November: The War on Democracy

    "Have we evolved to make money?"

    Saturday, 22nd November at 6.00pm

    The Socialist Party debates with Dr.Terence Kealey (author of Sex, Science & Profits)

    Birkbeck College, (room 407), Malet Street, London. WC1, (nearest tubes: Goodge St & Russell Square)

    Quote for the week:

    "War is not a pathology that, with proper hygiene and treatment, can be wholly prevented. War is a natural condition of the State, which was organized in order to be an effective instrument of violence on behalf of society. Wars are like deaths, which, while they can be postponed, will come when they will come and cannot be finally avoided." Philip Bobbitt in The Shield of Achilles.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Marxism and needs (2008)

    Book Review from the October 2008 issue of the Socialist Standard
    Does Marxism need to be reinterpreted in the light of the ecological problem faced by humanity?
    Is the “world of abundance” traditionally advocated by socialists feasible? Not according to Claude Bitot, known as the author of a book on the future of the movement for communism (see Socialist Standard, December 1995), in his recent book Quel autre monde possible? (“What other world is possible”?). Echoing the ideas of some Greens but denying any affinity with them as “bobos” (trendies), Bitot argues that the only viable form of communism (or socialism) today is the austere pre-industrial communism advocated by Babeuf and his followers during the French Revolution and first part of the 19th century.

    His criticism of Marx – that he accepted the development of capitalism as a necessary step towards socialism – can be traced back to the influence of a “productivist” or technological determinist reading of Marx, based on The Poverty of Philosophy and the Communist Manifesto, which the great man was considerably qualifying by the time he got round to writing the Grundrisse. According to this simplified version of Marxism – faithfully trotted out by Bitot – it is the development of the forces of production that drives history. Capitalism in the form of merchant capital develops in the pores of feudalism, notably in the towns. Over time the forces of production develop to the point where feudal relations become fetters on the possibilities of further development. Feudalism therefore disappears with the rise of the revolutionary bourgeoisie whose task it is to abolish lordly privilege so as to permit the further development of the forces of production. Eventually the enormous development of the forces of production – notably industrialisation and mass production – would enter into contradiction with the limitations placed on the restricted consumption capacity of the proletarians. The latter in their turn become the new revolutionary class capable whose “historic task” is to overthrow the capitalist class and unleash of the forces of production to meet a greatly expanded range of human needs.

    To further add to the confusion, the building of what was falsely called ‘communism’ in Russia by the Soviet authorities popularized the idea that a long transition period – misleadingly called ‘socialism’ – was required in order to bring about the communist utopia. During the transition period working class consumption would be sidelined to allow the breakneck development of the forces of production, (tractor factories, dams, electrical power plants and the like). And there was of course doctrinal justification for such a position given that Marx was absolutely clear that in underdeveloped countries like early twentieth century Russia ‘communism’ was not in any way feasible. Although Marx never separated the ‘socialist’ stage from the ‘communist’ one, the early enthusiasm for the Soviet experiment led to the transitional stage idea sticking. Indeed, many left-leaning thinkers became obsessed with technological development as such, with Bordiga – as Bitot conveniently points out – in the uncomfortable position of trashing the need for further technical advance in capitalist Italy whilst recommending the rapid development of the forces of production in Soviet Russia. This has created a good deal of confusion about what progress towards socialism really means.

    Bitot’s objection to capitalist development seems in many ways to be an attempt to overcome the legacy of these confusions in the light of what he rightly considers to be a looming ecological crisis. But he adds a few more confusions of his own. To begin with he goes back to the very origins of communism as a political movement: the agrarian communism of Buonarroti and Babeuf and he contrasts this with what he sees as the consumerist interpretations of socialism popularized during the twentieth century. As we know these pioneering communists were imprisoned and – in Babeuf’s case executed – in the years following the French revolution. Bitot sees in these interpretations an anticipation of the errors which socialists would make in the second half of the twentieth century.
    Incorrectly believing that the emergence of agricultural capitalism could be largely explained by the immoderate expansion of needs and taste for luxury, the agrarian communists turned their backs on the unconstrained development of industry and championed a system based on fair but austere shares for all. In this communist utopia technological development in the shape of machinery would take place simply as a need to lighten manual labour, production being oriented toward the meeting of a fixed standard of living.

    The development of English commerce depended, Bitot tells us, on the sharpening of acquisitive appetites and the introduction of machinery to meet an ever-expanding sphere of consumption: the upward spiral of capitalist production. This simplified depiction of capitalist development has the advantage of wrong-footing Marx who notoriously celebrated the technical achievements of the English industrial revolution in the Communist Manifesto and castigated the narrow material basis of the agrarian communists in France (he called them “crude communists”). Indeed, since Marx was prepared to admit that industrial capitalism provided the material preconditions for communism, he had in effect became a de facto fellow-traveller in the capitalist party, albeit a pretty unruly one. The solution, according to Bitot was to have nipped the capitalist weed in the bud by a bit of revolutionary action and Bitot appreciates the fact that French agrarian communism was an extension of the revolutionary political approach adopted earlier by Robespierre, the advocate of revolutionary terror. If only, one thinks, the English had read these thinkers rather than that scoundrel Adam Smith then they would have abandoned their silly economic ideas and got us to socialism a lot earlier.

    Bitot’s French communists may have been poor but they were neither wage-labourers nor serfs. Subsistence with only limited participation in the monetary economy still remained a possibility and the village could still operate as a community. In this sense, the emergence of capitalism could all too easily be identified with the inability of individuals to control their own desires once faced with the temptations of the marketplace. But however admirable their thinking was on any number of issues – and they were interesting thinkers - they were nonetheless not faced with the peculiar economic system which we now call capitalism. Furthermore, even if agrarian communist communities could have resisted the advent of a world market in agricultural products it is more than likely that an ever-more powerful capitalist class would have found a way to break them up as they have always done and continue to do today.

    The problem with Bitot’s interpretation of the communist tradition is that it facilitates the treatment of technological development as a force which develops in a social vacuum justified by a largely ahistorical appreciation of the development of needs. In fact, the aim of the mature Marx was always to demonstrate that the ‘immutable laws’ of political economy were in fact nothing more than the expression of highly specific social and historical relations. The hothouse development of technology under capitalism, for example, was simply a vector of its unremitting search for new markets and its insatiable appetite for profits. As Bitot himself concedes, Marx shows how the needs of the wage labourer under capitalism contain a historical and relative element beyond the purely physiological necessities which also have to be satisfied: in other words my wages now allow me to obtain some commodities which used to be considered as luxuries but I can still be ‘poor’ in the (Marxist) sense that I still have to sell my labour-power to another. Dependence on the capitalist is neither based on being starved nor reduced by the possession of a few luxuries; it resides in the fact that my access to the means of subsistence has become indirect in that it is mediated by the possession of money.

    Thus, although Bitot seems to have discovered a convenient jumping off point for the criticism of capitalism, his ideas provide few clues about how to find a way out. In the terms of this critique socialists who continue to believe in the possibility of open access to the means of consumption under socialism can be too easily accused of wanting to continue the consumerist game and Bitot doesn’t hesitate to tar the SPGB. with this brush. On the other hand, Bitot seems to accept that a fairly austere socialism is possible following the abolition of commodity production. But with the wants created by consumer society unconnected to the overall functioning of production, he is left with the difficulty of defining ‘moderate needs’ and showing how they would emerge within a society where commodity production no longer existed. After all, even if we can all agree that socialism will place more emphasis on meeting essential needs over the satisfaction of the trivial desires excited by capitalism, one still has the difficulty of defining these ‘essential needs’ no matter how austere one believes that socialism should be. But the problem of ‘austere’ or ‘abundant’ socialism is perhaps in the final analysis something of a quibble over words. As anyone who has argued the socialist case on a street corner will know, the ‘abundance’ referred to by socialists has never referred to the open-ended consumerism encouraged by the advertisers but has rather as its target a stable and more satisfying way of life in which the scramble to get things is no longer central. With material survival removed from the casino of the marketplace by the abolition of commodity production we can expect that individuals will calm down their acquisitive desires and pursue more satisfying activities.

    Fortunately even though he rehearses the usual arguments against socialism brought up by conservatives, Bitot seems reluctant to abandon the revolutionary idea altogether. He remains committed to the abolition of commodity production and has adopted the notion that production under socialism needs to be co-ordinated and de-centralized. (The SPGB can tell him how to do this without the price system). On the down side, he has now taken up the Third World population problem as a factor which he claims has been totally neglected by socialists. Regardless of the charge of inconsistency he then argues that further industrial development in these countries is necessary presumably on the grounds that the Third World exists on another planet. But capitalism is now more than ever a global system – witness the avalanche of books on the ills of globalization. The green beans in our plates come from Kenya, the knives and forks from China and the shirts on our backs from India. Subsidized crops from the advanced countries are killing peasant production in Africa. But the Third World industrial proletariat now outstrips that of the so-called First World. Bitot’s argument here is clearly self-defeating: If there is already a major population problem, then socialism as a world system is not only impossible but it is getting more impossible with every day which passes. So why write a book on the subject? Whilst there is clearly a need to deal with this problem lucidly, Bitot seems to have accepted the Malthusian legend at face value. But he gives only one statistic to prove the case about agricultural production in the Third World whilst First World production is subject to a statistical over-kill. Even Malthus, whose jeremiads have so far proved disastrously wrong, provided more substance to his arguments.

    One is left with a curious diatribe against the word ‘abundance’ coupled to an off-centre accusation that socialists advocate a world of passive consumerism and idleness; a picture of the Third World as a boundless reservoir of illegal immigrants associated with the conviction that the abolition of commodity production is nonetheless possible.
    Malcolm Mansfield

    Tuesday, November 11, 2008

    A Good Listener

    From the Socialism Or Your Money Back blog

    Studs Terkel, a prolific American writer and broadcaster over several decades, died at the end October at the age of 96. His style and approach is well illustrated by the sub-title of his 1975 book “Working: People talk about what they do all day and how they feel about what they do”. Besides the subject of work, he dealt with leisure, family and education, culture and sub-culture. An article partly based on his writings appeared in the Socialist Standard for August 2003.

    Some of Terkel’s nine thousand interviews — especially the broadcast ones — were with celebrities of various kinds. But his books were mainly about the life experiences of everyday men and women. He quoted these graphic words of an assembly-line worker: “I stand in one spot, about two or three feet area all night . . . it don’t stop. It just goes and goes. I bet there’s men who lived and died out there, never seen the end of that line.” Or again: “They give better care to that machine than they will to you . . . If that machine breaks down, there’s somebody out there to fix it right away. If I break down, I’m just pushed over to the other side till another man takes my place. The only thing they have on their mind is to keep that line running.”

    Terkel also captured people’s memories of the Depression years and the Second World War. Again and again the themes of solidarity and sharing shine through amidst the destitution and suffering. A woman born in 1911 recalls the ’20s in a mining town in Illinois: “we’d go out picnics, we’d go out fishing, all families. Everything for the picnic. And then when you went to the picnic, there was no money exchanged, no commercial, everything like one big family. They’d cook a pot of mulligan stew and everybody’d share out of that. That was a picnic. Today you go on a picnic, what is it? It’s commercial. You buy your ticket, you buy your popcorn, you buy your beer. If you haven’t got a fistful of money, you haven’t got no picnic.”

    As Oliver Sacks once said, “There is no one in the world who can listen like Studs Terkel.” Reading his books provides an unforgettable picture of working-class American life and shows that, contrary to what may sometimes appear, American workers are dissatisfied with their lot and more than prepared to fight for better times.

    Sunday, November 9, 2008

    Socialists and the First World War (2008)

    From the November 2008 issue of the Socialist Standard

    This month marks the 90th anniversary of the end of WWI. We recall the socialist opposition to it.

    The historian George Haupt has written that in July 1914 the workers movement did not consider war a possibility. Speaking six years later the German Social Democrat Karl Kautsky admitted that:
    “It is surprising that none of those present at the meeting thought of raising the question of what to do if war broke out...or which attitude the socialist parties should adopt in this war” (cited in Georges Haupt: Socialism and the Great War: the Collapse of the Second International. Oxford, 1972. p. 220.])
    Haupt comments that it is impossible to say whether the leaders of the International were “captives of their own myths or whether their reaction was the classical manifestation of that characteristic trait of the Second International: Reformist practice screened behind verbal radicalism.” (ibid. p. 221.)

    The parties of the Social Democrat Second International shared our view that capitalism causes war and, like us, called for the international solidarity of the working class but when war broke out in August 1914 this proved to be mere talk.

    To their disgust, but not to their surprise, the members of the Socialist Party saw workers and their leaders line up behind their respective governments ready to take part in the slaughter. Labour leaders such as Keir Hardie, Ramsay Macdonald and George Lansbury assured the government that “the head office of the Party, its entire machinery, are to be placed at the disposal of the Government in their recruiting campaign.” (Labour Leader 3 September 1914)

    The British Socialist Party (successor to the Social Democratic Federation) war manifesto declared that it recognised:
    “…that the national freedom and independence of this country are threatened by Prussian militarism and that the Party naturally desires to see the prosecution of the war to a speedy and successful issue.” (Justice 17 September 1914 cited in H. W. Lee and E. Archbold Social-Democracy in Britain: Fifty Years of the Socialist Movement. London, 1935. p.225.)
    The Socialist Party on the other hand denounced the war as none of the workers business. It was a war of capitalist interests,
    “ ...the workers’ interests are not bound up in the struggle for markets wherein their masters may dispose of the wealth they have stolen from them (the workers), but in the struggle to end the system under which they are robbed....The Socialist Party of Great Britain...declaring that no interests are at stake justifying the shedding of a single drop of working class blood, enters its emphatic protest against the brutal and bloody butchery of our brothers in this and other lands...
    Having no quarrel with the working class of any country, we extend to our fellow workers of all lands the expression of our good will and Socialist fraternity, and pledge ourselves to work for the overthrow of capitalism and the triumph of Socialism.”(‘The war and the Socialist position.’ Socialist Standard , September 1914)
    In common with most political parties the Socialist Party carried on a vigorous programme of in-door and out-door meetings. From street corners and open spaces Party speakers on platforms propounded the socialist case against war. In his memoirs R. M. Fox (an early member of the Party) recalls the almost mesmeric effect of one Socialist Party member, a man called Anderson, who could project his voice above the noise of a brass band hired by local shopkeepers to drown him out. (R. M. Fox: Smoky Crusade. London. 1938.)

    But even the most redoubtable speaker could not withstand the onslaught of a crowd whipped into fever pitch by jingoistic propaganda. There survives in the Party archive a bound minute book recording outdoor meetings held in North London. It records in a neat italic hand each meeting held by the branch giving details of date, time and speaker and chairman. Also recorded are the size of audience and occasional comments as to the kind of questions asked and the temper of the audience. Audience size seems to have fluctuated between 100 and 250. The meetings in August 1914 increased in size and the entry “Many questions mainly about the war. Good meeting” occurs a number of times. On Sunday August 30th a member named Wray addressed an audience this time of around 800:
    “Many questions mainly about the war...Hostility shown by the audience so soon as the speaker began to reply to the opposition and the police closed the meeting leaving Party members to get away with the platform amongst the hostile audience that had closed around it and damaged it one side of the steps torn away and lost thus rendering the platform useless for further propaganda meetings.”
    A later entry for September 20th records:
    “Opposition by Grainger of Daily Herald League [sympathetic to the Labour Party] supported by several members of B.S.P. [British Socialist Party] in the audience with design of raising prejudice against the SPGB and so of breaking up the meeting.”
    On a Sunday in mid September one Hyde Park meeting was the subject of a concerted attack. The organiser of the meeting reported
    “...There was a determined attack made to smash up the meeting. Just as Elliot was closing the meeting the police intervened and told him to close down. As he did not close down as quick as they wished they arrested him.
    Elliott was however, charged with insulting the British armies and fined 30/-. The crowd numbered over a thousand and the organised opposition attempted at the conclusion of the meeting to smash [the] platform but only succeeded in doing a little damage to it.”
    At a meeting held on 11 October the speaker replied to questions about the war but “On the speaker replying to the opposition the audience started the National Anthem and the raising of cheers” and the meeting had to be abandoned. It says a great deal for the character, optimism, and bravery of these early members that they could face hostile audiences week after week. Undeterred the branch repaired the platform and were by the end of the week again holding meetings.

    Some branches reacted to the threat of physical attack by banding together to continue open air meetings sometimes at new venues. In West Ham three branches got together to hold a meeting in Stratford Grove, an area not previously covered by the Party and its limited resources. It was possibly chosen to avoid marauding gangs of jingoists who were well aware of all the regular meeting places where anti-war sentiments might find expression.

    Other branches had better luck. The secretary of East London branch reported that they had abandoned a meeting at Victoria Park after an obviously sympathetic Park Keeper had informed him that there were eight plain clothes men present for the purpose of arresting the Speaker and the Chairman as soon as the meeting started. It would appear that some anti war meetings were having some effect and it is likely that the Party’s informant had listened to the speakers over a period of time, and was at least unwilling to see our views suppressed.

    But speakers did not have to oppose the war from the platform to get into trouble. A member named Baggett reported that he had been arrested and bound over in the surety of £50 to keep off the platform for six months. The reason being that he had read out an British Army circular issued by Lord Roberts regarding the supply of prostitutes to the British Army in India.

    In view of increasing hostility, and the fact that a number of branches had ceased to hold meetings on account of the difficult situation, the Executive Committee had to consider the suspension of outdoor political activity. Every effort had been made to maintain outdoor meetings but had to recognise the
    “...brutality of crowds made drunk with patriotism. The prohibitions by the authorities, and the series of police prosecutions of our speakers, compelled the rank and file of the Socialist Party to put an end to the fruitless sacrifices of their spokesmen by stopping outdoor propaganda.” (‘A Year of War.’ Socialist Standard, August 1915.)
    A further consideration was the issue by the Government of stringent Defence of the Realm Regulations outlawing the uttering of statements likely to cause disaffection. The decision appears to have been a difficult one as the minutes record that it was taken after a discussion lasting about two hours. The Party at a special meeting held to discuss the situation ratified the decision. There was clearly a small number within the Party opposed to this course of action and willing to “tough it out” but a motion approving of the Executive Committee decision was carried by a substantial majority.

    Explaining that “...our object was not to bid defiance to a world gone mad, but to place the fact that in this country the Socialist position was faithfully maintained by the Socialists.” (Socialist Standard, January 1915.) The Party continued as best it could, male members, under tremendous social and economic pressures, took what measures they could to avoid being called up. Those not so lucky ended up in Dartmoor prison.
    Gwynn Thomas


  • The War and You (September 1914 Socialist Standard)
  • The War and the Socialist Position (September 1914 Socialist Standard
  • The call of the patriot (November 1914 Socialist Standard)

  • The Keir Hardie Myth (1961 Socialist Standard)
  • Saturday, November 8, 2008

    The end of “neoliberalism”? (2008)

    From the November 2008 issue of the Socialist Standard

    What the critics of “neoliberalism” want is a “regulated capitalism”, but they are not the only ones.

    "Let us", President Sarkozy of France told the UN on 23 September, "rebuild together a regulated capitalism in which whole swathes of financial activity are not left to the sole judgment of market operators, in which banks do their job, which is to finance economic development rather than engage in speculation."

    This would normally be regarded as a position taken up by leftwing critics of what they call "neoliberalism". Thus Green Party MEP Caroline Lucas, when asked for her views on the global financial crisis by the Guardian (17 September), answered that "we are going to have to return finance to its role as servant rather than master of the global economy".

    Neoliberalism is not a word that Sarkozy would use. In fact, when he was elected President in May last year he was widely seen as France's equivalent of Mrs Thatcher. But then "regulated capitalism" is not how Greens and the other critics of free-market capitalism would describe what they stand for either.

    Neoliberalism is a term coined by opponents of the policies pursued by many governments since the 1980s of privatisation and deregulation, of allowing market forces to operate with less state interference. "Neo" because it was seen as a revival of the anti-state, laissez-faire philosophy of 19th century liberalism. As supporters of these policies often call them simply "capitalism", some opponents also presented themselves as "anti-capitalist".

    But this is a false distinction. Capitalism is not just private enterprise, free market capitalism. That is just one of the forms it has taken historically. To see this as the only form of capitalism, and therefore to use the term "capitalism" to refer to it only, is to ignore two important experiences of the last century: the nationalisation measures carried out by Labour and Social Democrat (and other) governments, and of course what existed in the ex-USSR and its satellites. Capitalism, in other words, can also take the form of state capitalism.

    The essence of capitalism is not any form of ownership – whether legal property rights vested in individuals or companies, or state property from which bondholders draw a legalised income, or state property where a bureaucratic elite exercises a de facto control of it. Capitalism is indeed based on the exercise of a monopoly over the means of production by a minority, but so have other class societies such as ancient slave society, feudalism and oriental despotism.

    What distinguishes capitalism from them is the way in which the producing class is exploited – via the wages system. Denied free access to the means of production, the vast majority of the population are forced to sell their working abilities – what Marx called their "labour power" – to an employer for a wage or a salary. Labour-power has the unique property of being able to produce a greater value than its own, but the employers have to pay only the value of the labour-power not the total value it produces. Marx called the value which workers produced over and above their wages, and which went to the employer, "surplus value".

    Capitalism is this economic mechanism of the extraction of surplus value from the wage-labour of the producing class and of the accumulation of most of it as new capital. Marx called it "the self-expansion of value". Capitalism is an economic mechanism rather than a form of property ownership, a mechanism which is in fact compatible with various different forms of ownership. Wherever there is the exploitation of wage-labour for surplus value, there there is capitalism. Which is why the ex-USSR where there was state property and a strongly regulated market was still (state) capitalist.

    In any event free market capitalism without any state regulation has only ever existed on paper. Capitalism and the state are not opposites or incompatibles. They have always co-existed and in fact capitalism could not have come into existence or survived without the support of the state. It was the state that helped dispossess peasants of their land so that they became factory fodder for the capitalist factory owners. It is the state that creates and enforces private property rights, without which the capitalist class would not be able to monopolise the means of production and extract surplus value from the wage-labour of their employees. The predominant form of capitalist enterprise – the limited liability company – is in fact entirely the creation of the state. The state has to issue the currency and set up bodies to interpret and enforce commercial contracts. It has to maintain armed forces, both to keep law and order internally and to protect and further the interests of the capitalist class abroad. It has to set up bodies to make laws and regulations at national and local level and other bodies to apply, police and enforce them. All these activities essential to the functioning of capitalism have to be paid for. So the state has to levy taxes.

    There is, then, no such thing as capitalism without the state. That said, there are still degrees of state regulation at different times and in different countries. The state is supposed to represent the general capitalist interest, but in practice is subject to all sorts of lobbying and pressures from special interest groups who want it to make laws and regulations in their interest, to which it often gives in.

    From time to time, however, the state does genuinely intervene in the overall capitalist interest. A classic case was state intervention in the 19th century to regulate the working day. Having machines which could be kept going 24 hours a day, seven days a week, and faced with a glut of factory fodder, capitalist factory owners profited from laissez-faire to extend the working day. A large part of Marx's Capital is devoted to describing what he called "capital's drive towards a boundless and ruthless extension of the working day" and how "the immoderate lengthening of the working day produced by machinery in the hands of capital leads later on to a reaction on the part of society, which is threatened in the very sources of its life, and, from there, to a normal working day whose length is fixed by law" (Capital, Vol I, Ch.15, section 3c). Society was threatened "in the very source of its life" in that factory owners so ruthlessly overworked their workers that their wealth-producing capacities, on which the future of society depended, were being undermined. Marx supported state intervention to stop this happening but he did not regard it as being in any way socialist. Others did and socialism and state intervention unfortunately became associated.

    It seems to be a pattern that, whenever capitalists are given a free hand to do what they want, they exaggerate and go for short-term benefits, even at the expense of their long-term interest so that eventually the state has to intervene to restrain them in their own interest. This seems to be the situation that has been reached today after twenty or more years of deregulation of financial markets. The banks and other financial institutions are now widely seen by other sections of the capitalist class as having abused their freedom and thus landed the world capitalist system in the crisis it now finds itself in. This is why the cry is going up for the re-introduction of a stricter state regulation of financial institutions and dealings. And not just from the usual suspects on the Left, but from open supporters of capitalism such as Sarkozy and Gordon Brown.

    It looks as if the opponents of “neoliberalism” might well get their way, at least as far as financial sector of capitalism is concerned. But there will be nothing anti-capitalist about this. Just a return to the "regulated capitalism" that used to exist in this sector.
    Adam Buick

    Thursday, November 6, 2008

    On Obama

    From Reasons To Be Impossible blog

    I've resisted so far.

    Two quick points. I explained to one of my freinds last night that whilst I am pleased Obama won - on the level of it representing an amazing change in cricumstance for African Americans in less than fifty years, and a change in the perception of race the world over (I think Socialist Economic Bulletin had some interesting thoughts about this); I'm also pleased that Obama may have some policies that, as Chomsky notes, will tendentially benefit the working class stateside more; I'm also pleased more people were drawn to the polls (64% according to Wikipedia, which, whilst not through the ceiling by other countries' standards, is high for stateside); but I still would not have voted for Obama had I been a yanklander myself.

    Howard Zinn seems, as ever to spell it out beautifully:

    I CONFESS I am excited by the thought of Obama becoming president, even though I am painfully aware of his limitations–his smooth, articulate intelligence covering up a quite traditional approach to domestic and foreign policy, aided and abetted by a group of advisers recycled from the Clinton administration and other parts of the Establishment.

    Does he really think Robert Rubin will come up with a bold approach to the economy? Or that Madeleine Albright will carve a new path in foreign policy? (It was she who ran around the country in 1998 to defend Clinton’s bombing of Iraq, warning of “weapons of mass destruction.”)

    If Richard Hofstadter were adding to his book The American Political Tradition, in which he found both “conservative” and “liberal” presidents, both Democrats and Republicans, maintaining for dear life the two critical characteristics of the American system, nationalism and capitalism, Obama would fit the pattern.

    His obsequious joining with McCain in approving the $700 billion “bailout” for the financial giants is a sad sign. See my article (I say arrogantly) in a recent issue of the Nation about the bailout, as a futile “trickle-down” act, instead of using the money directly for the people Obama claims to represent.

    So it will take a revivified social movement to do for Obama what the strikers and tenant organizers and unemployed councils and agitators of the early 1930s did for FDR, pushing him into new paths, so angering the superrich that FDR, in one of his best moments, said, “They hate me, and I welcome their hatred!”

    Obama needs such fire. It is up to us, the citizenry–and non-citizens too!–to ignite it.

    Obama is most emphatically not a socialist, and whilst a level of public engagement by the population would be welcome and would open minds to more socialistic ideas, I doubt even he could be lurched leftwards. Still, the SPGB's height was during a period of reformist hope, and socialism is bred from promise not despair. After all, building such a movement can lead to a genuine socialist movement being built, why ask them in power when you can begin to do it yourself?

    Pik Smeet

    Wednesday, November 5, 2008

    Obama wins

    From the Socialism Or Your Money Back blog

    So the next President of the USA will be Barack Obama. Of course as socialists we know that he is a capitalist politician, the representative of a capitalist party, who will form a capitalist administration to govern the most powerful capitalist country in the world.

    And that, as a left-of-centre politician getting support with hints of redistributing wealth to the poorer sections of society, he is going to fail, for the simple reason that capitalism simply cannot be made to work in the interest of the majority of the members of society. It is a profit-making system that can only work as such, in the interest of the tiny minority who own and control the means of production and live off the profits produced by the unpaid labour of the majority.

    This said, there are two points that can be made.

    First, the rapidity with which ideas can change. A few decades ago it was unthinkable that a man regarded as “black” could be elected President of the USA by an a predominantly “white” electorate. It is only about fifty years since most “blacks” in the South were allowed to vote and that segregation was ended. In some States the union of Obama’s mother and father would have been illegal. But now, under the pressure of experience, such prejudices have been abandoned by a majority of people in America. We can look forward to the time when same thing happen to the pro-capitalist prejudices still held by the majority.

    Second, the much higher turn-out shows that when people judge, rightly or wrongly, that what is at stake is important they are prepared to turn out and vote. We’ve seen this before in other circumstances, even if there too the issue wasn’t really as important as the majority judged. But they thought it was, and acted on this. In other words, that voting is a way in which a change in consciousness from pro-capitalist to socialist will express itself, despite what the “anti-parliamentarists” say.

    Adam Buick