Saturday, February 28, 2009

THIS JUST IN! Word of the Day

From the World Socialist Party of the United States MySpace page.
[Articles in this series will feast on random juicy statements about capitalism reported in the media.]
Erin McKean, a lexicographer writing in the Boston Globe, gives us a dictionary tour of today’s corporate capitalism and its private jargon that lights up a few interesting dark alleys. “The Word” of the day is “bonus” (as in “Bonus reduced”). For example:
…major financial institutions continued to pay massive bonuses to executives despite losing even more massive amounts of money. Last year Merrill Lynch essentially collapsed, but still paid almost 700 executives cash bonuses of more than $1 million each. (Boston Globe, 2/22/09)
Probably little folks like us just don’t understand how hard it is to run a complicated system like capitalism. We of course tend to weigh quantities against each other the way our parents and teachers taught us to do and draw the simplistic conclusion that someone is getting away with wasting a lot of precious money. Especially since the funds for these bonuses come from (among other sources) laying off millions and millions of workers around the world for the sake of making business more “cost-effective.”

But how are we ever going to manage cracking open a nice, warm fuzzy economics text again without laughing a blue streak, once we’ve learned that “unscrupulous executives may also engage in vest fleecing when they accelerate the vesting of their stock options, or they may get their companies to agree to imputed years of service, where their 10 or 15 years of employment are counted as 25 or even 40 years to bump up their pension payouts.”

Imputed years of service? Bump up their pension payouts? When was the last time you “bumped up your pension payouts” to get a cushier deal? And if you got away with inflating your years of service, did anyone (the IRS, maybe) come around wanting to know where all that nice money came from? Workers who still have real pensions should count themselves lucky, as corporate pensions are second only to the Big Black Lies told by CheneyBush during their Power Trip days.

Well, hold on! says a voice from the back. The hard work of oversight and supervision is well paid because it’s money well spent. Keeping profits from sagging isn’t for sissies. Some very special executives are so highly thought of, in fact, that they “are offered what is called a gross-up, where tax payments are made by the company (and thus borne by the shareholders) on behalf of those high-paid executives” (ibid).

What is a golden coffin? Don’t ask! But just imagine your skimpy little paycheck surviving you…

While it is true that even the Congress now sees such practices as abusive, the abuses don’t seem to cross the wage and salary line somehow. If they could, the uproar from the Top would be quite deafening. We knew all along, to be sure, that the rules work differently for “executives” than they do for everyone else. Now we understand too that the rules governing capital apply only to feeders at the trough of surplus value; ordinary (“little”) people Need Not Apply.

When you hear someone who dismisses all this as par for the course turn around and argue that common ownership and democratic control of the instruments for producing wealth by and for the whole community will never work because human nature is too weak to support it, you know you are listening to an ideologue who wants to sell you on the virtues of capitalism. Demonizing human nature is one of the time-honored tricks inherited from the past masters of civilization to justify their respective class rules, ever since humans first began planting seeds in the ground.

What do we learn from this? In societies that have Tops and Bottoms, the Top is usually made up of swindlers, liars and self-servers, protected by governments whose job is to limit the excesses of their pocket-lining. It is time for a society that has no Bottom, and therefore no Top.

- ROEL

Thursday, February 26, 2009

The Story of Stuff

The next in the fortnightly series of films and talks at the Socialist Party's Head Office, 52 Clapham High Street, London SW4 will take place this Saturday, 28 February, at 6pm.

It will be a showing of a short, 20-minute film "The Story of Stuff". Afterwards Pat Deutz will open a discussion on how to organise the production and distribution of "stuff" directly for use without markets or money instead of, as a present, for sale on a market with a view to profit.

Everybody is welcome and admission is free. The nearest tube is Clapham North on the Northern Line.

Tuesday, February 24, 2009

Pieces Together (2009)

The Pieces Together column from the February 2009 issue of the Socialist Standard

SIGN ON OR STARVE
Sgt. Ryan Nyhus spent 14 months patrolling the deadly streets of Baghdad, where five members of his platoon were shot and one died. As bad as that was, he would rather go back there than take his chances in this brutal job market. Nyhus re-enlisted last Wednesday, and in so doing joined the growing ranks of those choosing to stay in the U.S. military because of the bleak economy. "In the Army, you're always guaranteed a steady paycheck and a job," said the 21-year-old Nyhus. "Deploying's something that's going to happen. That's a fact of life in the Army — a fact of life in the infantry." In 2008, as the stock market cratered and the housing market collapsed, more young members of the Army, Air Force and Navy decided to re-up. (Yahoo News, 2 December)

BEGGING FOR WORK
"Paul Nawrocki says he's beyond the point where he cares about humiliation. That's why he weekly takes a 90-minute train ride to New York, where he walks the streets wearing a sandwich board that advertises his plight: The former toy-industry executive needs a job. "Almost homeless," reads the sign. "Looking for employment. Very experienced operations and administration manager." Wearing a suit and tie under the sign, Nawrocki -- who was in the toy industry 36 years before being laid off in February -- stands on Manhattan corners for hours, hoping to pass resumes to interested passers-by." (CNN.com, 6 December)

HALLELUAH IT'S A SLUMP
"The sudden crush of worshipers packing the small evangelical Shelter Rock Church in Manhasset, N.Y. — a Long Island hamlet of yacht clubs and hedge fund managers — forced the pastor to set up an overflow room with closed-circuit TV and 100 folding chairs, which have been filled for six Sundays straight. In Seattle, the Mars Hill Church, one of the fastest-growing evangelical churches in the country, grew to 7,000 members this fall, up 1,000 in a year. At the Life Christian Church in West Orange, N.J., prayer requests have doubled — almost all of them aimed at getting or keeping jobs. Like evangelical churches around the country, the three churches have enjoyed steady growth over the last decade. But since September, pastors nationwide say they have seen such a burst of new interest that they find themselves contending with powerful conflicting emotions — deep empathy and quiet excitement — as they re-encounter an old piece of religious lore: Bad times are good for evangelical churches." (New York Times, 14 December)

ANOTHER LABOUR FAILURE
"Social deprivation, child poverty and long-term reliance on benefits in parts of Britain are not alleviated or are increasing a decade after Labour pledged reforms to tackle them, a report shows. Many of the poorest households are not being reached by government initiatives to tackle deprivation, with most key measures now making no progress. Of the 56 poverty indicators tracked by the Joseph Rowntree Foundation, including the number of children in low-income families, young adults unemployed and children excluded from school, three quarters have stalled or are getting worse." (London Times, 8 December).

Monday, February 23, 2009

Class versus class (1982)

From the July 1982 issue of the Socialist Standard. 

With all the jingoistic talk about our masters' imperial battles it is easy to ignore the fact that there is a social war going on which will never cease as long as society is divided into two antagonistic classes. The class war turns humans into competing enemies and transforms society into a battlefield.

Under capitalism the means of wealth production and distribution are monopolised by a class which is legally entitled to defend its ownership and control by means of violent force. The facts of class possession are beyond dispute: in Britain, for example, the richest ten per cent of the population owns more of the accumulated wealth than the poorer ninety per cent put together. A society which is so fundamentally unequal can never be genuinely democratic.

The relationship between the two classes - capital and wage labour - is that of exploiter and exploited, robber and robbed. To understand this, one must consider the common source of wages and profits. It is sometimes claimed that workers should be grateful to their employers for giving them wages. It is implied that employment is a gift provided by the capitalists so as to support the workers. In fact, the opposite is the case: wages are the hallmark of legalised robbery; profits are a gift provided by the workers so as to support the capitalists. This closely-guarded secret may sound strange to workers ignorant of their own exploited position, but a little investigation into capitalist production soon demonstrates the truth of it.

The capitalists own and control the technology, means of production and resources which enable humanity to survive. In some countries they own them privately; in others they do so through their executive committee, the state. They are only in this privileged position because a majority of people allow thern to be. In Britain, workers regularly go to the polIs and vote for representatives of the system of class monopoly.

The majority of people are not capitalists: they possess very littie except their ability to work: labour power. So the workers possess mental and physical energies, but lack the ownership and control of the productive machinery; the capitalists have the productive machinery, but they need human labour to run it for them. The obvious conclusion must be for the two sides to form a "partnership ": the workers are employed to produce, but not possess and the capitalists are permitted to possess, but not produce.

A partnership between Haves and Have-Nots is bound to be an unequal one and this is the case under capitalism. The relationship of wage labour and capital is not that of equal partners, but of user and used. The capitalist employs - uses - the worker's labour power at a price which is called a wage or salary. When labour power is purchased it is the capitalist's to use for a period of time. Labour power is a commodity in that, like baked beans and electric toasters, it is produced for sale on the market. Why does the capitalist buy labour power? It is not that he or she feels sorry for propertyless workers and wants to give them money. Capitalists only pay workers to produce wealth if there is a likelihood that the value of the wealth produced will be greater than the wage or salary paid to the wealth producers. In short, unless workers create surplus value they are of no use to the capitalists.

Surplus value is that proportion of wealth produced by a worker which is over and above the reproduction of his own wage or salary (variable capital) plus the cost of machinery and raw materials, used during production (constant capital). So if a worker is paid £100 a week he must produce wealth which reproduces the value of £100, reproduces the cost of machinery and materials used, and in addition he must create a surplus which provides unearned income for the idle owner of capital. If a worker earning £100 only reproduces wealth to the value of £100 plus the cost of machinery and materials used, but not any surplus value, he or she will be considered unproductive.

The objective of capitalist production is the creation of surplus value. Out of surplus value comes rent, interest and profit. In short, profits arise from unpaid labour of the working class. This is not simply a case of a few fraud capitalists robbing a few gullible workers; legalised exploitation is as necessary the capitalist system as illegal robbery is to mugging - just as one cannot have a successful mugger who does not hit his victims over the head and rob them, so one cannot have a successful capitalist who does not exploit workers.

Many workers thank the capitalists for exploiting them; they think that being exploited is the greatest piece of luck that could happen to them. Some misguided workers, who call themselves socialists, but are in fact the most backward of social thinkers, actually organise processions demanding the right to be exploited. Yet despite the political acquiescence of the working class to its own inferior status, there are frequent and inevitable battles between the two classes. This struggle is inevitable because of the fundamental antagonisrn of interests between those who receive wages and those who receive profits. At its most primitive level the class struggle is a series of minor battles between sections of the two cIasses over the rate of exploitation, or how much of the wealth prooduced shall go to the workers as wages and how much will go to the capitalists as profits. Because the capitalist class own the productive and distributive machinery they always have the upper hand in these battles over the conditions of exploitation. Trade unions are a feature of this defensive struggle by workers to obtain a few more precious crumbs from the capitalist-owned, worker-baked cake. The class war never ceases under capitalism because there can never be a reconciliation of interests between capitalists and workers.

Victory in the class war can only be won by the exploited class, consciously, politically and democratically defeating the exploiting class. The workers must have no sympathy for the professed needs of the capitalists: they are our class enemies, they possess what we want and every effort must be made to take it from them. The political objective of socialists is to dispossess the capitalist class of its ownership and control of the means of life. Once we have done that society will be able to produce wealth for use rather than for profit. Socialists will not waste time engaging in diversionary and ultimately utopian attempts to reform the capitalist system. The revolutionary task is to end the system, not to amend it, for until the wages system has been abolished the majority of humankind will continue to be exploited.
Steve Coleman

Have the Tories gone Marxist? (2009)

The Cooking The Books column from the February 2009 issue of the Socialist Standard

Since the onset of the present crisis, as we have noted, Marx has been mentioned many times in the papers. One of the oddest must be a photo in the (London) Times (8 January) of the Tory Leader, David Cameron, with the caption “David Cameron has lined up with Marx and the Church of England”.

The photo was used to illustrate an article by the paper’s financial guru, Anatole Kaletsky, in which he argued that the way to stop the depression getting deeper was to follow Keynes’s advice and encourage people to spend more. But how can David Cameron, the Church of England and Marx be placed in the same boat? Because, says Kaletsky, all three don’t think much of the government’s policy of trying to spend its way out of the crisis.

True, they don’t, but for quite different reasons.

The Church doesn’t like people pursuing the acquisition of material things and so is opposed to the government encouraging people to spend more on this. In fact, they probably want us all to consume less.

David Cameron claims to believe that the policy won’t work. He wants a different policy to be pursued, but only with him as Prime Minister.

Marxists, like Marx, are not interested in proposing policies for governments to pursue. We say that, whatever the policy they pursue, they cannot make capitalism work in the interest of the majority class of wage and salary workers. We add that, in any event, once a crisis develops, an increase in government and personal spending cannot make it any shorter than it is otherwise going to be.

Crises only come to an end when stocks have been cleared, inefficient businesses eliminated, asset values have depreciated and real wages and interest rates fallen, so restoring the rate of profit, the incentive to produce (and the brake on producing) under capitalism.

Printing more money (or, what amounts to the same thing, the government borrowing money from itself), as an inflation of the currency, is likely to lead simply to rising prices while production continues to stagnate. “Stagflation”, as it has been called.

Cameron – of course – does not accept this. He has a different explanation for the crisis: that it was caused by the policies of the Labour government, and so can be ended by a new government pursuing a different policy. This is just the stuff of the game of parliamentary politics, based on the illusion that governments can, and do, control the way the economy works. But they don’t.

If Brown is being blamed for causing the crisis it’s partly his own fault. When the economy was expanding he was keen to claim the credit. He even made the ridiculous boast that he had ended the boom-slump cycle. Now that things have gone wrong, he’s blaming the international economic situation. This is true, but he – and politicians generally – can’t have it both ways. They can’t claim credit for the good times and blame world events for the bad times. Actually, it’s the uncontrollable world economy that’s responsible for both.

We hold no brief for Brown, but the Tories’s claim that the present crisis is made in Britain, that it’s “Gordon Brown’s crisis”, is not true. It’s not the government’s fault. It’s capitalism’s. It’s capitalism’s crisis, and the answer is not to change the government but to get rid of capitalism.

Saturday, February 21, 2009

Smoke and Mirrors: The Bend Some and Hedges Effect (2009)

From the February 2009 issue of the Socialist Standard
The fiasco surrounding the $50 billion hedge funds run by Bernard Madoff has been another illustration of the current instability at the heart of capitalism’s financial apparatus.
Hedge funds try to bend the normal financial rules of the market in whatever way possible, though it appears Madoff went too far in what could be the world’s biggest ever fraud. A massive investigation is under way into how Madoff set up and maintained a giant ‘Ponzi scheme’. These schemes take their name from Charles Ponzi, an Italian immigrant to Boston in the US who, during the early 1920s, set about spreading rumours of lucrative investment opportunities he was involved in. These supposedly guaranteed what the Wall St Journal exposed as impossibly high returns, when in reality most of the underlying investments did not exist and Ponzi merely took people’s money and used some of it to pay dividends and other returns to existing investors, while creaming the rest off for himself. This was able to continue as long as new investors were attracted to the schemes. When the flow of new investors stopped, the schemes imploded.

Although an investigation by the Securities and Exchange Commission in the US is currently taking place into the precise nature of Madoff’s actions, he has apparently confessed that the steady above-average returns that characterised his operation did not reflect the underlying reality and that, over time, his funds became an elaborate sham. There is now a mammoth scramble by wealthy investors, charities and financial institutions to try to recover whatever little may be left of their original investments, with these investors notably including funds managed (or held in custody) by major banks like UBS, HSBC and RBS. Indeed, Bank Medici reportedly had $3 billion invested with Madoff and because of this has now been taken over by the Austrian government (Financial Times, 3rd January).

Hedge funds
The Madoff affair is in many respects but the latest (and most spectacular) disaster to afflict the little-understood world hedge fund sector. Until last year, the most infamous previous case of a financial disaster involving a hedge fund was in 1998 when what had become the world’s biggest hedge fund at the time – Long-Term Capital Management – went bust. This had been headed by a team that included two Nobel Prize winners for economics, experts in the pricing and risk-assessment of complex financial instruments. But after years of stellar returns in the 1990s the fund collapsed and had to be bailed-out by a consortium of 50 investment banks put together by the then Chairman of the Federal Reserve, Alan Greenspan. The banks had already invested so much in LTCM (and loaned it so much money) that their own capital would have been seriously jeopardized by the losses incurred and Greenspan had to step in to help them in a way that was a precursor of recent actions during the 2008 financial crisis.

The collapse of LTCM demonstrated that those who viewed hedge funds as an esoteric but peripheral phenomenon were living in the past. Hedge funds had by this time become a hugely significant, if secretive, part of capitalism’s financial operations, with the ability to exert an influence on markets well beyond that of many governments. This had previously been demonstrated to those paying attention by George Soros and his Quantum Fund, which in 1992 had made $2 billion betting against sterling in the European Exchange Rate Mechanism, forcing the UK out of the ERM and metaphorically ‘breaking the Bank of England’ in the process, with government intervention unable to stop the slide of sterling against the deutschmark.

So, given the ascendancy of hedge funds in recent years and the recent media fascination with them, what do they really do and why are they deemed to have so much financial power?

Hedge fund strategies
While the public conception of hedge funds is that they are highly risky investment vehicles that aim at spectacular returns for their investors, this isn’t entirely true in every respect. Indeed, hedge funds gain their name from strategies aimed at ‘hedging your bets’, so that in theory the risk associated with one activity can be mitigated, at least in part, by others. Most hedge fund managers are not interested in relative performance measured against an accepted benchmark. In this sense, they do not aim to beat an index like the FTSE 100 or the S&P 500 in the US in the way that other investment managers running more conventional operations like unit trusts and investment trusts do (whereby, say, an annual return of minus 20 per cent would be considered a good relative performance if the market had fallen by more than 30 per cent as it did last year). Instead, hedge fund managers generally seek ‘absolute returns’, which are positive returns in any sort of market conditions.

Most, though certainly not all, hedge fund strategies are equity-based involving stock market investment, and hedge funds generally aim to try to secure returns noticeably better than the long-term annual average return from shares (which in most major western countries has tended to be in the 8-10 per cent range). This is another reason wealthy investors find them so attractive.

The strategies adopted by hedge funds to achieve this type of performance in all market conditions fall into various categories, the most common of which are the following:


  • Long/short equity, which involves buying shares in some companies in the hope they will go up (‘going long’), but shares in other companies in the hope they will fall (‘going short’), thereby hedging the bet. Going short usually involves borrowing shares and immediately selling them only to buy them back cheaply later when their price has fallen so that they can be returned to the original lender and the difference kept as profit. Sometimes this type of long/short strategy involves ‘pairs trading’, such as going long on BP but short on Shell in the belief that the former oil stock is undervalued compared to the latter.
  • Arbitrage, based on a variety of techniques and strategies used to exploit market pricing inefficiencies (for instance, a company like Shell is quoted on more than one stock exchange and there can be temporary discrepancies in the price quoted in Euros in Holland compared to the price quoted in sterling in London). Fixed income arbitrage funds try to exploit pricing inefficiencies in bond markets and this was the main strategy used by Long-Term Capital Management until its collapse. LTCM took the view, backed up by various mathematical models they had developed, that bond yields tend to converge over time. More often than not this is true, though not always – as they were to find out during the Russian debt and currency crisis of 1998 when traders took flight from Russia, sold risky investments and bought into the relatively safety of US Treasury Bills instead.But LTCM had bought low-priced and high-yielding Russian government securities, while at the same time selling short high-priced and low-yielding US Treasuries, in the expectation that their yields would converge over time. This was because they assumed that investors attracted by high-yielding Russian securities would buy them en masse, push their prices up and so reduce their yields, while selling the relatively unattractive US Treasuries, raising their yields. Charles Geisst pointed out in his excellent Wall Street: From Its Beginnings to the Fall of Enron that ‘the idea of converging yields evaporated overnight as the Russian obligations fell precipitously in price and the Treasuries gained as a result of the flight to quality. The fund was on the wrong end of both sides of the trade’ (p.380), a calamitous end for the Nobel Prize-winning economists.
  • Event-driven strategies, which can involve buying shares in the expectation that a company merger or takeover is likely, or which can involve buying into distressed assets (these are avoided by most investors so there is more likelihood of significant mis-pricing and the opportunity to buy assets at a knock-down price). Often hedge funds will buy the debt of a distressed company as a prelude to taking it over and/or liquidating it for a profit.
  • Macro-strategies, which are based on taking positions on what is likely to happen in the global economy. George Soros’s Quantum Fund has specialised in these macro-strategies, taking huge, credit-fuelled bets on the direction of currencies and commodities, for instance, and in doing so exerting more economic power than many governments can muster.
  • Quant strategies, which are based on complex mathematical models, and which can involve elements of the other strategies named above as well as short-term trading designed to profit from minute-by-minute and second-by-second price fluctuations.
  • What all these hedge fund strategies have in common is that they involve speculation to varying degrees as opposed to investment for the long-term, and typically involve significant amounts of leverage too (hedge funds often borrow in multiples of many times their own value as a way of maximizing their returns - for example, returns from arbitrage activities would often be minute if it wasn’t for the amount of leverage used). And unsurprisingly, these are two of the main reasons hedge funds are often considered to be risky, if not unstable, influences within the market economy.

    Hedge fund structures
    In truth, the risk hedge funds present to the operation of the market economy’s financial system isn’t solely because of what they do, though it is true enough that regulated investment vehicles like unit trusts and investment trusts are legally unable to adopt many of the strategies hedge funds use. The main issue with hedge funds, exposed once and for all by the Madoff scandal, is that they are largely unregulated entities for the secretive and super-rich, and as such are open to all sorts of abuses, attempting to bend the investment ‘rules’ at will under the guise of innovative practice.

    Most hedge funds are restricted to investors – who on investing usually become limited partners – with at least $1,000,000 (excluding their main residence), i.e. they are for capitalists only. They are also limited in terms of the number of investors who are allowed to join the fund. This is to avoid the restrictions and regulations placed by governments on other investment vehicles designed for mass participation and has been a way for hedge funds to slip ‘under the radar’ of the regulators. Most hedge funds – registered offshore for tax reasons and run as private investment partnerships – are covered by little in the way of investor protection and are barred from advertising or being sold to retail investors. Aside from withdrawing their investments (there are often restrictions on this too) hedge fund investors have little practical control over the managers, usually even less so than other collective investment vehicles like investment trusts which have shareholders and an elected board of directors answerable to them and which have to issue transparent annual reports, regular trading updates and so on.

    The basic hedge fund structure appears to have changed little since they first appeared in the early 1950s, having been pioneered principally by Alfred Winslow Jones in the US, though many others – such as Warren Buffett before he developed his huge publicly quoted Berkshire Hathaway investment vehicle – established comparable private funds at a similar time. Annual management fees are high, typically 1 or 2 per cent of capital under management, with another 20 per cent of annual returns over and above an agreed threshold, explaining why in recent years many high-flying fund managers working for the big investment banks have been so keen to leave and set up their own hedge funds.

    The role of hedge funds
    Hedge funds, like private equity, have emerged in the present economic crisis as some of the ‘bad guys’ of the financial world, almost as if a capitalism without them would somehow be sane and humanitarian. Small investors in retail banks in the UK that have had to be nationalised or merged railed last year against the hedge funds for shorting bank stocks, driving their prices ever lower. It was clear that this would have happened anyway though as was illustrated when the share price slides didn’t stop when the shorting of financial shares was prohibited by government order.

    There is always a place in capitalism for scapegoats, especially those as rich as most hedge fund managers have been (and as unpleasant as some of them no doubt are). But this detracts from the real issue which is the instability and chaos that lies at the heart of the money/prices/profits system itself. Capitalism without hedge funds is just as brutish and nasty as capitalism with them – and the irony is that if you accept the rationale of the capitalist economy, hedge funds and other speculators, contrary to much popular opinion, play a useful role.

    Capitalism’s financial markets are the lubrication for the entire capitalist economy. These markets depend on liquidity and frequent trading to accurately match buyers and sellers at any one moment in time. If trading is thin, this matching of trades becomes difficult if not impossible, whether in shares, bonds, commodities, or more complex financial instruments. If, for example, shareholders investing via the stock market all used a ‘buy and hold’ strategy and didn’t generally sell their shares for long periods after buying them, the equity markets would be stifled and trading difficult. This is why hedge funds and speculators more generally perform a useful role for the system – they are one of the main ways of ensuring sufficient liquidity for it to be able to function properly.

    Their growth in size and influence, especially in the last 15-20 years, has been phenomenal, explained by their potential attractiveness to capitalist investors aiming for a steady but above average return, and their attractiveness to fund managers because of their flexibility and fee structures. The number of hedge funds in existence now runs into the thousands, with London’s Mayfair being nick-named ‘hedge fund alley’. According to the Financial Times (31st December), hedge fund assets under management have grown from less than $50 billion in 1990 to around $1,900 billion last year, making them a hugely significant economic force.

    The current financial turmoil, however, has seen the biggest outflow of assets invested in hedge funds for decades, a sum estimated at $400-500 billion from January to November 2008. Lack of credit and high interest rates have meant that a great many hedge funds have had to de-leverage, reducing their debt as quickly as they can and selling their assets at the best prices they can get in falling markets. And as investors withdraw their money on the back of faltering returns, this has had the knock-on effect of hedge funds also having to sell their assets to meet redemptions, creating a vicious downward spiral for equity prices in particular, called ‘forced selling’. This was the cause of much (if not most) of the massive waves of selling on world stock markets last September and October, with quite unprecedented levels of market volatility over a sustained period.

    Due to this de-leveraging and forced selling at low prices, several hedge funds have already gone bust and there will surely be more to come. In addition, because they were so highly leveraged, the unpredictable volatility in equity, bond and credit markets has ensured that some funds have just folded under the onslaught, including some of the macro and quant funds that should, in theory, have been able to capitalize on these situations.

    As hedge funds operate in such a competitive market, those that don’t perform get shut down or merged with others (so much so that around 60 per cent of hedge funds are no longer around within five years of their inception). The financial crisis will almost certainly ensure that this figure increases further. Also, there are already indications that hedge funds will be the next target of the regulators and so it would seem that the great hedge fund bonanza is over, at least for now.

    As for Mr Madoff, he will have done the cause of hedge funds no good either as their lack of transparency has been illustrated as starkly as it could possibly have been. Many capitalists will no doubt now be looking elsewhere to invest their wealth – so long as another Mr Madoff hasn’t made off with it first.
    DAP

    Friday, February 20, 2009

    Weekly Bulletin of The Socialist Party of Great Britain (85)

    Dear Friends,

    Welcome to the 85th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1454 friends!

    Recent blogs:

  • Stop Supporting Capitalism! Start Building Socialism!
  • Have the Tories gone Marxist?
  • Is the End of Capitalism Nigh?
  • Quote for the week:

    "Journalism is one of the devices whereby industrial autocracy keeps its control over political democracy; it is the day-by-day, between-elections propaganda, whereby the minds of the people are kept in a state of acquiescence, so that when the crisis of an election comes, they go to the polls and cast their ballots for either one of the two candidates of their exploiters." Upton Sinclair, The Brass Check (1919).

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Wednesday, February 18, 2009

    How Near Is Socialism?

    Socialist Party Public Meeting
    Wednesday 18th February 8.30pm

    HOW NEAR IS SOCIALISM?

    Maryhill Community Central Hall

    304 Maryhill Road Glasgow, G20 7YE


    For over a century the objective conditions necessary for the establishment of socialism, i.e. the development of the means of production and distribution of wealth to a level which first permitted abundance and now superabundance, have existed. So, why has it not happened? When will it happen?

    These questions are obviously much easier to ask than they are to answer.

    Subjective Conditions, a majority of socialists.
    To answer these questions, it would probably help to look at some indicators within society which might show us what progress, if any, has been made in the last century or so towards increasing socialist consciousness, and consequently towards socialism itself.

    Some Indicators within society
    What does the decline of belief in religious superstition during the last century tell us about the state of consciousness amongst wage slaves? Has this decline been accompanied by a correspondingly better understanding of the society in which they live? What effects do globalization and improved. communication systems, such as the internet, have upon the potential for greater class consciousness amongst workers?

    Globalization is not new: it is a development which has been in progress for at least several hundred years, but its effects have become much more noticeable as a result of modern communication systems. Globalization has joined the lexicon of buzzwords used by our bosses' media machine.

    What are the effects of this media machine upon the minds of the working class?

    We are often told that certain events should be seen as "important", or signifi-cant", or even "historic". The recent presidential elec-tion in the United States of America was reported as such an event.

    The fact that Hillary Clinton and Barack Obama were both seeking to be candidates for the presidency, we were told, was in itself an "historic achievement". Now that Barack Obama has become the new President of the United States, we are invited to see this as some kind of great event. There is much goodwill, and sadly adulation, for this latest disappointment-to-be who now occupies the White House. Will those who support this man today be ready for socialism any time soon?

    These are some of the items Comrade John Cumming will be discussing at our 18th February branch meeting, looking forward to seeing you all there.


    Admission Free. All Welcome

    For more information about Glasgow Branch of the Socialist Party, visit their website.

    One for your diary . . .

    . . . if you are so inclined.

    Details of the Summer School will be posted on the blog if and when I stumble across them on the SPGB website.

    Is it just me or are you also thinking Port Sunlight?

    Friday, February 13, 2009

    What is socialism (Baby don't hurt me. Don't hurt me)

    Originally posted on the Marx and Coca Cola blog

    Recently Congressman Paul Broun (Retardlican-GA) had this to say about the Stimulus Bill:
    I see this as a huge leap toward socialism as a nation. It's creating new government programs, it's creating new government jobs, that don't have any sunlight to those programs, to those jobs. It expands programs that are already there. It further - some of the tax relief, I believe and hope the gentlemen will agree with me, actually just furthers through the refundable tax credits a dependency upon government. My friend Star Parker had wrote a book one time that she called Uncle Sam's Plantation. And what this does is it economically enslaves people. And that's what we see happening.
    Putting aside for a moment that this is all gibberish (Really? Tax credits are slavery. And "creating new government jobs, that don't have any sunlight to those programs", What the fuck does that mean?) let's explore this idea that somehow any government spending is equatable to socialism (I have a feeling that this idea will pop up a lot over the next couple of years). Socialism, like capitalism, is an economic system, which is the way goods and services are distributed throughout a society. A society can't have to two different economic systems. That would be like a hunter-gather tribe living next to a feudal estate next to a modern factory farm and operating as a coherent unit. Eventually one system would come to dominate the others. While the nation-sate may be the largest player within our capitalist system it is one of many. When governments spend money on goods or services (à la the stimulus) it does so in capitalist market with the other players (individuals, corporations, charities, etc.)

    But how is this "socialist" stimulus plan any different from regular government spending? As this handy graph from the Heritage Foundation shows discretionary spending, especially military spending, increased dramatically during George W. Bush's term. Rather it was Medicare part D, No Child Left Behind, or his two wars he used government spending to fuel economic growth (for a good account of how W turned Northern Virginia into a Silicon Valley of lobbyists and defense contractors see Thomas Frank's The Wreaking Crew). George Bush was a Keynsianist in everything except name. But why didn't the free marketeers stand up and decry Bush as a socialist? The government spending programs that are described as "socialist" are school construction, health care for children, etc., in other words spending that benefits the vast majority of working people. Government spending that lines the pockets of the rich is "capitalist". It would also mean that the hundreds of billions of dollars that are spent on defense is not meant to actually protect Americans, but to enrich the few. This idea that social spending is socialism is the view that is also taken by various "communist" parties and the likes of Hugo Chavez. Republicans are just like Trotskyists; no wonder they can't win an election.

    So from this we can conclude that socialism is anything Paul Broun doesn't like. For example if he saw The Curious Case of Benjamin Button, and didn't like it, it would be a "socialist" movie. And just as bad as slavery.
    JM

    Thursday, February 12, 2009

    Socialists and free speech (1986)

    From the July 1986 issue of the Socialist Standard. 

    "Here, dad, what's that bloke doing standing on a platform in the middle of the pavement?"

    "Ignore him, son, he's a nutter."

    "But why's he shouting about socialism?" "Because he's got freedom of speech. Now, take no bloody notice of him - you'll only encourage him to come back."

    "Is anyone allowed to stand up there like that?"

    "Of course, they are: this is a free country. I fought for the likes of him to have his say.

    Now, get a move on or we'll miss EastEnders:"

    The socialist on the outdoor platform, shouting to whoever will turn their gaze from the distractions provided by their masters, does not owe anything to the democratic inclinations of the capitalist class. The bosses who own and control the resources of society are an undemocratic class; whatever power the workers they exploit possess has been won in struggle. The first trade unionists were crushed by the coercion of the state, and only when the bosses learnt that wage slaves could not be stopped from organising were trade unions recognised. Free speech - that much cherished right which workers in Britain are urged to receive with gratitude from their employers - was won (to the limited extent it has been won) only after long struggle by workers who understood the value of democracy.

    When the workers of Manchester assembled to discuss their grievances in 1819 the bosses responded by demanding the silence of the crowd - a silence which was achieved through the barrels of the rich men's guns. In its infancy as a ruling class, the capitalists realised that workers thinking, criticising, talking, organising, assembling was a mighty threat to the power of the minority which is the political basis of the capitalist system. In the 1820s Lord Liverpool's Tories passed the notorious Gag Acts, making it illegal for groups of workers to meet together and virtually criminalising open political debate. Brave men and women of our class ignored the bosses' gag and persisted in the effort to persuade their fellow workers of the need for social change. Those great democrats have their counterparts today in the modern capitalist dictatorships - from Soweto to Moscow - and socialists can have nothing but admiration for the efforts of these battlers against tyranny.

    The socialist pioneers in Britain in the 1880s made great use of the public platform as a means of spreading the case for a new kind of society. Indeed, as early as 24 June, 1855 Karl Marx attended an illegal public meeting in Hyde Park. In an article in Neue Oder-Zeitung Marx described the scene and the struggle:

    "At 3 o'clock about 50,000 people had gathered at the appointed spot on the right side of the Serpentine in the huge meadows of Hyde Park. Gradually the numbers swelled to about 200,000 as people came from the left bank too. Small knots of people could be seen being jostled from one spot to another. A large contingent of police was evidently attempting to deprive the organisers of the meeting of what Archimedes had demanded in order to move the earth: a fixed place to stand on. Finally, a large crowd made a firm stand and the Chartist, James Bligh, constituted himself chairman on a small rise in the middle of the crowd. No sooner had he begun his harangue than Police Inspector Banks at the head of forty truncheon -swinging constables explained to him that the park was the private property of the Crown and that they were not allowed to hold a meeting in it. After some preliminary exchanges, in the course of which Bligh tried to demonstrate that the Park was public property and Banks replied that he had strict orders to arrest him if he persisted in his intention, Bligh shouted amidst the tremendous roar of the masses around him: "Her Majesty's police decIare that Hyde Park is the private property of the crown and that Her Majesty is not incIined to lend her land to the people for their meetings".


    Bligh urged the crowd to move elsewhere, the workers, angered by the Crown's contempt for their right to meet and speak, stayed and fought and one of them, by the name of Russell, was murdered by the police.

    The Marxists of the Socialist League set up their platforms on street corners and in parks and the revolutionary content of their message led the police (acting under the orders of the ruling class) to smash their meetings. One place where many socialist speakers were arrested was Dod Street in London. On Sunday, 20 September 1885 the police moved in to the meeting after it had been closed and arrested eight League members. Marx's son-in-law, Edward Aveling, gave evidence in court and when warned by the despicable magistrate, Saunders, that if he spoke at Dod Street he too would be locked up, Aveling responded "I shall speak there each Sunday till I am locked up." The prosecuted speakers were found guilty and William Morris was then arrested for daring to shout out "Shame". The following summer the state was even more active in its fight against free speech; in his Notes on Propaganda Morris noted that:
    "This summer we were much annoyed by the police who persisted in interfering with our open-air meetings ... it was made clear that the law could be so wrested as to make impossible any meeting on public ground not specially set apart."
    By the turn of the century every major British city had its outdoor speaking places and large crowds assembled to hear differing points of view. In these open-air universities working-class scholars were made. It was in this setting that The Socialist Party of Great Britain was formed in 1904. Right from the start The Socialist Party recognised that intelligent persuasion was the way to make socialists; our platform was then, and is now, democratic and open to criticism. Indeed, it has long been a Party tradition to allow serious opponents on to our platform for a few minutes to state the case against socialism, The value of serious heckling against opponents has always been realised and socialists have always been eager to give the defenders of capitalism a hard time. But never have we indulged in or supported the disruption of our opponents' meetings; like the workers who fought hard for the opportunity to speak openly, socialists understand that nothing is to be gained for our class by stifling ideas. When in the 1930s, Communist Party members attempted to break up Socialist Party meetings. arguing that whoever was not a Stalinist was a fascist, it was they who were the Red Fascists.

    The Socialist Party still uses the outdoor platform as a propaganda weapon, although we know that new material conditions require new communication methods and it is not as important now as it was in 1904. In London and Dundee, and several places in between, socialists use the platform to put the argument for democratic social revolution. The critics still criticise and the would-be comedians tell their bad jokes and the listeners who stop to scoff often go away with some new ideas. Since 1984 in Hyde Park our speakers have witnessed a new problem (not only noted by socialists, but also by the police, journalists who have visited the park and other speakers and regular attenders). a gang of verbal vandals intent on smashing up meetings. On several occasions while these disrupters have been in action speakers have been stopped from speaking as a result of organised chanting drowning them out, others have been subjected to racist and other vicious abuse and on more than one occasion violence has been threatened. One of the gang is an official in the Kensington Young Conservatives and the son of a West London magistrate. We refer to this gang of dedicated anti-democrats to make clear that there are still those whose response to the logic of the socialist case is to do their best to shout it down. They will not succeed.

    Not onlv from the university-smashing FCS types does the threat come. The Leninist Left, with their contemptuous view of workers as a class who are only capable of following leaders, is eager to prevent certain would be leaders from being heard. This view is expressed by Lucy Kaminska in a letter to the Guardian opposing the giving of a "platform for speakers with known racist, sexist and anti-gay views":
    "What meaning can "freedom of speech" hold in a Britain where blacks, Asians and Jews are attacked and murdered by neo-fascist thugs..."Rational arguments" clearly fail to dissuade these criminals from their actions, so why should their ideologues be given a platform?"
    Whatever the emotive force of Kaminska's view, that view needs to be questioned. We are told that neo-fascist thugs will never be dissuaded by intelligent persuasion. Does that mean that they are inherently inferior to people like Kaminska? If she believes they are, then why not go further and argue that they should be denied the vote - or imprisoned? But who is to define what is a neo-fascist thug? All racists - including the Labourites who are committed to immigration controls? Those who favour violence - including the majority of workers who vote for war policies? And where is the evidence that these deluded workers will not respond to rational arguments? After all, the Left has long opposed debating with racists, so how do they propose to convince them?

    The way to defeat anti-socialist ideas, including racism and sexism, is by democratic discussion. Rather than giving publicity to capitalism's most obscene defenders by shouting them down and letting them appear as martyrs, socialists must be present at their meetings to defeat their arguments in public. The best treatment for the likes of Martin Webster or John Carlisle or Enoch Powell is the lash of socialist logic, leaving them to endure the public scorn of workers who have seen through the idiocy of their propaganda. Remember, fascists are experts at kicking, socialists are experts at reasoning - if we are to defeat them we need to use our best weapon, not theirs.

    The Leninists who do not think that wage slaves have the capacity to see through the nonsense of capitalist ideology regard free speech as a concept which should be denied to those who will confuse workers' minds. (In that case it should apply to them). If the Leninists think that a Tory MP will confuse students at a university they attempt to shout him down - so giving him maximum media publicity. In an article in Socialist Worker (5 April 1986) entitled What Price Free Speech? the writer asks, "where should the line be drawn? It should be drawn at the point where it can be effective". In other words, you shout down speakers as long as you can get away with it. The article argues that university Catholic and Jewish societies should be left alone, despite their unacceptable ideas, because it will not be effective to smash up their meetings. We must assume from this that if the SWP regards The Socialist Party's ideas as dangerously mistaken - which it does -, then they should be able to break up our meetings, the only principle determining when this will happen being whether the SWP's action can be effective. The only difference between the SWP and the National Front in this respect is that the latter are less open about their methods of undemocratic behaviour. The Leninists stand in complete contradiction to the historical efforts of workers to gain the right to express ideas openly to one another.

    Under capitalism the worker who speaks freely is open to the ridicule of those who have been conditioned to fear freedom. Our voices are all but drowned out by the pernicious blasts of the capitalist media which functions as a silencer on the minds of the working class. But still we make our voices heard and, combined with the hard lessons of capitalist experience, those who ignore us today will be echoing our message in the times to come.
    Steve Coleman


    Socialist Party debate with the UK Independence Party


    Socialist Party debate with the UK Independence Party

    Saturday 14 February, at 6pm

    52 Clapham High Street, London SW4 7UN

    (Nearest Tube Stations, Clapham North and Clapham Common.)

    "British Jobs for British Workers?" will be a topic of debate on Saturday 14 February between Magnus Nielsen, of the UK Independence Party, and Danny Lambert, of the Socialist Party which has its offices at 52 Clapham High Street where the debate will take place.

    UKIP wants Britain to leave the EU. The Socialist Party wants a world without frontiers. Elections to the European Parliament take place on 5 June.

    Magnus Nielsen will be arguing that everyone in Britain has a common interest and should go it alone against the rest of the world. Danny Lambert will be arguing that workers in this country have more in common with workers in other countries than with employers in Britain, and that there is no national solution to global problems such as the environment, wars and, now, the world-wide depression.

    The debate starts at 6pm and admission is free.

    For more information, contact spgb@worldsocialism.org or visit the SPGB website.

    Wednesday, February 11, 2009

    Weekly Bulletin of The Socialist Party of Great Britain (84)

    Dear Friends,

    Welcome to the 84th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1441 friends!

    Recent blogs:

  • Xenophobic unionism?
  • Darwin and the Intelligent Design Brigade
  • Democracy and dictatorship
  • Quote for the week:


    It grows and grows--are we the same,

    The feeble band, the few?

    Or what are these with eyes aflame,

    And hands to deal and do?

    This is the host that bears the word,

    No MASTER HIGH OR LOW -

    A lightning flame, a shearing sword,

    A storm to overthrow.

    William Morris, No Master, 1885.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Friday, February 6, 2009

    Is the End of Capitalism Nigh?

    From the Socialism Or Your Money Back blog

    Our comrades in Ireland were invited to be one of the speakers in a debate last night at the Literary and Historical Society of University College Dublin on the motion 'That This House Believes that the End of Capitalism is Nigh'. Unfortunately, we were unable to send a speaker as we had done for previous debates but the organisers agreed to accept a written contribution to be read out. Here it is:

    I want to oppose the motion. It would be great if the end of capitalism really was nigh but unfortunately it isn't. Capitalism is not collapsing and will never collapse of its own accord. It will have to be brought to an end. It will only end when a majority of its victims, the majority class of those who work for a wage or a salary, consciously decide to replace it with socialism.

    By “socialism” I don't mean government ownership or what existed in Russia (that was state capitalism). What I mean is a society in which the means of production will belong, not to the state, but to the community as a whole, so that they can be used, under democratic control, to produce what people need and not for profit. A society in which the principle "from each according to their ability, to each according to their needs" will apply.

    Many people do want socialism but at the moment we are only a relatively small minority. Before the end of capitalism will be nigh, there will have to be a lot more of us. In fact, we'll have to be the majority. It is because this is not yet the case that I say that, unfortunately, the end of capitalism is not nigh.

    Every time capitalism enters a big crisis – as it has done at present and did in the 1930s and before that in the 1880s – overoptimistic people have predicted its collapse. In 1931 the British MP, James Maxton, predicted the collapse of capitalism within six months. He was wrong of course, but views like his spurred on the Socialist Party of Great Britain to publish a pamphlet called Why Capitalism Will Not Collapse that same year. In it we argued that there was no built-in flaw in the mechanism of the capitalist economy that would cause it to collapse automatically, of its own accord, for purely economic reasons.

    Production under capitalism, we said (and it's still true), goes in cycles. Periods of boom inevitably ending in a slump and a period of stagnation, as capitalist firms, driven by a desire to maximise profits and assuming the boom would never end, overproduce in relation to the market for their goods. Which, in fact, is what has happened this time with regard to housing construction in the US.

    But, we went on, slump conditions likewise create the conditions for a revival of profitable production. Eventually, the piled-up stocks would be sold, inefficient firms would go to the wall, capital would be depreciated, and real wages would fall, all helping to restore the rate of profit.

    As Karl Marx pointed out:

    “The life of industry becomes a series of periods of moderate activity, prosperity, over-production, crisis and stagnation”.

    Having said this, something has indeed collapsed, but it is not capitalism as such, it is only one form of capitalism – so-called "free market" capitalism. From the 1980s onwards we were continually told that if restrictions on short-term profit-making were removed, that's the best way for the economy to work. Let the "free market" rip, they said, and we'll all be better off. It didn't happen of course. The rich did get a lot richer and some of us did get a little more to spend, but look where it has now led. Events have proved Adam Smith wrong and Karl Marx right.

    It would be appropriate indeed if people would turn to Marx’s analysis of capitalism. Some are. But others are turning back to Keynes as if his theories hadn't been proved wrong too. Thirty or so years ago when the post-war boom finally came to an end, there was a slump. In Britain the government did what Keynes said you should do in a slump: they increased government spending. But it didn't work. It didn't kick-start or pump-prime the economy. It only added inflation to the stagnation, introducing a new word into the vocabulary of economics: "stagflation”.

    This, apparently, has now been forgotten and governments everywhere are trying once again to spend their way out of the depression that's already here. Once again, it won't work. Capitalism will only recover from the depression AFTER inefficient firms have gone out of business, capital values have depreciated, and real wages have fallen due to increased unemployment. Before capitalism will recover – and it eventually will, even if it takes two or three years – there's going to have to be massive job losses. And there's nothing any government can do to stop this. In fact, if they try they'll probably make things worse.

    Socialists have to organize now to replace capitalism – not wait in either hope or expectation that it will collapse. But this organization has to be based on an agreed knowledge of the task ahead. It has to be based on an understanding of, and a rejection of, the failures of the past. It has to be based on a rejection of the half measures and the so-called solutions like state capitalism, political putschism, dictatorships and so-called national revolutions as well as a rejection of leaders and careerists building their lucrative careers and reputations on the naivety and goodwill of millions of workers. Most importantly, we have to end the widespread misconception that Socialism is nothing more than capitalism run by the State.

    Capitalism isn’t collapsing. Capitalism won’t collapse. But even if it did, in the absence of the kind of organization I have been alluding to, it wouldn’t be collapsing into Socialism – it would be collapsing to give way to barbarism. So, in opposing the motion that "This House believes the End of Capitalism is Nigh", I would say that, until a majority take political action based on a desire for socialism, capitalism will stagger on from crisis to crisis as it always has done.

    Marx and Engels on The Origin of Species (2009)

    From the February 2009 issue of the Socialist Standard

    Two books of importance were published in 1859, one in June and the other in November. Each one stands at the opposite pole of popularity at the time they were published. And this contrast has persisted up to the present day. One hundred and fifty years after their publication, one is being celebrated as one of the most significant and audacious books ever to be published; the other is virtually forgotten.

    Both were written with some degree of reluctance by their authors, requiring pressure from theirs friends and supporters. Great things were expected of both. However, only one of them fulfilled them.

    The first book, published in German, was by Karl Marx: A Contribution of the Critique of Political Economy. This was to be the first instalment of a series of pamphlets, presenting what was to be a withering assault on the ideological foundations of capitalist society. But the beginnings were not good. Marx even had to write to his publisher to find out whether it had been published or not. And then there were the reviews, or rather their absence. Writing to Lassalle on the 6th of November 1859, Marx wrote: “I expected to be attacked or criticised but not to be utterly ignored, which, moreover, is bound to have a serious effect on sales.” But even his followers were disappointed.

    The contrast with the other book could not be greater. Charles Darwin, spurred into action by a letter he received the year before from fellow naturalist, Alfred Russel Wallace, had produced what he called an abstract of his work of the past twenty years. He had brought before the public gaze what he would have preferred to keep hidden, anxious as to how it would be received. But Wallace's letter had forced his hand, and he had to publish.

    The Origin of Species was brought out on the 24 November in a print run of 1250 copies. Earlier that month, Marx had written of the total silence that his book had received. The reception for Darwin's book could not have been different. Within 24 hours all the copies had been sold. The Darwinian Age had began. As the modest Darwin would not have said: Après moi, le deluge!"

    First Response
    It was Engels who was the first to respond to The Origin. He had always taken a keen interest in developments in the natural sciences and their relationship to his and Marx's materialist conception (some commentators have seen this interest in science as an importation of positivism, and as incompatible with Marx' view). Engels had bought one of the copies of the first edition, and within the month, he wrote to Marx on the 12 December:
    “Darwin, by the way, whom I'm reading just now, is absolutely splendid. There was one aspect of teleology that has yet to be demolished, and that has how been done. Never before has so grandiose an attempt been made to demonstrate historical evolution in Nature, and certainly never to such good effect. One does, of course, have to put up with the crude English method.”
    Darwin, Darwin, Darwin
    On the publication of The Origin, Marx was involved in other work. But when he had a chance to read it a year later, his assessment of it was similar to that of Engels, to whom he wrote on the 19 December, 1860:
    “In my times of trial [illness] during the last four weeks -I have read all sorts of things. Among others, Darwin's book on Natural Selection. Although it is developed in a crude English way, this is the book that contains the natural-history foundation of our view point.”
    A month later on the 16 January, 1861 he wrote to Lassalle in similar terms:
    “Darwin's work is most important and suits my purpose in that it provides a basis in natural science for the historical class struggle. One does, of course, have to put up with the clumsy English style of argument. Despite all its shortcomings, it is here that, for the first time, 'teleology' in natural science is not only dealt a mortal blow but its rational meaning is empirically explained.”
    What is significant about the assessment of Marx on Darwin, compared to that of Engels, is that it is Marx who is the first to relate Darwin's theory with his and Engels' materialist conception. For Engels it is only the anti-teleological content of The Origin that is noted.

    That Marx took more than a passing interest in the Darwin phenomenon is revealed in the recollections of his German supporter, Wilhelm Liebknecht. In his Karl Marx: Biographical Memoirs (1896; English translation 1901, pp. 91-92) he wrote:
    “Marx was one of the first to comprehend the importance of Darwin's investigations. Even before 1859 ... Marx had recognized the epochal importance of Darwin .... And when Darwin drew the consequences of his investigations and presented them to the public we spoke for months of nothing else but Darwin and the revolutionizing power of his scientific conquests. I emphasize this, because 'radical enemies' have spread the idea that Marx, from a certain jealousy, acknowledged the merit of Darwin very reluctantly and in a very limited degree.”
    In addition, he states that Marx attended the Popular Lectures of Liebig, Moleschott and Huxley and that these "were names mentioned in our circle as often as Ricardo, Adam Smith, McCullock and the Scotch and Irish economists" (p.91). In the autumn of 1862, Marx also attended a series of six lectures on Darwin by T.H. Huxley.

    Darwin's OK, but....
    For both Marx and Engels, the most significant feature of Darwin's work was the way in which it dealt a death-blow to the theological teleology which had blighted almost all forms of thinking about the human and non-human world. There was no divine plan which gave direction to human action and nature was not a set of fixed entities. There was a history of human development and a history of natural development, and neither was directed by a divine purpose.

    But the rejection of religious teleology did not imply that there was no order or development in the human and natural domains, where everything was just a series of random accidents. Rather, the explanation of the order and development was now put down to processes within each domain, without the need to refer to the outside influence of a divine being. For Darwin, the explanation for the evolution of species was primarily, but not exclusively, to do with the process of natural selection.

    While Marx was happy to accept the anti-theological implications of Darwin's work, he could not fully accept everything. It must be remembered that Marx was thoroughly educated in the philosophy of Aristotle and the post-Aristotelians, and had completed his doctoral thesis in this area. The influence of naturalistic Greek philosophy was to remain with him, and he did not reject Aristotle in the way that the 17th century British atomistic materialists did in their rejection of medieval Aristotelianism (the adaptation of Aristotle to Christian theology).

    The importance of Marx's Aristotelianism is seen in what he saw as a limitation of Darwin's work. On the 7 August 1866, Marx wrote to Engels:
    “A very important work which I will send you (but on condition that you return it, as it is not my property) as soon as I have made the necessary notes, is: P. Tremaux, Origine et Transformations de l'Homme et des autres Etres (Paris, 1865). In spite all the shortcomings that I have noted, it represents a very significant advance over Darwin. . . . Progress, which Darwin regards as purely accidental, is essential here .... In its historical and political applications far more significant and pregnant than Darwin.”
    The relevant notion here is that of "essential". For Marx, any scientific explanation had to include elements of both the "essential" and the "accidental". But for the majority of scientists in the 19n century, any element of Aristotle was unacceptable.

    Despite the fulsome praise which Marx heaped on Tremaux's work, it did not have any impact on the scientific world, and it sank without trace. And Engels, too, tore it to shreds (Engels to Marx, 2 October 1866). Marx tried one more time to persuade Engels of the importance of Tremaux's work: "an idea which needs only to be formulated to acquire permanent scientific status" (Marx to Engels, 3rd October 1866).

    Malthus and Darwin
    Although the initial response of both Marx and Engels to Darwin's work was positive, further reading brought out criticisms. For Marx, Darwin relied too much on the "accidental" in his explanation (see above), but it is not clear whether Engels shared this Aristotelian criticism. Both, however, were in agreement when it came to Darwin's use of the population theories of the Reverend Thomas Malthus. Both despised Malthus. As early as 1844, Engels had called Malthus's theory, which he saw as the "keystone of the liberal system of free trade", as "this vile, infamous theory, this hideous blasphemy against nature and mankind" (“Outlines of a Critique of Political Economy”, 1844).

    Writing to Engels on 18 June 1862, Marx commented:

    “I'm amused that Darwin, at whom I've been taking another look, should say that he also applies the 'Malthusian' theory to plants and animals, as though in Mr Malthus's case the whole thing didn't lie in its not being applied to plants and animals, but only - with its geometric progression - to humans as against plants and animals. It is remarkable how Darwin rediscovers, among the beasts and plants, the society of England with its division of labour, competition, opening up of new markets, 'inventions' and Malthusian 'struggle for existence'. It is Hobbes' bellum omnium contra omnes and is reminiscent of Hegel's Phenomenology, in which civil society figures as an 'intellectual animal kingdom', whereas, in Darwin, the animal kingdom figures as civil society.”
    Darwin's theory, then, was compromised by the importation of ideological capitalist theory. This did not imply that what Darwin said was wholly invalidated; only that the Malthusian justification had to be jettisoned. This was essential, as the Malthusian justification of the struggle for existence in nature could be used to justify the same principle in society as capitalist social relations. This was seen by Engels:
    “When this conjurer's trick has been performed.. .the same theories are transferred back again from organic nature into history and it is now claimed that their validity as eternal laws of human society has been proved. The puerility of this procedure is so obvious that not a word need be said about it." (Engels to Pyotr Lavrov, 12-17 November, 1875)
    Engels went on to discuss the relationship of Malthus and Darwin to Marxism at greater length in Part 1 (especially section VII, Natural Philosophy. The Organic World) of Anti-Duhring (1878, English edition 1894), and to explore the evolution of the human species in the posthumously published Dialectics of Nature, in particular the section “The Part Played by Labour in the Transition from Ape to Man”, originally written in 1876.

    In the work published during his lifetime, Marx refers to Darwin only in Capital, volume 1, and here only in two footnotes (Penguin edition, pages 461 and 493-494). He talks of the "epoch-making work" of Darwin and of how it directed his attention to the "history of natural technology, i.e., the formation of the organs of plants and animals which serve as the instruments of production for sustaining their life."

    Against Darwinian Marxism
    For Marx and Engels, there is no doubt that they saw Darwin's work as a significant step forward in the understanding of the natural world, especially in its eviction of theological teleology as a form of scientific explanation. But there was no plan to produce some grand Darwinian-Marxist synthesis, using natural selection as a justification for the Marxian analysis of society. Both nature and society were part of natural history. However, this did not mean that society could be reduced to nature. The attempt by German socialists in particular to ground socialism in natural selection was vehemently opposed by both Marx and Engels and by Darwin. Writing to Scherzer on 26 December, 1879, Darwin wrote:
    “What foolish idea seems to prevail in Germany on the connection between Socialism and Evolution through Natural Selection.”
    In a similar vein, but more sarcastically, Marx wrote to Ludwig Kugelman on 27 June, 1870:
    “Mr Lange [a German economist], you see has made a great discovery. All history may be subsumed in one single great natural law. This natural law is the phrase (- the Darwinian expression becomes, in this application, just a phrase -) 'struggle for life', and the content of this phrase is the Malthusian law of population, or rather over-population. Thus, instead of analysing this 'struggle for life' as it manifests itself historically in various forms of society, all that need be done is to transpose every given struggle into the phrase 'struggle for life', and then this phrase into the Malthusian 'population fantasy'. It must be admitted that this is a very rewarding method - for stilted, mock-scientific, highfaluting ignorance and intellectual laziness.”
    Marx is Marx and Darwin is Darwin. There is no Marx-Darwin. At his funeral in 1883, Engels was justified in comparing the importance of Marx with that of Darwin, but in doing so he recognised that their theories covered different terrains. There could be no marriage of Marx and Darwin any more than there could be with Marx and Newton. Many have tried to arrange the Marx-Darwin marriage over the last 150 years, but it always results in unhappiness.
    Ed Blewitt

    Wednesday, February 4, 2009

    Weekly Bulletin of The Socialist Party of Great Britain (83)

    Dear Friends,

    Welcome to the 83rd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

    We now have 1436 friends!

    Recent blogs:

  • Racism is bunk
  • Human behaviour
  • The weakness of the anti-war movement
  • Quote for the week:

    "Any society does not consist of individuals but expresses the sum of relationships [and] conditions that the individual actor is forming." Marx, Grundrisse, 1973.

    Continuing luck with your MySpace adventures!

    Robert and Piers

    Socialist Party of Great Britain

    Sunday, February 1, 2009

    Conflict (2009)

    From the February 2009 issue of the Socialist Standard

    A young relative was recently expounding his reasons for wanting to do well in upcoming examinations. A place at a good university with the aim of high-level entry to the armed forces and training as a helicopter pilot. He wanted to “make a difference” in Afghanistan or Iraq, to “do his bit for his country.” One would hope by the time he was old enough and suitably trained that both of these conflicts would be resolved and invading forces removed from those territories. But if not Iraq or Afghanistan there will be other opportunities waiting, no doubt.

    Thirty or so years ago an aged neighbour recounted stories of his involvement in the first world war in France as an underage volunteer. Stories of life, death and the mass maiming of the youth of both sides. He, too, wanted to make a difference when he answered the call and he considered himself one of the lucky ones to return home alive and in one piece. During WW2 his service was in the home guard where they paraded wielding sticks and broom handles with which they vowed to defend the Homeland. In his eighties he was under no illusions as to the lies, half-truths and overstated reasons of the propaganda fed to the nation with the aim of garnering overwhelming support for the plans for wars which would result in the death of millions of soldiers and civilians alike over a huge part of the world. Plans for war which would further the interests of the privileged, which aimed to hang on to and strengthen the Empire's stranglehold on trade routes, colonies and easy access to cheap resources. Plans which would forfeit the lives of 'ordinary' men to achieve the material goals of a few.

    Injuries in war are multifarious; missing limbs, damaged organs, psychological malfunction. Sophisticated weaponry has added other outcomes to combatants' injuries in contemporary conflict zones; post-traumatic stress disorder which brings a hugely increased chance of suicide, Gulf-War syndrome, exposure to dangerous levels of radiation causing birth defects in offspring sired post-conflict. Prosthetics may fit better now and be more comfortable and cosmetically acceptable than they were almost a century ago but an artificial arm/hand/leg is no substitute for your own. A husband/father/son incapacitated or wheelchair-bound for the rest of his life was not part of the family planning and death is death; there's no way to put a positive spin on that.

    ‘Ordinary’ citizens in ordinary situations don't have enemies. We may know people who hold opinions we don't share, we may meet people whom we don't want as friends but personal enemies are rare. Most people have no desire to deliberately kill another human being. Personal disagreements rarely conclude so drastically. Our most dangerous enemies the world over are the insidious, manufactured histories refashioned and spun in favour of the storyteller to keep us onside and supportive of damaging, acquisitive foreign policies and unpopular domestic ones. Part-truths, withheld information and downright lies as opposed to the truth, the whole truth and nothing but the truth is the norm and has caused many to become cynical of governments and opinion-makers whilst also becoming distanced from the realities of their own world, side-lined by fake democracies which offer participation in elections two or three times in a decade followed by immediate withdrawal of any chance of actual involvement in real decision making. They are left clinging to the hope of something better coming along with no real conviction that it will.

    The old soldier hopes for the end of all wars as promised in “the war to end all wars” and the would-be recruit hopes he can be one of the ones to finally put the world to rights. The one's hopes dashed to his certain knowledge in his lifetime; the other's also doomed, as actual history shows again and again. The experiences of an old man in a long ago war are not that different from those the young are experiencing right now. The technology moves on but the physical and emotional effects on the human beings remain terrifyingly similar. Hindsight is a wonderful thing but, like experience, it seems that humankind is reluctant to utilise, move forward and build on a previous generation's hindsight and experience. Somehow the dialogue has to be widened, to be more inclusive, immediate and truthful, to go beyond hope to a vision of a future reality for young and old alike. A vision of a world without conflict that can be achieved by the world's citizens in general agreement that they are no longer prepared to pay the price that has been demanded of them for so long.
    Janet Surman