Wednesday, February 13, 2013

Winstanley, Marx and Henry George

From the December 2012 issue of the Socialist Standard

The Occupy movement has led to the ideas of these thinkers being discussed again at public meetings.

To mark the first anniversary of the Occupy camp at St Paul’s London Occupy organised a series of ‘New Putney Debates’ in October and November. Some took place in the same church in Putney as the original 1647 debates in Cromwell’s army. Two were devoted to the question of land.

The first, on 1 November on ‘Land and Democracy,’ was billed as:

‘Nearly 400 years ago the Diggers described the Earth as a ‘common storehouse for all’ and objected to land being kept in the hands of a few. Are landowners still oppressing the people today, and how should we respond?’

One response was given by Natalie Bennett, the new Leader of the Green Party, who argued her party’s case for a tax on land values. She quoted Churchill (when he was a Liberal Cabinet minister before WW1) and Henry George as favouring this.

Not being a product of labour, the price of land is determined entirely by demand and can command a higher price the more fertile it is or the more favourably it is situated (for example, in a city centre or near a railway station). Land prices rise whenever the land’s situation becomes more favourable (as when a town expands), the benefit of which is reaped entirely by the landowner without having to lift a finger. The idea of a Land Value Tax (LTV) is to tax away this windfall benefit.

Henry George (1839-1897), author of a widely-read book ‘Progress and Poverty,’ was hugely popular in America and was once nearly elected mayor of New York.  He advocated that a LVT should be the only tax. Hence the other name of the Georgist movement: ‘Single Taxers.’ Natalie Bennett, while favouring a LVT, didn’t go that far. She was challenged by a Liberal Democrat in the audience who said that it was her party’s policy too. She added that it had also been supported by Karl Marx.

This is true. One of the ten immediate measures (the first in fact) advocated in the Communist Manifesto by the Communist League of Germany for implementation had it come to win political control in 1848 was: ‘Abolition of property in land and application of all rents of land to public purposes.’ Marx later explained (in a letter to F. A. Sorge in 1881) that, as a separate measure on its own, this was contradictory and criticised Henry George and others for ‘believing that if ground rent were transformed into a state tax all the evils of capitalist production would disappear of themselves’.

In the 1880s and 1890s Georgists and Socialists were rivals for working-class support, the Georgists arguing that to solve working class problems it was enough to tax away the rents of landowners while Socialists argued for the common ownership not just of land but of industry too.

It seems that this rivalry is being revived today, with many in the Occupy movement attracted by ideas of Henry George. This became evident at the second meeting on 9 November entitled: ‘A New Economy.’ The announcement for this started off well enough:

‘The foundations of the New Economy are: the means of life (water, food and housing) for all as a right; land and resources held in common and the benefits share,’

before petering out with ‘alternative currencies to foster greater equality and societal cohesion’.

It soon became clear that the organisers did not envisage ‘land and resources held in common’. What they wanted was a single tax on land values.  According to their handout, one of the ‘alternative currencies’ they had in mind was:

‘land backed interest free currency –spent into the economy to create infrastructure, rental income to fund citizens income and public services.’

In other words, the government would get money by taxing away the rental income, real or notional, of landowners (which these days includes not just the Duke of Westminster but those who own the leasehold or freehold of their homes) and using this to pay everybody a basic income as well as to finance its own expenditure. It is not clear that this is actually an ‘alternative currency’ since the existence of rental incomes to be taxed away assumes that there already is a currency. What they seem to mean is ‘land based interest free government financing,’ which would allow the government to dispense with borrowing money.

Whatever it is, it is not ‘land and resources held in common’. This was, in fact, specifically rejected by the speakers as unnecessary and leading to what happened in China under Mao during the period of the rural communes. This is the standard Georgist position, that common ownership of land would lead to tyranny and dictatorship, so private ownership of land is to continue in their scheme. They are not really opposed to capitalism either. (Henry George certainly wasn’t.) They even defended profit, saying that it was justified in that an element of risk was involved in contrast to interest which was a certain income. They cited Sharia Law as making this distinction too. Basically, what they are against is rent and interest but not profit.

Karl Marx came up at this meeting too when one of the speakers claimed that Marx agreed that landowners exploited both capitalists and workers. Actually, Marx’s position was that the capitalists exploited the workers but then were themselves exploited by the landowners. This is not at all the same, since it means that end exploitation by landowners would benefit only the capitalists and not the workers. Marx also looked forward to the time when: “from the standpoint of a higher socio-economic formation, the private property of particular individuals in the earth will appear just as absurd as the private property of one man in other men” (Capital, volume 3, chapter 46).

It is rather surprising that pro-capitalist ideas should be advocated within the Occupy movement which even the new Lord Mayor of the City of London, Roger Gifford, recognised started off as anti-capitalist. As he told the ‘i’ newspaper (10 November), ‘What they were basically saying was: “We don’t like capitalism as it looks today, we want another system.”’ What the Georgists in the Occupy movement are saying, rather, is, ‘We don’t like capitalism as it looks today. We want to give it a new look.’

What this shows is that it is not enough merely to have an anti-capitalist gut reaction. You need to know what capitalism really is and how it works. Otherwise you are going to be confused and misled, whether by currency cranks or by land reformers.

At the first meeting, Gerrard Winstanley was favourably mentioned many times, even if he was misunderstood as merely advocating setting up agricultural communes. In fact he was far more radical than this, advocating the common ownership both of the land and of products made from it to which everyone would have free access without money –what the announcement for the second meeting called ‘the means of life (water, food and housing) for all as of right; land and resources held in common and the benefits shared’. In this, even though three centuries earlier, he was far in advance of Henry George and his single tax on the rental incomes of land that would be left in private ownership.

It is good that people are discussing the ideas of past thinkers such as Gerrard Winstanley, Karl Marx and even Henry George. It shows that they are looking for an alternative to the capitalist production-for-profit system. It is disappointing, though, that at the moment it is ideas that are not really anti-capitalist which seem to have the upper hand in discussions within the Occupy movement, at least in London.
Adam Buick

Capitalism No Better (2013)

From the February 2013 issue of the Socialist Standard

Deborah Orr, who writes on economic matters for the Guardian from a vaguely Green standpoint, entitled her 28 December column, ‘It’s time for a better capitalism, one that creates jobs and provides security’, arguing that ‘the civil, civilised kind of capitalism we have long been promised could yet emerge from the rubble of the financial crisis.’

Her argument was based on what she sees some firms as doing in the current economic crisis:

‘After decades during which we have all be told that we must allow the market to decide, the market is making a pro-social and humane decision. It is choosing to sacrifice profits in order to save itself. This is what the sales are all about – companies slashing their profits in order to keep ticking over, providing jobs, maintaining a presence. Staying in the game is being valued above providing shareholder value.’

This is not what sales and their lower than usual prices are about. They are a business strategy designed to maximise income over expenditure, i.e., to make a profit by selling more at a lower profit rather than less at a higher profit.

Some firms, in the present economic crisis, may well be prepared to ‘tick over’, merely covering their costs without making a profit, just to stay in business. But this would not be the start of a ‘fairer’ capitalism in which firms seek merely to cover their costs so as to provide jobs for their workers and lower prices for their customers.

Doing this to try to survive the crisis would not be a ‘pro-social and humane’ decision, but a hard-headed business decision in the interest of shareholders, since if a company goes under – as Comet did before Christmas and Jessops, HMV and Blockbuster did in January – the shareholders lose nearly everything.

Surviving means that when the slump comes to an end and growth resumes, as it will sooner or later (even if later rather than sooner, as there is now talk of a triple-dip recession), the company is still ‘in the game’, ready to take part again in the chase after profits.

In imagining that companies accepting to make no or very little profit could prove to be permanent, Orr is being naive. Capitalism could not function on that basis. What would be the point for a capitalist to invest money in a business just to end up at the end of the accounting year with the same amount of money?

The aim of capitalist production is to end up with more money at the end than at the beginning. What Marx expressed as M-C-M’ where C is the purchase of the materials and labour to produce something. Orr’s ‘better capitalism’ based on M-C-M would not really be capitalism at all, just some unrealistic economic system that could never exist.

In any event, it is not the case that most companies involved in post-Christmas sales are just ‘ticking over’, still less aiming merely to do this. They are aiming to make as much profit as they can and they will be succeeding, even if for some this won’t be as much as in previous years. Others, on the other hand, benefitting from the disappearance of their rivals, will be making more than before.