From the December 1985 issue of the Socialist Standard
Defenders of the market system claim that the cost/price factors, through which it operates. enable modern production to be organised in a rational manner, that without the market modern production would break down and could not carry on in a practical way. Experience shows that it is precisely the operation of the market which constrains and dislocates modern production. It is only by first abolishing the market system that the useful structure of modern production could become free to be run in a practical way, directly for human needs.
This fact has been demonstrated yet again by chaos in the world tin market leading to a suspension of trading on the London Metal Exchange on October 24 and dislocation in the world distribution of tin. This was certainly not because the social need for tin was over-supplied. Obviously this metal is an important component of equipment and a wide range of finished goods which are needed throughout the world. But needs are not a "rational" concern which determines the operation of the tin market. In fact, the trading crisis centred on a very different question. Far from the market being a practical mechanism allowing for the distribution of tin, trading on the London Metal Exchange broke down because profit-making was thrown into chaos.
Central to the crisis was the work of the International Tin Council, which is fraudulently described as a “producers' and consumers' group". None of the actual producers of tin the miners of Malaysia, Indonesia, Thailand, Brazil, Bolivia, Australia and, among others, 2,000 tin miners in Cornwall - have got anything to do with the Council. Nor have the consumers of tin the wider community, for whose consumer needs tin should be directly produced.
The International Tin Council represents a very different set of interests. These are the owners and traders of tin who buy and sell this commodity with the sole object of profiting from it. It is a world price pact agency whose aim has been to maintain the price of tin on the world market. It has been financed by various governments and from loans, with a view to intervening in world trading with the object of regulating the world price above the recent floor price of £8,500 a tonne.
In trading conditions of over-supply in relation to market capacity, with a corresponding tendency of the price to fall below the floor price, the International Tin Council intervenes as a buyer with a view to increasing the price. It then controls reserve stocks which, theoretically, it is able to market when the price is restored. In addition to this, and by agreement, the Council is able to set export quotas aimed at cutting back on production as an added means of relieving downward pressure on the world price. For example, against the needs of people, production from Indonesia declined from 33,322 tonnes in 1981 to 22.500 tonnes in 1984.
During the early period of the 29 years of the price pact, regulation of the world price was never easy, even when four national capitalist groups - Malaysia, Indonesia. Thailand and Bolivia between them controlled 80 per cent of the world's supply. Also during this early period, sales at a profit were buoyant. But since that time world capitalism has entered the current depression and together with this other large scale sellers of tin, such as Brazil, have entered the world market outside the price pact. As a result, control of world marketing by the International Tin Council has fallen to 60 per cent of current production. This has brought pressure on the members of the price pact to cheat. So there has been a growth of smuggled tin and the movement of illegal tin. Far from the operation of this market being "rational'' - or. as its defenders believe. “the most practical system" the convolutions of its insanities have now resulted in something known as "illegal tin".
Substantially, the dealings on the London Metal Exchange involve the buying and selling of exchange contracts which do not necessarily result in the transfer of the ownership of the metal itself. The absurdities of this marketing saga were highlighted early this year when the stock manager of the International Tin Council insisted that, instead of the mere buying and selling of exchange contracts, which involved selling forward one day and then buying back cheaper the next, the actual tin involved should be physically delivered in line with the sales. This caused even more chaos in the market and so had to be abandoned.
The temptations for the capitalist controlling the supply to go on marketing tin, with the International Tin Council buying to keep the world price above £8,500 a tonne, have proved impossible to resist. In October the stock manager of the Council controlled reserves of 62,000 tonnes, enough to supply current world capitalist use for 5 months. Against an accumulation of 62,000 tonnes which the Council did not know what to do with, bankruptcy of their own funds, debts estimated at £340 million on outside loans with bankers in panic, trading was suspended.
It is important to note that behind this marketing chaos there is in fact a useful structure of world tin production which could be operated directly for human needs. The raw material is mined in various world locations by workers who have all the necessary skills. This raw material is transported to regional centres of industry where it is processed and refined into tin. It might then be processed with other metals as various alloys. These materials are then transported to centres of manufacture where they are prepared as the component parts of machinery, equipment or finished items of consumption goods. With further assembly the finished goods are distributed to the various localities.
This connected network of productive activities through which tin ore becomes finished goods depends on the skills and energies of the workers involved. The network operates as a result of required quantities of the worked-on materials and component parts being communicated throughout the various stages of production and distribution. As this useful structure of production already exists, the future society of socialism would not require an entirely new or different one. What is required is the removal of the present capitalist features which are now imposed on this useful structure. so that its useful features would be free to operate through co-operation directly for human needs.
Thus in socialism, with a system of production solely for use, needs would arise expressed as definite quantities of required goods among the whole community. These would be registered and communicated to regional centres of manufacture. As a result, regional manufacturing units would know the amounts of required production. This would be passed on throughout the entire network of production eventually to the mining and processing of such raw materials as tin. This would be a direct and practical response of social productive activity based on co-operation in line with social needs. But it can only be free to take place once the market system is abolished, which requires that the entire means of production and distribution must be converted into common ownership by the whole community.
Under capitalism the structure of tin production, based on the world mining of the raw material, regional processing and manufacture and assembly of finished products then local distribution, is inevitably loaded with waste. Competing enterprises repeat means of production and the constraints of the market result in these not being used to full capacity. At present the Tin Council alone retains a stockpile of 62,000 tonnes which has no immediate profitable use. Goods manufactured in Japan are sent to America and Europe and vice versa. This anarchic system of distribution results in the same articles criss-crossing each other on the world's trade routes. Moreover, tin production has been reduced as a result of the present depression. Tin miners have become unemployed.
Without the market, this useful structure of production could be operated more productively in direct line with human needs. This could avoid all the present wasteful features. Whereas "oversupply" of the material in relation to the capacity of the market for sales at a profit involves a denial of human needs, in socialism the position of oversupply would not be reached until human needs had been met.
It might well be asked - could the work of the present International Tin Council be adapted for use in socialism? Obviously its present function in the world market would be immediately redundant. Nevertheless, some of its useful features could be taken up. For example, it provides useful information on world tin production, its many uses and the world distribution and availability of the raw material reserves. Perhaps such an organisation could have a useful monitoring role in socialism, providing information which might help with decisions about the use of this material against others for different purposes.
What is certain is that behind the madness of the market, there is a useful structure of production and administrative machinery, which could provide ready-made organisation for the operation of production solely for use.