The Capitalist Class. By Karl Kautsky (continued) (1908)

From the July 1908 issue of the Socialist Standard 

Continued from the June 1908 issue.

Specially translated for the Socialist Party of Great Britain and approved by the Author.

6.—The fall in the rate of profit.

Simultaneously with the development aforementioned, the total amount of capital which the capitalists invest in their various undertakings with the view to profit shows the tendency to growing more rapidly than does the exploitation of the workers and the amount of surplus-value produced by them.

We cannot enter here into the details of the reasons for the appearance of this phenomenon, as the comprehension of such supposes some wider knowledge of economics. An example will illustrate the above statement.

Let us take a case of most convincing character. Let us compare a hand-spinner of a hundred years ago, who, we will say, was exploited by a capitalist as a worker carrying on home industry, with a machine-spinner of to-day. How much capital there is necessary to make possible the work of the latter ; and how small comparatively the capital has been which the capitalist used for the purpose of spinning by hand. He paid the wages of the spinner and gave him the cotton or flax to spin. With regard to wages little has altered, but the machine-spinner to-day uses up perhaps a hundred times as much raw material as the hand-spinner; and what enormous buildings, motive power, spinning machinery, etc., are necessary to carry on spinning by machinery.

Yet another circumstance has to be considered : the capitalist of a hundred years ago, who employed the spinner, invested in his concern only the outlay for wages and raw material ; there was scarcely any standing capital—the spinning wheel was not to be reckoned. His capital was quickly turned over—say in three months—hence he only needed to invest and advance in his concern one quarter of the amount of capital he used in the whole year. To-day the amount of capital required for machinery and buildings of a spinning mill is enormous. Though the period of turnover of the amount of capital advanced for wages and raw material may be equal to that of a hundred years ago, the period of turnover of the other portion of the capital, which a hundred years ago scarcely existed, is a very long one.

A number of causes act in the opposite direction, as for instance, the credit system, but especially the fall in the value of products, which is a necessary consequence of the increase in the productivity of labour. But these causes are by no means able to entirely put an end to the development in question. This development proceeds in all branches of industry, in some more, in others less rapidly ; with the result that the amount of capital advanced every year and reckoned at so much per head of the industrial workers, grows rapidly.

Let us suppose that this amount of capital a hundred years ago was £5 and to-day has grown to £50 ; let us further suppose that the exploitation of the worker has increased in the proportion of five to one so that if the surplus-value which a hundred years ago he produced each year amounted to £2 10s., it would to-day, given an equal amount of wages for the year, be £12 10s. The amount of surplus-value has thus in this case, as absolute surplus-value, risen enormously ; but in proportion to the amount of capital which the capitalist invests each year, the surplus-value has fallen. A hundred years ago this proportion was 50 per cent., to-day it is only 25.

That is, of course, only an example, but the tendency explained thereby actually exists.

The total amount of surplus-value produced each year in a capitalist country is increasing continually and rapidly; but more rapidly still increases the total amount of capital invested by the capitalist class in the various capitalist undertakings over which the surplus-value is distributed. If one further bears in mind the fact, which we have already observed, that for the requirements of the State and for ground-rent an ever increasing amount comes out of the total of surplus-value produced each year, one will comprehend that the amount of surplus-value which each year, on the average, falls to a given sum of capital is ever on the decrease, although the exploitation of the worker is growing.

The profit—that is to say, that portion of surplus-value which is left to the capitalist owner of the concern—thus shows the tendency to fall in proportion to the total capital advanced by him ; or, expressed in another way, in the course of development in the capitalist mode of production as a rule, the profit falling to a given amount of capital decreases continually. A sign of this fall is the unceasing decline in the rate of interest.

While thus the exploitation of the worker has the tendency to rise, the rate of profit of the capitalist shows the tendency to fall. That is one of the most peculiar contradictions of the many with which capitalist production abounds.

From this fall in the rate of profit the conclusion has been drawn that capitalist exploitation would end by itself; that capital would finally yield so little profit that the capitalist, in a starving condition, would be seeking something to do. But such would only be the case if the rate of profit would continually fall and the total amount of capital remain the same. That is, however, by no means the fact. The total capital in the capitalist countries increases more rapidly than the rate of profit falls. The increase of capital is one of the presumed conditions of the fall in the rate of profit, and if the rate of interest falls from 5 to 4, or from 4 to 3 per cent., the income of the capitalist, whose capital has in the meantime increased from one million to two or more millions, is not reduced.

The fall in the rate of profit or interest does by no means signify a reduction in the income of the capitalist class, because the bulk of the surplus-value which they obtain increases continually ; this fall in profit reduces the incomes of those capitalists only who are not in a position to increase their capital accordingly. In the course of the economic development the limit is ever extended from which a certain amount of capital begins to suffice for the maintenance of its owner in accordance with his social position. It is an ever larger amount of income which becomes the minimum required to enable anyone, without working himself, to live upon the labour of others. What fifty years ago was still a big fortune, to-day has become relatively a mere trifle. The fall in profit and the rate of interest does not cause the extinction, but merely thte decrease in the numbers of the capitalist class. Every year small capitalists are squeezed out of their ranks and brought face to face with the same death struggle that handicraftsmen, petty dealers, and peasants have to pass through ; a death struggle of a briefer or longer duration, which, however, ends, either for them or for their children, in their merging into the proletariat. What they endeavour to do in order to escape their fate, mostly only hastens their ruin.

One wonders at the great number of stupid people who are induced by swindlers to entrust them with their money on the promise that they will receive a high rate of interest. As a rule these persons are not so stupid as they appear to be : the swindling undertaking is the straw to which they cling in their desire to obtain adequate incomes from their small means. It is not so much their greed as their fear of want that blinds them in that way.

[To be continued]

Letter: Poverty: Its Cause and Cure. (1908)

Letter to the Editors from the July 1908 issue of the Socialist Standard 

A criticism criticised.

The review of our pamphlet “Poverty: Its Cause and Cure,” which appeared in your May issue, has been brought to our notice, and as your reviewer accuses us of propounding some flagrant heresies in the name of Socialism, we would like, with your permission, to defend our position in regard to certain points he has dealt with in the review.

In the pamphlet we stated that the causes of poverty were insufficient production, waste, and unequal distribution, all of which causes were in operation in England to-day. Your reviewer differs from us here on the ground that poverty does not afflict society as a whole, but only a portion of it, and he asserts that the poverty of the working class (which appears in his opinion to be the only class afflicted with poverty) is due neither to insufficient production nor waste, but wholly and solely to unequal distribution. Now we contend that poverty afflicts society as a whole, but we are quite willing to agree with your reviewer that only a portion of the members of society feel the effects of poverty ; and the reason of this is unequal distribution. We contend, however, that if an equal distribution of necessaries could be effected, there would still be poverty because of insufficient production and waste. It was therefore in our opinion necessary to show that Socialism, besides ensuring a more equal distribution of income, would increase production and diminish waste.

Your reviewer differs from us as to the manner in which Socialism will be established. He objects to our characterising as absurd the idea that a Socialist Government would be able to socialise all industries within its term of office ; but, having regard to the enormity of the task of socialising all industries, we must confess that we fail to see how any Government, however anxious it might be to establish Socialism, could complete the task within say five or seven years. This does not imply that a majority of opinion could be in favour of capitalism, as your reviewer seems to think, but, nevertheless, we do hold that it would be possible for a majority of the people to be in favour of certain Socialistic measures and at the same time not in favour of the whole of the means of producing and distributing wealth being owned in common and democratically controlled. As we have stated in the pamphlet, there is reason for thinking that Socialism will be realised by the socialisation of such industries as are authorised to be socialised by mandate from election to election.

We are next accused of repudiating the class struggle when we say that the method of Socialism is not to try to force the will of one class upon another class. Now it seems to us impossible to find a section or class of society to which Socialism would not be beneficial, and we think that as the tendency to Socialism becomes stronger it will also become wider, and that the spirit of Socialism—the universal brotherhood of man—will extend not only to members of the working class, but to members of all classes, and unite them on a common ground in the cause of the common good.

A. E. Peters.

A. W. Kersey.

Reply:

In this reply to my criticism of their pamphlet which appeared in the May issue, it is worth noting that no position is advanced that is not contained in that pamphlet, and, moreover, no new evidence is brought forward to uphold the position there taken up. In repeating that poverty is due to insufficient production and waste in addition to unequal distribution, the authors agree “that only a portion, of the members of society feel the effects of poverty, and the reason of this is unequal distribution.” Although this practically amounts to granting me the first point of my criticism, let me state the facts. The estimated total of the wealth produced in this country varies between 1,125 millions and 1,800 millions sterling. The population is about 43 millions. Were the distribution equal the income per head would be, on the low estimate, about £26, and on the high estimate about £42; which for the average family (5 persons) would be equal to a sum of £130 per annum in the one case, and £210 per annum in the other. So far as necessaries are concerned, therefore (and all references to poverty have been references to a lack of.necessaries), the unequal distribution is sufficient to account for poverty, quite apart from waste. Regarding their references to the increase of production, and the decrease of waste, under Socialism, I am quite prepared to agree, remembering that capitalism has been called a system for preventing production rather than a system of production. That, however, was not the point.

In the pamphlet originally under notice, the authors say “the majority of the people must first be converted to Socialist ideas” and “until then, Socialism must be to the legislator not a State, but a guiding principle, and he is prepared to co-operate with any political party which will introduce measures leading in the right direction.” The explanation of this appears in the reply to my criticism, wherein it is stated that “as the tendency to Socialism becomes stronger it will also become wider . . . and will extend . . . to members of all classes.” Here it is assumed that the capitalist class will assist in the realisation of Socialism. With us the assumption is that the capitalist class will fight in defence of its position of social and economic privilege as all previous privileged classes have done, and that the working class must work out its emancipation in the teeth of the opposition of the class which enslaves them. At present the capitalist class is prepared to use any means to safeguard its position, and even if we were to assume that, when the Socialist movement is strong enough, it will, making a virtue of necessity, bow to the inevitable, even then we should be compelled to insist that the movement is primarily that of the working class towards its emancipation, and any member of any section of society must adopt the standpoint of the working class—the socially useful class—to take part in that movement.The idea of Socialism being a guide to the legislator pending the conversion of the majority to Socialism is, therefore, extremely improbable, while the contrary seems much more likely: that the legislator, being a capitalist legislator, will do all that lies in his power to strengthen the position of his class, pending that Socialist majority which will inevitably mean the abolition of the system, the class, and the legislation he stands to support. The establishment of Socialism is dependent upon the majority, when the case will be altered and the majority, through the political machine as being most convenient, will establish Socialism, and not the Government legislating “Socialistic measures” on an unconverted people.

D. K.

Foundations. (1904)

Cross-posted from the Reasons To Be Impossible blog

"Since some people are talking about Party foundation arrangements, I reproduce below the minutes of the foundation of the SPGB:"

The Socialist Party of Great Britain Minutes of Inaugural Meeting held at Printers' Hall, Bartletts Passage, Fetter Lane, London, E.C. at 6pm on Sunday 12th June 1904 In accordance with the instructions of the Provisional Committee, R. Elrick and C. Lehane acted as Provisional Chairman and Secretary respectively, and the other members of the Provisional Committee acted as stewards. 

There was a good attendance, and the meeting opened with the singing of "The Red Flag". The Chairman briefly explained the object of the meeting, read the notice convening same, and then moved the following resolution:

"That we hereby declare our membership of and thus form the new Party, the constitution of which it shall be the business of this meeting to formulate". 

The resolution was carried, with three dissentients, who were requested to leave the building, as the invitation to attend was extended only to those who were prepared to cooperate in forming the Party. 

After these persons had left, the Chairman called on those present to give in their names and addresses for enrolment as members, and as a result the following one hundred and forty two names were handed in: 

Miss H. Aitken, Mrs Annie Albery, A.S. Albery, Victor Albery, Arch. Alcock, E.J.B. Allen, Mrs Allen, T.W. Allen, Sidney T. Alston, A. Anderson, G. Anslow, Isaac Asher, Will L. Auger, J.T. Bacon, B.G. Bannington, G. Barber, William Bartlett, Hy. Belsey, John Benford, W. Betts, J. Blaustein, A. Baggis, A.R. Brooker, R.J. Buckingham, H.J. Bull, A.H. Burton, F. Cadman, Miss L.E. Campbell, John Chishekoff, W. Chown, T.C. Collings, Robert Collins, R. Compton, Mrs E. Craske, F. Craske, Harry Crump, John Crump, A. Daintree, H.T. Davey, John W. Day, John Donovan, A.C. Dowdeswell, Paul Dumènil, W. Eayrs, Minnie Eden, Stanley Eden, R. Elrick, Edward Fairbrother, E. Fawcett, J. Fitzgerald, G. Fletcher, Haris Fagel, W. Fox, B. Galloway, John Gordon, C. Goss, A.J.M. Gray, A. Greenham, R.D. Gross, Edward Hammond, E. Hardcastle, G.R. Harris, H.J. Hawkins, Miss K. Hawkins, -- Hicks, Geo. H. Hobbs, G.J. Hodsau, Mabel Hodsau, William Holford, Mrs. Holford, Mrs. Holgate, Miss Homerton, H.E. Hutchins, A.W. Fugham, T.G. Jackson, A. Jacobs, Hyam Jacobs, S. Jacobs, A. Jones, A.C. Jones, G. Jones, Mrs L. Jones, J. Kent, R.H. Kent, W.G. Killick, G.T. King, Mrs King, William Lee, C. Lehane, F.S. Leigh, Hy. Martin, Valentine McEntee, J. McNicol, F. Mecklejohn, G.F. Moody, Moore E.O., A. Morrill, D.R. Newlands, H. Neumann, John Nodder, Charles Orme, J. Oxley, Alex. Pearson, Miss M. Pearson, H.C. Phillips, Alf Pilbeam, A. Pyrke, W. Pyrke, F. Quinney, D.G. Reid, G. Richards, A. Ridgewell, S.J.C. Russell, Walter Russell, Mrs L. Salaman, Hy. Salter, H. Severn, William Sills, F.G. Simco, Frank Linfield, H.J. Smith, H.O. Sparks, C.V. Sparks, T. Spooner, G. Streak, G. Sweeting, T. Tarrant, L. Thurston, R. Triggs, C. Turner, Annie Walker, R.H. Walker, J. Wallis, F.G. Watts, T. Wilkins, E. Wilkinson, G.H. Wilson, T.A. Wilson, W. Woodhouse, Walter Wren, H.J. Young. 

While the enrolment was in progress, one man refused to join the Party stating that he had not yet decided what to do in connection with the movement, and that he had an "open mind" on the matter. The Chairman again explained the object of the meeting and stated that the persons who had been invited to come were only those who had made up their minds in connection with the object of the meeting, and gently but firmly requested this man to take his "open mind" outside. 

This being done, the business of the meeting was proceeded with. The following letter was read:

Socialist Society, Newcastle upon Tyne 10/6/04 

Dear Comrades, 

Our society has recently had its attention drawn to the controversy between the S.D.F. and a section of its members. Although we are not affiliated to the S.D.F., we consider that, as a Social-Democratic Society, and one in full sympathy with the principles of the S.D.F., we had a title to consider the dispute. After much discussion of the question at issue, on information based on the two circulars of the dissentient members, the Report of the Burnley Conference, the Statement in "Justice" of a fortnight ago, the experience of those of our own members who, in other parts of the country, have been members of the S.D.F., and our own observation of the trend of affairs during the last few years, - we have arrived at the following resolution, "That, believing that the basic principles of the S.D.F. have not been violated by the expelled members and branches, we regret the motion of the conference and executive in relation to these members and branches". 

I remain, yours truly, (Signed) T. Kerr, Secretary. 

P.S. Am sending a copy of this letter to H.W. Lee. The resolution is as far as the bulk of our members are prepared to go at present. Permit me, however, to express my personal and, of course, absolutely unofficial sympathy with your comrades in the action that they have been compelled to take, and to trust that its result will be the rescuing of the S.D.F. from the dangers of opportunism and intolerance which at present beset it and the placing of that organisation on the absolutely straight and unswerving pathway of Social Democracy once again. Personally, I should be sorry to see a permanent second Social Democratic Party established in opposition to the S.D.F., but I quite agree that the action your comrades are taking is such as may well lead to the really closer unity of the Socialist forces in the near future. Would be glad if you would keep me informed of the progress of the agitation. 

The reading of the above letter was met with loud applause, and the Secretary instructed to send a suitable reply. 

The next business was the election of Chairman and Secretary of the meeting, and the election of tellers. On the motion of Fitzgerald and Anderson, the Provisional Officers, viz., Elrick and Lehane, were unanimously elected Chairman and Secretary respectively. Kent, Woodhouse and Killick were elected tellers. Phillips read the minutes of the Battersea Meeting on Sunday May 15th 1904, and on the motion of E. Allen and Jackson they were unanimously adopted. 

Phillips gave a verbal report on the work of the Provisional Committee elected at the Battersea Meeting to draft a constitution for the Party and to make arrangements for the holding of the Inaugural Meeting. 

On the motion of Hawkins and Lehane the report was adopted with unanimity. Anderson and Lehane moved: 

"That the name of the Party Shall be 'The Socialist Party of Great Britain."' 

Neumann and Blaustein moved an amendment: 

"That the name of the Party Shall be 'The Social-Democratic Party'". 

A good discussion followed, Hawkins, Jackson, E. Allen, Turner and Kent speaking in favour of the motion, and Martin, Mrs. Salaman, Killick and Albery for the amendment. On a show of hands, there voted for the amendment 27 against 76. The amendment was therefore deemed lost. Martin and Neumann moved a further amendment:- 

"That the name of the Party should be 'The Social-Democratic Party of Great Britain'." 

After some discussion a vote was taken, and there were 31 in favour and 73 against. The amendment was declared lost. Another amendment was moved by McEntee and Hutchins: 

"That the name of the Party shall be 'The Socialist Party of Great Britain and Ireland'." 

This amendment was also lost, only 6 voting in favour. There being no further amendments, the motion: 

"That the name of the Party shall be 'The Socialist Party of Great Britain" 

was put to the meeting and carried by 91 votes to 3. The announcement of the result was greeted with loud applause. Hawkins and Martin moved: 

"That the Object of the Party shall be 'The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community". 

There was no amendment and the motion was carried unanimously. The Declaration of Principles drafted by the Provisional Committee was then read: 

The Socialist Party of Great Britain holds:- 

 That society as at present constituted is based upon the ownership of the means of living (ie, land, factories, railways, etc.} by the capitalist or master-class, and the subsequent enslavement of the working-class, by whose labour alone wealth is produced. 

That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce, and those who produce but do not possess. 

That this antagonism can be abolished only by the emancipation of the working-class from the domination of the master-class, by the conversion into the common property of society of the means of production and distribution, and the democratic control by the whole people . 

That as in the order of social evolution the working-class is the last class to achieve its freedom, the emancipation of the working-class will involve the emancipation of all mankind without distinction of race or sex. 

That this emancipation must be the work of the working-class itself. 

That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working-class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic. 

That as all political parties are but the expression of class interests, and as the interest of the working-class is diametrically opposed to the interests of all sections of the master-class, the party seeking working-class emancipation must be hostile to every other party. 

The Socialist Party of Great Britain, therefore, enters the field of political action, determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working-class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom. Fitzgerald and E. Allen moved: "That we adopt the Declaration of Principles as read". 

Martin and Blaustein moved an amendment:

"That the statement of Principles be printed and submitted to each member of the Party for consideration and that a Conference of the Party be called in one month's time to adopt same or accept amendments thereto".  

Hawkins, Jackson and Leigh spoke against the amendment, and on a vote being taken only 3 were in its favour, all the other members present voting against. The amendment was therefore declared lost. Martin and Albery moved a further amendment: 

"That the word 'hostile' be deleted and 'opposed' substituted". 

This amendment was also lost, only a few votes in its favour. The motion: 

"That we accept the Declaration of Principles as read" 

was then put to the meeting and adopted with unanimity and enthusiasm. 

The Draft Rules drawn up by the Provisional Committee were then read: 

MEMBERS 

(1) Any person desiring membership shall be required to fill in and sign the application form signifying acceptance of the principles and policy of the Party. Such application shall be lodged with the Branch Secretary, whose duty it shall be to place same before the next business meeting, to which the applicant shall be invited, for consideration, when a majority vote shall decide. 

(2) A member shall not belong to more than one Branch at a time. A member may transfer to another Branch provided a clear record be furnished by his last Branch. 

(3) Each member shall pay 2d per week towards the Branch funds. The payment of dues shall be waived in the case of members when out of employment. Members thirteen weeks in arrears shall be struck off the books after written notices have been sent to them by the Branch and a further fourteen days have elapsed, unless a satisfactory explanation be given, and shall not be allowed to join any other Branch whilst these arrears remain unpaid. 

(4) Members shall have the right to attend and speak at meetings of Branches other than their own, but shall not have the right to vote. 

(5) Charges against any member shall be submitted in writing to the Branch and a copy supplied to the member accused. The Branch shall consider the matter, and a majority of two thirds of the members present at any business meeting shall have power to expel any members. An expelled member shall have the right of appeal to the EC or annual Conference. All expulsions must be immediately reported to the EC. BRANCHES 

(6) The Branch shall be the unit of organisation. A Branch may be formed by not less than six persons making written application on the prescribed form to the EC and receiving their sanction. In any Parliamentary constituency there shall not be more than one Branch. 

(7) Branches shall elect their own officers and may draw up such bye-laws as they may deem necessary for their internal management, provided they do not conflict with the rules and policy of the Party. 

(8) Each Branch shall report its numerical strength and financial condition once a quarter to the EC. 

(9) Each Branch shall remit to the centre 1d a member per week. 

(10) Branches thirteen weeks in arrears shall not be allowed to vote upon any Poll nor send delegates to any Conference of the Party. 

(11) Disputes between Branches shall be submitted to the EC, all statements being reduced to writing; copies of all documents in connection therewith shall be forwarded to the Branches concerned. The decision of the EC shall be binding, with a right of appeal to the next Conference. 

(12) Branches shall neither sell nor distribute any literature which has not been approved of by the EC. 

EXECUTIVE COMMITTEE 

(13) The EC shall consist of twelve members and the General Secretary and Treasurer, and shall be elected by a vote of the whole Party. Nominations shall be made by the Branches. A paid Official of the Party shall not be eligible to stand for election to the EC. 

(14) Any member of the EC absent from three consecutive meetings shall thereby forfeit his position on that body, unless a satisfactory explanation be given. 

(15) The EC shall meet at least once a fortnight, seven members to form a quorum, and shall send a report of each meeting to the Branches and a report to a quarterly delegate meeting. 

(16) The EC shall make all arrangements for the Conference of the Party, carry out the resolutions of the Conference and those adopted by general vote, supervise the work of the organisation, establish and maintain communications with the Socialist Parties of other countries, and establish a Literary Agency from which all Branches shall be supplied. 

(17) The EC shall submit an Annual Report to the Branches at least three weeks before the Conference upon their last year's work. The members of the EC shall be entitled to attend and speak at the meeting but shall not have the right to vote. 

(18) Should the action of any Branch be deemed by the EC to be an infringement of the principles, policy or rules of the Party, the EC may expel such Branch, but there shall be right of appeal to the next Conference. PARTY OFFICERS 

(19) The Party Officers shall consist of a General Secretary, Treasurer, and two auditors elected in the same manner as the EC. 

(20) The General Secretary shall send a financial statement to the Branches each quarter, and shall present to the Conference a Balance Sheet which shall have been submitted to the Branches at least three weeks previously. 

 

CONFERENCE 

(21) A Conference of the Party shall be held annually at Easter. A special Conference shall be called on a requisition, signed by six Branches, being sent to the General Secretary. 

(22) Each Branch shall be entitled to send two delegates. Delegates must have been members for at least six months immediately preceding the Conference, except in the case of Branches which have been formed for less than this period. A member of the EC or paid Official of the Party shall not be eligible to act as delegate to any conference. 

(23) A preliminary Agenda shall be submitted to the Branches eight weeks before the Conference. All amendments to resolutions and additional items received within three weeks thereafter shall appear on the final Agenda which shall be issued to the Branches at least fourteen days before the Conference. 

REFERENDUM 

(24) A Poll of the Party may be taken at any time by the EC or at the request of not less than six Branches sending a requisition stating the matter on which the Poll is desired. The result shall have the same effect as a resolution of the Conference. 

 

ELECTORAL ACTION 

(25) A member shall not be eligible for candidature unless he has been a member of the Party for six months. 

(26) A member of the Party shall not stand for any political office except as the official candidate of the Party. All candidates shall pledge themselves to act, if elected, in accordance with the instructions of the Branch in the case of local and of the EC in the case of Parliamentary elections. 

 Jackson and Hawkins moved: 

"That the rules as read be accepted provisionally and that the E.C. be instructed to have them printed and distributed amongst the members in order that they may be fully considered at a Conference to be held in three month's time". 

Neumann and Kent moved an amendment: 

"That the rules be printed and distributed amongst the Branches, any amendments to or additions thereto to be sent to the Secretary within fourteen days, and that a meeting of members be held one month hence to discuss and decide upon them. That a Provisional Executive Committee to consist of twelve members be elected forthwith to do such work as this meeting may instruct them". 

Killick and Wilson supported the amendment and Anderson and Lehane spoke against. On being put to the vote the amendment was carried by 40 to 35 and thus became the substantive motion. Anderson and Hawkins moved an amendment: 

"That we adopt the Rules as read, any necessary alterations to be made at the Conference of the Party nine months' hence, and that the Rules and Declaration of Principles be printed and placed in the hands of the members without delay". 

This gave rise to a further discussion in which Jackson supported and Kent opposed the amendment. The amendment was lost, 26 voting for and 49 against. Another amendment was moved by Day:

"That the adoption of the Rules be postponed for one month and that amendments to or additions to the draft be received within a fortnight." 

This was carried by 39 to 29 and became the substantive proposition. To this Phillips moved the following amendment: 

"That we accept Rules 1 ,2, 3, 4, and 13. Amendments to the draft submitted by the Provisional Committee to be sent in by July 15th. Rules and amendments to be submitted to a general meeting three months hence. Officers, General Secretary, Treasurer, and twelve members to be elected provisionally as Executive Committee". 

This amendment was carried by 62 to 1 and became the motion before the meeting. McNicol and Albery moved: 

"That the subscription be 1d per week and that Branches contribute at the rate of 1/2d a member per week to the Centre". 

The amendment was lost, only a few voting in its favour. The motion was then put and carried unanimously. Jackson moved and Phillips seconded:

"That C. Lehane be elected General Secretary" 

and there being no other candidates, Lehane was elected with unanimity. Anderson moved and Jackson seconded: 

"That R. Elrick be elected Treasurer" . 

Elrick was unanimously elected Treasurer, and as a first duty called for a collection, which resulted in £1.7/2 being handed in. 

For the twelve other positions in the E.C. there were 15 candidates, viz: 

Albery A.S., Crump J., Neumann H., Allen T.W., Fairbrother E., Phillips H.C., Anderson A., Gray A.J.M., Watts, F.C., Auger W.L., Jackson T.A., Wilson G.H., Belsey H., Martin H., Woodhouse W. 

Ballot papers were issued and the voting resulted as follows: 

Albery A.S., 54 Crump J. 34 Neumann H. 49 Allen T.W. 47 Fairbrother E. 37 Phillips H.C. 67 Anderson A. 61 Gray A.J.M. 44 Watts, F.C. 40 Auger W.L. 24 Jackson T.A. 48 Wilson G.H. 49 Belsey H. 50 Martin H. 63 Woodhouse W. 63 

Accordingly the following were declared elected to the E.C. Albery A.S., Gray A.J.M. Phillips H.C. Allen T.W. Jackson T.A. Watts, F.C. Anderson A. Martin H. Wilson G.H. Belsey H. Neumann H. Woodhouse W. 

On the question of Palliatives, Anderson and Lehane moved:

"That the E.C. be instructed to draw up a statement, to be issued in leaflet form, of the Party's position regarding immediate demands and municipal action and submit same to the General Meeting". 

Agreed without discussion. Neumann moved and Martin seconded: 

"That the question of establishing a Party Organ be considered at the General Meeting". 

To this there was an amendment by Anderson and Hawkins: 

"That the question of a Party Organ be referred to the E.C. who shall have powers to deal with the matter". 

The amendment was carried by 54 to 10 and became the substantive motion. Hawkins moved an amendment: 

"That we elect four members to act as Press Committee". 

This was lost, 10 voting for and 45 voting against. Another amendment was moved by Auger and Lehane: 

"That the E.C. be instructed to open a fund for the purpose of establishing a Party Press and submit a scheme in connection therewith to the next General Meeting". 

The amendment was carried by 45 to 3, and becoming the substantive motion was carried unanimously. H.C. Phillips made a statement relative to the financial position and Kent and Fairbrother were appointed to audit the acc's of the Provisional Committee. On the question of raising funds for the Party, Anderson and Martin moved: 

"That the E.C. be instructed to organise a series of Mass Meetings in different parts of London, half the amounts collected thereat to go to the Centre". 

The motion was carried unanimously. Woodhouse and Hawkins moved: 

"That Branches shall contribute to the Centre half the amount received as subscriptions from the members." 

The motion was carried unanimously. 

Neumann reported that with regard to the instructions of the Battersea Meeting, he proceeded to translate the first circular but had come to the conclusion that the circular was not suitable for circulation on the Continent. Neumann's report was accepted and Hawkins and Lehane moved:

"That the E.C. be instructed to draw up and issue Manifestos on the situation". 

This motion was carried unanimously. On the question of the relation of the Party to the Trade Unions, McEntee moved: 

"That consideration of the matter be deferred for three months". 

To this Hawkins and Jackson moved an amendment: 

"That the E.C. be instructed to convene as soon as possible a special meeting of members to discuss and determine the attitude of the Party towards Trade Unions". 

The amendment was carried by a large majority, and becoming the substantive motion was carried unanimously. Anderson and Jackson moved and it was unanimously decided:

"That the Declaration of Principles of the Party be printed and that a copy be signed by each of the members constituting the Party." 

On the motion of Fitzgerald it was unanimously decided: 

"That the E.C. be instructed to arrange a lecture list for the Party." 

The meeting closed at 10pm with the singing of the "Internationale" and cheers for the Socialist Revolution. (Signed) Alex Anderson.

Editorial: Nuclear Waste (1965)

Editorial from the August 1965 issue of the Socialist Standard

It was 20 years ago this month that the world witnessed the terrifying spectacle of Hiroshima and Nagasaki. Twenty years of gradually mounting evidence to help piece together like a jigsaw, a background of cynical and calculated brutality that is almost without parallel. Twenty years in which the soundness of the Socialist Party’s stand on the whole question of war in all its forms has been again and again vindicated.

This will no doubt be a month of commemoration and protest. From statesmen and politicians of every variety we may expect the usual tired platitudes, lies and hypocrisy as they spuriously talk about peace and prepare for another war. CND will be well to the fore, attempting to deal with nuclear weapons in isolation from their root cause – Capitalism. But society cannot put the scientific and technical clock back. From this time forward man’s ability to manufacture nuclear weapons is here to stay. The only truly reliable way to “Ban the Bomb” is to establish a society where human relationships could not possibly cause war or call nuclear weapons into use. Only world Socialism really guarantees that Hiroshima or Nagasaki could not happen again.

We have felt it important to return to the question again this month because apart from the threat to humanity’s existence in a world armed to the teeth with nuclear weapons, it illustrates well a point we have made many times― the shocking wastefulness with which Capitalism not only squanders society’s material resources, but squanders humanity itself.

We live in a world capable of a tremendous productive effort. The work that went into the first atom bombs must have been colossal, yet it pales into insignificance when compared with the picture today. America’s defence expenditure (never “offence” expenditure) last year reached the staggering estimated figure of $54,000 millions. Comparable figures for Great Britain were ￡2,043 million, West Germany 20,929 million Deutschmarks, and France 23,485 million Francs. The U.S. contribution alone to NATO forces included eight hundred intercontinental ballistic missiles (nuclear if necessary) and over three hundred Polaris submarines. At the beginning of last year, Soviet defence minister Marshall Malinovsky was boasting of Russia’s hundred megaton bomb and the missiles that were available to carry it to any part of the globe.

And this is the spectacle which has been the curse of the capitalist world, to come into still sharper focus in the post-war years. Millions go ragged and hungry and badly housed, while unsaleable food piles up in the warehouses and backwater barges, and vast resources of human ingenuity and productive effort are squandered in turning out yet bigger and more destructive weapons. Not only that. There are now five runners in the nuclear arms race with at least two more – W. Germany and India – thinking of entering the slips.

Even whilst CND have been campaigning, more nations have entered the nuclear field. The bombs are bigger, and there are more of them. CND have protested against one aspect of capitalism’s wastefulness. They will miss the important point until they realise that the need is to remove Capitalism itself. Gigantic waste which is horrifying in its effects is synonymous with Capitalism in every direction, from nuclear terror, to world hunger. The campaign against these problems outside the context of the demand for Socialism cannot carry the prospect of success.

It is when we realise this that we see the urgent necessity for the removal of capitalism and its replacement with a world of common ownership, for this is the only way to tackle such a problem. Only then could we be sure that society’s resources would be harnessed to serve human needs instead of the requirements of the profit motive. In a Socialist system there would be abundant wealth to meet everyone’s needs, but waste would be anathema – a thing of the past. Such conditions would make possible the development of human abilities on a scale undreamed of today, for the concern of all would be to produce and distribute the very best of which they were capable. Certainly a goal worth striving for; but more than that, one which becomes a matter of greater urgency with the passing of each day

News in Review: Quick look around (1965)

The News in Review column from the August 1965 issue of the Socialist Standard

Quick look around

To those who find the headlines depressing, and who prefer to look for the news in the newspapers’ smaller columns (“Vicar, 73, Weds Secretary, 21”) we can offer little comfort.

Events which are considered of minor importance reflect the same drab image as the big news.

Nearly two million people are receiving National Assistance in this country, which shows that many more than two million are not sharing in whatever the Tories meant when they talked about our rising prosperity. About three quarters of those on National Assistance are pensioners, which shows again that although the shadow of want may have been lifted from some people (for example the judges who are soon going to get a twenty-five per cent rise in their already big wages) it still hangs over the retired worker.

We have been promised that the report of the government’s Study Group on the North West will shortly be published. The Group found that parts of the North West have the highest mortality rate in the country, due to the fact that so many of its people live in towns and cities, under squalid conditions. It also discovered a fact which some other people had known for a long time; that there are still plenty of slums in this country, and that they are increasing fast. The Group concluded, in fact, that it will take fifty years, at the present rates of clearance, to get rid of the North West’s slums.

In Geneva, United Nations Secretary General U Thant said that on present showing there will be more unemployment, more hunger, more malnutrition, in 1970 than there is today. “The misery of the developing world,” he said, “is a progressive misery. It threatens to grow worse in the second half of the decade.” The only comment to make here is that this gloomy opinion comes from someone who, with the job which he has, must obviously be one of the world’s top optimists.

There is no reason to hope that the news will get any better. It is apparent that there was something seriously lacking in the perceptive powers of the man who first said that every day, in every way, things are getting better and better.

Vietnam mission

It is fairly safe to assume that Mr. Wilson was not heedless of the political advantages to be gained from the publicity which was bound to accompany the suggested peace mission on Vietnam.

Perhaps it was even hoped that in the excitement few people would have realised that the mission had not actually done anything, or gone anywhere and that indeed most of its members had split up and gone home.

The mission was the same sort of empty gesture—like Chamberlain’s trip to Munich, like the Locarno Treaty in 1924 — which convince workers that capitalism’s leaders are about to solve the problem of war.

This conviction rests upon a delusion; that wars are caused by international statesmen omitting to talk before they start shooting—or rather, before they tell their workers to start shooting for them. (At one time there was a popular theory that Stalin’s intransigence could be dealt with by getting him to raise a Kremlin cricket team to play an XI from Westminster.)

In fact, there is no lack of opportunity for capitalism’s leaders to confer. And, as the Vietnam mission has shown, there are also plenty of informal channels through which they can communicate, even if they do not recognise each other’s existence. It is clear .that they fail to do so only when they think there are other ways of settling their differences.

It is also clear that wars are not caused by a failure of communication. They are caused by conditions which cannot be affected by any conference, and they start when further talking is pointless.

The Western powers are now trying to get the Vietcong to negotiate, when they are convinced that they are close to victory. This is something like Hitler trying to impose his terms on the Allies as his empire was collapsing in April 1945. Like any other war, the one in Vietnam has its own momentum of ruthlessness and it will be played out to its bitter end.

That will not be the end of the matter; Vietnam is only the latest of the small wars in the greater struggle between the world powers over which shall control and exploit South East Asia. There is no sense, no reason, no humanity, in such conflicts—and no “right” either on any side.

It is typical of Labour Party hypocrisy that they should pretend that normal human standards can be applied to the war in Vietnam. They are among the supporters of the social system which produces the war there and which could make it (to use the current ugly jargon) escalate into something which even Mr. Wilson does not pretend to be able to control.

Algerian conflict

During the long war for Algerian independence, the people who suffered in the nationalist cause were comforted by the thought that out of their tribulations freedom would be born in Algeria.

At that time, as the French forces were daily committing the most brutal of excesses, it was easy to represent the FLN as fighters for liberty.

One of the heroes of the rebellion, who quickly emerged as the effective ruler of Algeria after independence, was Ben Bella. He was supposed to be the man who, once the French had been banished, would lead the poor Algerian peasant to freedom and prosperity.

One of Ben Bella’s closest associates, the man who stood by him and did so much to help him root out opposition after the rebellion, was Colonel Boumedienne. If anyone bears a load of responsibility for selling Ben Bella as Freedom’s Messiah, it is Boumedienne.

Yet now, according to the Colonel, the whole thing was a mistake. Ben Bella does not stand for freedom—he is a despot, a demagogue. He squandered Algeria’s resources, he frightened off investors. (We should remind ourselves here that the Colonel, who has pledged himself to encourage investment in Algeria, calls himself a Socialist.)

It is too late, now, to discover that the Algerian rebellion was to result in replacing one despotism by another; it would have saved some lives if at the time Boumedienne had reminded his followers that nationalist risings often have that effect.

All nationalist movements claim that they are fighting for freedom, and not a few of them also claim to be Socialist as well. But when they get power, and the moment of truth arrives, they frequently impose dictatorships.

Algeria is only the latest of several countries in which this has happened recently, and in which the leaders of the rebellion, after they have won, have split and denounced each other as despots. In one after another of the new African states this has happened—sometimes until the imposition of a one-party state has silenced the opposition and left only one side to put over its point of view.

These are the fruits of nationalist rebellion. There can be few causes which have induced so many people to waste so much time, energy and blood.

Gaolbreak

One fact is often overlooked by the man-in-the-street advocate of the deterrent effect of heavy sentences. The more severe the sentence, the greater the incentive to escape.

Heavy sentences are often imposed on members of big and well-organised mobs like the Train Robbers, who are well enough equipped, in daring and organisation, to bring off a rescue from gaol.

The prison authorities are of course aware of this; if rumours are true they have thwarted plans to free two of the Train gang. But the criminals have the same sort of advantages as guerrilla fighters—they can move freely in the world outside, they can watch and wait and pounce when they think the moment has come.

The rescue of Ronald Biggs has confirmed what the escape of Charles Wilson showed—that big time crime is now refined and organised enough not to reject any job. Perhaps some criminals with a sense of humour might reflect that they at any rate are responding to the Labour government’s appeal for greater technical expertise in our work.

It has been often said that men like the Great Train Robbers would make excellent soldiers or big business men. It is apparent that they do have the required amount of ruthlessness to succeed in these fields.

At the moment, however, they prefer to rob people in ways which capitalism says are illegal, and to ignore other methods which are likely to bring them a place in the Honours List.

One thing the robbers fear above everything else, above imprisonment, above the nervous stress of their work, and that is to be a normal member of the working class. They cannot face the prospect of the daily journey to the factory or office, the clocking on and off, the monotonous routine jobs, the kowtowing to the boss, the leisure time spent in visiting or cutting the lawn.

This is one of the influences which persuade them to be criminals. It is also one of the influences which persuade the capitalist class to hang on to their privileged situation, and to the rights it brings them to be legalised robbers.

Inflation and prices - Part 2 (1965)

From the August 1965 issue of the Socialist Standard

Link to Part 1

II. The influence of gold

In our first instalment, we examined the commodity’s value and we discussed two of the reasons for price fluctuations—the forces of supply and demand and the influence of monopoly conditions in supply. The examples were of fluctuations above and below what may be called the normal price and, as we have said, it would simplify matters if we could assume that the normal price is the value and that fluctuations due to supply and demand are variations above and below value.

In actual practice, the normal price is not always the same as value, and probably the great majority of commodities do not normally sell at their value, but at some point above or below it. Marx developed this question of what he called all the same thing as what the manufacturer calls his cost of production. It is arrived at from the labour theory of modifications to his theory and showed that the normal price of commodities in the market is not their value but what he called the price of production. The first thing to notice about this is that the Marxian price of production is not at value, but it takes into account the fact that there is a continuing tendency for the return on invested capital to be equalled in different industries so that if the average rate of profit for example is taken at 10 per cent, the capital invested in the oil industry or in agriculture or in shipping, will all tend to receive something approximating to the same 10 per cent average rate of profit.

The next point is that changes in the value of a commodity can cause changes in its price. The value of a commodity falls, for example, if through inventions and discoveries the amount of socially necessary labour needed for producing it is reduced. In that instance, the value would fall and the price would tend to fall with it. On the other hand, it is possible for the value of a commodity to rise because the amount of socially necessary labour required to produce it increases. This could happen to coal and other minerals. As the richer and more readily accessible seams of coal are exhausted and mines have to go deeper, more labour is required to produce a ton of coal than before, and the value rises, and as the value rises, the price will tend to rise with it. So, to take our example of 24 hours being the amount of socially necessary labour required to produce a bicycle, if it fell to 20 hours or rose to 40 hours, this would cause a fall or a rise in the price of bicycles.

So much for changes in the prices of individual commodities, but what about general changes of all prices? Why was it that in 1921 and 1922 the price level in Great Britain dropped by about a third and why is it that the present price levels are three or four times what they were in 1939? Why were prices rising at the end of the 19th century and in the early 20th century? To explain these movements, we have to come back to our example about the bicycle and the suit of clothes and one ounce of gold, which was by law cut up into four gold sovereigns each weighing about one-quarter ounce.

We have seen that gold has a value like all other commodities. So has silver or lead or brass or aluminium. The value of these and all other commodities are related to the amount of labour needed in their production. Because of this factor common to all commodities, the value of each commodity can be expressed in terms of any other commodity. In fact, historically, because of certain conveniences attaching to gold, the capitalist trading world came to accept gold as the universal equivalent, the money commodity and all commodities came to have their values expressed in terms of gold. We might imagine that the trading world could have made use of weights of gold and expressed the prices of all commodities in terms of a weight of gold—one-quarter, one-eighth or one-sixteenth of an ounce, etc., but this was obviously not so practical for purposes of internal trade as to have the gold turned into coins of legally fixed weights, although of course the particular weight differed in different countries.

In Great Britain, as already mentioned, gold coins were by law fixed at about one-quarter an ounce of gold. Actually the legal relationship was that one ounce of gold was priced at 77/10½d, but it is simpler to call it about one-quarter ounce per gold sovereign. Under the currency system as it was operated in Great Britain in the 19th century, and similarly in the U.S. with regard to the dollar, the value relationship between commodities in general and gold was preserved by what is called convertibility. Gold coins were in normal circulation alongside Bank of England notes, but there was a legal right at any time for a holder of notes to convert them into gold or to take gold bullion to the Bank of England for conversion into notes or coins. The gold bullion or coins were freely imported or exported.

Under these conditions there could never be any but minor variations between the purchasing power of Bank of England notes and the purchasing power of gold. Now we may ask how in such circumstances was it ever possible for the prices of commodities to undergo a general rise or a general fall. The answer is that, just as the value of commodities of any kind can rise and fall in certain circumstances, because more or less value is required to produce them, the same thing can happen to gold. The value of gold itself can undergo a change. If, for example, methods are devised which produce or refine gold more efficiently, then it is possible for the value of gold to fall, or, conversely, if it becomes more difficult to produce gold, then the value of gold would rise. The only thing to remember about this is that it operates in a sort of inverse direction, that is to say that a fall in the value of gold expresses itself as a rise in the price of all other commodities and vice versa.

Now let us come back to our examples of the bicycle and the ounce of gold. They had equal value because both of them take 24 hours of socially necessary labour for their production, but suppose that the labour required, to produce one ounce of gold was reduced from 24 hours to 12 hours. Twenty-four hours of labour would still be required for one bicycle, but 24 hours would now produce two ounces of gold instead of one ounce, so that one bicycle now has the same value as two ounces of gold. Under the requirements of the law in Great Britain, two ounces of gold were still divided into quarter ounces; so the bicycle now would equate with £8 instead of £4. Because the value of gold had fallen to one-half, the gold price of the bicycle would be doubled from £4 to £8, and of course the opposite could happen if the value of gold rose, that is to say, if more labour came to be required to produce one ounce of it than before.

A fall in the value of gold caused by new and more efficient production processes was in fact going on at the end of the 19th century and the beginning of the 20th century and, in accordance with the explanation already given, it showed itself as a general rise in the prices of other commodities. There is another circumstance in which, even with a convertible currency, you could have a general rise or general fall in prices. This is when booms and slumps occur. In a boom, every manufacturer is trying to buy raw materials, machinery and so on, with the result that the price of these things would rise and there would be a general rise in prices. In a slump on the other hand, the reverse takes place. Manufacturers and traders in a slump are all trying to sell goods at cut prices in order to get hold of money, and in these circumstances, you could have a more or less general fall in the price level.

Edgar Hardcastle

(To be continued.)

Finance and Industry: What is profit ? (1965)

The Finance and Industry Column from the August 1965 issue of the Socialist Standard

What is profit ?

Last March the Daily Worker had an interview with the Russian economist, Prof. Liberman, whose views on the role of profits in the Russian economy are well known. In the course of the interview Liberman told special correspondent Peter Temple:

“Profit is—like money, wages and prices—an essential part of any economy based on commodity production. It’s merely an expression of surplus product. If we didn’t have any surplus product, then we would be consuming everything we produced and it would be quite impossible for society to develop. Socialist profit is entirely different from capitalist profit, both in its origin and in its designation. In a Socialist society it arises solely from better and more efficient production, producing more goods and services with less expenditure of time, power, raw materials—and that’s all. But capitalism extorts profit from exploiting labour, cutting the workers’ wages, raising prices to the housewife.”

A similar argument was put forward by George Brown when he addressed a meeting of businessmen in Newcastle on May 22. The Times on the following day reported his words under the headline PROFIT MOTIVE AS TEST OF EFFICIENCY. Said Brown:

“As long ahead as we can see Britain is going to have a mixed economy with a very large private enterprise sector. Therefore the profit motive has a very important role to play. It is time we stopped being silly or doctrinaire on all this. Profits are a very good test of efficiency when earned by enterprising management introducing better methods or new products in competitive conditions. They are not good if they arise out of management using market power to raise prices.”

Both Liberman and Brown commend profits that are supposed to come from efficiency and condemn profits that are supposed to come from raising prices. The only difference is that George Brown, unlike Liberman, hasn’t the insolence to call his “good” profits “socialist”. In any event both are confused over the nature and source of profits.

In a way, Liberman is right when he says that profit is something to do with the surplus over and above what is consumed. For thousands of years Man has been able to produce more than he needs for bare subsistence but this surplus has been taken by a dominant social class or classes. The means by which this has happened have varied with economic circumstances.

In Ancient Slavery the process was obvious: the slave-masters led a life of ease without working, while the slaves received their keep. The surplus produced by the slaves over and above their keep belonged to their masters. In Feudal Society the process was obvious too: the serf was required to work so many days a year on the estate of his master. In Capitalist society too the surplus is taken by those who monopolise the means of production, but the process is a little more complicated.

Capitalist production is production for sale—what Liberman refers to as commodity production. In capitalist society everything, including labour power, is bought and sold. In fact capitalism is based on the exclusion of the majority of the population from the means of production. As a result the majority have to sell their working ability for a wage to the capitalists in order to live. On average this wage is about sufficient to maintain the worker in efficient working order.

The capitalist buys labour power for a day or week or a year, as the case may be. For part of this time the worker reproduces his own subsistence; the rest is free labour time, from which profits are derived. Profit arises in the process of production. The capitalist realises his profit when he sells what his workers have produced. In fact the sharing out of the social surplus among the capitalists and their hangers-on is more complicated than this, but the basic fact remains. Profit is taken from the working class in the process of production; this is the form in which the capitalist class take the surplus Liberman talks about. Because they monopolise the means of production the capitalist class are just as able to take this surplus as were the slavemasters and feudal barons.

The hard-headed businessman doesn’t see the origin of profit in this way. To him it appears as a surplus over his costs. He knows that if he reduces his costs he has a chance of increasing his surplus. Thus to him it appears that he can make profits by eliminating waste and cutting down costs, in short through efficiency. True, under certain circumstances, he can increase his share of profits in this way just as under other circumstances he can increase it by reducing wages or raising prices. But he deludes himself in seeing here the origin of profit. George Brown shares this delusion. So does Prof. Liberman, when he tries to tell us that in Russia profits arise from efficiency. In fact, of course, profit there as elsewhere arises from the surplus labour of the working class. This Liberman can’t—or won’t—see, but then he is after all an apologist for the system of exploitation in Russia.

Liberman’s views on profit lead him also to a false theory as to the origin of his “capitalist” profit. He suggests that such profit arises from depressing wages and from raising prices. Once again, a particular capitalist may temporarily increase his share of total profit in these ways but the point at issue is not this; it is what is the source of the total profit itself. Under capitalism profit arises even if wages are equal to their value and even if there are no monopoly elements present. Liberman’s argument about profits arising from efficiency is a familiar defence of capitalism.

Profit then is a form of theft. In Britain we have many robbers fighting over their shares in the legalised robbery of the working class. At present there is an argument as to who is entitled to what. George Brown is suggesting that those who get a share through using market power don’t deserve it. Enoch Powell, on the other hand, says that every capitalist is entitled to what he can grab. This is no argument in which Socialists can take sides: in our view the entire social product should belong to society as a whole. Then profit will disappear for ever and the surplus that arises from the labour of all will be used for the benefit of all.

In Russia there is one grand larcenist; the State. Till now the State has taken the surplus product of the working class more or less directly. Profit in this sense has long existed in Russia; it is not something new, as some discussions of trends in the Russian economy suggest. What is new is the reliance on supply and demand, and on profit on capital investment, to determine what amount should be produced. The market is gradually taking over from State directives. This changeover creates problems.

“Socialist” unemployment

In a State-directed economy, such as Russia had for a time, the labour force can be more or less fully used through coercive means such as restrictions on travel or on changing jobs, involving the issue of passes and cards of various sorts. This in fact was what did happen in Russia. Now this has been slightly relaxed, allowing a drift from the country to the towns, creating that chronic capitalist problem, the housing shortage. Thus at the 22nd Party Congress nearly four years ago, Krushchev admitted:

“We still have a housing shortage, the housing problem remains acute. The growth of the urban population in the USSR during the past few years is considerably in excess of estimates.”

Another problem which the Krushchev government had to face was that of large-scale seasonal unemployment on the land. Agriculture in Russia is very backward and very few agricultural workers are paid a steady wage; most in fact are not paid any money at all. In the winter these people are unemployed. Edward Crankshaw of The Observer, in a discussion of this problem in the issue of April 4, writes that a campaign to deal with this problem has now been launched.

“According to Sovietskaya Rossia, which is sponsoring this campaign, there are now well over 10 million collective farmers unemployed each winter—or over a third of the total number of able-bodied workers on the land—and the number is rising. Nothing was done about this under Khrushchev. Nothing much has been done yet. But the fact that a newspaper is permitted to campaign for State assistance in the development of local handicraft industries to keep the peasants in winter is very much a sign of the times.”

Socialist Profits, and now a Socialist Housing Problem and Socialist Unemployment—what next can we expect from the Workers’ Paradise which Russia is supposed to be? The return of our old friends the Soviet Millionaires, perhaps?

The "Public Money" Front

There is another example of the ignorance of economics shown, by the Daily Worker, Russian economics professors and other admirers of Russia, which must be recorded. It is taken from a letter by a leading member of the so-called Communist Party in the South Midlands to a local paper. Apparently he had met a member of the Socialist Party who tried to explain to him that ultimately the burden of taxation fell on the propertied class. This, he wrote,

“. . . is a prize example of the distortion of socialist ideas into nonsense. As if capitalism, under which we live, had not developed a capitalist state! As if that state were not strong, and the buttress of the exploiting employers! As if the state machine did not organise a complex set of attacks which working people have to resist, whether fighting for higher wages, shorter hours, moderate rent, decent pensions or equitable taxes and better government expenditure! The entire future of Oxford, with the Development Plan and the crying need for improved schools and social services, depends on the all-round struggle for the right use of public money.”

There is not space to go into this in detail; we only record this as in our view the prize example of the distortion of socialist ideas. It confirms that a correct understanding of political economy is a necessary prerequisite for correct practice. One thing is puzzling though : why only “moderate” rents, why not low rents or for that matter no rent at all? Why only “decent” pensions and “equitable” taxes? Surely “high” pensions and “low” taxes would gather more votes? Marx considered the demand of a fair day’s wages for a fair day’s work conservative, but this is almost revolutionary compared with some of the demands in the letter. After all, even Gladstone would have favoured “an all-round struggle for the right use of public money”.

Adam Buick

Fallacy of a National Incomes Policy (1965)

From the August 1965 issue of the Socialist Standard

The Prime Minister, Mr. Harold Wilson, has confessed that though he dipped into the writings of Karl Marx, he never got anywhere with it. If he had persevered he would have discovered that Marx knew about the problem which Mr. Wilson and his ministers are trying to solve with their Incomes Policy. Not that Mr. Wilson is an innovator in this endeavour, except that some of the descriptive names are different: “wage freeze”, “wage restraint”, “pay pause”, etc., have given place to “planned expansion” and the laying down of “criteria” for price reductions and avoidance of increases, and for keeping wage rises (with certain exceptions) within the rate of annual expansion of production—at present about 3½ per cent.

But before the present hopeful contestant, Mr. George Brown, entered the ring, there were others—Mr. Selwyn Lloyd in 1962, Mr. Thorneycroft in 1957, Mr. MacMillan in 1955. These were all Conservative Chancellors of the Exchequer. Earlier still there was the late Sir Stafford Cripps under the Labour government after the war, and both parties, and the Liberals, were sponsors in the War-time National government of the 1944 White Paper on Employment policy, which stated the problem and specified what they hoped were the lines on which it would be solved.

These separate income policies are divided by several years. Governments do not have to worry about a policy for prices and wages when unemployment is considerable.

What then is the problem? In the past 20 years it has come to be known as “Stop-go”. Each of the half-dozen Tory Prime Ministers has been chided by the Labour Party with so mismanaging affairs that periods of expansion and low unemployment have regularly been followed by a crisis, by falling or stagnant production, and a rise of unemployment. Each of the governments announced its intention of making expansion continuous and each time the Labour Party said that the government did not know its job and was doing the wrong thing. We are hearing this type of propaganda again now, from the Tories, who failed to control the situation when they were in office.

Marx described the situation briefly and pointedly just 100 years ago in a paper presented to an international Congress in September, 1865: —

“Capitalistic production moves through certain periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis and stagnation (Value Price and Profit Chapter XII).”

There were various reactions to Marx’s statement; that it wasn’t true; that it had happened but would not be allowed to happen again; that it was due to the greed and stupidity of the employers—and all these could be cured. The Labour Party, which first inclined to the view that the periodic crises were the fault of the employers has, since it became the government, veered to its present attitude—that a strong lead from the government to both employers and workers will put things right and keep them there. They are claiming to be able to do now what they and the Tories alike have failed to do and which nobody succeeded in doing in the past. Looking only at the period since the Second World War, annual average unemployment has been as high as 612,000 (1963) and as low as 287,000 (1956), with the monthly figures ranging from under 250,000 to over 900,000. Production has followed a similar course, with bursts of rapid growth followed by decline and periods of stagnation.

The question to be answered is “Why does this happen?” Why does expansion always get checked? Why do booms lead to crises? Basically it is because we live under capitalism. in which the great majority of people can get their living only by selling their mental and physical energies to an employer for wages or salaries. Under this system the propertied class—who live by profit, rent and interest—and the working class, are dependent on the market, on the ability of the owner of the products of industry to sell them at a profit. The mechanism through which all this goes on is that of money and prices.

Capitalism produces nothing directly and freely for the use of those who need it. If you are homeless or near starvation you will not get a house or food; you have to have money to pay for them. The manufacturer who cannot sell what his workers have produced, either because his competitors have produced more cheaply and have captured the market or because the product is no longer wanted (for example, coal being replaced by electricity or oil, or man-made fibres replacing cotton, silk or wool), or because his would-be customers have no money, has to sell at a loss and may end in bankruptcy and his workers join the unemployed.

But, say the “planners”, why cannot each line of production be accurately planned ahead so that nothing is produced in excess of the demand for it and nothing is produced for which there will turn out to be little or no demand? This is a deceptive hope. In a boom, when there are prospects of a big unfilled demand, capitalists (including the State industries)—not just in one country but internationally—hasten to expand and modernise their factories to capture as much of the market as they can. They simply have to do this; if they stand still they fall out of the competitive race. In some fields natural conditions defeat the planners anyway. Who can plan good harvests? or foresee and prevent the sudden discovery of vast and easily accessible supplies of oil or natural gas in the Sahara or the North Sea?

In a boom manufacturers are all competing to buy raw-materials, machinery, factory buildings—and to hire workers; collectively, they are trying to buy more materials and hire more workers than there are available. In these conditions, sellers—including the workers who are sellers of their labour-power—can put up prices, and do so: which brings us right back to Mr. George Brown and his predecessors, their policies for incomes and prices—and their problems. (Incidentally this is a universal capitalist problem not one in Britain alone. One same issue of the Times, April 28th, reported emergency measures including the attempted freezing of prices in Yugoslavia, and the American steel workers and employers arguing about a wage claim in the light of the Federal Government’s “Anti-inflationary guiding figure of 3.2 per cent”).

What then are the choices before Mr. Brown and other planners? If they let things take their course the boom runs into difficulties; in some fields through scarcities of materials (for example, the recent shortage of bricks) which hold up production, and in others, sooner or later, of overstocking of the market for certain products.

How logical it must look to Mr. Brown to try to prevent the collapse of the boom, by using persuasion and threats to damp down the rise of prices and wages. But is this a practicable policy? In conditions which enable sellers to push up prices and in which workers are favourably placed to push up wages, can government policy prevail? Past experience, the Stafford Cripps era, shows that it may have some effect for a time. But Wilson and Brown have to remember something else. Capitalism is a class society and the working class do not accept that any particular level of wages or profits is a proper and satisfactory one. Without clearly understanding that they are the producers of all the wealth which the capitalists own, they nevertheless always feel that they have a good case for getting a larger share of it. So before long their resentment turns against the government which is trying to induce them to go slow on wage claims: the national incomes policy of the Labour or Tory government finally breaks on the class nature of capitalism.

All of this Marx understood very well a century ago. It may be said that much of what he saw about the ups and downs of production in the market is now common knowledge among economists, but his insight was greater than theirs. Many of them, including those who toy with the idea of permanent and even expansion, think that expansion, because it is desirable is therefore “normal”, and that the interruption of expansion is a fault or failure, due to avoidable mismanagement or to the greed of some group or other. Marx, in his objective analysis of capitalism, viewed it differently. He saw that the expansion, the crisis and the stagnation are all “normal”, they are the way capitalism operates because of its own nature. Prices and wages rise in a boom because that is how capitalism with its prices system functions.

Marx did not share one error which is common to all his critics. They think that the problem is one of modern production; he saw that it is a problem of capitalist production—a very different proposition. Did he, because he understood it, have a solution to offer? A solution within capitalism? No! A solution without capitalism? Yes!

If Mr. Brown’s policy is bound to run up against the laws and the class nature of capitalism, Marx also saw that the opposite to Mr. Brown’s policy offers no way of avoiding a crisis. He dealt specifically with the notion that higher wages would solve the problem of unsaleable goods by enabling the workers to buy more. Apart from other inevitable disharmonies of capitalist production and selling as between the production of the means of production and the production of consumer goods he knew that a general rise of wages at the expense of profits would, while increasing the demand for working class necessities, at the same time reduce the demand for capitalist luxuries, and necessitate a curtailment of their production. He wrote: —

“It is purely a tautology to say that crises are caused by the scarcity of solvent consumers, or of a paying consumption. The capitalist system does not know any other modes of consumption but a paying one, except that of the pauper or the “thief”. If any commodities are unsaleable, it means that no solvent purchasers have been found for them, in other words, consumers (whether commodities are bought in the last instance for production or individual consumption). But if one were to clothe this tautology with a semblance of a profounder justification by saying that the working class receive too small a portion of their own productivity and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally and the working class actually get a larger share of the product intended for consumption. From the point of view of the advocates of “simple”(!) common sense, such a period should rather remove a crisis. It seems, then, that capitalist production comprises certain conditions which are independent of good or bad will and permit the working class to enjoy that relative prosperity only momentarily, and that always as a harbinger of a coming crisis.” (Capital Vol. II. P.475).

Fundamentally crises can happen only because of capitalism, under which the workers’ continued employment depends on each part of the productive apparatus (production of means of production, production of necessaries and production of luxuries) keeping in line with every other part. As Marx wrote elsewhere:

“The last cause of all real crises always remains the poverty and restricted consumption of the masses as compared with the tendency of capitalist production to develop the productive forces in such a way, that only the absolute power of consumption of the entire society would be their limit.” (Capital Vol. III. Page 568).

Marx’s critics do not believe this. They believe that by some means or other they can keep each industry in line with the others, and with the demand of the market at home and abroad, without overproduction in one part of underproduction in another, without the production of unsaleable goods, and without disturbance from rises of prices and wages and fluctuation of employment.

They have been trying, without success, for a century or more. Why do they not turn their attention to the way out, that of having Socialism instead of capitalism?

Edgar Hardcastle