What Next for South Africa? (1990)

From the April 1990 issue of the Socialist Standard

We may never know what discussions took place between President de Klerk and Nelson Mandela before the famous prisoner’s release, but it is evident they did a deal. It is possible they agreed on a detailed programme of reform. Economic forces have been pressing in on the deadlocked conflict for decades but movement has been slow. It has been thirty years since Harold Macmillan spoke of “a wind of change blowing through Africa”, but in South Africa this has been a gentle breeze which disturbed little, leaving the white monopoly of power intact. Delayed change results in greater pressure and now it seems the deadlock is about to be broken. What will this mean for our fellow workers in South Africa, both black and white?

An ideal model of capitalism would rest on a simple division between capitalists and workers with the latter voting in governments to administer their own exploitation in a “liberal democracy”. Capital would be free to invest most profitably and train workers to achieve maximum output without skin colour or ethnic background being an issue. This would tend to secure the most efficient use of labour resources, with political stability and without excessive expenditure on forces of repression.

Tortured history
In practice capitalism rarely confirms to this model. In South Africa the legal classifications of “European”, “Bantu”, “Coloureds” and “Asians” complicate the economic and political structure in ways which inhibit efficiency. They result from the tortured history through which these groups took root in the country.

Even within these groups there was never a common identity. For over two centuries the Europeans were bitterly divided between British and Dutch. Cape Town was established as a supply station by the Dutch East India Company. During the Napoleonic Wars the British pre-empted a French take-over by seizing it themselves after which it was kept as a British colony. In the 1830s a large number of the Dutch trekked north to found the Transvaal and Orange Free State but again they came into conflict with the British when gold, diamonds, coal and other materials were discovered in the Boer republics. To gain control of these materials colonial adventurers like Cecil Rhodes conspired with the British government to instigate the Boer War. Following the defeat of the Boers, and the sufferings of their families in concentration camps in which thousands died from disease and starvation, British imperialism gained control over the entire land area of what is now South Africa.

But it was not only the people of European origin who were in conflict. Tribal differences also divided the African peoples who in the seventeenth century had migrated south from East Africa. These divisions are still a potent force, further complicating the politics of South Africa. The Zulus are mainly concentrated in Natal under Chief Buthelezi and it is interesting that he controls his power base, Inkatha, as its unelected leader. Despite their demand for it, there is no “one person, one vote” amongst the Zulus. Nelson Mandela is a Chieftain of the Xhosa people and is acclaimed as being more representative of black South Africans through the African National Congress.

During the past seven years more than 2,500 people have died in violence between different black groups and Mandela has appealed passionately for an end to the fratricidal strife. “Throw your arms into the sea”, he recently implored a vast crowd of Zulus. The response of Inkatha was positive but also tempered with a warning:

  Only the enemies of peace and black unity would wish otherwise. However, we shall not succeed to achieve this by protracted attempts to demonise, vilify and marginalise Dr. Buthelezi. To do this is tantamount to planting the seeds of future civil war in our country.

This threat of possible civil war, presumably in circumstances in which the Afrikaner Nationalist government may have collapsed, is indeed ominous.

Those called the “Cape Coloureds” were originally descended from the offspring of early Dutch male settlers and their female servants brought to the Cape Province from the Dutch East Indies. The temptations of sexual relations between the “races” were more than the Calvinist citizens could resist and, in any case, pre-dated the ideology of “apartness”.

The indigenous inhabitants of South Africa were the defenceless Hottentots who suffered genocide at the hands of every invader, Dutch, British and Bantu. These three groups, very different in their origins and outlook, were pitched into the same land area and now form the main elements in today’s political strife.

Capitalists’ political frustration
One of the ironies of this history is that Rhodes instigated war with the Boer Republics under the slogan of “democratic rights for all white citizens” with the object of gaining control of diamonds, precious metals and vital raw materials. In this he succeeded but as the mining industry developed under mainly British investment together with manufacturing, the white working class of the urban areas eventually formed a political alliance with the rural Afrikaners to elect an Afrikaner Nationalist government in 1948 which has held power ever since. The various National Party governments under Malan, Strijdom, Verwoerd, Vorster and Botha (the names alone speak of the return of the Afrikaners to power) have never been the “natural” or direct representatives of capitalist class interests. The more liberal-minded United Party disappeared and its current replacement, the Democratic Party, has little chance of gaining majority white support.

Capitalist interests would have best been served by a reform programme aimed at integrating the black population within a non-racial system of exploitation. This could have been introduced through a gradually-widening franchise based, for example, on property or education qualifications, arriving eventually at “one person, one vote”. This was not to be. It is to the eternal discredit of white workers in South Africa that in the majority they have pursued what they saw as their interests through racist trade unions and by voting for the National Party.

But if all this has been frustrating for capitalist class interests neither has it advanced the hopes of the Afrikaner nationalists. Their ideal of apartheid, or separate development, was always an illusion. Whether we see it as, at best, a nostalgic yearning for an independent “volk” or, at worst, a cynical euphemism for racial oppression does not matter. Either way, apartheid was against the tide of history.

When the more fanatical Conservative Party accuses de Klerk of “betrayal” and “sell-out” the greater truth is that the National Party has been overwhelmed by the economic forces of capitalism. The seeds of this were planted when the Afrikaners won political control. As a government they had no choice but to depend on taxes from mining, industry and manufacture to run their state machine. From this moment on, they were tied to capitalism. It costs a lot of money to pay for the repression of 20 million black people and, inevitably, the bills increase. Where once the Afrikaners eschewed the idolatry of gold, diamonds and profit, their heirs speak the universal language of trade and commerce. De Klerk is a capitalist politician.

In his recent important speech to the South African Parliament on 2 February he said:

  A new South Africa is possible only if it is bolstered by a sound and growing economy, with particular emphasis on the creation of employment.

At times he sounded like a Thatcherite:

  By means of restricting capital expenditure in state institutions, privatisation, deregulation and curtailing government expenditure, substantial progress has been made already towards reducing the role of the authorities in the economy.

At other times he also sounds like Gorbachev:

  The government’s policy is to reduce the role of the public sector in the economy and to give the private sector maximum opportunity for optimal performance. In this process, preference has to be given to allowing the market forces and a sound competitive structure to bring about the necessary adjustments.

We might ask how it comes about that politicians as different in their backgrounds as de Klerk, Thatcher and Gorbachev are committed to the same policies. They each share a common role as functionaries of capital; the economies of South Africa, Britain and Russia are locked into the same system – world capitalism. As a result their respective governments are compelled to react to the same economic pressures to achieve efficiency and profitability and to pursue strategies which best protect their long-term interests. These are the same forces which are driving politicians in South Africa, despite their own very different origins into a common outlook.

An added reason why de Klerk can sometimes sound like Gorbachev is that both face problems of restructuring, or perestroika. According to the Independent (27 February):

 British businessmen and bankers are unlikely to return to South Africa in droves as a result of the lifting of the ban on new business investment . . . They left because of rising commercial and political risks, poor investment returns, difficulties in repatriating profits and higher returns available in other countries.

In his speech to the South African Parliament de Klerk complained of “a serious weakening in the productivity of capital and stagnation in the economy’s ability to generate income and employment opportunities”.

It is evident that de Klerk, through his negotiations with Mandela and the ANC, hopes that he will be the man to restructure the South African economy on the basis of political stability achieved through extended democratic rights, but it is likely that the National Party has left it too late. Surely the party and the man for the task is the ANC under Nelson Mandela? Is it not more likely that it will be they who emerge as the new functionaries of capital best suited to achieving a more efficient exploitation of workers in South Africa without distinction of “race”, as capital demands?

Not afraid of black government
Certainly a number of leading capitalists assume that the future lies with a black government. For some years, Gavin Relly, the chairman of Anglo-American, South Africa’s largest business corporation which controls gold, platinum and coal production, has been in close contact with the ANC. In 1985, together with the chairman of the South African Foundation, which represents general business interests, he met with Oliver Tambo and a negotiating team from the ANC. He said then:

  What we are concerned with is not so much whether the following generation will be governed by black or white people, but that it will be a viable country and that it will not be destroyed by violence and strife.

He added that he and the ANC “shared a common interest in maintaining the profitability of the South African State”.

Since Mandela’s release there has been some concern in capitalist circles over the ANC’s apparent commitment to nationalisation, including the mines. However, on 26 February Gavin Relly, continuing his personal contacts with the ANC, met Mandela and afterwards urged investors to calm their fears. He said it was premature now to get agitated about the ANC’s economic programmes:

  The community and international community should not get into a flurry over nationalisation. These are issues for sensible men to discuss. Issues of nationalisation will have to be subjected to the tests of debate and the tests of what is practical to make the modern economy work.

In his own comments on the meeting, Mandela said nationalisation remained, in certain areas, a basic policy of the ANC, but the economy at large would still be based on private enterprise. “The entire economy will remain intact” (Independent, 27 February). Again, we shall never know the details of their discussions but it is clear that Gavin Relly, a leading representative of capitalist interests, emerged a happy man from his meeting with Mandela.

Where does all this leave our fellow workers in South Africa? Our interests are directly linked with theirs and if democratic freedoms are now to be extended to that country it is in all our interests. Perhaps now the Directorate of Publications in Cape Town will release our pamphlets and the copies of the Socialist Standard which have been kept under lock and key in the cell where banned literature is stored.

In the short-term it appears that workers in South Africa may well continue to support those reformist organisations which they see as representing their interests in a “racially” divided society. However, it is also likely that the increasing pressure of the economic forces of capitalism and the reforms which are in prospect will simplify the issue into a straightforward confrontation between capitalist and working class interests. This will leave the fundamental problems of the workers still to be solved. Even now the vital work must be to ensure that a growing world socialist movement is extended to South Africa.

Pieter Lawrence

Russia and Private Property (1990)

From the April 1990 issue of the Socialist Standard

The decision by the Central Committee of the CPSU at its February meeting to abandon its guaranteed, constitutional monopoly on power really could prove to be as momentous as the media claimed at the time. However this will not be for the reasons they gave – that it will open up a new era of freedom, prosperity and progress for Russia – but because it could lead to a change in the way that the means of production are monopolised by the minority owning class there.

Except for some of those that can be operated by individuals or by a family unit, all means of production in Russia are vested in the state which also has a monopoly in the hiring of wage-labour. This has meant that the group that has controlled the state has also controlled the means of production, has in effect owned them. However, the members of this group have not done so as individuals possessing legal property deeds in their own names, but collectively as a group. It is this group – as a group – that has been the collective owner of the means of production and the collective employer of the working class in Russia, in short the collective capitalist there.

So who are they? Who are those who make up this group that monopolises the means of production in Russia in this way? As Russia has been a one-party dictatorship since Lenin introduced this in 1921, they have been the leading members of the ruling party plus those appointed by them to key posts carrying with them a life-style based on privileged access to the best consumer goods, housing, health care, education for their children, holidays and officially known as the nomenklatura. Not possessing legal property titles in their own names, they have not been able to bequeath their privileged position to their children. So the group that has constituted the collective capitalist class in Russia has been recruited by other means than inheritance, in fact by rising up the bureaucratic hierarchy of the single party.

It is this party that has been the mechanism by which the collective capitalist class in Russia has monopolised the state and so the means of production and by which they have renewed themselves and recruited new members. This is why the political and ideological representatives of this class have proclaimed the “leading role of the party” to be a pillar of the Russian system. It is also why the decision by the Party’s Central Committee at its February meeting to abandon it could prove to be of immense importance.

Gorbachev wants a mandate
Of course abandoning a constitutional right to be the only governing party, indeed the only party allowed to exist – the notorious Article Six of the 1977 Russian constitution – is not the same thing as actually abandoning power. The leaders of the “Communist” Party still want, like Mrs Thatcher, to go on ruling for ever but from now on they hope to do so with a democratic mandate from the electorate.

There is a short-term reason for this: they feel they need popular endorsement to be able to push through the tough anti-working class measures perestroika involves. For although glasnost (openness) has progressed quite far, perestroika has not. Enterprises have been given legal independence from the government ministries that used to control them, but price reform – the key measure of perestroika and what it is all about, designed to bring prices into line with what the law of value demands – has not yet been implemented.

Price reform will involve ending government subsidies on basic consumer goods such as food, housing and transport and allowing their prices, along with those of industrial goods, to be fixed by the free play of market forces. Although the object is to get the stagnant Russian economy moving again, it is bound to mean for at least the short-term falling living standards and rising unemployment. Learning the lesson of the events in Poland, Gorbachev is clearly not prepared to launch into this attack on the working class without a mandate to do so. His conservative opponents in the Party hierarchy might not like his political reforms, but they don’t want him to go since they know that they would have even less chance of controlling the potentially explosive situation in Russia.

It is the longer-term implications of the decision to abandon the Leninist principle of one-party dictatorship that could prove to be the most significant though, as this could herald a change in the way the means of production are monopolised in Russia with the ruling class there changing itself from a class of collective owners into a class of individual owners as in the West.

Such a change has always been a possibility but until now only a rather remote one. It is a measure of the historic importance of events in Eastern Europe – which will surely have led to the liquidation of the nomenklatura system there by the end of the year – that they have forced what once seemed to be the immovable Russian Party-elite to reconsider its position.

The transformation of the Russian ruling class from a collectively-owning state bureaucracy into a class of private capitalists with private property rights vested in them as individuals certainly won’t take the form of the present members of the nomenklatura abdicating and handing over their power and privileges to the small group of privately-owning capitalists who have always led a precarious existence on the margins of the Russian state-capitalist economy. Nor would it need to take the crude form of them simply dividing up the presently state-owned industries amongst themselves. It would be more likely to take the form of the Russian government gradually introducing more and more opportunities for private capitalist investment – which only those who have already accumulated wealth would be able to take advantage of. Most of these will inevitably be individual members of the nomenklatura as the group which for years has enjoyed bloated salaries, cash prizes and opportunities to speculate on the black market.

Although there have been periodic drives against corruption, the wealth accumulated by the members of the nomenklatura has largely survived intact. Up to now, however, they have not been allowed to use their accumulated wealth as capital – as wealth invested in production with a view to profit – but have been obliged to hold it as non-productive assets such as works of art, vintage cars and cash held in low-interest bank accounts. That Gorbachev wants to remove this restriction and channel such funds towards investment in production can be seen from the reference in the new Party Platform to “the distribution of state loan bonds on advantageous terms” and to “the selling of stocks and other securities”.

Ligachev’s Fears
High-denomination state bonds were issued for the individually wealthy to purchase right up until the 1940s (when their holders were virtually expropriated when Stalin reformed the currency in 1947), but this time rich Russians are to be allowed to purchase not just government bonds but also to invest directly in particular enterprises by purchasing bonds issued by them too. It is not difficult to see how this could evolve into a system of shareholding. In addition, private enterprise in the form of “co-operatives” is to be encouraged. Such co-operatives are supposed to be collectives of self-employed workers but once again, over time, pressure to allow them to employ wage-labour and for some of their members to become sleeping partners, or non-working investors, can be expected to grow.

This whole issue of “private property” is still a subject of controversy within the Russian Party. It ought to be understood, however, that the issue at stake is not whether individuals should be allowed to own non-productive assets, sometimes considerable amounts, as private property which they can bequeath and inherit. This has long existed and all sides agree it should continue. Nor – yet – is the issue about whether individuals should be allowed to employ other individuals. It is about whether “co-operatives” of the self-employed should be allowed to own means of production and compete with state enterprises for sales and profits.

On the one side, there are the supporters of Igor Ligachev who was reported as saying at the February Central Committee meeting that “he opposed the introduction of private property with his whole soul”, adding: “I am also against turning our party into an amorphous organisation, a political club” (Independent 7 February 1990). On the other side, are those who agree with Boris Yeltsin when he says: “I am for private property, including the means of production. The limits are that it should not be sold, and not inherited” (Vancouver Sun, 21 December 1989).

The new Party Platform shows that it is the partisans of “private property” who are winning. Ligachev is nevertheless probably right when he sees “co-operative private property” as the thin end of a wedge that will open the way, despite what Yeltsin says, both to private property rights in means of production being sold and inherited and to the private employment of wage-labour. This latter is still regarded in Russia as a case of “the exploitation of man by man” – as indeed it is, though Ligachev is being inconsistent when he denounces the employment of hired labour by private individuals while accepting it by the state. Clearly, what he favours is the nomenklatura continuing to monopolise the means of production collectively as a group dictatorially controlling the state where the means of production are state-owned.

Gorbachev, on the other hand, realises that it is now no longer possible for the nomenklatura to role in the old way and that some sort of flexibility is called for, if only to be able to push through perestroika without provoking a workers’ revolt. He probably isn’t consciously working towards ushering in a Russia where the nomenklatura has disappeared as such and has succeeding in converting itself into a class of Western-type privately-owning capitalists, but it is in this direction that his reforms can now be seen to be leading.

Adam Buick

Socialism on Tape (1990)

From the April 1990 issue of the Socialist Standard

The Socialist Party Tapes Library has again been fully updated. and the list below replaces all previous lists Each cassette can be purchased for £3. including postage and packing. There is a discount on larger purchases: any six tapes can be bought for the price of five. Allow up to four weeks for delivery. Socialist Party branches and groups may wish to purchase a range of tapes for re-sale at meetings. Further tapes will be added to this list in due course.

1. Is Britain Worth Dying for? DEBATE between the Socialist Party and Lady Olga Maitland (Women and Families for Defence) (1984).

2. After the Miners' Strike—Which Way Forward for Socialists? DEBATE between the Socialist Party and Socialist Workers Party (Colin Tipton) (1985).

4. Did Lenin Distort Marx? DEBATE between the Socialist Party and Monty Johnstone (Communist Party. Marxism Today) (1982).

5. Terrorism versus Socialist Action. Richard Montague. World Socialist Party (Ireland) (1985).

6. What is the Next Step for Socialists? DEBATE between the Socialist Party and Revolutionary Communist Party (Sean Mullen) (1987).

7. Why You Should Be A Socialist. E. Hardy. Dick Donnelly (1988). 

8. Fear of Freedom: The Development of the Personality in Capitalist Society. Steve Coleman (1983).

10. DEBATE between the Socialist Party and Militant Tendency (Bill Sheppard ) (1982).

13. Should You Join The Socialist Party? DEBATE between the Socialist Party and Andrew Broadhurst (Greater London Conservative Association) (1988).

14. The Crisis in Capitalism—What is the Next Step? DEBATE between the Socialist Party (Clifford Slapper) and Bill Etherington (General Secretary, NUM Durham Mechanics) (1987).

15. Is there a Free Press in Britain? DEBATE between the Socialist Party and Lady Olga Maitland (Daily Express) (1987).

17. Is Equality Just A Socialist Myth? DEBATE between the Socialist Party and Professor Anthony Flew (1981).

18. Conservation versus Democratic Revolution. DEBATE between the Socialist Party (Pieter Lawrence) and the Ecology Party (Tony Jones) (1983).

19. Can We Change the World Through Music? Forum with Clifford Slapper (Socialist Party) and Annajoy David (Political Co-ordinator. Red Wedge) (1988).

21. Conservatism versus Socialism. DEBATE between the Socialist Party (Dick Donnelly. Clifford Slapper) and Monday Club (Harry Phibbs. A. V. R. Smith) (1984).

22. Should We Return To Victorian Values? DEBATE between the Socialist Party and G. Webster Gardiner (Conservative Families Campaign) (1986).

23. Two LBC Radio Debates on one tape: Can The Profit System Benefit Most People? between Pieter Lawrence (Socialist Party) and Ian Picton (Conservative councillor) (1982) and Is Britain Worth Defending? between Dick Donnelly (Socialist Party) and Paul Backhouse (Peace Through NATO) (1985).

24. LBC Radio Debate: The Royal Wedding was a Complete Waste of Time and Money, between Clifford Slapper (Socialist Party) and Simon Kinnersley (Woman's Own) (1986) and LBC Radio "Futures" phone-in on What Would A Socialist Society Be Like? Speaker Steve Coleman (1986).

27. Religion and Historical Materialism. Forum with Dick Donnelly (Socialist Party) and David McLellan (1984).

30. The Social Origins of Music. Kerima Mohideen (1987).

Education Series: The Thatcher Government, 1979-85 (1985):

32. From Churchill To Thatcher: Your Elders and Betters? Ralph Critchfield.

33. The Economics of the Thatcher Government. Clifford Slapper.

34. A Guided Tour of the Conservative Mind. Steve Coleman.

Education Series: Socialist Thinkers — People Who History Made.

Speaker Steve Coleman (1982).

39 Plekhanov And Historical Materialism. (Part 1) (Part 2)

40. Dietzgen And Dialectical Thought. (Part 1) (Part 2)

41. Kautsky's Critique Of Religion. (Part 1) (Part 2)

42. Bronterre O’Brien And Working Class Radicalism. (Part 1) 

43. Belfort Bax And The "Ethics" Of Socialism.

44. William Morris' Vision Of Socialism.

45. Martov And The Anti-Bolshevik Approach To Revolution. 

Why hasn't a Socialist Revolution happened yet?

46. Reformism: What it has achieved and where it has failed. Howard Moss (1986).

47 Are Workers Capable of Co-operating. Pieter Lawrence (1986).

48. What is Capitalist Ideology? Steve Coleman and Brian Montague (1986).

Socialist Women (1988)

49. Women Under Capitalism. Kerima Mohideen.

50. Men in a Sexist Society. Steve Coleman.

51. What Socialists Can Learn from Feminist Ideas. Janie Percy- Smith.

52. Women For Change: Why You Should Join the Socialist Party.

Left-Wing Capitalism versus Revolutionary Socialism (1984)

53. Trotskyism. Wally Preston.

54. Anarchism. Brian Rubin.

55. Labourism versus Socialism. Howard Moss.

56. The Politics of Rosa Luxemburg. Victor Vanni (1983).

57. Useful Work Versus Useless Toil. Victor Vanni (1983).

58. Schools—Who Needs Them? Clifford Slapper (1987).

59. The Myths of Racism Exposed. Gary Jay (1989).

61. Ten Years of Thatcher—Should the Workers be Grateful? DEBATE between Conservative Party (Leslie Winter) and Socialist Party (Steve Coleman) (1988).

62. Controlled Market Economy versus the Abolition of the Wages System. DEBATE between Paul Hirst (Sociology Lecturer) and Socialist Party (E. Hardy) (1983).

63. Should Workers Vote Labour? DEBATE between Labour Party (Kelvin Hopkins) and Socialist Party (E. Hardy) (1988).
64. Marx's Conception of Socialism. E. Hardy (1983)

Party News (1990)

Party News from the April 1990 issue of the Socialist Standard

Eccles branch are putting up a candidate in the Winton ward, Eccles, for the elections to Salford Borough Council on 3 May.

Those in the ward who want to indicate a preference for socialism can do so by voting for the socialist candidate Jimmy Rushton.

Further details, offers of help, donations to: Andy Pitts, Election Agent, Erne Court, 146, Slade Lane, Levenshulme, Manchester M19 2AQ. (Tel: (061) 225 ****).

#    #    #    #

West London branch are putting up three candidates in the Southfield ward for the elections to Ealing Borough Council on 3 May.

The socialist candidates will be Adam Buick, Ralph Critchfield and Kevin Cronin.

Further details, offers of help, donations to: Adam Buick, Election Agent, 40 Granville Gardens, London W5 3PA. (Tel: (01) 992 ****).

#    #    #    #

Socialist Teachers Group

A meeting will be held at the Socialist Party Head Office, 52 Clapham High St, London SW4 7UN (nearest tube: Clapham North) at 2pm on Sunday 20 May to discuss setting up such a group. Further information: Kerima Mohideen, c/o Head Office.

Inflation: the Endless Farce (1990)

From the April 1990 issue of the Socialist Standard

Every Prime Minister since the War has pledged himself or herself to tackle inflation as a top priority but rising prices have been with us continuously for half a century. Every year since 1938 prices have gone up and are still going up. The price level on average is about 24 times what it was before the war.

It was not always so. From 1850 to 1914 prices were stable; there were moderate fluctuations but the price level in 1914 was almost exactly the same as it had been 64 years earlier. And in 1919 the government decided to bring prices down and there was a fall of over 30 per cent between 1920 and 1925.

One of the rules of the game is that the party in opposition blames the government; that is, until it becomes the government itself, when it blames someone else, the greedy workers or the greedy shopkeepers and manufacturers; or the lenders of money not being greedy enough (according to the Chancellor of the Exchequer it is low interest rates that cause inflation).

There is a short answer to these glib excuses. Between 1850 and 1914 average wage rates went up by nearly 90 per cent, more than keeping up with the steadily rising productivity in industry – but no inflation.

If shop-keepers and manufacturers have the power, as well as the will to push up prices, why no inflation before 1914? And how come they allowed prices to fall heavily between 1920 and 1925?

As for interest rates, compared with the present 15 per cent bank minimum lending rate, the rates before 1914 were mostly between 3 per cent and 5 per cent – but no inflation.

Control of currency issue the key

It was not an accident that governments before 1914 and in the year 1919 knew how to stabilise prices, how to raise them and how to lower them. They, or their advisers, knew that the key to the situation is the amount of currency (notes and coins) in circulation. If this is kept in line with the needs of the growth of production, population, etc. prices will be stabilised. If currency is arbitrarily increased prices will go up. If arbitrarily reduced, prices will go down.

Before 1914 stability was maintained through the gold standard which closely controlled the issue of currency by the Bank of England. In 1920-25, on government instructions, the currency in circulation was cut. (The Bank burned £66 millions worth of notes).

Since 1938 there has been no control. Additional notes and coin have been issued in a continuous stream. The amount of currency in circulation with the public in 1938 was £442 million. It is now more than thirty times as much, at £14,388 million, and is still steadily increasing. The bath has been slopping over for fifty years and one dotty thing the Labour and Tory plumbers have been agreed about is that they need not turn off the tap. So why couldn’t they ask their professional advisers what to do? They did, but those advisers had all picked up the same dotty notion from the same original source. As early as 1923, in his Monetary Reform, the economist J. M. Keynes had argued that it is not necessary to have direct control of the amount of notes and coin.

Degeneration of Monetary theory

How monetary theory degenerated was told by Edwin Cannan, at that time Emeritus Professor of Political Economy at the University of London, in his Modern Currency and the Regulation of its Value [1931). Referring to what he called “the bank-deposit theory of prices”, he wrote (p.88):

  Within, I think, the last forty years a practice has grown up among the people who talk and write on such subjects, of regarding the amount which bankers are bound to pay to their customers on demand or at short notice as a mass of ‘bank-money’ or of ‘credit’ which must be added to the total of the currency (of notes and coin ) whenever variations in the quantity of money are being thought of as influencing prices. This is one of the most obstructive of all modern monetary delusions.

Cannan went on to show that this alleged mass of “bank-money” does not exist:

  with the exception of a small amount of currency which they keep ready to meet any likely demands on the part of their customers, the banks have . . . paid away money as they receive it, buying land and buildings for the conduct of their business with some of it, and investing or lending all the rest.

Cannan’s warning was not listened to. In the same year, 1931, the bank-deposit theory of prices received official endorsement from the MacMillan Committee (Report of the Committee of Finance and Industry, p.34). In its report the Committee rejected the idea that deposits in banks are cash deposited by customers, and argued that:

  the bulk of the deposits arise out of the action of the banks themselves, for by granting loans, allowing money to be drawn on overdraft … a bank creates a credit in its books which is the equivalent of a deposit.

Keynes was a member of the Committee and was credited with having drafted that section of the Report.

The Committee “proved” that, on a deposit of only £1,000 cash, a bank could lend £9,000. Their method of proof was a masterpiece of rigged argument. They assumed that only one bank existed. This, they argued, really made no material difference. But also, and without saying that they were doing so, they assumed a prolonged series of lending operations which would take several months and in all that time no-one ever withdrew cash from the bank. Cash was assumed to go into the bank but no depositor or borrower took any cash out. It was a kind of bank that never existed in the real world.

If the doctrine had been based on reality its significance in relation to prices would be obvious. If an individual with £1,000 spent it or lent it the measure of its influence on prices would be just £1,000. If lent to a bank which re-lent it, its influence on prices would be multiplied by nine. What is more the MacMillan Committee’s arithmetic was related to the 10 per cent cash reserve banks ordinarily maintained at that time. As the bank cash reserve is now only about 1 per cent of total deposits the multiplier now would be not nine, but ninety-nine.

In recent years there has been a seeming conflict of views on inflation between the followers of Keynes and their rivals, the so-called monetarists. It is a phoney war. The high-priest of Monetarism, Professor Milton Friedman, suffers from the same delusion about the mystical powers of the banks as did Keynes, as will be seen in Free to Choose (by Milton and Rose Friedman, p.298).

Unlike the politicians and many economists, the professional bankers ridiculed the Keynes-MacMillan Committee monetary doctrine. They knew that banks do not have this fanciful power to “create deposits”. One banker, Walter Leaf, Chairman of the Westminster Bank, had this to say:

 The banks can lend no more than they can borrow – in fact not nearly so much. If anyone in the deposit banking system can be called a ‘creator of credit’ it is the depositor; for the banks are strictly limited in their operations by the amount which the depositor thinks fit to leave with them. (Banking, Home University Library, p.102).

Walter Leaf’s Westminster Bank is now the National Westminster. In the Financial Times (9 April 1984) it published as an advertisement a survey of its operations during 1983. Under the heading “Financial Highlights 1983” the following item appeared:

Money Lodged £55,200 Million
Money Lent £45,200 Million

No nonsense about receiving £55,000 million from depositors and lending 9 or 99 times as much.

Confusion about money supply

Government monetary policies have gone through several phases. From 1945 to the 1970s the Labour and Tory Parties both believed, with Keynes, that the cure for unemployment is for the government to run a budget surplus. (The present Tory government policy of using a big budget surplus to pay off the national debt is what the former Labour Prime Minister Lord Wilson specified in 1957 as the cure for inflation).

In 1977 the Callaghan Labour government, faced with prices and unemployment both rising fast, and the obvious impossibility of running a budget deficit and a budget surplus at the same time, threw overboard the Keynesian doctrine and adopted as their price policy studying the movements of what they call “money supply”.

The favourite for several years was the index called M3 which is made up predominantly of bank deposits though it also included the relatively minor element of the currency. The latest M3 figures are:

Bank Deposits £225,260 millions
Currency              14,384 millions
Total                 £239,644 millions

Eventually the Thatcher government lost confidence in the usefulness of M3 and the Treasury has just decided to stop publication. The Thatcher government’s interest was then transferred to M0, which, unlike M3, is predominantly made up of the currency. But the government and its advisers have quite failed to see the point of the achievement of stable prices by the gold standard, and the reduction of prices in 1920-1925. It is not a question of just “watching” M0 but of actually restricting the issue of notes and coin, something the government is not doing and has not indicated the intention of doing. The amount of currency in circulation is still going up.

The politician who has for years taken an active interest in inflation is Enoch Powell. His line has been to criticise governments for their refusal to recognise that they and they alone are responsible for inflation. He argues that the prime cause of inflation is that government expenditure is too high:

  Nobody knows so well as the Bank of England … that the expenditure of Government itself is the prime factor in causing mounting inflation” (from a speech on 11 November 1966).

He resigned from the Tory government in 1958 over that issue, though he served as a Minister again from 1960 to 1963. And during all the period 1955-1963 the government was pumping out more and more currency, pushing up prices. So Powell was just as much responsible for inflation as any other Minister. He has never understood the real cause of inflation. He shares the same delusion about banks’ supposed power to create deposits as Keynes and Professor Milton Friedman. He claims to see a difference between the government borrowing from “the public” and borrowing from the banks. In an article in Intercity (July/August 1989) he wrote:

  Only the banking system can provide purchasing power to one section of the public without the equivalent purchasing power having been transferred to it by another section.

This is nonsense. The banks can’t create purchasing power. As Walter Leaf rightly pointed out, the only way the banks can be enabled to lend is to persuade “the public” to lend to the banks, in the form of deposits.

Why inflation started

The question arises why do governments go in for inflation. In this country the three big inflations have started in wars, the Napoleonic wars and the two world wars.

It is a mistake to think that the British government’s interest in inflation is to provide revenue by printing notes, though this could happen as it has in some other countries. What happened in the three wars was that the government had to call in all the gold in circulation and in bank vaults to pay for desperately needed imports of food and war materials, which made continuation of a gold-backed currency impossible. The amounts of revenue the government actually gets from increasing the note issue is too trivial to count in relation to government expenditure. In the current year the £800 million from additional notes in circulation is less than one half of one per cent of Government expenditure of £181,000 millions.

Another issue of interest is who gains by inflation and who loses. Long experience supports the view that borrowers, including the industrial capitalists, gain under inflation by repaying loans in depreciating currency, and lenders do well from deflation. Bankers being both borrowers and lenders, generally prefer stable prices. Some property-owners to whom inflation has been disastrous are those who bought and held certain government and local government stocks the market price for which is now only £30 for each £100 nominal.

It is an error to suppose that inflation is bad for the workers. It is no harder (and no easier) for organised workers to raise their standard of living when prices are rising than when they are falling or stable: it all depends on the varying conditions in the labour market. In the great majority of years in the half-century of inflation wage rates have risen more than prices. And it happened when prices were falling sharply between 1920 and 1925 that wages fell more than prices. The workers were worse off.

One last word about the supposed evils or benefits that will flow from ending inflation. It will not have the effect either of causing unemployment and trade depression or of preventing them. Capitalism goes its own way irrespective of governments’ monetary policies.

Edgar Hardcastle

50 Years Ago: The Stalin Dictatorship (1990)

The 50 Years Ago column from the April 1990 issue of the Socialist Standard

The late Prince Kropotkin stated at the outset of the Russian revolution: "The Bolsheviks are not what the Western workers think they are". He was correct. The Western workers thought them to be Socialists: they were mistaken.

Socialism is the noblest cause that ever appealed to the world or to man; the Bolsheviks defamed those who would not accept their leadership and have dragged the working-class movement into the sewers of opportunism and corruption: they used their organisation, the Communist Party, as a means of enabling them to influence the Labour movement of the Western world in the interests of Soviet Russia: the Communist Party became the foreign office of the bureaucracy of the Kremlin, and now. under the dictatorship of Czar Stalin, functions as the ruthless tool of imperialism.

[From the Socialist Standard. April 1940.]

Seeing Red (1990)

Book Review from the April 1990 issue of the Socialist Standard

Seeing Red—Being Green. The Life and Times of a Southern Rebel. By Denis Hill. Iconoclast Press. £8.95.

This is a disappointing book. The advance publicity suggested it would be arguing a case for socialists supporting the Green Party, but it turns out to be a wordy (nearly 600 pages) autobiography of a former member of the Communist Party (left 1969) and Secretary of Brighton Trades Council (1960-1974) who, sadly, expresses views that can only be described as racist.

At one point Hill does write: “I do not myself think that we can achieve a truly equal and just society until we have abolished the wage-system altogether. This implies the abolition of money itself, for it is the existence of these token vouchers which distorts everyone's thoughts and values". But this is marred, indeed completely negated, by a passage in the following paragraph about the need to form “a classless national community . . . based on the original Anglo-Saxon/Celtic stock" and references to “our country’s racial stock” having been diluted by mass immigration and turned into a “hybrid mixture of non-European races". Hill now supports the Green Party but we can't believe that such views will be any more acceptable to them than they are to us.

Adam Buick

Against apartheid (1990)

Book Review from the April 1990 issue of the Socialist Standard

Subverting Apartheid: Education, Information and Culture under Emergency Rule. By Jim Corrigall, Elaine Unterhalter and Gillian Slovo. International Defence & Aid Fund for Southern Africa, 1990. £2.

In a world of objectionable regimes South Africa is in the forefront of those states in which the blatant repression of the majority population is systematically pursued. Any publication that aims to present the facts about South Africa necessarily involves a catalogue of horror. Subverting Apartheid by a group of anti-apartheid militants is no exception to this rule.

It examines the effects on the media, education and culture of Emergency Rule introduced in June 1986 and only recently relaxed and provides detailed evidence of the extent to which the apartheid regime attempted to justify and maintain its position at whatever cost to the majority. The period of Emergency Rule magnified the measures that the state was prepared to undertake in an already repressive regime This study is largely descriptive in presenting information about repression in South Africa even if it was written before the release of Mandela and the unbanning of the ANC, but it also pinpoints the failure of the state apparatus to stifle unrest and resistance.

The other concern of the study is to draw attention to those groups and individuals pursuing what it calls "the goal of national liberation, creation of a united, non-racial and democratic South Africa". The attempt to suppress what the Pretoria government viewed as revolutionary movements by a counter-revolutionary strategy did not succeed:

In spite of inflicting thousands of deaths and detaining and arresting tens of thousands, it was clear that the forces of democratic resistance were not crushed or demobilised, but adapted to the conditions of extreme repression.

It is this failure to subvert resistance that is a positive aspect of a period and place in history often associated with the purely negative. It enables the reader to find some relief from the evidence of over 5.000 deaths since 1984, of the 40,000 people who were detained without trial, and of the host of regulations restricting the activities of anyone who sought to oppose apartheid.

There is a tremendous resilience which adapts to such nightmare conditions and perpetuates the struggle against repression even in areas specifically targeted by the total might of the state apparatus. Given the restrictions imposed on informa

tion emerging from South africa, this study provides valuable evidence of what actually took place. It also helps counter some of the propaganda of the South African Department of Information whose budget for 1988-89 was R31,600,000.

Questions can, and should, be raised about the nature of the society being pursued under the guise of "national liberation", particularly as it assumes that non-racial democracy in South Africa would eradicate exploitation and oppression. What cannot be underestimated, however, is the irrepressibility, organisational abilities and adaptability of individuals and groups surviving and putting forward ideas under the most horrendous conditions. South Africa may be a byword for repression but it should also be recognised as a symbol of the resilience and resistance of the repressed.

Philip Bentley

Between the Lines: Power Play (1990)

The Between the Lines column from the April 1990 issue of the Socialist Standard

POWER PLAY

People with not very much to do at noon each day tune into Channel 4 and watch The Parliament Programme. It used to be a bit dull, filled mainly with actionless-packed shots of the House of Lords (a yawn an hour) and talk about the exciting events taking place in the lower chamber. These days the programme is not just a bit dull, but dullness unrestrained, with lengthy recordings of the Commons at work. This "work" takes two main forms: there are the big shows where the two chief dinosaurs shout names at each other across the room, while backbenchers make animal noises: and there are the fringe shows—which is what goes on most of the time—where the chamber is as empty as the bars are full and a few unknown losers sit around trying to make the poll tax or Scottish water supplies sound interesting.

In the big shows there are set postures which regular viewers of The Parliament Programme have come to expect. There is Kinnock's effort to sound like Thatcher and Thatcher's effort to to sound like Churchill, the Speaker's effort to sound like a real man even though he has on a wig. and Jeremy Corbyn's effort to sound like Fidel Castro, even though he is a pathetic reformist twit. MPs seem greatly concerned to know what Thatcher is doing today. One day she will tell them that she is devoting every spare hour to the efficient legalised robbery of the working class. Paddy Ashdown speaks every so often to let everyone know that he is still there, dead centre, dead boring and with the deadest of prospects.

The Parliament Programme not only records these mind-numbing scenes of debates between those who support capitalism and those who support capitalism (with occasional interruptions from those who support capitalism), but it also invites the mind-numbers into the studio to analyse what they have been saying. It is like watching Neighbours and then inviting Melvyn Bragg to host a studio debate on the dramatic merits of each episode.

Let's face it: people who enter parliament on a capitalist ticket do so with the intention of re-arranging the furniture in a museum which should long ago have been demolished. What have workers to gain from listening to their political justifications for such futile game-playing? For example, on The Parliament Programme today (8 March) there was an interview with Graham Bright, a Tory MP for Luton, who is dedicating his energies to passing a reform which will make it more difficult for acid-house parties to be organised. The merits or demerits of his stupid law are of no interest to this writer; what is of interest is that here is a man who has been elected by tens of thousands of workers who naively imagined that making Mr Bright an MP would make their lives better. Far from this being the case, he seeks to conserve a social order which treats workers with contempt, while using his limited powers of oratory to waste parliamentary time complaining that the proles are dancing too much.

GIVING THE GIRLS A GO

It used to be argued every so often that all of this parliamentary pomposity was a reflexion of the male egos dominating the Westminster gentleman's club. Now that a female presides over the show the argument is put less often. If she has proved little else. Margaret Thatcher has shown that you do not need to wear trousers to be a callous political opportunist.

Forty Minutes (BBC2. 1 March. 9.30pm) told the story of three Tory women who were trying to be nominated as candidates for the safe Conservative seat of High Peak in South Yorkshire. The good bit of the programme was that none of them won. The bad bit was watching them trying to win. Asked whether they supported capital punishment (strangling by the state) there was not the hint of a blush as one of the smiling opportunists affirmed her full support (as if there is such a thing as partial support for hanging). In the end the Tory-women hopefuls were rejected in favour of a chap who looked like a parson who had presided at too many funerals. The pro-hanging hopeful said that she would live to fight another day. Of course, the Guildford Four would not have been able to enjoy that opportunity if she had her way.

Steve Coleman

Anyone for change? (1990)

From the April 1990 issue of the Socialist Standard

The dramatic social and political upheavals in Eastern Europe led to almost daily images of public demonstrations and popular uprisings against long-established dictatorial state regimes. Coming as it did over the Christmas period, the fall of the tyrant Ceausescu in Rumania presented the western news media with a golden opportunity to make the most of a normally slack period for hard news. We were told repeatedly that "democracy" was breaking out all over Eastern Europe; that workers there were finally tasting "freedom", and that "communism" was literally falling apart. The same newshounds were far less vocal in explaining what these terms meant, and why the changes in countries such as Rumania. Hungary. Czechoslovakia and East Germany had occurred.

The Socialist Party has a very clear and practical conception of what is meant by socialism or communism; to us, both these terms mean the same thing and have nothing whatsoever in common with what are called socialist governments, countries or states. By socialism we mean a fundamental change in the economic basis of society, that is, the way in which the members of society are organised to produce and distribute the things they need to exist. It means a world-wide social system where the entire productive and distributive resources of the planet are commonly owned, consciously controlled and democratically operated by the world community as a whole. It means a society where social wealth is produced solely to meet the needs of the community, on the basis of free and equal access by all, without money or any other medium of exchange taking place.

Class Ownership

This outline contrasts sharply with the present world social order of capitalism, which grew historically out of previous social systems and now dominates the world. Its underlying features are the class ownership of the means of wealth production and distribution by a small minority of people in all countries of the world, and the exclusion of the great majority of people from any significant ownership and control of these means. Having little or no resources at their disposal, the working class majority are forced by economic necessity to sell their working abilities to the capitalist minority in order to live. Wealth produced by the workers takes the form of commodities which are sold on a competitive market with a view to profit for the capitalists. In return for selling their labour power—which itself becomes a commodity—workers receive payment in the form of wages or salaries. However, in the process of production generally, these payments represent less than the value which the workers as a class create, and the difference between them is surplus value, which the capitalists repeatedly accumulate and which is the source of their monetary profit, realised through sales.

So capitalism is a class-divided, profit-generating system governed by impersonal market forces and not the needs of the human community. The useful, producing majority are in a subordinate position of wage slavery, whilst the useless, non-producing minority enjoy a privileged unearned income from their economic exploitation of the workers. The capitalists wield power through their control of governments, together with the legal and military might of the state machine. This apparatus ensures that, firstly, workers are legally robbed when they produce wealth and, secondly, it conditions them by force and ideological persuasion to accept these social arrangements as necessary, inevitable and. indeed, natural.

Since its formation the Socialist Party has consistently opposed the profit system, no matter how its supporters or apologists have tried to disguise it as something else. In this country and the United States of America, for example, the classic free market form of capitalism developed. with the ownership and control of resources in the hands of predominantly private shareholders holding legal property rights backed up by the state. In Russia, starting with the Bolshevik seizure of power in 1917, another form of capitalism came into being: the state-managed variety. This soon spread to most of Eastern Europe and as far afield as Cuba and China. The rulers of these countries, using the rhetoric of Marxism and the theories of Lenin, labelled these countries communist or socialist, but in reality they were state-capitalist systems of class monopoly and control, where the state itself was the collective employer of wage labour. A minority of top officials in these '‘communist’’ parties personified the capitalist class: they directed the production of goods and services which did not belong to the "people" but were sold within a buying and selling framework. The majority of people were excluded from access to this wealth, and like their counterparts in the ‘free" west could only buy back what their wage rations would allow. The Socialist Party is just as hostile to this arrangement of social affairs as we are to the supposedly liberal free market with which we are only too familiar.

Reforms No Solution

Because it is not primarily geared to satisfying people's needs but with producing saleable commodities, capitalism inevitably generates insoluble social problems, like starvation, homelessness and war. the latter being the outcome of competitive economic rivalry between capitalist states over trade routes, raw materials and sources of profitable investment. For the working class this means lives of relative poverty, fear, insecurity and frustration, arising out of our alienation from real social power and control over our lives.

Socialists argue that these problems cannot be reformed away, as the various conventional political parties continually advocate. Whether capitalism is run by those on the right, left or centre, the problems arise directly from production for sale and profit, and will only disappear when workers in a majority become conscious of their class interests and abolish capitalism.

It is workers who keep capitalism in being through their misguided support for its political representatives, including the many misnamed socialist and communist parties which have done so much to obscure and distort the concept of socialism. Part of the ideology of capitalism is that society cannot function without government and leaders, and that workers at election times can register their votes to put into power the political party of their choice. In the state capitalist countries, workers do not possess this much vaunted "democratic freedom" to swap their political leaders around, even though this right would still leave them in the position of being wage-slaves.

When a majority of the world's workers understand what socialism is and want it, they can organise themselves to take the necessary democratic political action to abolish the capital/wage-labour relationship and bring in common ownership of all resources, democratic control by the majority, and production solely for use in accordance with their self-defined needs.

Socialism is an exciting vision of a world freed from artificial, market-based restrictions which will allow human beings to live in peace with each other. With the problems of social living solved, we will be able to determine for ourselves the kind of relationships and lifestyles most suited to our changed conditions, relationships not imposed from above but freely chosen by ourselves.

So the real choice facing workers all over the world is not between private and state capitalism but between production for profit and production directly for need. The scale and growth of modern technological developments make socialism a practical possibility now. and not some distant utopian fantasy—the missing element is the political awareness of the majority. The real utopian fantasy is capitalism working without its inherent problems, and we therefore urge you to consider seriously the revolutionary socialist alternative which has never been tried anywhere. Join us and help to make it a reality.

Valentine McEntee

Caught in the Act: Missing a stroke (1990)

The Caught in the Act column from the April 1990 issue of the Socialist Standard

Missing a stroke

Forty years is a long time and anyone who hangs on in a job that long can expect to get a gold watch which they think is a reward but which is actually a stark reminder that in a commodity-producing society our lives are tyrannised by time, not least by the need to give our employers full value for our wages by never being late for work. A recent, rather different recruit to the ranks of the long-serving is Edward Heath, whose 40 years as an MP were celebrated, a touch ghoulishly. by a lunch at London's Savoy Hotel.

The 500-odd guests were presided over by Lord Home, whose brief and disastrous premiership more or less paved the way for someone with Heath's background to become Tory leader. But Home is not one to bear grudges; after all he is an aristocratic Scottish landowner who went to Eton and played cricket for Cambridge University. Perhaps because he had to claw his way up from his origins as the son of a humble shopkeeper in the tumbling Kentish seaside town of Broadstairs, Heath does bear grudges, which means that Margaret Thatcher's presence at his celebratory lunch could hardly have added to its warmth and gaiety.

Heath has never tried to hide his pique at Thatcher's victory over him in the Tory leadership election in 1975. From his regular seat in the Commons he glowers and simmers, a persistent critic of a government which in theory he should support. This causes much resentment among Tories who are more loyal— or more ambitious. Says Teddy Taylor, the MP for Southend who has upset quite a few people in his time, "he is just enjoying himself because the government is in trouble" Well Heath doesn't look as if he's enjoying himself; after all it must be pretty stressful for a politician to try to resurrect themselves in a form which history would hardly recognise. But yes. the Edward Heath of 1990 who mutters rebelliously about our poverty, the current economic crisis and Thatcher's head-on style of politics is the same man who was Prime Minister for over three years of muddle and conflict during the early 1970s.

Selsdon Man

In fact Heath was never really secure in the leadership for he was dogged by persistent doubts about whether he was sufficiently cunning to survive in the political jungle and to keep his party in the same state. His unexpected victory in the 1970 General Election meant that he was suddenly dominant in the Tory party—the more so because coming through all that internal enmity relieved him of the usual debts to supporters. Clearly, in his old age—he is 73—Heath has forgotten the policies he was pledged to when he came to power. The 1970 election had been preceded by the notorious mini-conference of Tory leaders at the Seldson Park Hotel, which marked the beginning of the end of 'liberal'' economics and the planning of an open assault on the trade unions' power. This was called the emergence of Selsdon Man. an atavistic being who would soon be swept into extinction by progressive votes. While the Labour Party chuckled Heath replaced "liberal" Edward Boyle as shadow Education Minister with Margaret Thatcher.

But the voters found Selsdon Man rather attractive and for a while after the Tory victory in 1970 he ruled with his theories about the market economy and worker/employer confrontation. It was the government's intention that there should be no more support for ailing industry; companies which were “lame ducks"—in other words, unprofitable—should not be kept going simply because they made something useful or because a locality depended on them for employment. They should be abandoned to die. The abolition of the Prices and Incomes Board set up by the Wilson government signalled that in future both sides in industrial disputes would be left to slug it out without any interference from the government (the Industrial Relations Act which became law in August 1970 did not count as government interference). The idea was that if the employers were thrown on to their own resources they would more keenly resist wage claims and this would eventually make British industry more efficient and competitive and profitable.

U-Turns

To some people this all sounded gloriously simple and intelligent—the kind of policy some Tories had been waiting for for a very long time. But as a rehearsal of Thatcherite politics it was a disaster, at times farcical. Heath's ambition to take on the unions foundered when the Industrial Relations Court did what Parliament had told them to do and imprisoned five dockers who refused to appear before them. Quite apart from the dock strike and other protests which this provoked, this was extremely embarrassing for the government who escaped from their predicament by discovering an obscure functionary called the Official Solicitor to challenge the court's decision. Having succeeded in this, an equally obscure person called a Tipstaff went along to Pentonville prison and knocked three times on the door—or whatever Tipstaffs do when they want a door to open to relieve a government of an embarrassing blunder—and got the dockers released. Whereupon the Industrial Relations Court subsided into death.

Even more farcical were the government's attempts at controlling the economy—at one time tightening the screw, at another time loosening it only to frantically tighten it again. A recession came rumbling in. unemployment rose towards the million mark and prices—which Heath had said could be reduced "at a stroke" continued to rise The panic at Westminster became obvious for all to see when the government performed its U-turn, implementing policies which it had so recently opposed on the argument that they were destructive of the economy of British capitalism. Huge sums of money were made available to industry in investment grants with two world- class lame ducks—Rolls Royce and Upper Clyde Shipbuilders—being especially grateful to be allowed to walk again. A statutory restriction on prices and incomes was introduced and a Price Commission and a Pay Board were set up to ensure the government intervention in pay negotiations which Heath had said had been so damaging.

Three Day Week

The curtain began to come down on this rollicking farce with the Yom Kippur War and the Arab oil states making hay while their skies were unclouded by competition from the North Sea, restricting production and hiking up the price of what exports they allowed. For British industry the crisis was aggravated by their deliberate policy of relying on oil rather than coal, which was always under threat from those nasty disruptive miners . . .  At the end of 1973 the government were in conflict with, apart from the miners, the electricity supply workers and the train drivers. Their response was the measure for which Heath will always be remembered: the Three Day Week and its restrictions on power consumption. As a way out, Heath chose to fight a General Election on the theme of Who Runs Britain—the Unions or the Elected Government? His defeat was by the narrowest of margins but. more importantly, his most cherished policies, through which he was to go down in history as the Saviour of the Nation, had been ignominiously abandoned.

No one can argue with Heath about the waste of the past ten years except that there is nothing better to say about his own time in power, which exposed his claim to be able, not only to control capitalism but to do it At A Stroke.

Ivan

Poll Tax battles (1990)

Editorial from the April 1990 issue of the Socialist Standard

As the time for the first payment of the Poll Tax in England and Wales approaches, the battle of words that has been going on for the last couple of years about the government's decision to impose this in place of the existing system of local rates is reaching a crescendo.

Though there are new features, this battle is a continuation of the century-long struggles by sections of the propertied class to pass the burden of rates and taxes on to some other sections. For instance, there was the campaign of the landowners to secure full or partial exemption from rates for agricultural land which went on throughout the 19th century. As local rates fell heavily on them they also pressed for some items of local expenditure to be transferred to central government. This is again being proposed today with one Tory MP for a rural constituency saying that the government could greatly reduce the amount of the Poll Tax and therefore its unpopularity by more such transfers (The Times, 17 January). Other group interests obtained reduced rates for industrial and transport companies and for offices and shops.

As the cost of central and local government has increased enormously (in relation to total production it is now more than five times what it was a hundred years ago) this struggle between sections of the propertied class has intensified. And, as the workers now have a clear majority of votes in local and parliamentary elections, so have the efforts to persuade them that their interests are involved in the question of rates and taxes.

We have always urged workers to resist such efforts. As we wrote in 1912: ‘‘Right through the history of taxation the spectacle has been seen of one section of the propertied class trying to shift the burden of taxation on to another section, and the question in many minds is . . . Can they shift it on to the working class?' We answer no! The working class does not own property. They exist alone by selling their energy (their power to labour) to the employing class the owners of the means of production" (Socialist Standard, March 1912).

The economist David Ricardo wrote in 1817 that “a tax on wages is wholly a tax on profits". Adam Smith had presented the argument earlier still, in his Wealth of Nations (1776). Smith showed that if, in given market conditions, an employer could only get the workers he needed by payment of £100 a week before a tax on wages was introduced, he would have to pay a wage sufficiently larger to leave £100 a week take-home pay after the tax was imposed.

The ability of workers to maintain or improve their standard of living does not depend on whether taxes or rates (or prices or interest rates, for that matter) are rising or falling. The standard of living of the working class depends on their ability to get employment, on the amount of their wages and salaries, and on the level of expenditures they have to meet.

Material improvements of the standard of living can be gained by effectively organised workers during periods when production, sales and profits are all rising, as has taken place in the last eight years where wages have steadily risen more than prices (this despite the continued protests of government ministers). When the next depression approaches and profits fall sharply, the resistance of employers to wage claims will strengthen and the recent rate of increase of wages will be halted.

Under the new system of local government finance introduced by the Tories to replace the rates nearly all individuals over 18 will have to pay a local poll tax at full or reduced rates, and business ratepayers will pay a standard business rate. How the working class will fare will depend as in the past on conditions in the labour market, and not on whether those opposed to the Poll Tax succeed in preventing it being implemented or in getting it repealed or replaced by some other local tax. What we said in 1912 is just as relevant today: ‘‘The working class, therefore, should not waste their time seeking lower rates and taxes. The question for them is How long shall the slavery and robbery of our class continue?"'

Letters to the Editors: The Real World (1990)

Letters to the Editors from the April 1990 issue of the Socialist Standard

The real world

Dear Editors.

As a reader of the Socialist Standard for several years now and interested in your analysis of the capitalist system and its replacement by Common Ownership, I am left wondering at times if it is not some wonderful dream that captivates us all from one time to another when we become so depressed at our horrible grey surroundings that we need some escapist illusion to take our minds away from it all. However, be that as it may, I would now like to comment on aspects of the SPGB’s case:

You heavily criticise the Left Wing' stating that it's just another part of capitalism, but surely these elements which exist, no matter how negative, unruly and disorganised they are most of the time, are also a necessary part of material reality. They are also surely every radical youth's first introduction to political rebellion—where they see themselves as dangerous 'revolutionaries'—and, no matter how crazy you think they are, they exist as part of the opposition to a terrible exploitative system.

Come on, let's be realistic. When I was 18 back in the mid-sixties and ‘raring to go' I didn't run to the good old SPGB. I investigated the 'Socialist Labour League', the International Socialists, the IMG. All right, no way did they hold the same credentials as yourselves in consistency in their adherence to the ideas of Marx and Engels—but they have adopted some of the radical notions of these two major revolutionaries who also believed in a quick demise of the system. You can rail against the Left's romanticism and their political confusion but I repeat they are a necessary part of reality.

You say that the 'Socialist Workers Party' should fight to establish socialism instead of campaigning for the 'Right to Work'—or against the Poll Tax or whatever other issue is thrown up by capitalism—but wouldn’t it be completely extraordinary if workers didn't campaign and vent their anger against varying detrimental aspects of the system?

You say that real socialists do not get involved in such futile ‘goings on', yet these are real people in a real capitalist world acting out of despair and frustration—can you really imagine a strong-minded worker getting so angry about what is happening that he rushes to join the Socialist Party of Great Britain to sort things out once and for all!

You are talking about workers with no patience who want quick solutions which are being offered by various sects on the 'Left' and I agree if they follow these ratbags up the blind alley they will become even more disillusioned and apathetic, but what do the Socialist Party offer in its place? Do you seriously expect workers to abandon their ‘Right to Work' signs and 'Maggie Out' demands for the placards of the Socialist Party who would have us marching through the city streets with 'Abolish the Wages System' written on them!

Come on SPGB. come into the real world—capitalism will end one day; other systems will evolve in line with conflicts, confusions and contradictions, and whether future systems are based on common ownership, exploitation, state dictatorship, or something as yet unconceived will be determined by humankind's expediency at crucial stages—not by a small clique who forever professes to be more Socialist Than Thou' without advancing the cause of positive human progress one whit!

Paul Cash

Sheffield

REPLY:

The "left wing" are not a "part of the opposition" to capitalism. On the contrary they advocate merely a variation to its form (that is the state capitalist one) in which the wages system, buying and selling, police, armies and so on will continue to exist. They peddle the illusion that it is in our class interest. Do not be fooled by their use of the words “socialism” and “communism" or by their use of Marxist terminology. The test to use is a simple one—will the successful outcome of their policies result in the abolition of class exploitation and its replacement by a world-wide system of common ownership of the means of life with production for use and free access by all to the wealth produced?

Clearly the political organisations you mention do not work for this end as an immediate practical possibility. Indeed at election times they urge the working class to vote for the Labour Party. Nothing could be more dangerous and futile because, as they themselves admit, the Labour Party is a reformist and capitalist organisation committed to running the system of production for profit.

Agreed that many sincere and well meaning people "vent their anger" with the system by actively taking part in "left wing" activity. We are unclear why you consider this exercise in futility "necessary". It will not remove the cause of working class misery, rather it will confuse the issue which workers everywhere should have always before them—capitalism or socialism?

Confusion gives rise to frustration and often to apathy which is a barrier to the democratic class conscious political action which must be undertaken if we are to liberate ourselves. Changes in society don't just happen, they are the result of human activity in pursuit of class interest. This is how the change from capitalism to socialism will come about, and it will take a lot of patient hard work to build a socialist majority because there are no short cuts. We do expect workers to give up their support for organisations which simply tinker with the problems of class society. Sticking plaster solutions must be abandoned if we are to free ourselves by taking control of the state and its armed forces, using them to take into common ownership under democratic control the whole of the means of wealth production and distribution. Until that time comes (and it cannot come quickly enough) capitalism and its horrendous problems will continue to afflict the useful majority in society.

EDITORS

South Africa

Now that the Communist Party of South Africa has been unbanned, it is possible to discuss its mistaken policies openly in South Africa. We reprint below a letter published in the Johannesburg "Star" on 26 February.

In the article "Alone is my joy—after 40 years" [The Star, February 8), Joe Openshaw states: "After 1948 I ceased being an active communist but continued to have faith in the economic arguments propagated in ‘Das Kapital’ and in Marxism".

And he concludes: "The upheavals in the Soviet Union and in the communist bloc have shaken me, but joining the Communist Party seemed a good idea at the time. My conviction still is that socialism could work if not perverted".

The last point, "the perversion' of socialism”, has been the central deception of the Bolsheviks from before 1917: and their followers, as well as their mainstream opponents and detractors, have "gone along with" the distortions of Marxism, to support the introduction and development of state capitalism in Russia and elsewhere. The Leninists "adapted” Marxism to suit their programmes after the overthrow of Tsarist feudalism.

Joe, your "faith” in Das Kapital and Marxism is very sad, in view of the obvious fact that you have never understood either of these. Das Kapital defines capitalism as a system of commodity production based upon wage-labour and capital, whose purpose is the realisation of the surplus- value wrung from the working class and contained in all commodities. This system prevails in Russia and in all modern countries in this world.

Finally, Marxism does not propose or support minority and/or insurrectionary action for/by/on behalf of the world's working class, but insists on the need for the democratic self-conscious, political act of the said class—when sufficiently enlightened—to replace commodity production by production solely for use, freely and willingly, based on the new relationship of common ownership and control of social production by the whole of society; not by the state, which will no longer function.

Alec Hart 

Johannesburg