Cooking the Books: No Marx without Adam Smith? (2026)

The Cooking the Books Column from the February 2026 issue of the Socialist Standard

Next month is the 250th anniversary of the publication of Adam Smith’s The Wealth of Nations. In the run-up to this, the Economist (18 December) carried an article by its ‘senior economics writer’, Callum Williams, in which he suggested that Smith had been ‘misinterpreted and his influence overstated’.

His case was that Smith wasn’t the originator of the ideas he expressed, that he copied from others and was a bad writer, and that he also made mistakes:

‘In the “Wealth of Nations”, he argued for the “labour theory of value” (the idea that the amount of work that goes into a product determines its price, rather than how useful that product is). This theory distracted economists for decades and laid the groundwork for Marxism. Exploitation, in Marx’s view, arose from the difference between how much workers had laboured to create a good and what they were paid for producing it. Without Smith, there could have been no Marx’.

The last sentence is ridiculous. There were others before Smith who put forward the view that the exchange-value of a product of labour depended on the amount of labour required to produce it. In a footnote early on in the opening chapter of Capital, Marx’s quotes Benjamin Franklin as having pointed out in 1729 that:

‘Trade in general being nothing else but the exchange of labour for labour, the value of all things is … justly measured by labour’.

Prior to Capital, in A Contribution to the Critique of Political Economy (1859), Marx credited Franklin as the person ‘who for the first time deliberately and clearly … reduces exchange-value to labour-time.’

In a podcast on the same subject on 1 January, Williams attempted to refute the labour theory of value by saying that, on the contrary, ‘what determines the price of a good is … how much demand there is for that good and how much of that good is supplied by the market’. This differs from what he had written in his article that a product’s price is determined by ‘how useful that product is’. That argument is easy to refute —there are a lot of things that are more useful than gold or diamonds yet gold and diamonds have a higher price; which, clearly, must have something to do with the fact that it is more difficult (takes more work and time) to produce gold and diamonds than it does to produce the other, more useful products.

Supply and demand determine the short-term market price but, in the longer term, supply will only continue if the suppliers — profit-seeking capitalist firms — cover their costs and make a profit. In bringing about the longer-term price the play of market forces will take into account the labour-time required to produce the product from start to finish.

Not that Marx did argue that under capitalism products exchanged at their labour-time value. He was well aware that the pursuit of profits resulted in this happening only accidentally but that the prices at which products sold could only be explained on the basis of a labour theory of value.

The reason why economists came to reject any labour theory of value (Smith’s as well as Marx’s) was that it led to the conclusion Marx reached who, said Williams, based ‘his entire theory of exploitation on the labour theory of value’. It was, he said, ‘precisely because Smith was so influential, his wrong-headedness about the labour theory of value was a big problem.’

This problem was solved, says Williams, when economic theory ‘gets wrestled back through the correct understanding of value by the marginalists at the end of the 19th century’. How convenient for the exploiters of labour, but it turned academic economics from a science into apologetics for capitalism.

Capitalism’s road to riches (1985)

From the December 1985 issue of the Socialist Standard

Question: How do capitalists go about the business of making all that money — the legitimate' capitalists, that is? One answer takes into account the fact that they invest their capital, either in direct ownership of production plants or merchandise emporiums; or indirectly through building portfolios in the stock exchanges. In either case the process revolves around commodity ownership. Anything that can be extracted or captured from land, waters, or skies that is potentially saleable at a profit is processed and manufactured with that in mind — commodity production and distribution.

In other words, the only way potential profits and riches can be created is by manufacturing or processing items of wealth through the application of human labour power to natural raw materials. But how is that profit finally obtained? After all, what capitalists have immediately on conclusion of the manufacturing process are warehouses bulging with merchandise — products for which they have no personal need. How do they convert those wares into money and profits?

If we go to conventional wisdom we learn that the costs of production are totalled, to which a percentage is added which will constitute their profit. The merchandise will then be shipped to wholesalers, dealers, jobbers, retailers, or whoever, and each individual entrepreneur involved with the sale of the commodities will, in turn, add a percentage of hoped-for profit, thus raising the cost of the commodity to the ultimate consumer in a purely arbitrary way.

There is, too, an added emphasis that clever merchandising talent helps to separate the men from the boys, to enable those with the good business heads get the better of the rest through wheeling-and-dealing. Also, it must be admitted, is the acknowledgement of an element of luck — being in the right venture and the right place at the right time. But the bottom line on how one is supposed to earn profits is: add a percentage to one's costs.

To be sure, capital invested in production is involved in the business of increasing commodity value through the manufacturing process. And such capitalists, in fixing their selling prices, must add to the costs of the commodities that they need to purchase from other production capitalists. They add those expenditures to the other costs in their production process, and then tack on a figure representing the average profit in their industry to arrive at what Marx termed their ' price of production".

But the merchandising capitalists, who are concerned only with the marketing of finished commodities, would have no reason to jack up the cost of the item since marketing adds nothing to its value. True, they do appear to be doing just this and that is exactly how it shows up in standard bookkeeping. But it is all mere semblance of reality; the merchandisers get their profit by sharing in the surplus value that has been added during the manufacturing process.

To whom do they sell?

The population of industrial and trading nations are made up, generally, of two major elements: capitalists, or employers of labour; and the working class. While there are members of the population that seemingly fit neither category professionals who work on their own for fees, artists, insignificantly tiny business people who hire no help — but their totals are minuscule as against those of the main segments and their income aggregates would be more in the category of working-class levels than capitalist.

Looking at the working class as customers for commodities, the maximum they can afford to consume would have to amount to the total of their wage/salary income. They can hardly spend more without getting into deep trouble which, to be sure, a noticeable percentage of them manage to do from time to time, egged on by the flood of huckstering in the press and over the broadcast media. But there is one outstanding flaw in the argument that profits arise from sales to the wage and salaried section of the population. If that were so, would it not seem practical for the employers of labour to force frequent pay raises in order that the workers might have more to spend on profit-generating merchandise? It should be apparent that the driving rationale of capitalist production is to produce more cheaply in order that commodities can be sold for less with similar, or greater, profit. So the working class, whose labour power applied to raw materials is the source of all wealth, is forever being forced to modify their wage increases while increasing productivity — which is equivalent to accepting a wage cut, even if indirectly. That is the bottom line for the employer.

Profiting from one another?

Now what about that capitalist market? It goes without saying that the capitalist class is the consuming class, although not because of the total values of the necessaries and the luxuries that they buy for themselves whether for simple, personal use or for purposes of conspicuous consumption. The bulk of capitalist purchasing is in production goods needed to operate the industries that turn out and distribute commodities. There are tons of ore and metals of all sorts extracted from ore; there are forests and timber and lumber, crude and refined oil. coal and gas. So individual capitalists indeed seem to get rich from selling to one another.

But we run into another problem when we dig below the surface of what is happening in all that commercial activity. Certainly capitalists do get richer when marketing is enjoying boom times but do those riches arise directly from the sales? The trouble with that theory is simply that it is not possible to sell without also buying. Even a manufacturer of men's trousers must buy buttons or zippers and thread and equipment and machinery of all sorts. So what the wily sales staff would gain for the trousers capitalist would be lost when the equally shrewd people from the firms that supply the accessories and equipment go to work.

There is no question about capitalists needing markets in order to make money. But the profits do not emanate from sales. All that is happening in the area of marketing is a re-distribution of profits that have already been produced. That fact was noted a long time ago by the American author and scientist Benjamin Franklin who wrote: 

Trade in general being nothing else but the exchange of labour for labour, the value of all things is . . . most justly measured by labour.

(The Works of B. Franklin &c. edited by Sparks. Boston. 1836. VoI.ll. p.267.) (Quoted in Capital, Vol I. p.59 footnote. Kerr).

In other words Franklin, like others before him, anticipated Marx in observing that value arises from labour not exchange. Marx, like all scientists, took hold of something already known and added to it, in this case, exposing the legalised swindle of surplus value and wage slavery.

The source of the profit

Actually, it should not take too much reflection to understand why it seems to be so difficult to detect the fallacy in the theory that profits arise from the sale of the commodity. In a society based on production for profit it is even perplexing to most that the question need be raised. From the time we are old enough to comprehend, the proposition that profit is made by adding a percentage to cost, at the selling stage, is seen as self-evident and is taught in the institutions of learning from primary grades on up through university level. Even that common assertion, especially by discount merchandisers, that they buy for less and consequently are enabled to sell for less than their competition, does not alter the fact that their profit is supposed to be traced to their mark-up from cost.

And yet, on dose examination, the concept breaks down. Try asking yourself this question, for example: would you be willing to pay £7,000 or more for a shiny new car at a showroom if you were told that a part of that value was added in the dealer's business office simply by putting pencil to paper or fingering the keys of a calculator? The truth is that every penny of value had been added to that car when it had been inspected at the factory for shipment to the dealer.

Every penny of profit that is garnered by the various entrepreneurs involved with the sale of the car comes from the surplus value that had been extracted from the workers engaged in its production. The production capitalists cannot gobble up all the profit that is left after the expenses associated with plant operation have been subtracted.

To leave nothing for commercial capitalists they would be compelled to market the commodity themselves, thus tying up capital that would be better earmarked for production. It makes more economic sense for industrial capitalists to share the loot with merchant capitalists. This they do by selling their commodities to the merchandising capitalists below their full "price of production"; the merchant's mark-up brings the final selling price which the consumer pays up to a level representing costs plus the average rate of profit in full. But this profit has been created in the manufacturing process as surplus value. When the commodity in which it is embodied is sold this surplus value already created by the labour of the working class is converted into a monetary form: profit. Profits are made in the process of production and only realised on the market.

Harry Morrison

(World Socialist Party of the United States)

A Useful Volume Reviewed. (1914)

Book Review from the June 2024 issue of the Socialist Standard

Labour in Irish History. By James Connolly. Paper covers, 1s net. Published by Maunsel & Co. Ltd., 96, Mid Abbey St., Dublin.

Home Rule and Carsonism are filling the columns of newspapers. Wild and furious threats, accompanied by more or less genuine spasms of gun-running, are thrown out as to what will happen if Home Rule is established, and thousands of workers both in England and Ireland are quite excited as to the result of the conflict.

At such a time much good may be done by drawing attention to certain historical evidences for the fundamental facts so important for the workers’ consideration.

And this book will largely help in such a desirable end.

Written by one who has made some study of the Marxian analysis of society, it cuts through the sham superficialities of the struggle between Home Ruler and Ulsterite, Catholic and Protestant, and shows how in Ireland, as everywhere else where classes exist, the real fight, the fundamental antagonism, is between those who own the means of life and those who have nothing but the sale of their labour-power to depend upon for an existence.

The development of the worker in Ireland is traced from the days of the Williamite wars to the present day, after a short account has been given of the previous conditions.

A particularly useful part of the book, in face of the many romances dealing with the time, is the description of the period preceding and covering the “Act of Union” between England and Ireland. The analysis of the various “revolutionary” leaders and their movements, with the exposure of frauds like Grattan, Flood, and O’Connell, is well worthy of study. Above all the fear and hatred of the working class by the wealth owners is shown by their slimy scheming to disarm the volunteers at that time.

These consisted of three sections—the Liberty Corps—working class; the Merchants’ Corps—capitalist class; and the Lawyers’ Corps—members of the legal profession.

As the author puts it:

“The Government [Irish Government bear in mind] had to use force to seize    the arms of the working men, but the capitalists gave up theirs secretly as the     result of a private bargain . . . and the lawyers privately handed their guns over     to the enemies of the people.”

    

“The working men fought, the capitalists sold out, and the lawyers bluffed.”    (p. 58).

An interesting account of a co-operative colony founded at Ralahine, County Clare, in 1831 is given, but the reader will tend to gather the impression that it is by such means the workers will emancipate themselves—an impression distinctly reactionary in face of the growth of the Social forces and the power needed for their economic manipulation.

There is one part of the work, however, to which distinct exception can be taken. This is the section dealing with the first Irish Socialist. One is here curiously reminded of the same attitude taken up by Miss Beatrice Potter (now Mrs Sidney Webb) in her book on "Co-operation".

The attitude is one of suggesting a thing without actually saying it.

The author claims that the great forerunner of Marx—standing between the Utopians and the latter—was an Irishman named William Thompson, who, among numerous notable statements, laid bare the source of value in his work entitled, An Inquiry into the Principles of Wealth most conducive to Human Happiness, etc, published 1824, where it is laid down that all labour can be reduced to unskilled labour of the average kind at a given time.

Miss Potter says Marx took his notion of “homogenous human labour” from Thompson and incorporated it in Capital.

The author says “In the English speaking world the work of this Irish thinker is practically unknown, but on the Continent of Europe his position has long been established” (p. 115).

Now what is common to both Connolly and Miss Potter is the curious fact that neither of them state who established Thompson’s position and made him known on the Continent. The uninstructed reader may learn with surprise that the person responsible was—Karl Marx!

Many years ago Dr Aveling pointed out in a little book called Darwin Made Easy, that the various “objections” by ignorant Christians and parsons to Darwin’s work were all first formulated by Darwin himself in the Origin of Species, and no opponent had ever brought forward any other. So with Marx. All the opponents of Marx who are so loud in their claims to have discovered “forerunners” of his work and ideas are all of them—German, English and Irish alike—indebted to Marx, who first discovered and gave full credit to them in his various works, particularly in the Poverty of Philosophy and the Critique of Political Economy.

And among others he points out that Benjamin Franklin had already in 1721 stumbled on the secret of undifferentiated labour as the source of value, though he (Franklin) did not work the idea out to any extent.

However, it is the fashion to-day among the shallow critics of scientific Socialism who are unable to refute the case or show a flaw in the arguments of Marx to pretend to demolish that genius by finding someone who “anticipated” him, and keeping “gradely dark” the fact that the very person they are indebted to for such discovery is Marx himself.

Jack Fitzgerald

Nature, production and system change (2021)

From the November 2021 issue of the Socialist Standard

System change not climate change. Yes, but how and why do social systems change? What is behind this?

What do we mean when we say we ‘produce’ something? What are we doing? Basically, we are changing the form of something that originally came from nature (or, rather, the rest of nature, since of course we are part of it ourselves). We are changing nature, with the ultimate aim of surviving better within it. All animals, in fact all living things, do. Nature is not something static. Like everything else, it is changing all the time – not just through physical forces like the weather, volcanic activity, solar activity, but also through the activity of living things, both plants and animals.

All living things work, in the sense of expending energy, to extract from the rest of nature what they need to survive. Humans are no exception. We have to as well.

Although other animals are better at doing many things with their bodies than humans are (better eyesight, hearing, sense of smell, but also other abilities we don’t possess), our particular nature as an animal (symbolic thought, vocalisation, writing, prolonged maturation and passing on knowledge) gives us one advantage over all other animals. We are not dependent just on our own bodies – our hands, arms, legs, etc – to extract what we need from the rest of nature. We can make instruments (from materials found in nature) to help us do this:

‘The use and construction of instruments of labour, although present in germ among certain species of animals, is characteristic of the specifically human labour process, and Franklin therefore defines man as ‘a tool-making animal’ (Marx, Capital, Vol 1, ch 7).

Benjamin Franklin’s definition is a good one. We are tool-making animals, i.e, we are animals, but specifically animals which make and use tools. These tools have evolved and developed over time:

‘Darwin has directed attention to the history of natural technology, i.e, the formation of the organs of plants and animals, which serve as instruments of production for sustaining their life. Does not the history of the productive organs of man in society, of organs that are the material basis of every particular organisation of society, deserve equal attention?’ (Marx, ch 15, section 1).

It does, because:

‘Technology reveals the active relation of man to nature, the direct process of the production of his life, and thereby it also lays bare the process of the production of the social relations of his life, and of the mental conceptions that flow from those relations.’

This is the ‘materialist conception of history’. Today, all serious theories of history are ‘materialist’ in the sense that they analyse history in terms of material causes. The idea that history is the working out of some god’s plan or that some god intervenes in history – what might be called ‘the creationist conception of history’ – is as absurd as creationism is in biology.

The ‘matter’ of the materialist conception of history is how humans are organised to meet their material needs, how they are organised to produce these from the rest of nature. The different technologies used by human societies to obtain from nature what they need give rise to different forms of society and as technology changes so does society; in fact as technology develops and progresses so does human society.

But how exactly do changes in technology – changes in the way humans interact with nature to live – lead to a change in the structure of society?

Chapter 1 of the Communist Manifesto of 1848 famously opens with: ‘The history of all hitherto existing society is the history of class struggles.’ How, then, are class struggles related to changes in technology?

‘It is the development of tools, of these technical aids which men direct, which is the main cause, the propelling force of all social development. It is self-understood that the people are ever trying to improve these tools so that their labour be easier and more productive, and the practice they acquire in using these tools, leads their thoughts upon further improvements. Owing to this development, a slow or quick progress of technique takes place, which at the same time changes the social forms of labour. This leads to new class relations, new social institutions and new classes. At the same time social, ie, political struggles arise. Those classes predominating under the old process of production try to preserve artificially their institutions, while the rising classes try to promote the new process of production; and by waging the class struggles against the ruling class and by conquering them they pave the way for the further unhindered development of technique’ (Anton Pannekoek, Marxism and Darwinism, 1909, Chapter II).

The materialist conception of history explains the change from one system of society to another, not just in terms of slow technological changes, but in terms also of a class struggle, with one class championing a new technology against an entrenched class benefiting from institutions relevant to an outdated technology. Such a disconnect exists today, and has done for some 150 years, between already ‘socialised’ methods of production, a vast cooperative effort linking people working in different parts of the world, and property institutions dating from a time when production was still local and individual. Before humanity can organise its current relationship with the rest of nature in a rational and sustainable way this contradiction has to be ended.

Adam Buick

St. Monday: Ye Old holiday (2019)

From the November 2019 issue of the Socialist Standard

Back to St. Monday?

The Labour Party announced at its annual conference in September that if it were to form a government, it would introduce a 32-hour week for workers within the next decade, a reform that many businesses are prepared to accept, a quarter of business owners having said they would consider introducing a 4-day week.

A recent study by Henley Business School saw 250 firms participate in a four-day week, and nearly two thirds of these businesses saw productivity increase. The firms’ ability to attract and retain staff had improved, too. Collectively, these firms now save £92bn each year.

Before the arrival of capitalism and its factory system rural workers were accustomed to sunrise and sunset hours, to the seasons and the vagaries of weather, along with the needs of the crop and animals. Men and women worked in direct relationship to nature. It was an irregular and informal working week. In medieval feudalism there were over a hundred holy days a year on which no work could be done, in addition, to numerous trading fairs. Those who worked enjoyed much more free time than they do today. As the dark satanic mills spread, holy days disappeared. It was the factory which brought in clocking in and clocking out. But peasants driven from their small plots of land by the Enclosures had to be broken of their independent spirit and disciplined into wage-slavery.

The new labour regime did not go uncontested.

‘Keeping St. Monday’ meant observing Monday as a holiday. Many a Tuesday was also observed as a ‘Saints’ day. A rhyme printed in 1639 gives a satirical version of the working week:

‘You know that Munday is Sundayes brother;
Tuesday is such another;
Wednesday you must go to Church and pray;
Thursday is half-holiday;
On Friday it is too late to begin to spin;
The Saturday is half-holiday agen.’

Payday was typically Saturday, and therefore workers often had spare money on Monday. They declared Monday a public holiday of sorts (often to recover from the binge drinking that was commonplace on Sunday, the day of rest). Piece work was often the norm, with workers adapting their skills to operate on flexible working periods. If they missed Monday they could make it up by working extra hard at the end of the week in order to have more free time. In London ‘St. Monday’ was commonly observed and the working week in London during the 1750s was clearly shorter than five days, but as capitalism grew in ascendency it led to an increase in annual working hours from 2,288 to 3,666.

The worship of St Monday had troubled a factory inspector called Edward White who reported in 1864:

   ‘In Birmingham an enormous amount of time is lost, not only by want of punctuality in coming to work in the morning and beginning again after meals, but still more by the general observance of ‘Saint Monday’, which is shown in the late attendance or entire absence of large numbers on that day. One employer has on Monday only about 40 or 50 out of 300 or 400, and the day is recognised by many masters as an hour shorter than others at each end…’

Of course, all this made efficient scheduling of work almost impossible.

Benjamin Franklin, one of the founding fathers of the USA, said: ‘I think the best way of doing good to the poor, is not making them easy in poverty . . . Repeal that [welfare] law, and you will soon see a change in their manners. St. Monday and St. Tuesday, will soon cease to be holidays. Six days shalt thou labor, though one of the old commandments long treated as out of date, will again be looked upon as a respectable precept; industry will increase…’

There was a financial incentive to maximise the return on expensive machinery by having long hours. Machinery does not stand `idle’ nor would the workers attending them be permitted to stand idle either. Working life was becoming increasingly regulated, and the working week was reorganised. Longer hours and unnatural shift working were implemented.

One of capitalism’s myths is that it has reduced human toil yet Kalahari Bushmen work two-and-a-half days per week and on average the working day was less than five hours. The use of the term St Monday may have faded but the custom has not entirely died off. Pulling a sickie is still common practice. With the Labour Party promise, workers are simply recovering what they had four or five centuries ago and subsequently lost.

In line with Karl Marx’s son-in-law, Paul Lafargue, socialists support the right to be lazy. So let’s drink to the health of St. Monday and in the words of Billy Bragg

I’m a hard worker,But I ain’t working on a Monday.I’m a hard worker,But I ain’t working on a Monday.A hard working fellowI ain’t working on a Monday,St. Monday’s still the weekend to me.

ALJO

13th century – Adult male peasant, U.K.: 1620 hours

Calculated from Gregory Clark’s estimate of 150 days per family, assumes 12 hours per day, 135 days per year for adult male (“Impatience, Poverty, and Open Field Agriculture”, mimeo, 1986).

14th century – Casual laborer, U.K.: 1440 hours

Calculated from Nora Ritchie’s estimate of 120 days per year. Assumes 12-hour day. (“Labour conditions in Essex in the reign of Richard II”, in E.M. Carus-Wilson, ed., Essays in Economic History, vol. II, London: Edward Arnold, 1962).

Middle ages – English worker: 2309 hours

Juliet Schor’s estimate of average medieval laborer working two-thirds of the year at 9.5 hours per day.

1400-1600 – Farmer-miner, adult male, U.K.: 1980 hours

Calculated from Ian Blanchard’s estimate of 180 days per year. Assumes 11-hour day (“Labour productivity and work psychology in the English mining industry, 1400-1600”, Economic History Review 31, 23 (1978).

1840 – Average worker, U.K.: 3105-3588 hours

Based on 69-hour week; hours from W.S. Woytinsky, “Hours of labor,” in Encyclopedia of the Social Sciences, vol. III (New York: Macmillan, 1935). Low estimate assumes 45 week year, high one assumes 52 week year.

1850 – Average worker, U.S.: 3150-3650 hours

Based on 70-hour week; hours from Joseph Zeisel, “The workweek in American industry, 1850-1956”, Monthly Labor Review 81, 23-29 (1958). Low estimate assumes 45 week year, high one assumes 52 week year.

1987 – Average worker, U.S.: 1949 hours

From The Overworked American: The Unexpected Decline of Leisure, by Juliet B. Schor, Table 2.4.

1988 – Manufacturing workers, U.K.: 1856 hours

Calculated from Bureau of Labor Statistics data, Office of Productivity and Technology.

Taken from: groups.csail.mit.edu/mac/users/rauch/worktime/hours_workweek.html

Rear View: Peaceful New Year? (2019)

The Rear View Column from the February 2019 issue of the Socialist Standard

Peaceful New Year?

2019 got off to an unexpectedly candid start with US Strategic Command – ‘Peace is our Profession’! – tweeting ‘#TimesSquare tradition rings in the #NewYear by dropping the big ball . . . if ever needed, we are #ready to drop something much, much bigger’. The nuclear-armed Command later recanted: ‘Our previous NYE tweet was in poor taste & does not reflect our values. We apologize. We are dedicated to the security of America & allies’ (@US_Stratcom, 1 January). The video clip accompanying the original tweet prompted Caitlin Johnstone to comment: ‘The only way you could possibly encapsulate the US military’s values . . . more perfectly than cramming it full of footage of $2,000,000,000 warplanes cruising around dropping $3,500,000 GBU-57 bombs would be to also show the human bodies they land on being ripped to pieces. Inflicting death and destruction using unfathomably expensive machinery is the US military’s whole job. Of course, it reflects their values’ (ahtribne.com, 2 January).

Class war

‘In the first three days of 2019 top bosses will have earned more than the typical worker will earn all year, according to a report. The average pay of a FTSE 100 chief executive is £1,020 an hour, research from the High Pay Centre and HR industry body the CIPD has found. By “Fat Cat Friday” bosses will have earned more than the typical annual UK salary of £29,574, the report said’ (bbc.com, 4 January). Kautsky saw such capitalists as anachronistic by the late nineteenth century: ‘But however necessary were the capitalist system and the conditions which produced it, they are no longer so. The functions of the capitalist class devolve ever more upon paid employees. The large majority of the capitalists have now nothing to do but consume what others produce. The capitalist today is as superfluous a human being as the feudal lord had become a hundred years ago’ (The Class Struggle, 1888).

‘There never was a good war or a bad peace’

Writing a century earlier Benjamin Franklin, one of the Founding Fathers who paved the way for American capitalism, wrote: ‘What vast additions to the conveniences and comforts of living might mankind have acquired, if the money spent in wars had been employed in works of public utility. What an extension of agriculture even to the tops of our mountains; what rivers rendered navigable, or joined by canals; what bridges, aqueducts, new roads and other public works, edifices and improvements, rendering England a complete paradise, might not have been obtained by spending those millions in doing good which in the last war have been spent in doing mischief! In bringing misery into thousands of families, and destroying the lives of so many thousands of working people who might have performed the useful labor’ (Letter to Josiah Quincy, 11 September 1783). Indeed.

Piecemeal

Worldstatesmen.org lists 40 major wars since 1700, including WWI, the war to end all wars. Just five years after that mass murder ended, War Resisters League was founded by Jessie Wallace Hughan with a focus on ending armed conflict. ‘Today’s WRL is zeroing in on underlying causes of military tension—including economic inequality, unequal access to resources, imperialism, and racism’ (popularesistance.org, 25 October). How many such groups have come and gone? Innumerable peace treaties, pious resolutions, prayers, demonstrations have been written, passed, uttered, forgotten and staged since the dawn of capitalism. Nuclear weapons remain and cluster bombs are making a comeback. In addition to weapons of mass destruction, capitalism produces poverty, insecurity, disease, and all the vicious things that stem from those, and it gives rise to the wars for which governments are constantly preparing.

World without war

‘The increasing intensity of competition for economic markets must lead to armed conflict unless an economic settlement is found. This, however, is hardly to be hoped for. Talk about peace in a world armed to the teeth is utterly futile’ (W. M. Hughes, Prime Minister of Australia during WWI, News Chronicle, 25 July 1936). Time and time again the socialist has demonstrated that war stems from capitalist struggles for markets, trade routes, sources of raw materials, and places of strategic importance. The 99 percent based in the UK and US face the same problems as members of our class existing elsewhere. Workers have no country. If anybody can really delude themselves into believing piecemeal measures will bring everlasting peace worldwide, their gullibility can know no bounds. We have a job to do, in this century, the establishment of socialism, and while workers are pursuing reform rather than revolution, they are falling down on their historically appointed task.

This Month's Quotation: Benjamin Franklin (1941)

The Front Page quote from the November 1941 issue of the Socialist Standard

  "What vast additions to the conveniences and comforts of life might mankind have acquired, if the money spent in wars had been employed In works of utility.”

Benjamin Franklin (1706-1790)

Notes on Economic History (11) (1961)

From the September 1961 issue of the Socialist Standard

The Theory of Population

As Adam Smith's doctrine spread, it was elaborated and modified. Attempts to develop his ideas led to endeavours to explain the poverty and misery of the working class and all the defects that had become apparent during the rapid development of Capitalism, from the time of publication of his Wealth of Nations.

Two contrasted attitudes appeared. One was a condemnation and a criticism of conditions—this led to ideas about Socialism. The other was a pessimistic resignation, accepting the conditions and declaring them to be the result of the working of natural laws. This was the views held by Malthus. Malthus was responsible for two important works; in 1820 his Principles of Political Economy was published preceding by some 22 years his Essay on the Principle of Population, first published in 1798, and for ever associated with his name.

Malthus begins his statement on population with an account of the "tendency of all life to increase beyond the amount of nourishment available to it." In illustration he quotes Benjamin Franklin—"It is observed by Dr. Franklin that there is no bounds to the prolific nature of plants or animals, but what is made by their crowding and interfering with each other's means of subsistence. Were the face of the earth, he says, vacant of other plants, it might be gradually sowed and overspread with one kind only, as, for instance, with fennel; and were it empty of other inhabitants, it might, in a few ages, be replenished from one nation only as, for instance, with Englishmen." It follows from this, he says, that population has a constant tendency to increase beyond the means of subsistence.

Studying the increase of population in America, where there was an ample supply of good fertile and virgin land, and where there were few natural checks to growth of numbers. Malthus arrived at the conclusion that during about one hundred and fifty years the population had doubled itself every 25 years. The natural increase of population therefore took place like the increase in a series of numbers—1, 2, 4, 8, 16, 32, 64, 128, 256. In short, population, when its growth is unhindered, tends to increase in geometrical progression.

On the other hand, says Malthus, it is impossible to increase the produce of the soil in such a ratio. Under favourable conditions we may suppose that by improving the land already under cultivation, and by utilising the comparatively poor and neglected land, it would be possible to increase yields considerably. But the increase in twenty-five year periods (those in which population can double) could not be expected to be more rapid than is represented by the series of numbers—1, 2, 3, 4, 5, 6, 7, 8, 9. "It may be fairly pronounced . . .  that, considering the present average state of the earth, the means of subsistence, under circumstances the most favourable to human industry, could not possibly be made to increase faster than in an arithmetical ratio." To sum up, whereas population can increase in geometrical progression, the means of subsistence can increase only in arithmetical progression.

Population for Malthus, therefore, is limited by the means of subsistence. As a result of the tension inherent in the contrast between these two rates of increase, there is a tendency for population to increase beyond the means of subsistence. The result is that population increases in any country when the means of subsistence increase, whether as a result of more intensive agriculture, the import of food, or changes in the distribution of national wealth. Insufficiency of the means of subsistence, on the other hand, makes itself felt in the form of checks. These checks are of two kind—positive and preventive.

The positive checks are those which set by destroying existing population: the most obvious are wars, diseases, and famines, but they include every cause, whether arising from ignorance, vice or misery, which in any way helps to shorten the natural span of life. Preventive checks are those which are deliberately undertaken, such as refusal to marry and what Malthus calls the postponement of marriage, moral restraint. "By moral restraint I  . . .  mean a restraint of marriage from prudential motives, with a conduct strictly moral during the period of restraint."

The fact that the produce of land is uncertain and irregular was embodied in the "Law of Diminishing Returns." In the cultivation of land, assuming that the technique remains unchanged, Malthus argued that each successive addition of capital and labour applied to it beyond a certain amount (the optimum expenditure upon a particular technique) produces a smaller increment of yield. Accordingly, beyond the optimum expenditure further increments of capital and labour no longer produce equal additions of yield, but progressively diminishing ones. To put the matter in more general terms—the conditions remaining unchanged, additions of expenditure prove less profitable. If, for instance, the expenditure of 1,000 of additional capital produces an additional product of 500, the expenditure of a second 1,000 will produce an additional product of only 300: that of a third 1,000 will produce no more than 200, and so on.

This "law" has in fact been shown to be fallacious. It assumes that the productive technique remains unchanged, an assumption which is contrary to all evidence. In fact, Malthus himself says that this "law" is valid only so long as agricultural techniques remain unchanged. It would be difficult to find a period since Malthus wrote the essay, during which advanced countries' techniques of production has not been continuously changing and must, as man's knowledge increases, continue to change.

Bob Ambridge