Have pity on them (1947)

From the November 1947 issue of the Socialist Standard

At times the many-sided interplay of World Affairs presents a confused and complex character that does not permit of ready and facile interpretation. To admit that often we are only wise after the event is not necessarily a confession of a lack of one’s powers of perception or a deficiency in native intelligence.

It may also be that in this process of becoming wise after the event there are some who take longer than most. It may even be that there are others who never become wise about events at all.

Which brings us to Mr. Clynes’ article, “When Crisis comes to the Cabinet.” (News of the World, l4/9//47.) Mr. Clynes also sketches there what, for him, were apparently the essential features of the 1931 economic crisis. That crisis happened sixteen years ago, a fair period you will agree for cogitation and reflection on what it was all about. After reading Mr. Clynes’ article we can only conclude that sixteen years has not been long enough for him to have become really wise after the event.

Mr. Clynes, who was Home Secretary in the 1929-31 Labour Government, says that during crises he has been behind “closed doors.” He means 10, Downing Street, of course. With such qualifications he offers the newspaper’s readers “a picture of what happens.”

Perhaps the ”negative” of the picture has remained in “the dark-room” of Mr. Clynes’ memory too long. For, to use a slightly technical term, the picture is sadly lacking in definition and detail. Instead of a clear-cut impression of the real political significance of the events produced by and associated with, the 1931 crisis there is merely a confused blur of disconnected incidents and trivial political minutiae. Thus we get a presentation of “day by day Cabinet meetings, of men with white strained faces, going painfully over one scheme after another to meet a frightening situation.” Of strained nerves and tempers. The sudden bitter enmity of life-long friends. A broken-hearted and bewildered Cabinet deserted by their leader, Ramsey MacDonald, and so on. Touching, no doubt, but scarcely enlightening as a piece of political history.

Neither does any word issue from the lips of the chief characters in the picture to indicate in the slightest what the real nature of the Cabinet Crisis was. Indeed, so far as the understanding of events being gathered from what at the time was said, its significance apparently is to be found in what was not said. For Mr. Clynes’ tells us that not only was MacDonald reticent to the Cabinet concerning a visit to him in the early crisis days by the private secretary of King-George V, but, moreover, he refused to disclose to them what had passed between the King and himself at a Buckingham Palace interview. One could comment that MacDonald’s preference for a silent part in “the picture ” was indeed a rare choice for perhaps the most garrulous politician of the age.

In spite of the apparently crucial importance which Mr. Clynes rather obscurely attaches to MacDonald’s silence in the matter of the crisis, we could assure him—if that were needed—that whatever passed between King and Premier in the crisis talk would not have materially affected the nature of the 1931 economic crisis or the main trend of events which resulted from it.

The fact that MacDonald refused to spill the beans on what was said is open to the more charitable suggestion that so far as any concrete proposals about the handling of the crisis was concerned he had no beans to spill. It may even be that he didn’t discuss the crisis with the King at all. After all it is Secret History and our guess might be as good as anybody’s in the matter.

Mr. Clynes does, however, inform us that MacDonald and the Cabinet had agreed on matters which it seemed were regarded as unalterable; although about the question of what these matters were, Mr. Clynes himself is highly reticent. Albeit MacDonald altered the unalterable by the simple device of continuing his Premiership with the aid of the Tories instead of that of the Labour Party.

Mr. Clynes, anxious perhaps to cushion any criticism of his party’s failure to effectively deal with the problems of Capitalism in so far as they affect the workers’ interests, assures us that Ministers are fallible human beings. We, of course, have never said anything to the contrary. To which he further adds a somewhat tearful, spare a kind thought for the poor politician plea, by exhorting us “in our own worry and uncertainty to have Pity on them.”

It would seem that only at Election Times does the cloak of Papal infallibility fall upon the shoulders of political spokesmen. Only then, with much fingering of their political rosaries, do they proclaim with almost divine assurance to the electorate that “They are the Way, the Truth and the Light.” Only then does isome leader take on the role of a political Moses whose mission it is to lead the workers into “The Promised Land.”

It is only when political parties have become the Government of the country that they discover they are liable to be the prey of the mysterious and malignant economic visitations popularly known as “Blizzards,” “Catastrophes” and “Disasters” and for whose coming they assume no responsibility or claim any real control. It is these things which it seems set to nought their good intentions and bring to dust their political programmes and promises. In this manner do “our statesmen” translate the economic contradictions of Capitalism into librettos for the eternal political theme of the struggle between the Forces of Good and The Powers of Darkness.

Mr. Clynes tells us that Ministers “are, perhaps, family men each with domestic worries and as deeply involved as the rest of us in the common disaster which threatens our common citizenship.” No doubt this touching spectacle of the domestic worries of Ministers, such as paying the rent, meeting the milk bill or the uncertainty of the next meal, getting all mixed up with the affairs of State, is a sombre reminder of the price that has to be paid for “Democracy.” Whether the Fascist Dictatorship can be explained by the fact that Hitler was a bachelor up to the last few days of life and presumably had no family responsibilities, might engage the attention of those “psychological gentry” who are always trying to explain social and economic events by processes which have nothing to do with them. Nevertheless both Goebbels and Goering were family men and for that matter, so was Mussolini.

Doubtless, the raising of families by our Ministers is a worthy and human concession to the democratic notions of our age, but what precisely its connection is with the objective cause of the economic crises of Capitalism, Mr. Clynes fails to explain.

Mr. Clynes then tells us that “as the result of an half-an hour’s angry disagreement we were going out into the desert deprived of four-figure salaries, secure positions, the confidence of bewildered supporters and indeed of any political future for which we had painfully given our working lives.” This, indeed, must have been the supreme moment “When Crisis comes to the Cabinet.” In view of all this it will not perhaps come as a surprise when he informs us that among the varying emotions experienced by some of his colleagues, avarice was one of them.

And if the gentle reader impatiently asks what has all this to do with the political and economic events of the 1931 period, we can only say that it is Mr. Clynes’ article on the crisis and not ours.

Nevertheless Mr. Clynes does make some attempt to more realistically portray how the crisis came to Britain. For instance we are informed that foreign countries’ confidence in Great Britain was shaken—a not altogether unknown phenomenon in this country’s history. As a result of this lack of confidence “shipload after shipload of gold was loaded at the docks and passed overseas.” “At every bank queues of people tried to draw out silver and notes. Business almost stopped.” Again, £10,000,000 in gold was withdrawn and the Bank of England was by an emergency Act relieved of the necessity to pay out gold on demand. To remove any possible misapprehension these shiploads, of gold were not the nest-eggs of the working class becoming an article of export. Neither were the bank queues those of workers trying to draw out their “savings” as a preliminary to departing to sunny climes. The “going off the Gold Standard” in this country was of no vital concern to the workers because they had never been on it. Indeed the only standard the working class have ever been on in the present system is, a “Copper” one and that will remain their money evaluation as a class, whatever financial arrangements the capitalist class come to in times of crisis.

For Mr. Clynes, however, the cessation of the normal functions of The Bank of England indicated that “Britain shivered on the verge of catastrophe”.

To cap it all that other great working class institution, The Stock Exchange, closed down temporarily. However, those other working class institutions, the Labour Exchange and the Public Assistance Committee, were very much open and marked by a continuous and feverish activity.

“Then,” says Mr. Clynes, continuing his crisis theme, “for no apparent reason confidence returned.” “At mid-day Treasury officials felt a degree of terror. By the afternoon speculators were buying instead of selling . . . the tide had turned … a great crisis was weathered.” Such a description of the nature of the crisis strongly suggests a marked affinity with that vague and unaccountable phenomenon called an Act of God.

At a less sensational level we could offer the somewhat more accountable explanation, that the year 1931 was witnessing one of those familiar trade cycles which Capitalism is periodically subject to. Also the fact of going off the Gold Standard was merely an effect—not a cause of the crisis. Capitalists all over the world, faced with glutted markets and unsaleable stocks, were not only anxious to cut their commitments but were demanding gold as the means of payment in any transaction that occurred. Other Capitalists and their financial institutions were busily trying to call in loans, in view of the slump. Faced then, with the catastrophic decline of international trade it was inevit able that the creditors of British Capitalism should seek bullion as the only means for liquidating debts incurred. Thus a heavy drain on the Bank of England’s gold reserves was an automatic consequence of the conditions brought about by general and chronic “overproduction.”

To explain a capitalist crisis of “overproduction” in terms of financial panics and stringency is like attempting to explain Delirium Tremens by the patient’s shudders and shivers. Although Mr. Clynes tells us “that the crisis in money was passed” a few incidental features of the crisis, like nearly 3,000,000 unemployed, economy cuts, falling wages, distressed and devastated areas and the general intensification of poverty, remained for some years. Such crisis events, however, are not the best kind of reminiscences to keep for one’s political old age. Neither perhaps do they constitute the best form of Sunday afternoon reading for the working-class readers of the News of the World.

We have, of course, on other occasions dealt with some of Mr. Clynes economic fallacies, as far back as 1919 and as recently as the June Socialist Standard of this year. Undoubtedly Mr. Clynes’ consistent propaganda in “more production” campaigns has revealed him as an untiring advocate of harder work for other people.

But Capitalism is a profit-motive economy and it is profit anticipation which not only determines how wealth is produced but in the final analysis how much is to be produced. Thus with every increase in wealth-producing efficiency a greater quantity of goods are enabled to be thrown on to the market. Workers’ wages constituting but a fraction of the wealth they produce, it is insufficient to absorb the ever greater amount of the goods turned out by them. In the case of the Capitalists their effective ability to consume the products of labour is fixed by the limits of their personal and physical capacities. Hence a greater portion of their “surpluses” tend to go into greater investments of those industries which turn out productive goods,. The contradiction between the expanding forces of production and the limited class income distribution inherent in Capitalism is thus intensified. It is this which finally leads to glutted markets. Effective demand ceases, or to put it another way, a condition is reached where no purchasers can be found. Profit anticipation then declines or disappears. Production is, then curtailed; plants close down; workers are dismissed and all the familiar conditions of a slump make their appearance.

Thus Mr. Clynes’ sovereign remedies—greater productive output on the part of the worker—for dealing with unemployment and low wages, provide the very means for bringing about in a shorter time those very conditions which he seeks to obviate.

It would appear that Mr. Clynes has been so busy during his life, assisting or seeking to assist in the administration of Capitalism that he has never had time to acquaint himself with a few simple facts about the system he has, helped to run. Thus do “Practical Politics” keep our statesmen, so far as the understanding of this present system is concerned, in a perpetual economic “Egyptian Darkness.”

Should we then include Mr. Clynes among those politicians he asks us “to have pity on?”

Ted Wilmott

Old Fallacies — A Look at the International Communist Current

From the October 1977 issue of the Socialist Standard

The organization called International Communist Current is a mixture of perceptiveness towards some aspects of capitalism, blindness to others, and a belief in long-exposed fallacies. It recognizes that nationalization is state capitalism, that the so-called national liberation movements are anti-socialist and that Russia, China, Cuba, etc. are “just so many capitalist bastions” — “There are no socialist countries on this planet”.

ICC claims to be Marxist but shows no appreciation of Marx’s analysis of capitalism’s economic laws. Politically it belongs to the early 19th-century world of Louis Blanqui (originator of ICC’s slogan “Dictatorship of the Proletariat”) and the young and inexperienced Marx and Engels. It rejects the mature Marx’s view of the necessity to gain control of “the machinery of government, including the armed forces”, and offers instead confrontation with the state power and “world civil war” to be waged by “armed workers’ councils” (see ICC pamphlet Nation or Class).

A basic difficulty about establishing Socialism is that such a social system, involving as it does the disappearance of buying and selling, wages and prices, and the coercive state, could only be operated if the mass of the population understood and wanted it and were ready to accept all the new responsibilities of voluntary co-operation that would rest on them. If the working class as they are at present, most of them attached to capitalism, preoccupied with wages and prices, wage differentials and trade-union demarcation lines, and dependent on management direction and trade-union leadership, were suddenly faced with Socialism there would be chaos and no alternative but to return to capitalism.

Two solutions were offered. One was the Blanquist and early Marxist view—a transition period during which the mass of the population would be “educated to Socialism”. This is the ICC policy. The other, the mature Marxist, view was stated by Engels in his 1895 Introduction to Marx’s Class Struggles in France:

“The time is past for revolutions carried through by small minorities at the head of unconscious masses. When it gets to be a matter of the complete transformation of the social organisation, the masses themselves must participate, must understand what is at stake and why they are to act. That much the history of the last fifty years has taught us.”

And again, referring to France:

“Socialists realize more and more that no durable success is possible unless they win over in advance the great mass of the people, which, in this case, means the peasants. The slow work of propaganda and parliamentary activity are here also recognised as the next task of the party.”

ICC rejects the Marxist idea of socialists gaining control of Parliament on the ground that Parliament is nothing but “mystification of the working class”. Of course defenders of capitalism use Parliament to mislead the working class, just as they use religion, sport and the bogus economic theories of J. M. Keynes. They can do this only because the workers lack socialist understanding—which fact ICC fails to see. It thinks that if non-socialist workers spontaneously throw up workers’ councils these can’t be “mystified”. Experience has shown how wrong ICC is. Lenin, in State and Revolution, complained that his political opponents had

“managed to pollute even the Soviets, after the model of the most despicable middle-class parliamentarians, by turning them into hollow talking shops.”

ICC greatly admire the Workers’ Councils set up in Germany after the first world war. At the Workers’ Councils National Congress in 1918, and again in 1919, they were bamboozled by Social Democratic politicians into voting their support for the Social Democrat Government, which government then sidetracked the Councils and used state forces to crush resistance.

The argument that because the franchise has been used to trick the workers they should not use it was sensibly answered by Marx in the preamble he wrote for the French Workers’ Party. In it, he commended transforming the vote “from a means of duping, which it has been hitherto, into an instrument of emancipation”.

As ICC are not going to wait until there is a socialist majority, they have to find some other spur to working-class action. Like the young Marx and Engels, and like the British Communist Party in the 1930s, they find it in capitalism’s periodic crises and depressions which stir up discontent about unemployment and falling living standards. But, as Engels pointed out in a letter to Bernstein (25th January 1882), when the depression passes and production and employment expand again “returning prosperity also breaks the revolution and lays the basis for the victory of reaction”.

Are depressions permanent?

ICC think they have an answer to this. They say that the present depression is permanent, that it throws up problems the capitalists are impotent to deal with, and that capitalism cannot afford any more concessions to the workers. The great changeover is supposed to have happened in 1914, after which capitalism became “decadent”, ICC evidently does not know that all these themes are almost as old as capitalism itself.

In every one of capitalism’s depressions there have been people, capitalists as well as workers, who have been convinced that it would be permanent. In the “Great Depression” of the last quarter of the 19th century, which lasted for twenty years, it was widely believed. Lord Randolph Churchill, shortly before he became Chancellor of the Exchequer, declared in 1884: “We are suffering from a depression of trade extending as far back as 1874, ten years of trade depression, and the most hopeful either among our capitalists or our artisans can discover no signs of a revival . . . Turn your eyes where you will, survey any branch of British industry you like, you will find signs of mortal disease.”

Even Engels in 1886 temporarily abandoned Marx’s view of crises and announced a theory of “permanent and chronic depression”. Marx’s own view was tersely summed up in his statement: “There are no permanent crises.”

ICC’s example of the supposed impotence of the capitalists to deal with a problem relates to inflation. In International Review No. 10 (page 10) ICC says that “the bourgeoisie” is equally terrified of more inflation and of ending inflation by “restriction of credit”. From which it is evident that ICC does not understand the cause and purpose of inflation, rejects Marx’s demonstration that inflation is the result of excess issue of inconvertible paper currency, and has—like the Labour Party—fallen for the Keynesian nonsense about the supposed consequence of expanding or contracting credit. Inflation, like free trade, is just a way of operating capitalism. It suits some capitalists and not others. Inflation serves the interests of borrowers, including industrial capitalists, who take up loans and repay them later in depreciated currency.

Inflation and Credit

Inflation, at least for a considerable period, also enables many employers to get away with paying reduced real wages. Deflation, on the other hand, suits financial interests and lenders. If and when inflation reaches dangerous levels, or when those who favour deflation get their way, inflation will be curbed or ended as it has been on scores of occasions in the past, in this and other countries.

Marx showed what he thought of the people who held ICC’s superficial view about credit.

“They looked upon the expansion and contraction of credit, which is a mere symptom of the periodic changes in the industrial cycle, as their cause.” 

(Capital Vol. 1, p. 695, Kerr edn.)

To show that capitalism is not what it used to be before 1914, ICC points to recent falling production and living standards, and rising unemployment, but this is what has taken place at the beginning of every depression for nearly two hundred years.

Capitalism did indeed change in 1914. As Professor E. H. Carr puts it, up to 1914: “Britain was the pre-eminent Great Power, and the directing centre of the worldwide capitalist economy.” Now the industrial and military centres of power have shifted to New York, Moscow and Brussels; but this has not altered capitalism’s economic laws or introduced a new “decadence”.

ICC’s belief that since 1914 capitalism cannot afford to make concessions to the workers is belied by the facts, and betrays a failure to understand the economics of capitalism. The capitalists (supported by ignorant or servile academics) have always “proved” that they could not afford to concede anything, as for example giving up the twelve-hour working day and the employment of small children: but the concessions have continued since 1914 as before, and particularly since the second world war.

As output per head of the workers increases (a process speeded-up during the present depression) of course the capitalists can afford to let the workers have some of the increase—as ICC will discover when the depression lifts and in the programmes at the next General Election.

Regarding “the Dictatorship of the Proletariat”, ICC admit that during their prolonged “transition period” the dictatorship will be operating capitalism all over the world (see Nation or Class). They have, however, not seen its implications. How will the dictatorship deal with the next normal capitalist crisis and the strikes that will accompany it? Will they have an “incomes policy”? or suppress the unions?

The peasants are not to be allowed to share in governmental power. What if they seize the land? And what will the ICC dictatorship do when workers, discontented with the effects of capitalism, carry on ICC policy and set up “armed workers’ councils” to fight the dictatorship?

All of ICC’s assumptions about capitalism are wrong; but let us suppose that they are right. Suppose that a minority of workers sets up armed councils all over the world, and suppose (absurd as it is) that they could win against the massive combined armed forces of all the world’s governments, and suppose they succeeded in setting up their world dictatorship—what would have been gained? The problem of winning over the mass of the population before Socialism could be established would still be there, its completion put back a few more years by ICC’s unnecessary and useless war.

Edgar Hardcastle

Blogger's Note:

In the original issue of the October 1977 Socialist Standard, this article had a notice attached below it advertising a cassette tape recording of a recent debate between the ICC and the SPGB. Though the SPGB and the ICC debated each other twice in 1977 - once in Leeds and once at the SPGB's Head Office - my guess is that the advertised recording is of the debate in London between Alan Ward of the ICC and Edgar Hardcastle ('E. Hardy') of the SPGB. That recording of the London debate is available on the SPGB's website at the following link:

Debate with the I.C.C.  – Which way Socialism? 

Debate at Head Office with the International Communist Current; Hardy (SPGB) v. A. Ward (I.C.C.)

Date: 20th August 1977

Applying Marx (1983)

From the March 1983 issue of the Socialist Standard

We are now in the heaviest trade depression since World War II, with little expectation that recovery will take place in the near future. This has caused dismay and confusion among the economists, dividing them into half a dozen groups each with its own remedy and denouncing their rivals. Not only did they not foresee the depression but nearly all of them denied that it could happen. They had accepted the belief that it is possible for a government to prevent unemployment if it wishes to do so.

First in the field was the Labour Party. In its Election Programme. 1918. Labour and the New Social Order, it stated: "It is now known that the Government . . . can arrange the public works and the orders of National Departments and Local Authorities in such a way as to maintain the aggregate demand for labour in the whole kingdom”. (While they were the Government, 1929-1931, unemployment rose by 1½ million.)

By 1944. under the influence of J.M. Keynes, the three parties. Tory, Labour and Liberal (and the TUC), had all accepted the commitment to maintain "full employment”. It was set out in a document Employment Policy issued by the three parties represented in the war-time national government. Confidence in the policy was confirmed by the Committee on the Working of the Monetary System in a Report in 1958. In Paragraph 484 they said: "When discussing with witnesses the impact of restrictive monetary measures we have been constantly reminded that, as compared with earlier decades, restrictive developments have a much less frightening aspect now that Governments are always committed to full employment policies”.

Commenting on this. Professor F.W. Paish wrote: “This belief springs directly from the expectation that no government will in future allow any really substantial amount of unemployment to appear, even temporarily”. (The Banker, October 1959.) Actually, at the time the Committee published their report, unemployment was already on an upward trend after the very low levels of the ten years after the war. Unemployment rose again while the Labour Party was in office from 1964-1970, though they declared they would not let this happen, and it more than doubled under the Labour government of 1974-1979.

Towards the end of that government's office Prime Minister Callaghan and Chancellor of the Exchequer Denis Healey began to question the validity of the Keynesian “full employment” doctrine. Later, for the first time since the war. a government — under Thatcher — formally repudiated it. But they still claimed to be able to deal with unemployment, firstly by curbing inflation and secondly by reducing taxation: “The State takes too much of the nation's income; its share will be steadily reduced. When it spends and borrows too much, taxes, interest rates, prices and unemployment rise”. (The Conservative Manifesto — 1979.) After four years of office unemployment has risen from 1,300,000 to over 3 million.

The one economist who comes well out of this confusion is Marx. He showed that, in competition with each other to gain a larger market share, capitalists are always seeking to reduce prices by means of labour-displacing machinery and that inevitably depressions occur from time to time: "Capitalist production moves through certain periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis and stagnation". He never accepted that unemployment and depression could be avoided by some change of government monetary, taxation or investment policy. Nor did he accept the validity of the argument that unemployment would fall and depression be avoided by putting up wages. (The policy which the Independent Labour Party sought to popularise in the 1920s.) Marx showed that not only do wages rise in every boom, but at that time the working class “actually get a larger share of the annual product intended for consumption”. (Capital Vol. Ill. Kerr Edition, p. 474.) Far from remedying the situation this is, said Marx, "always . . . a harbinger of the social crisis".

Marx showed the limitations of the trade union struggle for higher wages. The aim of the capitalist in carrying on business is "the augmentation of his capital”. Wages can therefore go on rising only as long as the rise “does not interfere with the progress of accumulation". (Capital Vol. 1, p. 678 in the Kerr edition). Beyond this, accumulation slackens, "because the stimulus of gain is blunted", in other words, the employer does not for long employ workers out of whom he cannot make profit. Marx saw as inevitable a fall of the workers’ standard of living in depressions when, owing to heavy unemployment, the supply of workers overshoots the demand. Though he did suggest that “it might in such circumstances be necessary to test the real state of demand and supply by a strike, for example, or other method". (Value Price and Profit).

After Marx's death, Frederick Engels put forward the idea that Marx's cycle no longer applied, and had given way to "permanent and chronic depression”, but events soon showed that he was wrong and he returned to Marx's “cycle” theory. In the depressions of the 1880s and between the wars, a considerable number of workers and even some economists became convinced that Marx was right about unemployment and depressions. Then Marxist theory was pushed into the background by Keynes. John Strachey, who had claimed to be a Marxist, told how reading Keynes’ book General Theory of Employment, Interest and Money made him change his views. (He became a Minister in the Attlee Labour government). Richard Crossman. Minister of Housing in the 1964 Labour government, said that Keynes demonstrated that capitalism is not "an inherently unworkable system” and, by so doing, undermined “the old economic case for socialism". (The Times, 24 February 1956)

Even before Keynes dominated the scene most economists rejected Marx's labour theory of value, including the few who looked favourably on other parts of Marx's writings. It is interesting to notice the irrelevance of some of the more common objections to the labour theory, clearly the result of not troubling to understand it.

Marx explained carefully that he was dealing with commodities, articles regularly produced for sale and capable of reproduction. Because Marx showed that commodities have a value and a price the critics assumed, without any justification, that Marx must also be saying that everything which has a price had to be a commodity and have value. They have instanced the enormous prices paid for old master paintings, forgetting that these are incapable of reproduction and are therefore not commodities.

Marx answered the critics:

Objects that in themselves are not commodities. such as conscience, honour etc. are capable of being offered for sale by their holders and of thus acquiring, through their price, the form of commodities. Hence the object may have a price without having value. (Capital Vol. I p. 115. Kerr edition).

The late Harold Laski. who wrote quite sympathetically about Marx, gave an astonishing interpretation to the labour theory, in his book Communism (Home University Library 1927, p.95):

Thus we can measure the amount of labour-power in each man's effort, and so determine scientifically how he ought to be paid.

Laski borrowed this from A.D. Lindsay's book Karl Marx’s Capital (page 61). Lindsay wrote “The Labour Theory of Value is misleading. It is primarily interested in what a man ought to get in reward for his labour”. Both Lindsay and Laski were quite wrong. No such idea entered Marx's head and it is impossible even to guess what can have given Laski and Lindsay this strange notion.

Much has been made by critics of the allegation that in Volume I of Capital Marx put forward the theory that commodities exchange at value and then changed his mind and concluded in Volume III that some commodities permanently sell above their value and others below their value. The critics failed to notice Marx’s explanation in Volume I that he was first dealing with value and would later deal with its price form and that they were not identical. There was, for example, the footnote on page 244 of Volume I (Kerr edition):

The calculations in the text are intended merely as illustrations, and in them, therefore. it is assumed that prices are equal to value. In Book Three we shall learn that even in the case of average prices no such simple assumption can be made.

As for the critics' assumption that the alleged change of mind took place later, Louis Boudin pointed out that "most of the third volume, and particularly those portions of it which are supposed to modify the first Volume, were actually written down by Marx in its present form before the publication of the first Volume". (Theoretical System of Karl Marx, page 133.)

Cartoon by George Meddemmen.

Mention has already been made of the way in which the emergence of Keynes as the leading economist pushed into the background what Marx had written about unemployment and depression. The reason for this was obvious: if, as was almost universally believed, “full employment” was guaranteed for all time, theories about unemployment and depressions ceased to be of interest.

The almost total disregard of what Marx had to say about inflation is less easy to explain. That it should have been disregarded in this country in the period of nearly 100 years before 1914 when the gold standard operated is understandable, because there was no inflation. Why then has there been no interest in Marx’s explanation in the nearly forty years of continuous inflation since World War II? One reason is that, while much has been written about other aspects of Marx's writing, his economics have stayed out of favour even among many people who profess to be Marxists. A second reason is that many of the latter appear to be unaware that Marx had something to say about inflation. A third reason has been that when Keynesian doctrines began to fall into disrepute because of the failure of the “full employment" policy, attention went to the monetarists led by Professor Milton Friedman, who added to the confusion with his absurd remark that Marx, too, was a monetarist.

It is beyond dispute that the policies of Labour and Tory governments have led to the present price level being at least ten times what it was in 1945. (Prices have risen by over 50 per cent under the Thatcher government). It is also beyond dispute that all the governments up to 1979 have claimed to be following Keynesian policies; yet the Keynesian document, the 1944 Employment Policy endorsed by the Tory, Labour and Liberal parties in the national government, proclaimed the intention of seeking to maintain a “more or less stable price level". It is also true that while Keynes himself advocated short term use of inflation to reduce real wages in certain circumstances, his long-term aim was “allowing wages to rise slowly while keeping prices stable" (General Theory page 271). It is at least arguable that if Keynes had lived to see what was being done in his name he would have disowned it.

Why then have prices been rising continuously for over forty years? Marx’s answer would have been that it became a possibility with the abandonment of the gold standard in 1931, and became an actuality through the increase of the currency (notes and coin) in circulation with the public, from under £500 million in 1938 to nearly £11,000 million. The gold standard background is important. While the gold standard operated the pound sterling was. by law, a fixed weight of gold (about a quarter of an ounce). The effect was that the notes could never deviate, except marginally, from the value of the legally fixed equivalent weight of gold. As it was said at that time, "a Bank of England note is as good as gold", and it was everywhere accepted as such. Now the notes are “inconvertible" and their purchasing power steadily declines through excess issue.

Marx defined it as follows:

If the quantity of paper money issued were double what it ought to he, then, as a matter of fact. £1 would be the money-name not of a quarter of an ounce of gold but of one-eighth of an ounce of gold. The effect would be the same as if an alteration had taken place in the function of gold as a standard of prices. Those values that were previously expressed by the price of £1 would now be expressed by the price of £2. (Capital. Vol. I page 144 in the Kerr edition)

Several points have to be noted. What Marx meant by "what it ought to be" was the total quantity of gold that would circulate with a wholly gold coin currency. It was an application of his labour theory of value, gold having value like all other commodities. He was not saying (as did some quantity theorists) that any increase of inconvertible paper currency causes prices to rise. The rise occurs only to the extent that the quantity of notes is in excess of “what it ought to be". If, for example, production and population increase, the "necessary" amount of gold in circulation would increase. Other factors also affect this, including the tendency for the “necessary" amount of currency to decline with the development of transport and the banking system.

Marx also pointed out that there are other, "non-currency" factors, which affect prices, including changes in the value of commodities and the rise of prices in a boom and fall in a depression. (Also, while the gold standard operated, a fall in the value of gold would raise prices and a rise in the value of gold would reduce prices.) Marx made another valuable contribution to the whole issue of inflation and deflation. In accordance with his labour theory of value wages too are prices, the price of labour-power. So inflation which raises prices also raises wages. And deflation, which lowers prices, also lowers wages. Both situations are however affected by whatever ability the workers have to gain wage increases beyond the rise of other prices, or to prevent wages falling as much as other prices.

Some people have been misled by Milton Friedman's talk of controlling “money supply" into believing that he and Marx were thinking on similar lines. This is not so. Marx was talking about "currency", notes and coins, while Friedman’s doctrine is concerned with bank deposits, based on an old fallacy that the price level is related to the rise and fall of bank deposits. Keynes held the same view. In his Monetary Reform (1923 p. 128) he wrote: "The internal price level is mainly determined by the amount of credit created by the banks, chiefly the Big Five . . . The amount of credit, so created, is in its turn roughly measured by the volume of the banks’ deposits"

One last word about Keynes. Now that the Keynesians are in disarray perhaps some of them will look again at Keynes’ statement that Marx’s Capital was “an obsolete economic textbook which I know to be scientifically erroneous and without interest or application for the modern world".

Do they still find that convincing?

Edgar Hardcastle

Material World: Will capitalism implode? (2025)

The Material World column from the January 2025 issue of the Socialist Standard

Nothing quite so vividly demonstrated the absurdity of existing society and that it had run well past its sell-by date than the phenomenon we call a depression. By what insane topsy turvy logic could it be that the very abundance of goods that industry churned out should become the source of intense misery to those who had produced this abundance? How absurd that with technology having been developed to the point where human want could be eliminated, this very want should become magnified.

Glutted markets meant mass layoffs, the indignity of the dole queue and the desperation of trying make ends meet. Even in a boom time, needs go unmet; now in a depression the perceptible gap between what people have to put up with and what is materially possible, widened as never before.

It is facts like these that should prompt us to reconsider whether, in the kind of society we live in today, technology or technological innovation can actually deliver ‘abundance’. But delivering abundance doesn’t seem to be the real purpose behind such innovation — making our lives more secure, happy, and content. Behind the smoothly executed fakery of the advertisers, the dissimulation of the pasted-on smiles of the actors who perform in these adverts, another ulterior motive is at work —making a profit by meeting paying demand which, for most people, is limited.

Some argued that crises and depressions were becoming, if not permanent then, at least, progressively worse. Even the Communist Manifesto (1848) had contended that whatever existing measures might be undertaken to overcome such crises this simply meant, ‘paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented’.

However, a quick comparison of the Great Depression of the 1930s and the 2008 global crisis should dispel any such notion. The former event was, by most standards, far more destructive and socially disruptive than the latter, thus refuting the claim that there is some built-in tendency for crises to get progressively worse. As an article in the Economist (10 December 2011) pointed out:

‘The shock that hit the world economy in 2008 was on a par with that which launched the Depression. In the 12 months following the economic peak in 2008, industrial production fell by as much as it did in the first year of the Depression. Equity prices and global trade fell more. Yet this time no depression followed. Although world industrial output dropped by 13% from peak to trough in what was definitely a deep recession, it fell by nearly 40% in the 1930s. American and European unemployment rates rose to barely more than 10% in the recent crisis; they are estimated to have topped 25% in the 1930s.’

Even when the idea was mooted that the working class would act consciously, and in a united fashion, to deliver the coup de grâce to a demonstrably dying system it was assumed that the desire to do so could only have arisen out of the intense hardship workers experienced within a capitalist society in its apparent death throes. That in itself is a highly questionable thesis. The ‘absolute immiseration’ of workers is, if anything, more likely to impede, than promote, the kind of mindset it will take to get rid of capitalism.

In any event, the very fact that capitalism is still very much alive (if not exactly well) should make us think twice about all such prognoses concerning the ‘impending collapse of capitalism’ — irrespective of the particular route by which it is supposed to reach this point. What needs to be questioned is the very notion of ‘collapse’ itself with all its unfortunate mechanistic and millenarian overtones.

In the Great Depression of the 1930s when many on the Left believed fervently in the imminent collapse of capitalism, we in the Socialist Party brought out a landmark pamphlet called Why Capitalism will not Collapse (audio version here). The pamphlet pointed out that previous crises, going back to the early 19th century, had all likewise prompted predictions of apocalyptic collapse on much the same grounds yet these had all proved unfounded. There was no compelling reason for thinking that things would be any different in the future. Capitalism would only disappear if and when workers clearly wanted that to happen and that was something that could not be imposed on them from above – or, indeed, behind their backs.

Apart from anything else there is no ‘internal’ mechanism one could identify that would mechanically cause the system to collapse. Of course, it is conceivable that capitalism could be brought to a shuddering halt as a result of some ‘external’ factor intervening — such as a global ecological catastrophe or a nuclear war — but that is a different argument and, in any case, it is not quite consistent with what the term ‘collapse’ conveys, which would suggest some kind of systemic or internal implosion.

Robin Cox

The Socialist Forum: A question of gold and prosperity. (1931)

Letter to the Editors from the December 1931 issue of the Socialist Standard

A question of gold and prosperity.

Editor of Socialist Standard.

Sir,—Your notion that the relation between gold and trade depression is “an illusion,” and that it can be “easily dispelled” is erroneous. The relation is not, as you seem to imagine, such that the stock held by individual countries can secure their prosperity in face of world depression. The relation is between the rate of increase of the world’s stock of gold as against that of other primary products, and the statistics for the period 1850-1913 show that when this relative gold supply was increasing primary prices rose, and that when it decreased their prices fell—vide the figures and chart of Professor Cassel and Mr. Kitchin re-published in the first interim report of the Gold Delegation of the League of Nations. The ill effects of a downward trend of prices upon industry and employment are well established, and the relation between gold and trade depression is now only disputed by those who are concerned to maintain a deflationary policy, or who are ignorant of Professor Cassel’s work.

Geoffrey Biddulph.

Church Street, S.W.7.

October 18th, 1931.

Reply:

Mr. Biddulph “corrects” a notion which we do not hold. That he attributes it to us can only be due to careless reading of the article in question. We made it quite clear that we were concerned (as indeed, we always are) with the main problem of the workers, not with the problems of different sections of the capitalist class.

The difference between Mr. Biddulph and ourselves can be illustrated from his notion that rising prices, due to an increasing supply of gold, mean prosperity. We do not deny that prosperity may come to the manufacturing and trading capitalists : but what of the workers?

The table to which Mr. Biddulph refers us, and from which we have ourselves quoted recently, shows a very great increase in the world supply of gold from 1890 to 1914. Do we, then, find the workers prosperous? In 1901 Mr. Seebohm Rowntree found a third of the workers below a very meagre level of existence which he called the poverty line. In 1903 Sir Henry Campbell-Bannerman endorsed Rowntree’s findings and declared that “about 30 per cent. of the population is living in the grip of perpetual poverty.” In 1904 Sir Leo Money (then Mr. Money) ascertained that 96 persons out of every 100 died owning less than £100, while the other 4 out of every 100 possessed an average of over £9,000 each. He found that about one-seventieth of the population owned far more than half of the entire wealth of the United Kingdom.

If this is what Mr. Biddulph means by-prosperity—i.e., prosperity for the few—we do not dispute it. But we repeat our statement that the main problems of the workers have nothing to do with the supply of gold.

Ed. Comm.

The bankers and the crisis (1982)

From the November 1982 issue of the Socialist Standard

The German philosopher. Hegel, said that the only lesson of history is "that people and governments never have learnt anything from history". This is not altogether true but it can be applied to the attitude of capitalists, of capitalist politicians and of economists to the recurrent crises and depressions of capitalism. In spite of a score or more of depressions in the past 200 years the capitalists (and most workers) believe, when each boom comes, that it will last for ever. As Marx put it, when the market is expanding, each capitalist behaves as if the demand for his products is limitless. For a time this appears to be true: there is a growing demand for raw materials and finished products, and for workers. Profit prospects are good, unemployment falls and wages rise. But, as Marx also said, that situation is "the harbinger of a coming crisis". Suddenly some industries find that they have overproduced for their particular market and start to halt further investment and curb output.

Capitalism does not go on producing if there is no profit in it. At that point (as happened in the autumn of 1973) there will be. side by side, some companies cutting back because of falling orders and other companies still reporting inability to meet their orders because of scarcity of materials and workers. Then they all become more or less involved in the depression as unemployment grows and demand falls generally.

When the inevitable depression takes place, politicians and economic "experts" say that something has gone wrong, and that what they have to do is discover what this something is, why it happened and how to avoid it next time. Dozens of "remedies" have been publicised: put wages up or put them down; raise prices or reduce them; go in for free trade or import restrictions; increase government expenditure or decrease it; stay in the EEC or leave it; induce the banks to lend more freely or the reverse; increase government borrowing or avoid it; increase taxation or reduce it; raise the foreign exchange rate of the pound or lower it; tighten up trade union law or relax it: have more nationalisation or less nationalisation. One thing ignored by all these peddlers of remedies is that they have all been tried before and failed.

Take the Thatcher government, with its “monetarist” policies. They say that all will be well if government expenditure, borrowing and taxation are reduced, inflation got rid of, wages and prices left to market forces, if there is less nationalisation and tighter laws governing trade unions and strikes. But all these supposed cures for depression existed in the last quarter of the 19th century. Government expenditure and taxation, in relation to the National Income, were only about a fifth of what they are now. There was no inflation. Wages and prices were then left to market forces and not only were the unions numerically much weaker but they operated under more stringent trade union law. There was much less nationalisation. For most of the time Tory governments were in office. So what happened? It was the period of the Great Depression, which lasted for over twenty years. In the middle of it, in 1884. the Tory leader. Lord Randolph Churchill, had this to say:

We are suffering from a depression of trade extending as far back as 1874. ten years of trade depression, and the most hopeful either among our capitalists or among our artisans can discern no signs of a revival.

He listed all the industries that were, in his words, dead or dying — coal, iron, shipbuilding, silk, wool and cotton. He ended: “Turn your eyes where you like, you will find signs of mortal disease".

This country had not at that time experienced capitalism run by Labour governments, whose record was in fact no better than that of the Tories or Liberals. In the fifty years 1929-79 there were four periods of Labour government, in all of which priority was given to reducing unemployment and keeping it low. (Actually they said they could abolish it entirely.) In all these four periods unemployment was higher when they left office than when they went in. The latest period was 1974-79, which saw unemployment rise from 629,000 to just under 1,300,000. The favourite remedy of Foot and Benn to this is to increase government expenditure. In 1973 unemployment was 630,000 and government expenditure £24,000m. The latter has increased every year since 1973. including the years of Thatcher government, and in 1981 was £107,000 million, but unemployment, though still much below the levels of the 1930s. is now over 3 million.

One question on which the Labour Party, the Tory Party and the economists are agreed is that one cause of depression and heavy unemployment is that prices are too high. In a similar situation of depression and heavy unemployment in 1931 a government committee (Committee on Finance and Industry), took exactly the opposite line. The fourteen top bankers, economists and Tory, Labour and Liberal politicians studied the problems for eighteen months and issued their Report in June 1931. Among the recommendations was a chapter on "The immediate necessity to raise prices above their present level”. Both views are baseless: capitalism has periodic depressions whether prices are high or low, rising or falling.

The belief of the searchers for remedies is based on a misconception. They believe that trade depression and heavy unemployment prove that something has gone wrong. They are mistaken. Nothing whatever has "gone wrong" with capitalism; it is just the way the system operates in accordance with its structure, with alternate expansion and contraction, much like the tides. If, one evening at the seaside, you see the sea almost up to road level, and then in the morning see that it has dropped twenty feet, you don't shout: "Something has gone wrong. What shall we do about it?"

Where the analogy with the tides fails is in respect of regularity and the length of trade depressions. It is not possible to count on all depressions lasting for some specified time. Some are quite short, others very long, like the Great Depression. (Some economists have recalled the "long-wave” speculative theory of Kondratieff. An article on this in the Financial Times on 6 September had the cheerful title:"Why The Recession May Last Till 1996".) All that can be said is that at some stage in the present depression, as in all the earlier ones, expansion will be resumed when capitalists, viewing all the relevant factors (prices, interest rates, wages) decide that it will be profitable to invest again in the development of new industries and the re-expansion of old ones.

The headlines have recently been made by the banking crisis. There is nothing new in this; every trade depression is accompanied by bank failures or banks losing much of their assets. Walter Leaf in Banking (1926 edition, page 59) says that in the crisis of 1837 "it is believed that every bank in the United States, without exception, suspended payment". And the same happened again in 1875. Writing of the American depression in the 1930s, H. G. Nicholas says that “two-thirds of the banks of the country had closed their doors". (The American Union, page 252.) H. M. Hyndman, in his Commercial Crises of the Nineteenth Century (page 95) wrote of the collapse of the great banking house Overend & Gurney, described as standing next to the Bank of England, and “their name and influence extended to all parts of the civilised globe”. When they stopped payment on 10 May 1866 "the panic occasioned throughout Great Britain was to the full as furious and unreasoning for the time . . . as the panic of 1857”. Hyndman says that the Foreign Secretary "was impelled to send a circular to all our Ambassadors abroad, in order to assure foreigners that the bottom had not fallen out of our island". Banks make most of their profit by borrowing money from depositors at a low rate of interest and lending or investing at a higher return. According to the Financial Times (27 September) the London Clearing Banks are now paying on average about 3 per cent to depositors and lending at over 12 per cent. Out of this margin they have to meet the costs of 234,000 staff and of maintaining some 11,000 branches. Banks can get into difficulties either by their depositors wanting to withdraw all their deposits, or by lending money to companies or governments which go bankrupt or default on the loan.

If depositors lose confidence in the bank and try to get their money out the bank is in trouble because they have only very small amounts of cash in their tills or on deposit at the Bank of England, and it may not be possible for them to turn other assets into cash at short notice without big losses. The Evening Standard (8 September) reported that the sudden decision of the Mexican government to nationalise all banks, suspend payment for five days and make the dollar an illegal currency was because there was a run on the banks; they "literally ran out of dollars". The Western bankers are all in trouble through having lent vast sums of money to companies and governments which, because of the depression, are unable to keep their repayment agreements or, in some cases, even to pay the interest. Mexico’s interest payments have been running at £580 million a month.

One aspect has been the fall of oil prices and oil consumption which have reduced the foreign investments of the oil producing countries (OPEC). At the same time Third World countries find their exports falling so that they are unable both to pay for necessary imports and meet commitments on their huge debts. One of the worst-hit countries is Mexico. On the strength of hoped-for big and increasing revenue from oil exports, loans were raised from world banks totalling £67,000 million, of which £15,700 million was due to be repaid this year. Because of the depression and falling oil revenues Mexico was unable to pay. In effect it was on the verge of defaulting. but that is the last thing the bankers want. So the Mexican authorities were able to induce the bankers, through the International Monetary Fund, to lend still more, an amount of £2,640 million, and with the agreement of the bankers to defer repayment of the debt in the hope that sometime or other Mexico will be better able to pay. However, IMF loans are granted only on the condition that the borrowing government agrees to restrict its expenditure and take whatever other measures the IMF will approve'. One action forced on the Mexican government is to impose a wage freeze until the end of the year.

Poland and many other countries are in the same plight as Mexico. While arrangements such as the IMF loan to Mexico save the banks from having to show big losses in their balance sheets, as they would if Mexico defaulted, they cannot avoid the loss they suffer through deferment of repayment of the loans. The Polish Government, which is in negotiation with Western banks over its huge debts is reported (Financial Times, 25 September) to have warned them that "there is no point in talking of repaying our debt over the next seven or eight years".

While the depression, like all the earlier ones, has seen thousands of companies go bankrupt in America. Britain and other countries, if appears that the governments will, this time, try to prevent widespread failures of big banks. And a small step has been taken in Britain to protect depositors against losses through bank failures. The banks, with Bank of England approval, have arranged to set up funds to ensure that depositors up to £10,000 will receive 75 per cent of their deposits in the event of the smaller banks closing down. The Midland Bank is reported (Sunday Times, 19 September) to be asking the government to guarantee any further loans to ailing companies to prevent them closing down, since this was done with government encouragement.

It should of course be remembered that whatever governments may, or may not do, the banks cannot escape running up huge bad debts in a depression, at the expense of bank shareholders. If banks fail, depositors lose. Any government financial aid must come out of taxation — a choice of evils as far as the banks are concerned. The Daily Mail (7 September) quotes an American banker as saying: “We’ll never sec most of these loans again. The best we can plan is to lose them gradually and gracefully”.

What of the future? In this depression, as in all the others, voices are heard prophesying the coming end of capitalism — a "final collapse". This overlooks the fact that all the parties of capitalism, including the Labour Party, far from seeking the end of capitalism, are busy devising policies to keep the system going. Until the world working class decide to end capitalism this present chaos will continue — the present depression will end followed by another crisis and depression, and another and another.

Edgar Hardcastle

Not concise (2024)

Book Review from the July 2024 issue of the Socialist Standard

Historical-Critical Dictionary of Marxism. Editors: WF Haug, F Haug, P Jehle, W Kuttler. (Brill, 2024)

This is a selection of essays by a Berlin-based group of contributors, translated into English, in what the publishers claim is the Historical Materialism Book Series. It’s an open-access title freely distributed under the terms of the Creative Commons Licence. The start of the Foreword gives some indication of where they are coming from:

‘The sudden downfall of the Soviet Union and the Eastern bloc after 1989, an upheaval of cataclysmic proportions, left many of us in a state of shock, disbelief, grief, relief, doubt and hope. It forced us to take stock of what was irretrievably lost, and what could and should be saved’.

The result is this book. Its scope is impressively wide-ranging but pithy it ain’t. Anyone looking for concise dictionary definitions will be disappointed. Each of the 30 entries gives a detailed historical background but in crucial respects some are uncritical. Among the contributions you might not expect to find are entries on Cooking, Hackers, Hope and Intellectuals.

In the essay on Communism we are told that it is without classes, without state, without market and without contractual relations. However, the writer then poses the question:

‘Which form of trans-subjective relationship can determine such a society, without opening itself to the constitutive intersubjectivity of a new kind of social contract? Communism threatens to become an activist or operaist variant of an absolute knowledge in the sense of the Hegelian objective spirit.’

Whether the writer is being deliberately obscure or bullshitting is difficult to say, but this way of writing occurs frequently in this book. We are also told that socialism is a transitional society between capitalism and communism, where ‘social activity is still subject to the organisation by state planning’. Marx and Engels made no such distinction. Lenin did, though in the entry on Lenin’s Marxism this is not explained. Most of the contributors to this book refer to the former USSR as an example of ‘state-socialism’. There is no stand-alone entry on socialism.

The essay on Crisis Theories is probably the best of the book. It makes the point that Marx’s writings on this subject are ‘somewhat disjointed or even contradictory’. For three decades Marx wrote about underconsumption theories, overproduction theories, disproportionality theories, profit-squeeze theories, and over-accumulation theories which take the ‘law of the tendency of the rate of profit to fall’ as their starting point. The author argues that cyclical capitalist crises only emerged in the 1820s. In 1844 Engels was to state that ‘periodically recurring’ crises were an inherent feature of capitalism. This point is important because some influential defenders of capitalism wrote before this time. For instance, Jean-Baptiste Say’s Traité d’économie politique (A Treatise on Political Economy), published in 1803, declared that ‘the value we can buy is equal to the value we can produce’. This ‘law’ is usually interpreted as saying ‘supply creates its own demand’. Or, more precisely, that the normal state of an economy is equilibrium in which total demand equals total supply. This notion can still be found in some branches of capitalist economics where any imbalances are said to be ‘self-clearing’. This may have been the case when Say wrote but not when capitalist production became a competitive disequilibrium.

Lenin and Leninism are treated largely uncritically and the writings of Antonio Gramsci are given reverential handling. Most of the entries, to a greater or lesser extent, are guided by his thinking. For Gramsci, ‘organic intellectuals’ had a key role to play in social transformation. They would provide the cultural politics that would allow the working class to establish its hegemony. In Gramsci’s version of Leninism, capitalism is a system of privilege and oppression, but he said it is ‘the duty of the “leader” to explain the source of these privileges and this oppression’ to the working class. This is the way to socialism, so it is claimed. This cult of political leadership is a line of theory and practice which stretches back through the twentieth century from Gramsci to Lenin, to Kautsky and the Second International. Its failure wherever it is tried is a vindication of any basic understanding of Marxism: that the emancipation of the working class must be the work of the working class itself. There is no understanding of that anywhere in this book.

Lew Higgins

Some theoretical questions (1954)

From the September 1954 issue of the Socialist Standard

Through having a formal Declaration of Principles to act as basis for membership and for the control of conduct, and through the use of Marxian economics and explanation of social change, the S.P.G.B. has maintained a continuity of outlook unknown in organisations guided largely by the mood and circumstances of the moment. But continuity has not meant refusal to recognise changes of capitalist trends or the emergence of important new information.

Marxian economic conceptions, in spite of the continuous stream of disparagement from critics, have shown themselves remarkably robust in serving to explain the workings of the capitalist system under modern developments. One illustration is the great rise of .the price level in the last forty years. While reformist parties have offered “explanations” which consist of little more than attributing the rise of prices to the wickedness of capitalists and the cowardice of governments,, Marxism economics enables us to see that the overwhelmingly largest factor has been the devaluation of the currency in terms of gold, in U.S.A., to about one half and in Great Britain to about one-third of the value before World War I.

Examination of current economic problems from the Marxian standpoint enabled the S.P.G.B. to show the absurdity of the periodical waves of currency crankism such as the Douglas Scheme; the truth that rates and taxes, in spite of their deceptive appearance, are a burden on property not on the workers' wages and that war likewise is paid for by the capitalist class; and that while wages do not merely follow prices—other factors including the workers' struggles play a part—the belief that lower prices mean prosperity for the workers is a delusion.

In all these matters economic understanding reinforced the S.P.G.B.'s political principles and saved it from floundering in the confusion that fogged the reformists.

Special reference needs to be made to economic crises.

Marx’s valuable material on capitalism’s economic crises was published after his death in Volumes II. and III. of Capital in virtually the incomplete form in which he left it—he had not reached the stage of rounding it off into a comprehensive whole. In the hands of later writers, friendly, critical, and hostile alike, who have overlooked this, Marx’s tentative and piecemeal conclusions have sometimes proved to be dangerous half-knowledge, and many are the explanations of and prophecies about, crises that have not stood up to the test of events; including some by the S.P.G.B. But this has not been of too great importance because the S.P.G.B. was never dependent on crises and crises theories in the way the Communists and some other groups have been. The S.P.G.B. has never been in the position of some reformists of believing that capitalism is only open to condemnation during crises and not during its boom periods; or in the position of Communists of believing that capitalism can only be got rid of through a crisis, a collapse.

This belief has a long history and it has been the S.P.G.B. alone which set itself firmly against it

When Marx and Engels were first approaching the subject of crises they thought, on the evidence then available, that crises happened at shorter and shorter intervals, each one worse than the one before. They soon dropped the first and worked on the supposition that crises happen about every ten years; and they later recognised that it was possible for a relatively acute crisis to be followed by a mild one. It is, however, probable that Marx, and certain that Engels, thought that the general trend was for crises to become worse. This came put most markedly after Marx’s death when we find Engels in 1884, under the influence of the prolonged “Great Depression,” believing that the 10 year cycle had gone and that permanent depression had taken its place; and writing two years later that “we can almost calculate the moment when the unemployed . . . will take their fate into their own hands.”

Just as 30 years earlier, in 1856, he had expected the coming economic crisis to end capitalism, so he now thought in 1886 that unemployment would drive the workers to revolt; and seven years later he was pinning his hopes on the crisis he anticipated from America’s invasion of world markets.

Nobody could hold a theory that crises become worse and worse without being at least strongly tempted to believe that this could not go on indefinitely; a time must come when the crisis would be too great for recovery to be possible. This notion was gratefully taken up by many groups, including the Communists and the I.L.P., for they had dire need of some such theory. How else could they envisage the end of capitalism? The Communists never accepted the S.P.G.B. case that capitalism would be ended by the positive action of a majority understanding Socialism. Instead they trusted in leadership of the discontented masses by an intellectual minority and they welcomed the notion that an economic crisis would provide the opportunity.

The I.L.P. had earlier believed that foe road to emancipation was through Labour Party pressure in Parliament for reforms, especially under Labour government. But by the 1931 crisis, after two Labour Governments, the I.L.P. leaders could no longer be enthusiastic for this and they gladly swallowed the “collapse” theory which promised an easy and early alternative.

The S.P.G.B., which had never needed such a theory, never entertained it and in 1932 marked its opposition to the then popular collapse doctrine by publishing a pamphlet “Why Capitalism will not Collapse,” in which was reaffirmed the Party’s view that “until a sufficient number of workers are prepared to organise politically for the conscious purpose of ending Capitalism, that system will stagger on indefinitely from one crisis to another.”

Because the S.P.G.B. has this firmly based and comprehensive Socialist case against capitalism and is not dependant on particular temporary trends of capitalism, it could view with equanimity unforeseen new developments and reversals of trends that have seriously shaken other organisations. The S.P.G.B. never mixed up State capitalism with Socialism and was therefore able from the start to examine critically the organisation, and finances of nationalisation and expose both the Labour Party propaganda asking working class support for it and the equally fraudulent campaigns against it carried on by sections of the capitalists and by the Tory and Liberal parties. The limited progress made by nationalisation in the U.S.A. and many other countries (contrary to Engels’ expectation 60 years ago), and the present perhaps temporary flow of the tide against nationalisation do not at all affect the S.P.G.B. case though they profoundly disturb the reformists to whom nationalisation meant something different and so much more important

The S.P.G.B., while opposed to building up an organisation on a reform programme, never accepted the two ideas that from time to time have obtained wide acceptance in Labour circles, that the capitalists either would not concede reforms or that they could not afford to do so. So the rise first of unemployment insurance (not foreseen by Engels and others who foretold unemployed revolt) and later of more comprehensive schemes has not in any way affected the basic case of the S.P.G.B. against capitalism.

Nor has the S.P.G.B. case needed to be modified because of the growth in trade union membership and changes in structure and activities. Members of the S.P.G.B. could be and were keenly interested in discussing trade union trends, forms of organisation, strike tactics, etc., but all of these aspects were secondary ones viewed in the light of the recognition that trade union action cannot end capitalism and establish Socialism. The “general strike” of 1926 was for the S.P.G.B. a complete confirmation of views long before thought out and discussed by members. The “general strike,” that is to say united action to hold up industry as a whole, had been advocated in the Socialist Standard four years before (Apr. 1922) as the only means of meeting the general attack on wages. The three guiding conditions then insisted upon were that the stoppage should not be prolonged, it would succeed in its object quickly or not at all; that it should be carried out peacefully for its limited objective with no encouragement of riot or destruction to give excuse for the use of the armed forces; and that the decisions to come out and go back should be in the hands of the rank and file and not entrusted to leaders. In the event it was misguided trust in leadership that made the strike of 1926 less impressive and effective than it could have been, though the S.P.G.B. certainly had never encouraged illusions as to what could be hoped for from such a strike.

On war there has been some development in the Party’s attitude due to events stimulating deeper consideration. In 1904 it seemed sufficient to explain war between capitalist powers (and their wars of colonial expansion) and to insist that the workers had no interest in the issues behind war; rounding this off with denunciation of capitalist greed and capitalist cruelty. Little was said of the attitude of Marx half a century earlier of being prepared to support one side in war either on the ground that the outcome would be an advantage for the democratic and working class movements (e.g. the defeat of reactionary Russia), or that the workers should resist aggression against the country they live in. Had this question been raised as a live issue in 1904 there can be no doubt that the Party would have decided then (as it did nearly 30 years later) that Marx was mistaken in thinking that results worth while for the working class or for the speeding up of the introduction of Socialism could result from waging war. That the S.P.G.B. should have reached a conclusion different from his was due partly to the fact that, looking back, we could see that his hoped for beneficial results did not happen; partly to realisation of the tremendous barrier to Socialism presented by nationalism; partly to the much greater magnitude and destructiveness of the weapons and organisations of war; but basically to the S.P.G.B.’s unique appreciation of the importance of understanding in the achievement of Socialism. For us it was unthinkable that lack of understanding could be compensated for by use of force. Hence the affirmation in a lengthy statement on war formally adopted by the Party that “war is not an instrument that can be used by Socialists or supported by Socialists.”

The Party’s original condemnation of unscientific emotionalism and insistence on the need to understand the causes and methods of social and ideological change and of the emergence of new forms has stood every test. The early issues of the Socialist Standard contained many articles and answers to correspondents on this issue and the article “Unscientific Emotionalism” in the issue for December, 1914, will show how adequately the problems were understood by that time. The following are extracts;—

"When our method of reasoning is applied back through history, we find that man’s thoughts have always been governed by his inherited notions and the material conditions surrounding him; and as these conditions have centred round the obtaining of food, clothing and shelter, so at each period of social history the more or less clear relations that were built up on this basis (the particular relations that existed at the particular time between the various producers and distributors of the social wealth) have been reflected in the mind in a correspondingly more or less clear manner. After the break up of the early tribal communities society was split into various classes, and history since then has been the record of the struggles of each class in its turn to control society for its own advantage. When the progress of the method of producing wealth had reached a certain point the class in society that, was taking the principal part in production found the old laws (that were suitable to the old governing class) placed a restriction on their further development. The problem of the removal of all these restrictions therefore constantly occupied them, and it is then forced home to their minds that the only solution to the problem of the removal of these restrictions is the control of society by themselves, and the alteration of the existing laws to suit the new conditions. Just so at present the spectacle of the workers doing all the work of the world forces home to the minds of men the socialist view that if the workers produce and distribute all the wealth of society they therefore should own it, and reap the benefit of their work themselves, instead of supporting a group of idlers and good-for-nothings. The solution of the problem is contained within the problem itself. 'Therefore mankind always takes up only such problems as it can solve’ (Marx).”

The article showed how the ideas of equality that had lain dormant in the minds of men since the break up of tribal Communism, had been exploited in the past by particular propertied classes struggling for supremacy and wanting the support of the oppressed, and were being exploited now by reformist bodies that did not understand the nature of the problem. The following further extract is a fitting note on which to end this brief survey of some aspects of Socialist theories.

"The socialist reasons from the practical affairs of everyday life to general conclusions, while the emotionalists set out with a plan formed in accordance with certain abstract ideas true for all time (!) without taking account of the historical development of society. They try to organise society according to the idea instead of recognising that the shape their particular ideas take has been formed by society.”

Edgar Hardcastle

Blogger's Note:

In the original text, Hardcastle thought that the article where the Party was advocating for a General Strike was from the February 1922 issue of the Socialist Standard; it was, in fact, an editorial from the April 1922 issue.

The Results of Rationalisation. (1930)

From the February 1930 issue of the Socialist Standard

Karl Marx, in the opening statement of his chapter on “Machinery and Modern Industry” (Capital, Vol. I), quotes John Stuart Mill as follows :—”It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being.”

Marx’s retort in a footnote, apart from his scientific analysis of this aspect of Capitalism, is :—

“Mill should have said, ‘Of any human being not fed by other’s labour,’ for without doubt machinery has greatly increased the number of well-to-do idlers.”

Capitalist apologists are never tired of telling us to-day of the blessings and comforts that Capitalism has bestowed—but on whom?

Part of the work of Marx and Engels was devoted to showing that the main object of the introduction and use of machinery was to increase profits. Long before Capitalism it was possible for human labour power to produce more from nature’s materials in a given time than was required to maintain the producers during that time. This gave rise to the surplus wealth upon which all forms of slavery have been founded. These slave societies have varied according to the particular form under which the wealth was produced and appropriated (chattel slavery, serfdom and wage slavery). The latter form is the one with which we are at present concerned; it is one in which the means of production (land, machinery, railways, etc.} take the form of investments of Capital, owned by the Capitalist class. They are the section in society owning property in the means of life, and that possession enables them to buy the labour power of the large remaining propertyless section, the working class. This labour power, the workers’ only asset, when set in motion, produces, as in other slave systems, “a greater value” than it receives in return as wages. With the aid of power, machinery, science, etc., this greater or surplus value has been extended to proportions once undreamed of. The buyers of labour power, the Capitalists, are not concerned with production as such, their concern is primarily with the effective exploitation of the working class for profit.

This term, Capital, is unknown when applied to wealth prior to the present system. Problems that confront the Capitalist class to-day are not those which confronted other ruling-classes. Production cannot proceed uninterrupted unless markets can be found for the products, and, while these products are useless to the Capitalist personally, they contain the surplus or unpaid labour of his workers. The power to produce wealth grows by leaps and bounds, but the power of the workers to consume is limited to the fractional value of their output received as wages.

In this fact lies the secret of the epidemic of over-production, and, finally, of trade depression and stagnation which necessitates restricted output in most of the important industries to-day. Says Marx :—

“The consuming power of the labourers is handicapped partly by the laws of wages, and partly by the fact that it can be exerted only so long as the labourer can be employed at a profit for the Capitalist class. The last cause, of all real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of Capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire Society would be their limit.”—(“Capital.” Vol. III. Page 508.)

A favourite method, and one that used to be considered safe in refuting Marx’s teaching regarding the relative worsening of the workers’ conditions, was to look wise and repeat, “Look at America.” Now the Economic League and the I.L.P. will have to construct fresh apologetics with which to defend themselves and with which to meet Socialist arguments. From the very country where we were told that mass output and high wages had banished poverty we now learn from the “Daily News” (14/1/30) in bold headlines that there are “Millions of workers scrapped by machines.” Apparently not even the so-called high wages, nor the prodigal dissipation of wealth by thousands of millionaires, has prevented Capitalism taking the course predicted by Marx. The “Daily News” New York Correspondent says in the same issue :—

“Unemployment in fact, despite the greatest prosperity boom in history, has become as in Great Britain with 1,500,000 workless—the greatest of all national problems.”

This correspondent estimates the unemployed figures at about four millions, but confesses these figures are “merely shots in the dark.”

Previous reports from Capitalist sources (see Socialist Standard, October, 1928) would appear to make it a reasonable assumption that they actually underestimate. The causes of this huge displacement of workers are now, strangely, claimed to be the very things that were previously hailed as the means of American prosperity. They are declared to be “Improvement in machinery; the invention of labour-saving devices; the extension of cheap electric power; the process described in Great Britain under the name of Rationalisation.” The latter is interesting news, especially as the day previous to this report Mr. Ben Tillett was reported in the “Daily Herald” as saying:

“Our textile magnates appear to be either too poor or too inept to realise the virtues of scientific rationalising of industry and the scrapping of all obsolete plants and processes for the greater efficiency which modern methods and equipment arc capable of providing” (“Daily Herald,” 13/1/30).

Practically the whole programme of “Labour and the Nation” aims at the same schemes of Rationalisation, or more efficient organisation of Capitalist production for profit. Without spending time and space on details of argument, any thinking and reasoning reader can see that if America is evidence, then it is not production that is at fault there or here. This fact also rules out such freakish reforms as Birth Control, Family Allowances, or a so-called Living Wage, as relief remedies within a system that reduces its producers to poverty and raises its parasites to millionaires. With a naive innocence that reeks of Nonconformist cant, the same “Daily News” Editorial, commenting on the American situation, says :—

“It is a kind of nonsense to say that a process which makes the world richer must inevitably make thousands of individuals poorer.”

Really ! is it ? Have they never heard of Henry George’s “Progress and Poverty,” Chiozza Money’s “Riches and Poverty,” Chas. Booth’s “Darkest England,” or the statements of Capitalist Prime Ministers like Gladstone, Campbell Bannerman, and Lloyd George? The Capitalist class cannot conceive of any other form of ownership of society’s means of life than the private property basis of modern society. To them, abolition of the present form of wealth, ownership, Capital, means abolition of the means of production themselves.

The “Daily News” unable to explain away the glaring contradictions of Capitalism, increasing poverty, side by side with increasing wealth, refuses to reason and takes refuge in the statement that “it is a kind of nonsense,” They even have to abandon the stock argument that these inconveniences are temporary, for their report says :

“The theory that the workers thrown out of one occupation can find employment in others is not sustained by observation . . . for the first time in history there are indications that this compensatory process may have come to an end and that the trend of modern invention may be to make less work for idle hands instead of more.”

Free-born Britons—note ! Even in the same issue of the paper that considers the co-existent condition of poverty and superabundance, “A kind of nonsense ” we read of 2,000,000 Chinese who have died of famine aggravated by the fuel and transport shortage. Millions of willing and able producers withdrawn from production, transport and transporters who could circle the earth with once undreamt-of rapidity, millions of unemployed willing to produce wealth and yet—famine and poverty. What stark madness ! Such is Capitalism ! No reform that could be introduced will prevent the present system from proceeding according to the laws of its own development. The effects of these laws we have briefly outlined. From the workers’ point of view Capitalism renders all reform futile to solve the main poverty problem. Their conditions worsen faster than the reforms can be introduced and take effect.

The very advocacy of Reform presupposes the continuance of the present system whether those reforms are presented as the sugar-coated pills of the I.L.P. or the frothy catch-phrases of the so-called Communist. It is the Capitalist system itself that enslaves the Worker. The remedy is the removal of the cause and no “meantime” patchwork can do that. Only a Socialist Working-Class will ever be able to undertake the removal of Capitalism and the establishment of common ownership of the means of life. Such ownership will place the powers and the results of production at the disposal of the whole of society; consequently leisure and comfort could be available for all if the Workers had the Knowledge and the desire to bring the change. Until then, through political ignorance, they will continue to keep in existence the present system.

W. E. MacHaffie