Poverty Anonymous (1975)

From the December 1975 issue of the Socialist Standard

If it would be wrong to say that poverty is an old friend of the working class, it is certainly a companion from the womb onward.

It is an ignorant delusion to believe that poverty is abolished during booms and times of so-called full employment, and only returns from banishment when there is a slump and unemployment. All the conditions of hardship, misery and deprivation, which are currently receiving so much media coverage, are there all the time. A slump simply makes them more widespread and sharpens the degree of suffering.

Poverty is an inherent part of class society. Under capitalism, the means of wealth production are concentrated into the hands of a minority class, or their state machine (which comes to the same thing). Wealth, the goods and services of society, is produced for sale with a view to profit. The vast majority are employees. By definition, they are propertyless. They must sell their working abilities for wages in order to live. They spend their lives as appendages to the factories, offices, mines and machinery owned by those who employ them. They are hired and fired at the dictate of the world market and the profit margin. They are alienated from life in any meaningful sense of the word. The wealth they are able to obtain, either through wages (if employed) or so-called Social Security (if unemployed or sick) is generally enough to keep them in working order and maintain themselves and families between pay-days.

That there are many workers in “better” paid jobs, who think of themselves as middle-class, in no way changes the basic situation. In fact it often accentuates it.

Poverty leaves a terrible imprint upon all who suffer it. Not only in the physical struggle to get by, but even worse are its mutilating effects on the personality and the mind. There is nothing so brutally pathetic, as a worker with a job who counts his “prosperity” in terms of hard work and rails against other workers who live on social security, without working. Poverty of the mind can be seen in the acceptance by most workers of the perverse ideology of their capitalist masters. It is this which anchors them to capitalism so that the whole ridiculous set-up keeps going.

It is not uncommon to hear workers in this country argue that if places like India, and other starving areas in the world, were brought up to the standard of living in Western Europe “we” would have to make sacrifices. This reflects the capitalist ideology, in that it glibly looks to solutions within capitalism. Whilst it is true that poverty is a relative thing and that the degree of poverty among workers in most of western Europe is not so extreme as that of many people in India, this becomes a convenient argument in favour of workers here being content with their lot.

The real perspective in which to see the issue, is in terms of the technological capacity for world abundance, as against the inhuman, profit-motivated performance of capitalism with its vast wastefulness and destruction (no less so in India). Capitalism subjects modern technology to the strait-jacket of the market. Over-population is one of the absurd myths that help to make capitalism seem plausible. It is sheer humbug to talk of over-population in a system which destroys vast amounts of food each year, or simply does not produce it. As we write, the Daily Mail (20th October 1975) carries a story of nearly a quarter of a million tons of apples destined for destruction, because

 . . . the cost of shipping them to the hungry millions in Asia would be far more than their value.

Nowhere in the world are there any wealthy people starving. But even in the wealthiest countries there are poor people who go hungry.

John Pilger, the well-known and widely-travelled journalist, has seen poverty in many parts of the world. On 28th February 1975 the Daily Mirror carried a report he sent from Detroit. After a brief reference to the American Dream and Henry Ford’s promise to make the workers rich, the report gets down to the ugly realities of capitalism.

At the time of the report there were more than 8,000,000 Americans unemployed. In Detroit, the car industry was at a standstill with 26 per cent, (officially) unemployed. A young unemployed worker who was interviewed said:

  Guys who thought they had it made are now getting a taste of what the poor and the blacks have always had. I’ll say this; when the supplement runs out it won’t be only the blacks who’ll be picking up a brick to get some food.

Government food stamps are regarded as “the badge of poverty”. There are 37 million Americans who qualify. Pilger details a picture of abject poverty. He says:

  In the last three months since the lay-offs began in earnest, the Detroit Health Department has reported 150,000 cases of malnutrition, mostly among women and children.

And further:

  The same food which Washington sends to the starving of India is being sent to the heartland of American industrial wealth: and incredibly, people get this food with a medical prescription marked, in large type, MALNUTRITION.

Six months later, Pilger was in Liverpol and another report appeared in the Daily Mirror (14th August 1975). He interviewed a family who live in a three-year-old block of council “barracks”, where damp has destroyed lino, bedding and clothing. The rent for this unhealthy hole was £9.45 weekly. The breadwinner was unemployed. They were £50 in arrears of rent and had been threatened with eviction. The father, who is up at first light every day following up job ads, said: “Watching my kids pushing down bread and marge just to stop hunger pains is the greatest humiliation.” They were told by those champions of the needy, the so-called Social Security: “You should be more thrifty, you should be less wasteful.”

Pilger goes on to cite a report by the Child Poverty Action Group, showing that 5,000,000 people (in Britain) were spending as little as £1.60 per head each week on food, and this was diminishing. This was at a time when the average amount was £3.46. The penalty for two people being unemployed or sick in July 1974 was to be condemned by the Welfare-State to live on a pittance of 29 per cent. of average earnings. By November this year, it is expected to fall to 27 per cent.

Pilger slates Wilson and Healey, and calls them “jugglers and manipulators”. He says they “have lost all grasp of what is happening to millions of people in this country”. People who buy above-average amounts of baked beans and margarine and less than half the average amounts of butter, meat and fish. People who under a Labour government suffer hunger and among whose children rickets is returning.

Pilger, like the Daily Mirror and the media as a whole, comes to no conclusion. He lamely poses the question: "Where have all the radicals gone?” The “radicals” are those do-gooder reformists who built that supreme political irrelevance the Labour Party. Which, with the support of the Daily Mirror, is currently running British capitalism. The radicals, who were going to “tax the rich out of existence” a generation ago, seem resigned to the “compromise” of starving the poor out of existence. The Labour Party has long been stripped of any pretence of being other than a capitalist party.

Capitalism mocks all who try to tame it. The very morning the Daily Mirror announced 1,000,000 unemployed (25th July 1975) it carried a front page story about the Kleenex tycoon’s wife Roberta Kimberley, who filed a claim for expenses in her divorce case, which included £1,000 per month for food and £300 per month for flowers. Meanwhile, back on the other side of the class jungle, the nationalized (state-capitalist) gas and electricity authorities, with the aid of energy-man Benn, were making various ludicrous suggestions as to how the poor might be enabled to pay their ever-rising gas and electricity bills.

Determined as ever not to learn from history, the “Communist” party, IS, the WRP, the “bad boys” in the Labour party and the trade unions, are busily drumming up the schemes of the moment and proffering useless advice to the government on how to run capitalism — without crises. Poverty, despite all the schemes of the “left” and generations of reform legislation, is as virulent as ever. Socialists have never been deluded that it would be otherwise.

Harry Baldwin

No Mystery About Banking (1966)

From the December 1966 issue of the Socialist Standard

Banks have been in the news, with the failure of the Intra Bank in Lebanon, the largest in the Middle East and a bank in Detroit, the Public Bank of Detroit.

Both banks claimed to have assets more than sufficient to pay depositors eventually, but neither had the cash available when the depositors took fright and wanted their money back. The Intra Bank is reported to have invested much of the £86 million deposits (some of it from oil-rich Arab clients) in such varied properties as a West End Hotel in London, docks in France and properties in Paris and America. As the Sunday Telegraph (23 October) remarked:– “This is dangerous banking practice – office blocks cannot be sold overnight to repay depositors”.

The Detroit Bank, which had deposits of $117 million at the end of 1965, had got heavily involved in financing “home improvement” work.

It was the biggest American bank failure in thirty years.

It was the familiar story, recalled by the failure of a small British bank a few years ago, when the manager complained sadly that “depositors were taking the money out faster than they were putting it in”.

The outcome has been that the Detroit bank has been taken over by another American bank, and the Intra Bank, with Government and other aid, has re-opened. Among those who propped it up were the Maronite Patriarch of Antioch, with that the Times described as “the not inconsiderable resources of his Church”.

But what is of more lasting interest is the light such bank failures throw on the absurdities of the banking theories held by what the late Professor Cannan called the “Mystical School of Banking Theorists”.

Before their ideas gained their present widespread acceptance economists and bankers, though they disagreed about other things, had no doubts about the basic principle that what a bank lends or invests is placed at its disposal by depositors.

Marx for example wrote: –

A bank represents on one hand the centralisation of money-capital, of the lenders, and on the other the centralisation of the borrowers. Its profit is generally made by borrowing at a lower rate of interest than it loans (Capital Vol. 111. P. 473).

And a banker, Mr. Walter Leaf, Chairman of the Westminster Bank, wrote: –

The banks can lend no more than they can borrow – in fact not nearly so much. If anyone in the deposit banking system can be called a “creator of credit” it is the depositor; for the banks are strictly limited in their lending operations by the amount which the depositor thinks fit to leave with them. (Banking. Home University Library 1926.)

But the mystical school (which included Keynes) would have none of this. They saw by experience that a prudently conducted bank, having the confidence of depositors, could rely on them to leave the bulk of their deposits in the bank, so that the latter could safely invest about twelve to fifteen per cent, keep about 20 per cent in a form of lending which they could call on immediately, keep about 10 per cent in cash in their tills or at the Bank of England, and use about one half to make advances to customers. From this they make the topsy-turvy deduction that out of the 10 per cent cash (it is now down to 8 per cent) the bank had “created” the rest.

The Committee on Finance and Industry (The Macmillan Committee) in its report in 1931 claimed that “the bulk of the deposits arise out of the action of the banks themselves, for by granting loans, allowing money to be drawn on an overdraft or purchasing securities a bank creates a credit in its books, which is the equivalent of a deposit”.

They went on to give what they called a simple illustration. First they assumed that all banks had been merged into one bank. Then they described what they said would happen if a depositor deposited £1,000 in cash, the bank relying on past experience that it was only necessary to keep £100 of it in cash. The bank, they said could now make loans (or purchase securities) up to a total of £9,000 “until such time as the credits created . . . represent nine times the amount of the original deposit of £1,000 in cash”. They were of course assuming that when each borrower drew on his account to make payments the cheques would come back into other accounts in the bank.

Two things they overlooked or obscured. In the real world there are quite a lot of separate banks and in the nature of things most of the loans made by each bank are used to make payments, not to customers of the same bank, but to customers who have accounts in other banks. So if for the moment we accept the assumption that the banks by making loans have created deposits they are doing most of it not for themselves but for their rivals. More important, their simple illustration is too simple. If their argument is sound it could be applied to a bank just being formed just as well as to a bank already functioning. (They were silent on this.)

But as soon as it is put like that its absurdity becomes apparent. A newly formed bank with no deposits except the £1,000 cash just handed in would, on the past experience which the Macmillan Committee itself accepted, invest £150, have £200 on call, £100 in cash and make advances of £550. Thus its total of investments and advances would be, not £9,000, but £900. It would only need one borrower of £1,000 to draw a cheque paying it to an account in another bank, for the first bank’s £1,000 cash to be reduced to nothing.

The same principle applies to an existing bank; for example if we take total deposits £100,000, with £15,000 invested, £20,000 on call, £10,000 in cash and advances of £55,000. For the existing bank would only have been able to expand to the £100,000 level by treating each additional deposit of £1,000 cash in the same way, with investment and advances totalling £900 out of each £1,000, not the mythical £9,000.

The members of the Committee were soon faced with a problem. Taking their words at their face value the late Major Douglas concluded that this power of “creation” meant that a bank “acquires securities for nothing”, creates new money “by a stroke of the banker’s pen”, and that the banks “are the potential or actual owners of everything produced in the world”.

Faced with this, members of the Committee who were asked about it, including the late Reginald McKenna, Chairman of the Midland Bank, had to repudiate Major Douglas. The fact remains however, that Major Douglas was only taking them to the logical conclusion of their own mystical theory of banking.

Edgar Hardcastle

Another Economic Blizzard? (1958)

From the April 1958 issue of the Socialist Standard

So the bread lines and soup kitchens have appeared again—in the United States and in Canada.

It looks as if the slump that would never come again is now on its way. At least that is the impression one gets from statements by leading financiers, here and in America, and from articles that have appeared in London papers recently.

The Times for March the 4th, under the heading, “World Unemployment Survey,” gives figures of unemployment in different countries. In the United States in January the figure was 4,494,000. This does not include unemployment among the 30 million who are not covered by unemployment insurance. Since January there has been a considerable increase in unemployment The Times gives the unemployment figure for Canada in January as 520,000. Here also the figure has increased since January.

The News Chronicle for February 28th contains an article on Detroit by Bruce Rothwell. From this article it is evident that the huge empty factories around Detroit, and the empty shops the present writer saw in Dearborn, when he was there last September, were the expression of something more than the shift of industry out of Detroit and the change-over to automation.

The News Chronicle writer has this to say

   “Signs of the slump are everywhere and this is frightening America.
   “For beyond this city millions more jobs depend on the car industry. One business in six is wholly concerned with it.
    “Steel, rubber, glass, leather; they all slump when the assembly lines slow; and soon it spreads to us all.
      “So Detroit, the centre of it, is harder hit to-day than in the ’thirties."

The writer states that there are 250,000 unemployed in Detroit now, and he tells of the soup kitchen run by the Capuchin monks which can only touch a tiny fragment of the thousands of hungry.

He goes on to tell of the workers who are "called in for only a few hours and then sent home with too much pay to qualify for unemployment benefit”; of the cars, bought on the hire system, and almost the only means of transport, that are seized because of failure to pay the instalments: “this is the heyday of the debt collector. In haulage trucks they cruise the streets checking their lists with parked cars. Two hundred a day are seized.” Of the City Welfare Office, where people queue all day in the hope of relief: “They queue all day, and the queue is lengthening for the list of men who have been out 26 weeks is lengthening, too—at the rate of 7,000 a month.”

This is a grim picture of the passing away of the boom times and the fraud of the Welfare State.

The seriousness of the position is emphasised by an announcement in The Observer, March 9th, that Eisenhower is proposing action to mitigate the effects of the slump:—

   “In an unprecedented move, President Eisenhower announced to-day a forthcoming Bill which guarantees that while the recession lasts jobless United States workers will not go without unemployment benefit—a fate that has been staring many of them in the face."

The Observer article points out, however, that only 60 per cent, of the jobless workers will be entitled to benefit under Eisenhower’s proposed measure, just as under the existing law.

The article also makes this general statement:— 

   "As many areas have been depressed for months, there are substantial numbers of United States workers who have exhausted their 26 weeks’ allowance, and many more are about to reach that stage. Without the President’s new measure, these workers would have had literally to stop buying anything at all, and to stop paying the time payments with which every American working-class family is saddled.” 

Another paper, The People, March 9th, had an article headed “They queue for free soup in Canada now” with a picture of a line of unemployed and destitute outside a soup kitchen at Marian Centre, Edmonton, where 400 free meals a day are being distributed. The writer of this article says:—

   “The emergency is not Edmonton's alone. In the last eight weeks an economic blizzard has swept over all Canada.
    “Only eight weeks ago I reported that, according to official figures, 300,000 people were on the dole, including many emigrants from Britain.
     "I forecast then that the figure would increase. It has— to an extent far beyond my worst fears."

From the extracts we have given it will be seen that the indications are that there are tough times ahead; for capitalism is an international disease. A collapse of industry in one part of the world soon makes its effects felt in every other part. So the Cohen Committee need not have bothered to assert the need of arranging for a certain percentage of unemployment—the system will more than take care of that in the fullness of time.

Gilmac.

Obituary: Walter Kobus (1990)

Obituary from the October 1990 issue of the Socialist Standard

We regret to have to report the death earlier this year of our Comrade Walter J. Kobus of the World Socialist Party of the United States. He lived in Detroit, the centre of the American car industry, and until his retirement had been an active member of the United Autoworkers Union. For a short while the headquarters of the WSPUS, before it was moved to Boston, was in Detroit and comrade Kobus was active in the party local there. Some members will recall his visit to Britain a fair number of years ago. His generous bequests to us and the other Companion Parties will be used as he would wish: the furtherance of our common aim to foster knowledge of and the desire for the establishment of world socialism.

Inspiring Conference in U.S.A. (1957)

Party News from the November 1957 issue of the Socialist Standard

Report of Our Fraternal Delegate 

As a delegate from the Socialist Party of Great Britain I attended the Conference of the World Socialist Party of the United States on August 31st and September 1st and subsequently visited Detroit, Winnipeg and New York.

The Conference was attended by about 30 members and sympathisers, many of whom had made a Long journey to get there. One had come over 3,000 miles from Los Angeles, three about 800 miles from Detroit, and four about 200 miles from New York. This is an example of the difficulty our comrades in America are faced with owing to the scattered nature of the membership in such a large country. Some who wished to attend were unable to do so owing to the distance from Boston and the time they would have had to take off from work.

The proposals, ideas, arguments and general discussion were almost identical with what takes place at our own conferences, and was a striking example of how parties based on the same principles react in a similar way to conditions that are largely the same.

On the evening of the first day a social was held, which was attended by about fifty members and friends. At the social films of activities were shown and the recordings from groups in different parts of the world. This was a very inspiring part of the Conference, and an indication of the genuine international character of our movement. Recordings came from Los Angeles, San Francisco, on the west coast of the U.S.A.; from Canada, Australia and London, the latter included a recording of our Austrian comrade. There was also a recording from Ireland, which came too late for the Conference, but was heard afterwards, and also a cable with greetings from Iceland.

The recordings were a considerable advance upon the customary cables of greetings. To me it was very heartening to hear comrades from so many distant places actually speaking to us; particularly when I recognised the voices of two former members of the S.P.G.B. speaking from Australia.

The recordings had such an effect that at the Conference the next day resolutions were passed recommending that recordings should be taken of public and class lectures to be exchanged between parties and branches for their mutual advantage.

On the second day of the Conference there was a dinner in the evening, at which the Conference discussions continued until the room had to be cleared. The next day there was a picnic to a park just outside Boston. After this most of the delegates had to make their way home.

The warmth and comradeship of my reception at the Conference was something I will always remember. Also the work of one of the Boston comrades, who spent most of the first night and the next day transferring the different recordings on to spools so that they could be sent abroad without delay for others to hear.

On Friday morning, September 6th, I went with Comrade Rab to Detroit, taking films and recordings with us. Here again I met the same warm and comradely reception. I spoke at a meeting on Saturday evening, at which there were many questions and a lively discussion. Owing to a misunderstanding, the meeting was not advertised as early as it might have been, and I understood afterwards that some who would have attended learned of it too late to do so. There was another meeting later, in a member’s house, to which about 40 turned up. I said a few words and then Comrade Rab took over. We both answered questions.

While in Detroit a number of members and friends went for a picnic across the Canadian border to Lake Erie and had a very pleasant time. I was also taken for a trip to the factories and learned that there were about 150 thousand out of employment. Some huge factories had completely closed down, partly due to automation, which requires only one storied buildings, and partly, I was informed, because industry was slowly moving out of Detroit

On Friday, 13th September, I left for Winnipeg. There I also met the same warm reception I had become familiar with. I arrived after 1 a.m. to find four members waiting to collect me. They took me to the member’s house where I was to stay, and I was staggered to find a group waiting up to greet me. After a short time they had to disperse, as most of them were due at work the next day.

On Sunday afternoon I spoke at a meeting. The attendance was not what the members had hoped, but there were over fifty present. There were good questions and discussions, and a collection that covered the expenses of the meeting and left some over. There was also a good sale of literature.

On the following Wednesday evening I was given ten minutes to address the Winnipeg Trades and Labour Council. I had a good reception, and a considerable number of Western Socialists and Socialist Standards were distributed. It seemed to me, after listening to a political discussion at the council meeting (about 100 delegates were present), that there was good material there for our Canadian comrades to work on.

On Thursday morning, the 19th September, I left for New York, arriving there at 6 p.m. I spoke the same evening at a small meeting that was hurriedly arranged. The next two days I was shown around New York.

On Saturday evening, 21st September, I left for Boston, arriving at midnight. On Sunday night I spoke at a meeting of members and friends at Headquarters, largely giving my impressions of my visit. On Monday night the Boston comrades held a farewell party for me, where I said goodbye to those I had met for such a short and inspiring time. The next morning I left for London.

I would add a few words on my impressions—necessarily scanty.

The standard of living appears to be much higher than in England. Apart from the rush hour in the subways, there is no sign of rush and tear. The cities are cleaner and more open. Even the factory districts I saw are clean and fresh looking compared with European. Boston has a factory, which I only saw by moonlight, that is graceful, set in gardens, and looks like the type we hope to see in the future. In general there is none of the smokiness we see here, and the factories are not crowded together. I was told it is different in Chicago, but I did not see that city. The streets are very wide, and there are special roads for fast moving traffic. The buildings are huge—apart from the skyscrapers—and the shops immense, clean and light,. The houses I have been in are charming and mainly built of wood.

All the time I was in the U.S. and Canada the members everywhere could not do too much for me. The hospitality I received was amazing. It was the best time I have ever had in my life. Everywhere I went I was struck with the enthusiasm of members who are ploughing a much harder furrow than we are. They have told me of their intentions to stir things up in the future, and I am convinced that the next member of the party that goes there next year will witness the result of these intentions. I have made many new friends that I will take care to keep contact with, and whom I will always remember with warmth.

Before concluding, I must pay a tribute to the herculean efforts of Comrade Gloss in securing recordings from distant parts and for organising my trip so successfully. Also to Comrade Rab, with whom I spent many cordial and exciting days. With these two and other members and friends I had numerous pleasant and inspiring discussions.

Finally, I must add how valuable I think these interchanges of visits are, and I hope it will be possible for a much larger interchange in the near future. The better we know each other and the more closely knit our international movement is, the faster we will progress towards the end we all have in common

Gilmac.