Finance and Industry: What of the future (1963)

The Finance and Industry Column from the November 1963 issue of the Socialist Standard

What of the Future

After a period in the doldrums the motor industry is booming again. To judge solely by the British press one would imagine the boom was confined to these shores. In fact, the U.K. industry is doing no better than most of its competitors and in some cases is not doing as well. Production, for example, is up by 15 per cent. in Britain so far this year compared with 1962; this is higher than the increase in Germany (14 per cent.). but less than in France (17 per cent.) and in Italy (28 per cent.). Even the recently stagnant U.S. industry has managed to show a rise of about 12 per cent.

The export comparison is even less flattering. U.K. exports in the first six months of this year are up 6 per cent. over 1962; but for France the rise is 18 per cent. and for Germany 21 per cent. Italy, on the other hand, has shown virtually no rise in exports at all and has had to contend in addition with a tremendous increase in imports.

All the big national producers in fact are turning out cars faster than they have ever done before. Total U.S. production is reckoned at over 8 millions for the whole of this year whilst Germany will probably produce about 2½ millions, Britain and France 14 millions each, and Italy near enough a million. The automobile is fast becoming as crucial to the Western European economies as it has long been to the American. “When Detroit sneezes,” it has been said, “America catches a cold “; the same can now be said of Dagenham, Wolfsburg, Billiancourt, Turin.

The urge towards more production and bigger sales has become hectic. Every firm in every country strives to keep ahead of its rivals; every national group tries to beat its competitors. New model follows new model with bewildering rapidity; there is new styling; engines go from the back to the front, and from the front to the back; gimmickry of one kind or another has free rein. To keep sales buoyant, it is essential to put something new before the buyers. Once a model like the old Ford 8 or Austin 7, or the Volkswagen, or long Citroen, went on for 15 or 20 years; now it is the exception if a model lasts a third of that time.

Having overwhelmed the small car sector with a vast range of differing models, the car manufacturers of the world are now switching their attention to the medium bracket. British Ford has currently no less than 17 different types in its Consul/Corsair complex in an attempt to cater for every idiosyncrasy on the part of buyers: other firms, such as Renault, Simca, and Volkswagen, are only just coming into the field with perhaps one or two models, but are geared up nevertheless to turn them off the assembly lines at 500 a day.

Apart from the rivalry between individual firms inside their own countries, competition has spilled over national boundaries. To get a foothold in the French market, British Ford and B.M.C. are selling cars at prices that must be bringing them little if any profit. Renault and Simca are doing the same in the U.K. Since the removal of certain tariff restrictions by Italy, the market there has been invaded by cars from Britain, France, and Germany (Volkswagen alone has taken up 5 per cent, of the market). Germany itself will import about 160,000 cars this year, 12 per cent. of new licences.

But in spite of all this frenzied activity, many firms are worried. Although they are turning out cars in large numbers, the profits are not coming so easily. Competition is intense, and the outlay on new plant, factory extensions, and more and more research, is a heavy burden. Most of the new production has been in small cars and the profit on these is low. The firms with the vast capital resources to cope with this mass production will have the best chance of survival, the others will either be taken over or will amalgamate.

The chief threat will come from American capital; from Ford with its holdings in Britain and Germany, General Motors again in Britain and Germany, and Chrysler in France. Volkswagen is already said to be feeling the pinch from Ford and Opel (General Motors), and Rootes has long suffered the same uncomfortable position in this country. Rumours continue to flourish in Europe about amalgamations of various “family”‘ concerns to counteract American pressure —Fiat in Italy, Mercedes—Auto Union in Germany, Citroen and Peugeot in France. That they all have reason to be afraid is emphasised by a recent calculation made in a European trade paper: General Motors in the U.S. would apparently still have made a profit of almost £300 million if they had given away free the whole of the production from their Opel plant in Germany.

It will be interesting to see for how long the independent European car producers can continue to stand up to the might of the American colossi. In the meantime, they carry on the frenzied struggle to sell their cars with one eye fixed anxiously on their European rivals and the other looking apprehensively at the United States. No wonder they cannot see where they are going—perhaps its just as well for them.

It’s all as planned

When trade booms the politicians dispute with the business men about the responsibility, both claiming the credit. When trade slumps the business men blame the government and the government blames the greedy workers or the wicked foreigners. The truth is that neither business men nor Cabinet Ministers can have much certain knowledge of the future ups and downs of home and foreign trade, or do much to control it: but some are luckier than others.

One widely held belief of our age is that governments can manipulate trade expansion and therefore can know what the future will bring because they control it. Sometimes they appear to be right not because they made it happen but because it was going to happen anyway and in spite of their efforts. An example of this was recently commented on by Paul Bareau in the Daily Mail on September 9th. He recalled that earlier in the year the Chancellor of the Exchequer undertook to promote an improvement in trade by running a budgetary deficit. Trade did improve between April and September but without the deficit having happened.

“The Chancellor of the Exchequer, therefore, budgeted for a current deficit of £90 million, a capital deficit of £597 million, and an overall deficit of £687 million—or ten times the modest and mean figure for 1962-63.

So far, virtually nothing of this worthy intention has been translated into fact. In the first five months of this financial year the current deficit was £28 million larger than in the corresponding period last year, but the capital deficit was £3 million smaller, leaving an almost negligible £25 million change in the overall deficit.

The recovery which has taken place in the economy, therefore, owes virtually nothing to the stimulus that was to be applied through the Budget.”

Business men may say that this just shows the limitations of politicians and their theories. But a recent book on the American Ford Company (The Fate of the Edsel, by John Brooks) recalls a colossal blunder of that company. They went to great expense to give the public just the car they wanted. It was a flop and lost £100 million.

Stan Hampson & Edgar Hardcastle

Finance & Industry: Report on piecework (1961)

The Finance and Industry Column from the November 1961 issue of the Socialist Standard

Report on piecework

The Labour Gazette for September contained the latest report by the Ministry of Labour on the extent to which piecework and other payment-by-results systems are operated in different industries. The advantages to the employer of having workers who, to earn more, speed up their own output without the employer having to bear the cost of supervising them, are obvious, yet payment-by-results systems have never become predominant in industry as a whole in this country; partly because trade unions resisted, but mainly because some work processes are not suitable for practicable payment-by-results systems. 

What the Report shows is that while 42% of workers in manufacturing industry are paid by results, 58% are on systems of payment which do not vary the amount of pay according to the output of individuals or groups of workers. Generally speaking, piece-work, etc., is much less common in the non-manufacturing industries; in the gas, water and electricity group, for example, only 2% of workers are on piece-work. It is more common among women and girls than among men.

The manufacturing industries are divided into fourteen industrial groups. Among them the two groups with most piece-work, etc., are iron and steel, and shipbuilding (65% and 59%); and the two with least piecework, etc., chemicals (21%) and paper, printing and publishing (19%).

Bevan on piecework

The second world war gave a big impetus to piecework among men. In all the industries covered by the Report (manufacturing and non-manufacturing) only 18% of men were on payment-by-results systems in 1938, but after the war it was 24% and it is now 30%. Among women workers it has fallen slightly, from 46% in 1938 to 44%, but among girls under age 18 it has increased from 27% to 44%.

The ratio among boys of 1 in 5 has remained about unchanged.

When the late Aneurin Bevan was Minister of Labour in 1951 it fell to him to sponsor the Government’s campaign to increase production by going over to piecework and similar schemes, and the Ministry published its pamphlet Wage Incentive Schemes to encourage the idea. One of the reasons given by the Ministry for needing increased production was to help the Labour government’s rearmament programme. “The need for reduced costs of production and increased output has become even more urgent in face of the unavoidable diversion of a substantial portion of the labour force to the carrying out of the government’s defence programme.”

Bevan had read some of Marx’s works and it is unlikely that he had not come across Marx’s derisive remarks about “a fair day’s pay,” (not to mention his denunciations of piece-work), but the Ministry’s pamphlet contained in the Foreword:—”A fair day’s work for a fair day’s pay remains the soundest basis for relationship between employers and workers. . . .”

Impact of Automation

The increase in payment-by-results in recent years goes against some forecasts that it would decline because of the development of automation. The expectation that it would decline was based on the proposition that the employer has no use for a payment system designed to speed up the worker or group of workers, if this is looked after by the technique of production. A rather different view was taken by the Department of Scientific and Industrial Research in their booklet Automation (1956, page 78). They thought that payment-by-results would take different forms.

“Payment by piece-rates, based on the output of individual workers, rarely suits work on automatic processes. The rate of output will be decided by managements on technical grounds, and it will be controlled by technicians rather than operatives. Moreover, the contribution of one operative can rarely be isolated from the contribution of others, so payment will tend to reflect the performance of a team or factory rather than that of any individual ; and it may be based on criteria other than output, for example, machine-utilization.” (Page 78.)

A speaker at a recent conference on automation, Mr. J. Jones, Birmingham regional secretary of the Transport and General Workers Union, pointed out that the old incentive schemes to encourage the individual to increase output have no place because “with automation a worker no longer had control of output” (Financial Times, 29/6/61). But he went on to say that in the engineering industry some managements have tried to adapt old systems of payment-by-results to the new conditions, apparently not at all successfully.

Russia’s Oil Market

The oil companies of the West have for many months been facing a determined drive by Russia to enter their markets with oil at undercutting prices. Russian oil production has jumped from 80 million tons in 1955 to over 120 million, and is expected to double by 1965, so the threat is not a trivial one. Nevertheless, it has to be remembered that Russian production is still only half than in U.S.A. and her oil exports have to be multiplied many times before they reach the level of the nineteen thirties when Russian oil accounted for about one-eighth of the Western markets.

Back in 1934 Stalin was asked about Russian oil exports, by a visiting delegation of workers from various European and other countries. They wanted to know how Russia could sell so cheaply and were offered the explanation that Russian oil (and wheat) were cheaper because Russian industry “does not require super-profits.” He also told them that Russian policy of cheap export “reduces prices and improves thereby the position of the masses of consumers.”

Among the eighty visitors there must have been some who had seen in their homelands how little falling prices ever benefited the workers, since the employers naturally took advantage of it to press down wages, and in those times of heavy unemployment, with complete success.

However, rumours, so far not confirmed, have been floating around that there is a possibility of the Russian government now doing a deal with the oil companies to cut out undercutting, and to divide up the market.

A writer in the Daily Telegraph (19/9/61) alleges that because the Russian government sometimes uses cheap oil exports to further political ends they have been selling their oil more cheaply in Italy and West Germany than to their own allies, Eastern Germany and Poland.

Our “prosperity”

In its issue of September 16, the Daily Express had one of its cheery little editorials informing readers about the “growing prosperity of the ordinary men and women of Britain.” It claimed, on the strength of the government booklet on National Income, that “in 10 years their income has almost doubled. Allowing for the rise in the cost of living, they are still more than 50% better off.” Seemingly, arithmetic is not a strong point at the Express office, because while the national income in money terms actually has nearly doubled in 10 years the adjustment for the rise of prices reduces this, not to 50% but to about half that amount, making an average annual increase of about 2½% a year. Even that exaggerates the increase because in those ten years the population has risen by two million.

Russian Industry

Many of those who have studied the expansion of Russian industry have remarked on the fact that while some industries have jumped ahead both in size and the use of modern methods, others have lagged far behind the development in other countries.

An example of this is Russia’s backwardness in telephone development. The latest figures show Russia as having four million telephones, compared with about eight million in Britain, 70 million in U.S.A. and nearly five million in Japan. Related to population Russia shows 1.91 per 100 of the population; Britain 15.03; U.S.A. 39.52 and Japan 5.21.

Edgar Hardcastle

Finance and Industry: Exports and hard work (1965)

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

Exports and hard work

“Everyone must do a full day’s work for a full day’s pay from now on.”

“This is not a year in which we can afford large wage increases.”

“There is far too much indiscipline in every part of the nation.”

“We can no longer afford workers who inflict harm on production and the public with sporadic strikes.”

“Production, more production, more efficient production, cheaper production.”

These are typical of the pleas we get from Wilson and his Ministers almost every weekend now. We are told that there is a serious balance of payments problem which must be solved if prosperity is to be maintained. Labour Ministers, joined the other week by Prince Phillip, entertain us with stories about the simple economics of the family: if you spend too much you can only make this up by sacrifice and hard work. The implication of such stories is that the population of Britain, like members of a family, have a common interest. Socialists deny precisely this; today society is composed of two classes with completely opposing interests. This is why the analogy of the family is invalid; though there is perhaps a sense in which a nation can be likened to a family: a family of capitalists who have banded together for the furtherance of their mutual interests. When people talk of “the nation,” “the country” or “Britain” they are, in fact, referring to this small capitalist minority. For they are the country; Britain in this context is just a fancy collective name for them; the so-called national interest is their interest.

The balance of payments are the overseas trading and investment accounts of the capitalist class. They record, on one side, exports, loans from other capitalist groups, income from overseas investments and the investments of foreign capitalists in the home country. And, on the other side, imports, loans to other capitalist groups, income from foreign investments in the home country which goes abroad and overseas investments. These accounts are generally divided into two parts: the actual balance of trade (exports and imports) and what in Britain is called the “capital account” which records loans and investments. The balance of payments as a whole must, in accordance with simple accounting principles, balance. A deficit in the balance of trade, for instance, must be made by a surplus on the so-called capital account. Balance of payments difficulties arise when payments continuously exceed receipts. Before the last World War the deficit in the balance of trade of the British capitalist class was matched by an inflow of Profits and Interest from overseas. However, many of these overseas investments had to be sold to pay for their war. As a result at the end of the war the British capitalists found that they couldn’t go on as before: now they had to try to eliminate the trade deficit altogether by increasing exports. This is their much-publicised “exports problem.” The position of British capitalists is further complicated by the fact that its currency, Sterling, is one of the international means of payment and also by the fact that they act as bankers to a whole group of capitalist states known as the Sterling Area.

No group of capitalists can go on running a balance of payments deficit without in the end risking bankruptcy. There are various measures that can be taken to try to avoid this dire result (though, of course, the ups and downs of industrial production and trade mainly depend on factors which governments can’t control): loans from other groups of capitalists, cut down imports, try to increase exports and to reduce costs. Devaluation, which involves making it cheaper for foreigners to buy Pounds Sterling, and thus making British exports more attractive in the World Market.

When the Labour Party took over the management of the common affairs of the British capitalists last October, they were immediately faced with a serious balance of payments problem: imports rising, reserves falling, confidence in Sterling disappearing. As they themselves have since revealed they considered that their first duty was to “Save the Pound.” They got a loan from the International Monetary Fund, put on the import surcharges and the like. Most of their promised social reform schemes were “postponed” under the excuse of “clearing up the mess the Tories left.” Since then a major part of their economic policy has been directed to “saving the Pound,” from Wilson’s pleas for a New Britain with boardrooms full of fighting go-ahead managers and salesmen and factories full of hard-working, docile workers who have abandoned strikes, tea-breaks and clock-watching, to Brown’s futile prices and incomes policy. The emphasis is always the same: old attitudes must go, British capitalism can’t afford anything which increases costs from expense account lunches to Trade Unions using their economic strength to the fullest.

The general logic of this policy flows from the (correct) assumption that the continued employment of the working class depends on the continued prosperity of the capitalist class; thus to keep full employment, it is argued, the Government has to take measures to preserve prosperity (including using armed force to protect oil in South Arabia and copper, tin and rubber in Malaya) and avoid measures which threaten to upset it (like expensive and interfering social reform schemes). This might be reasonable if you accept, as the Labour Party does, that the working class must for ever be dependent on the capitalist class.

After all it was Marx himself who wrote that an “indispensable condition for a tolerable situation of the worker is the fastest possible growth of productive capital.” But this is merely the result of the utter dependence of the working class on the capitalist for a living in the first place. This is a dependence which Socialists say amounts to enslavement. We are wage-slaves, condemned to work all our lives for the capitalists in return for a wage or salary. But more than this we can only find employment when our masters can sell what we produce, when they are prosperous and affluent. Socialists say that this economic dependence on the capitalist class can and should be ended. Socialists have always urged workers to realise that their interests are completely opposed to those of their employers and to pursue policies in line with this. On the economic field the conscious pursuit of this class struggle involves using the trade unions to fight and improve wages and conditions all the time; and on the political field an organised struggle in an uncompromising Socialist Party for the conquest of political power in order to achieve Socialism.

Once it is realised that society is not one happy family with a common interest, but rather is composed of two hostile groups then it can be seen how dangerous from the working-class point of view are the Labour Party pleas for hard work, moderation in wage demands and co-operation with capitalist enterprises (“enlightened management and co-operative labour” is what Callaghan once called for). For if accepted this would amount to a complete capitulation to the capitalist class. The Labour Party is, in fact, saying, “If you want to exist under capitalism you must do so on capitalism’s terms, so WORK HARD, DON’T STRIKE, CO-OPERATE.” Socialists have heard this before and have always fought against this servile attitude. Under capitalism the working class must struggle; they have no choice as their economic position forces them to—this, in fact, is why this particular policy of the Labour Government must fail.

Exports, gold reserves and balance of payments only come into this insofar as the prosperity and affluence of the capitalist class in Britain—and so also the continued employment of us their slaves—is particularly dependent on its overseas trade. Today the workers are slaves whose interest it is to organise and struggle to free themselves. Once this is realised then it becomes obvious that exports and the like are not problems that concern the working class at all.

Rachman and rent control 

In the May Socialist Standard in a discussion of the Milner Holland Report we drew attention, as an example of the futility of reformism, to the fact that operators like Rachman were the products in part of rent control. A recent pamphlet by the Conservative Political Centre, Target for Homes, now says:

“The particularly unpleasant strong-arm practices associated with the name of Rachman resulted from control and not from decontrol. It was only the enormous financial attraction of vacant possession that rendered it so profitable to use these unconscionable pressures to get rid of controlled tenants. If there had been no rent control and no controlled tenants this particular exercise would have had no conceivable purpose. And it is significant that Rachman’s operations started some years before the 1957 Rent Act and ceased very shortly after it was passed—long before his activities became public” (p.44).

Adam Buick

Finance and Industry: Flurry in the chicken coop (1963)

The Finance and Industry Column from the October 1963 issue of the Socialist Standard

Flurry in the chicken coop

 “I had three conversations with Mr. Kennedy, and each time he brought up “the subject of poultry. Is he a President or is he a chicken farmer?”

Thus Dr. Adenauer, the German chancellor, rather scathingly, about the American preoccupation with chickens. So preoccupied, in fact, that the U.S. Government announced a few days afterwards that they were prepared, if necessary, to do economic battle with the whole of the Common Market to establish their right to continue exporting broilers to Germany.

Second thoughts have taken over since then and U.S. official remarks have become much less belligerent. Some unkind critics have remarked that the thaw set in immediately members of the Six began to point out that they imported three times as much from the U.S. as the U.S. imported from them and that if there was going to be a trade war it wouldn’t be the Six who would come out worst.

But why such a fuss in the first place over a cut in, of all things, chicken imports? A cut which in any case only amounted to about $46 million, 4 per cent. of total American broiler production, and a fleabite in total exports? As usual, a small upset is only the first symptom of much more serious trouble.

What the U.S. Government is really afraid of is that the restriction on broiler imports is but a prelude to bigger cuts later on. The Common Market countries in fact import about $1,200 million of agricultural products a year from the U.S., including S370 millions of cereals. “Where will the next cuts fall?” is the American worry.

The whole disturbance, of course, is yet a further reflection of the present crisis in agriculture affecting many parts of the world, the Common Market in particular. Among the Six, France is determined to make herself the chief food provider —at the expense of the United States. At the same time, Germany must come to terms sooner or later with its high cost farmers; it can’t go on protecting them with high tariff walls unless it is prepared to see retaliation against its industrial products. And the German capitalists see the red light and are already beginning to squeal.

Only a couple of months have passed since we said that we were going to hear a lot about agriculture in the months to come. It may be the poor relation of present-day capitalism, but it is going to cause lots of trouble to the better-off members of the family before they decide what to do with it. They may end up by palming it off with a regular allowance, small, of course; or marry it off into a richer circle and make it one of themselves, big and efficient. Many of them, of course, would probably like to have it put quietly away—quite an impossibility, however, since capitalists appreciate their food even more than most.

But, by the way things are going, they will need to make a decision one way or the other before very long.

Together again

When the Allies got to work on German industry after the war, they made a brave show of doing something about the Krupps, the Thyssens, and the other steel barons. Their huge empires were broken up as “politically dangerous concentrations of political power” : never again were they to come together to threaten the peace of Europe.

The table published elsewhere on this page shows how successful all these wonderful aspirations were.

At the same time in Japan the Americans were busy dismantling the huge Mitsubishi trust. Never again was this powerful economic empire to overshadow Japanese policy and help push the country into aggressive war.

Now the three units into which the original group was broken up have just been put together again into Mitsubishi Heavy Industries Ltd. The new company will become Japan’s biggest shipbuilder and one of the biggest producers of railway rolling stock, cars, industrial machinery, and aircraft. Only Hitachi, again mentioned in our “top twenty” table, will have a larger turnover. With 77,000 workers Mitsubishi will have the biggest labour force in Japan.

Yet another example of the intrinsic drive for capitalism’s units to get bigger and bigger in spite even of difficulties deliberately put in the way.

The top twenty

Earlier this year (in our February issue) we published details of the top twenty British firms. Now Fortune, the American finance magazine, has compiled a list in its August issue of the top two hundred firms in the whole of the world, excluding the U.S. itself.

It is obviously too much for us to reproduce the full list, but readers may be interested to see the names of the top twenty. The list relates order of precedence to sales; there would be some changes in the order if net assets or net profits had been taken as the criterion. But the main pattern is here, nevertheless.

             Company Nationality Total Sales $ million

1 Royal Dutch/Shell Neth’ds/Britain 6,022

2 Unilever Britain/Neth’ds 4,136

3 National Coal Board Britain 2.490

4 B.P. Britain 2,011

5 Nestlé Switzerland 1,829

6 I.C.I. Britain 1,621

7 Volkswagen Germany 1,596

8 Philips Netherlands 1,529

9 Siemens Germany 1,350

10 Fiat Italy 1,262

11 Daimler-Benz Germany 1,176

12 Krupp Germany 1,040

13 Thyssen-Hutte Germany 1,029

14 Bayer Germany 1,004

15 Rhone-Poulenc France 992

16 Hitachi Japan 955

17 Hawker-Siddley Britain 915

18 Mannesmann Germany 915

19 British American Tobacco Britain 882

20 British Motor Corp Britain 871

An analysis of all the two hundred firms shows that 54 of them were British or had British connections; 36 were German; 31 were Japanese; and 27 were French. More than anything else, perhaps, it shows how Japan has risen to the top rank of the modern capitalist powers.

Stan Hampson

Finance and Industry: Who are the share-owners (1962)

The Finance and Industry column from the August 1962 issue of the Socialist Standard

Who are the share-owners

Last month we reported on the new campaign being organised to encourage British workers to buy more stocks and shares. We also quoted the estimates made by the organisers about the number of shareholders in the country.

The New York Stock Exchange has now provided details of the number of shareholders in the United States. These are estimated at about 17 million, an increase of over 10 million in the last ten years.

The U.S. correspondent of the Financial Times, giving these figures, comments that in happier times they might have been a cause for congratulation, but that recent events have given “people’s capitalism” a rather tarnished look. Judging by the panic and disillusionment that hit many of these small investors in the recent Wall Street shake-up, he is certainly right.

High pressure salesmen

One result of this shake-up has been the questioning of the methods that have apparently been used by many U.S. Stock Exchange firms to get business. They have been using a large army of part-time salesmen to go round getting people to buy stocks and shares just as they would soap or toothpaste. Some of them have even been selling extremely doubtful issues in such industries as electronics, automatic vending machines, etc., which have turned out to be virtually worthless. We wonder how many of the 17 million have been accounted for by this sort of dubious activity?

Beyond the curtain

In view of the way production and distribution are carried on in Russia and her satellites, Socialists would not suppose that the trading and financial problems there would differ essentially from what we have here.

It suits ill-informed writers in the Press to keep plugging the theme that it is quite astonishing that capitalist Russia should behave like a capitalist power—but what else would they expect?

In the early part of July, a two-week international summer school of bankers was held in Moscow to enable the foreigners to learn about the Russian banking system. (Last year they met in Oxford). The British visitors numbered 35 and represented the big five joint-stock banks as well as the Bank of England and the merchant banks. More than 50 countries were represented, including the U.S.A. and many of the newly formed African and Asian countries.

Innocents who suppose that things are really different in Russia may wonder why Russia needs to encourage such an affair. But Russian industry is engaged in producing goods for sale at a profit in home and foreign markets and has just as much need of a vast banking and finance apparatus as has the rest of the world. It has not at all been able to escape the necessity of finding markets for exports and has been no more successful than its Western rivals. If Britain has problems which lead some industrial groups to favour entry into the Common Market, Russia has her own difficulties in COMECON (The Council for Mutual Economic Assistance, established in 1949 by Russia, Poland, Czechoslovakia, Hungary, Bulgaria, Rumania, Yugoslavia and Albania).

An article by Norman MacKenzie in the New Statesman last month maintains that these countries have been unable to achieve the degree of common planning already attained by the six European countries in the Common Market—hence Krushchev’s apparent anxiety lest Britain’s entry into the Common Market and the further development of the Market may make great difficulties for the exports of the Comecom countries, including Russia. Mr. MacKenzie’s view is that each of the Comecom countries is concentrating on industrial self-sufficiency rather than on integration into the whole group. One outcome has been that “with the exception of Poland, these predominantly rural countries are now chronically short of food.”

One ironical accompaniment of the relationship between Russia and the other Comecom countries related by Mr. MacKenzie is that their internal price systems are so complex that when they enter into trade agreements between themselves they have to make use of world prices as a common basis of measurement, which “explains why the trade attaches of communist embassies in the West spend so much time collecting invoices and catalogues which are sent to Moscow for analysis.”

The mailed fist

It is the fashion these days for managing directors, Ministry of Labour officials and politicians to congratulate themselves and everyone else on the harmony and amity that is supposed to mark industrial relationships. To the extent that things have changed it is mostly the result of years of low unemployment and shortage of labour—employers have had to hide the mailed fist a little. But Mr. Peregrine Worsthorne, of the Sunday Telegraph, recently scented a wind of change. He noted that the Wall Street Stock Exchange collapse alarmed the workers at the Ford Motor Works at Dagenham with whom Mr. Worsthorne had been talking.

This is what he had to say about it:

“The men I talked to were frightened and malleable, as if they had been suddenly awakened from a deep sleep, and scarcely knew where they were. If the mood at Ford’s is any guide, now would seem to be the time to put industrial relations on a sounder footing. At the risk of being called all sorts of unpleasant names, I should like to suggest that this means, in blunt terms, putting the working man in his place, which is a very much lower one than he has been encouraged to enjoy for 15 years.”

Don’t say you haven’t been warned!

Going up or down?

On the whole economists and politicians claiming to understand the workings of the economic system have lived in a mood of sustained optimism for the past twenty years, based on the sanguine belief that things would never get really bad again because there is more knowledge and experience available than there used to be. Bernard Harris, writing recently in the Sunday Express, on prospects of a slump in America like that in the ‘thirties, dismissed it, not precisely because there aren’t danger signals, but because “the cause of business fluctuations is better understood. The techniques for dealing with them are better developed.”

But there are dissident voices. Mr. Enoch Powell, who has been “saving the country” by resisting the nurses’ demand for higher pay, went on record two years ago to the effect that the Government’s techniques for handling the crisis of 1958-9 had had no effect whatever. (As he had resigned from the Government he was exercising the right to be critical of what his ex-colleagues were doing). And Mr. George Schwartz has been wondering in the Sunday Times whether we aren’t “back to the old trade cycle” (Powell’s view appears to be that we never left it.)

Mr. Samuel Brittan in the Observer goes further than Powell, who thought the Government’s actions had no effect, because he (Brittan), thinks they make the problem worse:

“Government financial measures have in recent years actually accentuated the trade fluctuations that they were supposed to control.”

The Financial Times (June 15) pointed out another difficulty about prescribing cures for whatever ails the patient, namely, the difficulty of diagnosis. How do you prescribe for an unhealthy state of trade if you can’t decide what is its state?

“At present British industry is operating on a plateau, and one can make out an almost equally convincing case for saying that the plateau is sloping downwards as upwards.”

East-west trade

For many years after the war, and particularly when the Western governments rigidly prohibited the export to Russia and her allies of products and materials useful for armaments, never a trade union conference went by without resolutions being moved demanding more trade with Iron Curtain countries. Many workers who were enthusiastic about it had a somewhat mixed idea of what it meant: to them “more trade” meant more British goods being sold abroad without its counterpart of more foreign goods being marketed here. (Some supporters of joining the Common Market have the same blurred vision.)

In the last year or two, with more exports from Russia and Eastern Europe coming into world markets, zeal for East-West trade has cooled off considerably. British coal miners who had supported the idea had never anticipated that it might take the form of the large quantities of cheap Russian oil hastening still further the decline of coal as a fuel for manufacture and domestic lighting and heating. And workers in engineering concerns doing big business in exports were not counting on the steady increase in the amount of machinery and equipment that now figures in Russian exports. A recent, development has been the Russian invasion of the watch market. Soviet Weekly (June 28, 1962) tells how Russian exports of watches have increased from 12,000 in 1938, to 250,000 in 1955, 1,147,600 in 1957 and 4½ million in 1961. They go to 50 countries in all parts of the world and “in price and quality Soviet watches are challenging the long-standing pre-eminence of the Swiss watchmakers in this field.”

Edgar Hardcastle

Finance and Industry: How many millionaires (1962)

The Finance and Industry column from the March 1962 issue of the Socialist Standard

How many millionaires

When the Inland Revenue Report for the year 1960-61 was published in January it showed that while in the previous year there had been 66 individuals with incomes above £100,000 a year, the number has now dropped to 60. The Evening News called it “Britain’s Vanishing Millionaires.”

It is not the Inland Revenue officials who are responsible for calling these people millionaires, but the newspapers nave long worked on the assumption that when a man’s income, before payment of tax, gets above the £100,000 mark (roughly £2,000 a week) his property of all kinds is probably above £1,000,000.

The number has varied a great deal. In 1938 it was 99. Then it dropped more or less steadily till it touched 38 in 1949 and 37 in 1952. Then it started rising again and reached 67 in 1958 before declining to 66 and now to 60.

In this century the peak seems to have been reached in 1921 when they numbered 208. As taxation is much higher and the purchasing power of each pound is much less than it was then, the very rich must find that things aren’t what they used to be. Even so, taking the official figures for 1958-9, the 2,700 people who had incomes over £20,000 had an average income of about £34,400 before paying tax and were left with an average of about £5,550 after paying tax —about £100 a week.

But Mr. Bernard Harris, city editor of the Sunday Express (5/11/62) gave it as his view that the number of people in the millionaire class as regards ownership of property far exceeds the number with incomes above £100,000 a year. His explanation is that in order avoid high death duties most of the very rich take steps in time to hand over the bulk of their property to their heirs.

“. . . for every one who died a millionaire there were probably 10 who divested themselves of part of their wealth in order to lose that distinction and qualify for smaller death duties. So it is a pretty safe conjecture that the number of millionaires and tax-conscious ex-millionaires ill Britain today is well over a thousand.”

As an example of this business of transferring property to escape heavy death duties the Daily Express (8/2/62) had the following:

“The Earl of St. Germans, 48, who has had a remarkable success with a London bookmaking firm called Nicholas Eliot, is to make over all his family estates, worth around £1,000,000, to his 21 year old son and heir Lord Eliot.”

The estates to be transferred include 6,000 acres in Cornwall, but not the turf accounting business.

A nice job

In the House of Commons on January 30 the Assistant Postmaster General, Miss Mervin Pike, was asked what is the weekly wage of Post Office men, Cleaners, Doorkeepers and Liftmen. She replied: “£8 16s. a week. The rates in outer and inner London are greater by 10s. to £1 respectively. This is the same as is paid to non-industrial male cleaners in the Civil Service generally.”

“. . . Asked if this wage is not ridiculously low” Miss Pike,, who clearly lacked the inclination to attempt lo justify it, took refuge in the argument that inquiry had shown Post Office cleaners to be getting more than is paid in industry generally.

These cleaners and others are among the Post Office workers whose claim for higher pay the Government rejected last year.

Accidents

This century has witnessed a great increase in the number of industrial accidents, that is to say, in the number of accidents that have to be reported and become recorded in official publications. But what of those that do not have to be reported?

The reportable accidents are those which are fatal or which disable the worker for more than three days from earning full wages for the work at which he is employed.

Within this definition the Ministry of Labour reported 217 deaths and 16,934 accidents in the building trades in the year 1960 (Labour Gazette, April, 1961).

But, according to a building trade employer, Mr. Peter Trench, the total number of accidents is enormously greater.

Writing in the Financial Times Building and Contracting Supplement recently, Mr. Trench, who is Director of the National Federation of Building Trades Employers, estimates that for every reported accident there are 30 or 40 that do not have to be reported. And he puts the total number of accidents in the building trades at 500,000 a year or nearly 10,000 a week.

He records that accidents have been increasing in spite of propaganda designed to lessen the number. He gave his opinion as to the reason:

“Despite all the publicity and propaganda there are still far too many building firms in which little or no direct responsibility is accepted for seeing that accidents are prevented from happening; and there are still two many operatives adopting the metaphorically fatal attitude of ‘couldn’t care less’ which all too often becomes fatal in reality.”

He records the opinion of others that one of the causes is the greater size and complexity of modern buildings.

The New Men in Russian Industry

The emergence of a new social group is not necessarily dramatic or even at first obvious, but there are clear signs that new men are entering on to the political stage in Russia. In an article “New Pressures are growing up in Russia,” the Soviet Correspondent of the Financial Times recently noted that among the people who backed and to some extent forced Kruschev’s denunciation of Stalinist Terror at last year’s Party Congress in Moscow are “the younger professional managers.”

“These Party Professionals have as their principal job, the supervision of the running of the economy in their respective areas of the country. Like other young educated people in the Soviet Union, they enjoy a good standard of living, and are in a position to know that the country’s economic position can be improved much further still if sensible policies are assured. An obvious prerequisite of stable life for everyone is that there should be no repetition of the police rule, with arbitrary arrests and executions of Stalin’s time.”

David Floyd, in the Sunday Telegraph (26/11/61), expressing a similar view, quoted from a recent book on the history of the Russian Security Services, by Boris Lewytzkyj:

“The worker or technician responsible with the aid of the most up-to-date machinery for the whole industrial process, cannot carry out his duties properly unless he has considerable freedom of decision. No scientist can make progress with his terribly difficult intellectual work if he is constantly aware that the failure of an experiment may be labelled as an act of sabotage by some primitive policeman.

The ‘historical role’ of the terror in the Soviet Union is finished. At the present time the Soviet leaders could achieve nothing by terror, at the best they could destroy the foundations of their own power.”

The Manager’s Life

On the same subject, interesting details about the life of a factory manager were given some time ago in articles written by a Russian factory manager and his English-born wife who recently left Russia.

He and his wife had no complaint about their financial position in Russia, though the husband, Ignat Ovsyannikov, did remark that sometimes a skilled worker in the factory might take home more pay than he did as manager.

As a manager he had

“the very comfortable living of 6,000 roubles per month, six times a Soviet working man’s wage, and as much as the salary paid to a Minister of a Soviet Republic.”

One of the features of the life of the factory manager and other people “in authority” is the way they are cut off from contact with the ordinary workers outside the factory:

“Anyone who has any authority at all in the Soviet Union is cut off from the ordinary people. it is, for example, impossible for a factory manager or party secretary to use the ordinary restaurants in his town. He would be likely to meet his employees on equal terms and that would not do. The managerial class is isolated from the rest of society. If a man is a member of the Central Committee of the Communist Party he will ever have a personal bodyguard to accompany him everywhere.”

Arrangements are made for the manager’s family to buy food at special stores, and to eat in closed restaurants They also have special medical services “for the upper class of Soviet society. They have their own clinics and sanatoria where they get the best of treatment. Members of the Central Committee and the Government have luxurious rest homes on the Black Sea coast.” (Sunday Telegraph, 13/7/61).

It is all remarkably like life as it is lived by the favoured few here or anywhere else in the world.

Edgar Hardcastle

Finance and Industry: Controlling unemployment (1965)

The Finance and Industry column from the March 1965 issue of the Socialist Standard

Controlling unemployment

We have referred many times in these columns to the fact that American academic economists are seriously questioning the adequacy of traditional Keynesian policies to deal with unemployment. One leading American economist wrote in 1963: “Our problems of unemployment have seemingly become chronic.” But it is precisely chronic unemployment which Keynesian policies are supposed to prevent.

In his General Theory of Employment, Interest and Money which appeared in 1936, Keynes set out to show how it was that capitalist economies of the free enterprise variety did not automatically lead to full employment. He said that unemployment and stagnation were caused by a lack of “effective demand.” Keynes went on to suggest a number of ways of dealing with such “demand deficiency” unemployment: stricter control of investment, a redistribution of income in favour of the poor, budget deficits and various other fiscal and monetary measures to encourage effective demand and investment. This is the so-called Keynesian revolution, the application of deliberate fiscal and monetary policies by the government to try to affect the workings of free enterprise capitalism.

From 1958 on, unemployment in America has averaged 6 per cent despite the application of Keynesian policies. It is this that has started economists questioning. Consider the views of Robert Lekachman expressed in a book published last year. Of the advanced countries he writes,

“The original simplicities of keynesian policy prescriptions have been overtaken by the actual complexities and contradictions of applying monetary and fiscal techniques to situations simultaneously subject to inflation and unemployment, or high interest rates and gold outflows, or falling demand and rising prices. The dilemmas of recent American economic policy exemplify this point. President Kennedy’s major response to unsatisfactory rates of unemployment was the 1963 program of tax reduction and tax reform. Now if simple Keynesian fiscal policy were enough, such a program would dependably stimulate aggregate spending, diminish unemployment, and restore the economy to some approximation of full-capacity operation. Yet even Administration spokesmen hive made comparatively cautious claims for the spread and the adequacy of this policy, and few economists indeed believe that by itself tax policy is capable of reducing unemployment to tolerable levels. It is a sign of the times that this tolerable level has itself shown a secular tendency to rise from 2½-3 per cent to 4-5 per cent. For the sad, uncomfortable fact may be that just about the time that some version of the simplest Keynesian revelation has at last won the hearts of businessmen and politicians, the nature of the economic problem has sufficiently changed to require different remedies and different theoretical justifications to support them (Keynes’ General Theory: Report of Three Decades).

It is true that the American economy did show signs of increased activity in 1964 but unemployment was still around five per cent with four per cent as the “tolerable level” as Lekachman suggests.

Capitalism will not break down in depression and stagnation as a result of the inability of the working class to buy back what they produce, as has sometimes been suggested. If this were so, the Keynesians would have some justification for their claim to have found an alternative to socialism. In fact, the capitalist system will continue until the working class organise to end it. In the meantime its growth will be accompanied by a trade cycle involving periods of unemployment and prosperity. So the shoe is on the other foot. It is we Socialists who are in a position to point out that the Keynes theory on its own admission has proved incapable of dealing adequately with the problem of chronic unemployment in America.

African capitalists

The capitalist system is still spreading rapidly throughout the world turning peasants and tribesmen into wage-workers. In Asia, Africa and Latin America new capitalist states are emerging. Some of these, as in Cuba or Ghana, are totalitarian state-capitalist regimes in which the emerging working class is subjected to an industrialising elite. In others like India and Nigeria the emergence of capitalism is not forced and controlled to such an extent.

It is under such regimes that from the motley collection of shopkeepers, traders and contractors a more substantial group of big capitalists is allowed to evolve. A recent supplement to the international edition of the New York Times introduces some of the new capitalists of Africa to American businessmen. In Nigeria there are Sir Mobolaji Bank-Anthony and Chief Shafi Lawal Edu. Sir Mobolaji is, we are told, “either owner, chairman or director of 10 large corporations.” His compatriot is “chairman of the African Alliance Insurance Company, and serves on the boards of several companies.” In Somalia there is fish-processing magnate Abdullahi Omar who:

“… for several years operated his own general store in Hargeisa, and then moved to Mogadiscio, Somalia, in 1960 after independence. He established a wholesale import agency and interested himself in the fishing potential of his country. He recently established Somalia’s first steel and wood furniture factory and is negotiating with American interests for the opening in June of a pickled-skins plant.”

In Uganda there is Jayant Madhvani who is supposed to be the wealthiest man in East Africa. He:

“. . . heads the Madhvani group of companies based on Jinja. These include sugar, tea, coffee, textiles, steel, paper and more than a dozen other companies operating in Uganda, Kenya and Tanzania. In Uganda alone, Madhvani enterprises account for more than 10 per cent of total product.”

At present this group of “non-European” capitalists is only small in number but as capitalist development proceeds more can be expected to appear. The working class in Africa has the choice of being exploited by and subjected to such a group of wealthy magnates or to an industrialising elite of nationalist political leaders. Either way they suffer. Either way the fact is brought out that the important social division in these newly emergent capitalisms is that of class, not race or colour.

Adam Buick

Finance & Industry: Our educated politicians (1961)

The Finance and Industry column from the February 1961 issue of the Socialist Standard

Our educated politicians

In an interview published in the Observer (8.1.61) the banker Lord Brand, asked if he thought that academic economists do more good than harm, replied that they are extremely valuable. He claimed that through the studies of Keynes and other economists knowledge has grown and this “has altered the whole picture of economic life”. Possibly because Lord Brand would hesitate to claim that economic life has altered particularly (“I do not think we have an easy time ahead of us in the next year or so”) he went on to blame the politicians for not accepting the good advice of the economists.

He recalled the reparations chaos after the first world war, when the politicians (backed however by 3 out of their 7 banking economic advisers) insisted on exacting impossible reparations from Germany. Lord Brand says: “It was clearly mad at the time to those who would, and could, see, and were prepared to act accordingly. But the people who had control of policy could not see”.

He singles out Lloyd George—”Like most statesmen of the day, he knew little or nothing of finance”—yet Lloyd George had been Chancellor of the Exchequer. But it appears, according to Lord Brand, that Lloyd George insisted on the mad policy because he had boasted of squeezing Germany “till the pip squeaked” and dared not back down for fear of losing political support among voters as blind as he was.

But in the second world war the statesmen appear not to have changed much. Lord Brand tells how Churchill and Roosevelt, on the advice of Morganthau, Secretary of the U.S. Treasury and with the agreement of Lord Cherwell (a “highly intelligent” man) adopted a plan to reduce Germany to a purely agricultural country. Lord Cherwell’s defence of his action was that the British Government wanted a loan from America and acceptance of this fantastic plan would make it easier to get the loan.

Capitalism 1961

Lord Brand’s complacency about the altered picture of economic life reads oddly in face of the motor car slump and the looming difficulties facing international trade and currencies. The years between the wars were spent creating currency collapse in one country after another and then laboriously re-establishing stable currencies. After World War II it was all supposed to be different but now Professor Meade is warning of the drastic remedies that he thinks may be necessary because of America’s loss of gold, so he proposes that the dollar and the pound should be cut adrift from their existing link with gold.

The Guardian in an editorial (3.1.61) remarks “Undoubtedly a period of chaos would follow. Professor Meade feels sure that stability would return at a new level of exchange rates within six months. Perhaps so; but in the process the structure of the International Monetary Fund, one of the greatest achievements of international collaboration in our generation would have been laid in ruins “.

One prospect seen by the Guardian is that “soon the Russian rouble might be the only major currency with a fixed gold parity “.

This seems ironical to the Guardian but only because they persist against all evidence in believing that Russia is not a great capitalist power, but something else.

Flood Havoc in China

Through floods and storms China is threatened with what may be a catastrophic fall of food supplies. In a Socialist world such an event would be met by movement of supplies from elsewhere. But under capitalism a different set of values rules. America, Canada and other countries have masses of food they cannot sell profitably. The Times (20.12.60) reported that in the four chief exporting countries America, Canada, Argentina and Australia, “the end-of-season carry-over on July 31 next are expected to reach the unprecedented total of 60,400,000 tons, a rise of 7,500,000 tons on the year”.

So what problem can there be? But capitalist trade and rivalries create problems. The American government when it wanted to give wheat away or sell it cheaply met opposition from the other exporting countries, who feared this would reduce world prices and cut into their own sales. Secondly there are those who on political grounds would object to help being given to China, and according to Mr. Cyril Osborne, M.P., who was recently in Peking, there are politicians in that country who reply that the Chinese people “would rather starve than eat American food or accept American charity”. (Daily Telegraph, 3.1.61). (The starving might give a different answer).

According to Reynolds News (1.1.61) projected Canadian sales of their surplus to China are likely to meet with objections from the American government.

In the meantime the American food stocks are being nibbled at by the recently increased numbers of unemployed :

“In September 3,200,000 Americans were given food from the surplus supplies held by the government”. (Guardian 2.1.61).

Speculating in Misery

Under the heading “It’s an ill Wind” the Financial Times (9.1.61) had the following:

“Americans, by their law, may not trade with Communist China. But no law stops them speculating on the effects of China’s misfortunes, and for the past week they have been rushing to do just that. Scene of their operations is the Chicago soybean (spelt this way in America) market, biggest commodity futures market in the world.

The present bout of speculation in soya-beans and their products began three months ago, as reports of crop disaster began to seep through from China, only big soya-bean producer apart from America itself. People in the trade saw then that if the usual Chinese exports did not reach Europe, American beans and oil would have to go instead. So they put their money on a rise in the market.”

Edgar Hardcastle

Finance & Industry: If only prices would come down! (1961)

The Finance and Industry Column from the January 1961 issue of the Socialist Standard

If only prices would come down! 

A woman reader of the Evening News (28/11/60) wrote referring to the old saying that what goes up must come down, and asked if this applies to the cost of living; “if so I haven’t noticed it”.

About 99 per cent. of the population would say, if asked, that they “want prices to come down”. They don’t really mean this. What they mean is that it would be very nice if the prices of the things they buy went down and the price of the thing they sell went up. The worker would like to sell his mental and physical energies to his employer at a higher price (a higher wage) and at the same time get more for each pound he spends, through lower prices in the shop. And manufacturers who sell industrial products would like to see those prices go up and all other prices (including wages) go down.

One exception to this general attitude is the common practice of trade unions of associating themselves with their employers in approving higher prices. Thus the railway unions approve higher fares and the coal miners higher prices for coal.

But coming back to the question in the Evening News, would workers be better off if prices were lower? France a few months ago and Russia this month gave one kind of answer to the question, the answer being that it did not make any difference. What happened was that France cut the face value of her currency by 100, and the Russians cut their rouble by 10. At the same time all prices, wages, fares, etc., were cut in the same proportion, so everyone was in just the same position as before.

But on some occasions prices have not been reduced by this kind of government action but have fallen under the influence of trading conditions. Did the workers gain then?

It happened in 1920-1922. Between November 1920 and December 1922 prices fell on average of 35 per cent.; like being able to buy for 13/- some article which had cost 20/-.

But in the same period wage rates fell on average by the same percentage (or perhaps a little more). So the worker who could buy articles at lower prices had fewer shillings in his wage packet to buy the articles with.

It was a time when unemployment was heavy and conditions were particularly unfavourable for trade union resistance to wage cuts.

New Russian Rouble

The declaration of the Russian government that as from 1 January 1961 the official rate of exchange of the rouble will be 2.52 to the £ which will make it of higher value than the dollar and equal to about 8/-, will not mean much in practice since (unlike the dollar) it is not tied to gold and is not freely convertible into pounds or dollars. Commentators in the newspapers mostly take the line that the aim of the Russian government is prestige, the satisfaction of having at least a nominal exchange rate greater than that of the dollar. In addition however there is already the long term purpose of making the rouble eventually a gold backed world currency acceptable in inter-national trade as the pound and dollar have been.

The Daily Worker (17/11/60) anticipates that “the new exchange rates and the change in the gold content of the rouble herald the opening up of peaceful competition between the rouble and the dollar”, and “It may not be long before the rouble begins to challenge the dollar for primacy in world trade”.

There was a time when even the Daily Worker would have recognised that the trade war between capitalist states is anything but “peaceful competition “.

Rouble Millionaires

The Daily Telegraph (6/12/60) tells of a Russian woman who got into the ranks of the rouble millionaires by a piece of private enterprise that landed her in jail for three years. She ran an organisation, complete with a lawyer as secretary, a “scientific consultant”, an accountant, and a network of agents selling cure-all herbs at 45/- a packet. When arrested she had 700,000 roubles (worth about £60,000 at the old rate of exchange) and had just bought a country house for 300,000 roubles. “Her daily earnings would sometimes amount to 5,000 roubles, or eight times a worker’s monthly wage”.

The Economic Horizon

A year ago most of the political and economic forecasters were happy about the boom time ahead and still confident that if anything went wrong the government could fairly easily take the steps that would put the economy back on expansion. Now they are not so sure. The fact that they are all asking the question is itself a pointer to growing uneasiness, made greater by the foreseeable but generally not foreseen collapse of motor exports.

Now it is accepted that America and Canada are likely to have unemployment greater than in any year since the end of the war and there is the natural fear that British export trade may fall further and the jobless increase in number.

Gone is the post-war optimism based on the belief that they could always dip into the Keynesian remedies and keep everything under control. One of the current activities is the setting up of export councils to boost the sale of British goods in overseas markets, including the Export Council for Europe set up by the Federation of British Industries and manned by “some of the most prominent men in British industry and commerce ” (Financial Times, 11/11/60).

But before anyone accepts that the export problems of British capitalism can readily be solved by pushing into other markets (and thereby crowding out some other would-be sellers) it has to be remembered that other sections of the capitalist class would have had the same idea. Canada has appointed a “super salesman” to head its export drive, in the person of a new Minister of Trade and Commerce, and the American government is trying to boost their exports. Sweden, too, is aiming to solve its problems by more exports, and their eyes are fixed on the market for their goods in Britain. And to add to the troubles of all of them Russian exports are finding their way into many of the world’s competitive markets.

Paul Bareau, the new economic editor of the Daily Mail (25/11/60) argues that the present troubles in this country are due to “the excessive optimism and rashness of the years 1958 and 1959. Restrictions on hire purchase should never have been completely removed. This freedom was abused and we are now paying the price”.

So you take your choice between those who say that there is no need to worry because the government can always take action to put things right, and those who say, like Mr. Bareau, that the government did take steps but they were the wrong ones and had the effect of making things worse.

However, Mr. Bareau is cautiously hopeful. “The coming year will provide plenty of problems; but they will not be the problems of a great slump”.

Edgar Hardcastle

Finance and Industry: For the record (1963)

The Finance and Industry Column from the December 1963 issue of the Socialist Standard

For the record

Britain's industrial revolution was powered by coal and forged in iron. It was the Darby's of Coalbrookdale, a family of ironmasters, who pioneered the technique of first coking the coal which in turn enabled the use of English ores; in less than half a century, coal and iron between them had transformed the face of England. Since then coal has lost ground to oil, but iron and steel continue to dominate the economy of world capitalism.

It was iron that provided a material strong enough to stand up to steam and so paved the way for Watt’s engines. Industry was able to get away from the rivers and streams and its dependence on waterwheels. Hundreds of miles of canals were built in no time to cope with the increased demands of the blast furnaces for coal. Roads were built to carry away the manufactures.

In the I850's, iron gave way to steel with the developments introduced by Bessemer and Siemens of using “blowers” to raise the furnace temperature and get rid of the impurities in the iron. Since then there have been further improvements, using electric furnaces for special steels and, very recently, the use of oxygen instead of air for the blast. At the same time, as the industry has grown bigger and bigger, more use has been made of the integrated plant principle whereby all the processes of steelmaking are concentrated on the same site- hence the growth of the huge complexes which are the dominant feature today.

These installations need vast capital resources. United States Steel, the biggest producer in the world, has a share capital of over £1,000 million and its nearest rival. Bethlehem Steel, more than £500 million. The world is now scoured for iron-ore; mountains of it are literally taken away and transported thousands of miles to the furnaces. Marvels of engineering construction are built to load and unload it and bulk carriers of up to 100,000 tons ply a ferry service across the oceans. More and more, the furnaces are migrating to the coast to eliminate transport costs—the result is the huge new plants at Newport and Dunkirk, and the proposed giant complex at Rotterdam.

In the Darby’s time, a firm was big if it produced a thousand tons of iron a year; nowadays it is in economic danger if it produces less than a million, or even two million, tons. Steel is still one of the pillars of capitalism’s economy—it is still the barometer that can forecast whether the economy is set fair, or there are storms ahead, or just a period of doldrums.

As usual under capitalism, the tendency is towards bigger and bigger units. There are still absorptions and amalgamations going on, and more and more does an annual output of 2 million tons seem the minimum unit for present day efficiency and competitiveness. In the following table, showing the “top twenty” producers in the world excluding Russia and China, the minimum is actually about 2$ million tons a year.

The most striking impression from the figures is, of course, the overwhelming preponderance of the American firms, particularly U.S. steel, which on its own has a greater output of steel than the whole of the U.K. It is also interesting to note the apparently greater fragmentation of the British industry. United Steel is the only British firm to appear, in the table and there is only one other, the Steel Company of Wales, in the next ten, whereas there are three further German companies, three French, and one Japanese.

We hope to take a further look into the international steel industry in a later issue.

Rivalry v. Safety

We do not need to labour the point about the intense competition existing at present in the aviation industry. What with the excitement over Australia’s decision to buy American TFX's instead of British TSR-2's, the race between the Anglo/French Concord and the U.S. Mach 2 airliner; and the current struggle of B.A.C. to get their V.C.-10 into the air commercially before the Douglas D.C.-9; the aeroplane manufacturers must really be having a worrying time of it.

It was thus a major setback for B.A.C. when their prototype V.C.-I0 crashed recently, apparently as a result of trouble with the tail assembly.

As is well known, the V.C.-10 carries on a technique, engines set well back in the rear, that was developed originally by the French company, Sud-Aviation, with their Caravelle. And it is with Sud- Aviation that B.A.C. are developing the new supersonic Concord.

It has also been known for some time that the V.C.-10 has been running into snags with this particular tail assembly—only a few months ago B.A.C. announced publicly that they had had to modify it. Strong rumour also has it that the Caravelle went through similar troubles in its early development stages. What more natural, then, that B.A.C. should ask Sud-Aviation—after all, their collaborators in the Concord—for details of their earlier experiences of putting engines under the tail?

And what sort of an answer do you think they got? A very dusty one, according to an Insight report in the Sunday Times of October 27 -“Sud-Aviation would disclose nothing.”

A few months later, the V.C.-10 crashed, killing all its crew. There may conceivably be other crashes before the makers discover what is happening to the tail assembly.

In the meantime, the Caravelle flies on, with hardly a competitor. And the longer the V.C.-10 takes to get commercially off the ground the longer will Sud-Aviation enjoy this happy state of affairs. Co-operation may be all very well but under capitalism one must be very careful not to carry it too far.

Stan Hampson

Finance and Industry: Who goes bust? (1966)

The Finance and Industry Column from the November 1966 issue of the Socialist Standard

Who goes bust?

Many workers refuse to accept the hard fact that they have been condemned for life to work for a wage or salary for those who own the means of wealth production. Spurred on by stories of how ordinary workers have risen to be wealthy capitalists, they imagine that they, too, can do this. Such people long for their own shop or snack-bar or garage to escape from wage-slavery, Unfortunately for them they often find they have to work harder for themselves (or their creditors) than they had to when working for wages. For some it’s even worse—they go under and are cast back into the working class, less their savings.

The latest annual report of the Board of Trade on bankruptcy gives as the top lines among the 3,404 who went bust in 1965:

The list continues with hardware and electrical goods retailers, confectioners, tobacconists and newsagents, meat retailers, plumbers, fruit and vegetable retailers, general stores, electrical contractors, commercial travellers and so on. In other words the small shopkeepers and businessmen that workers often wish to be.

Next time you hear the story about how good capitalism must be because so-and-so rose to be a capitalist, remember the other side of the story: for every one who succeeds hundreds fail completely and thousands more are condemned to a life of drudgery and worry not unlike the rest of us. Besides capitalism can’t work without a working class, which means that most of us don't even get a chance of becoming a petty capitalist.

World Capitalism

Socialism can only be world-wide because capitalism, the system it will replace, is already so. Modern industry has a world-wide character which ignores frontiers. But although millions co-operate to produce wealth this wealth does not belong to society as a whole; it belongs to just a part of society. Today wealth is produced socially but owned privately. This is the basic contradiction of capitalism. Private ownership of the means of wealth production in fact conflicts with modern technology. One aspect of this is the division of the world into competing, and often warring, states.

Many people don’t realise that the typical firm today is not the small builder or motor repair man mentioned in the previous section. Production, in many lines, is dominated by a few giant, international firms such as Shell, ICI, Unilever and Philips. Sir Paul Chambers, head of ICI, made an interesting speech at the International Management Congress in Rotterdam on September 20. He doubted whether the creation of a Western European economic bloc could be more than a short-term solution to the problems created by the vast size and international character of some modern industries. Modern technology, he said, could be a source of “strife" if its international character were not taken into account. Chambers went on:

I have pointed to the aircraft industry and the inevitability of the growing integration of aircraft firms on an international basis. Almost every emergent country wants its own airline, but it has to rely upon the major makers—mainly British and American—for its needs. A similar trend can be seen in computers and in photographic materials and equipment. In car manufacture the integration of firms is beginning to take on a similar international character. The complete sovereign independence of small states is becoming inconsistent with the growing economic dependence upon large international industrial groups domiciled elsewhere. (Financial Times Sept. 21, 1966).

Men like Sir Paul Chambers do not think in national terms. They know that capitalism is international and act on it. The workers, those who run these industries from top to bottom , in all countries, might well learn from this.

The right to be lazy

Are you tired even before you start work? Do you dislike having to work hard for eight or more hours a day?

Peter Lennon, in the Guardian of September 22, wrote up some of the views put forward on these and other questions at a recent international conference on psychosomatic medicine in Paris:

Many citizens manage to reach a condition of distressed exhaustion before doing anything at all. They wake up tired, grouse through the day, and at night mourn departed sleep. A scrabble and tangle of humanity, they stew in bad air and petty psychological turmoil, buffeted by noise and needled by a multiplicity of unrewarding duties. In eternal competition with shadowy colleagues and goaded by social obligations beyond their capabilities they experience a feeling of impotence and inadaptability. Neurotic fatigue is the result.

Professor Chombart de Lauwe claims that fatigue, other than muscular fatigue, has its origins in the discrepancy between our means and our needs: between aspirations and social pressures—the eternal discrepancy between a possible life and the life we are forced to live.

At least one concrete conclusion to rejoice the civilised emerged from the conference: laziness, far from being the shameful attribute of the social renegade is the man of sensibility’s criticism of an unnatural activity: hard work. It is also his defence against a barbaric way of life.

A hard look at the conclusions of these eminent specialists leaves us with these convictions: the prestige attached to daily strenuous toil is a myth and a shabby modern one, and it is seriously probable that, in spite of generations of domesticity, intense, sustained daily work is incompatible with the realities of human physiology.

Lennon writes in an amusing way. But, when you come to think of it, it is a serious matter that most of us should be condemned to a lifetime of boring, toil. The least we should do is ask: Does this have to be?

Work, of course, is necessary in any human society. But it does not have to take the form of “intensive, sustained daily work”. If such boring, unsatisfying toil is “incompatible with the realities of human physiology” (as most of us must suspect anyway) then socialist society can abolish it. Indeed it should abolish it. Work itself cannot be abolished. However it is up to the defenders of capitalism to show that wealth can only be produced by people, working under unhealthy conditions, doing jobs they find dull and uninteresting.

Adam Buick