Sting in the Tail: The Perfect Worker (1989)

The Sting in the Tail Column from the October 1989 issue of the Socialist Standard

The Perfect Worker

That the owning class have a very poor opinion of the working class was perfectly illustrated in a recent report in The Guardian. It informed us that Professor Eysenck, emeritus professor at the Institute of Psychiatry in London and Professor Charles Spielberger, president-elect of the American Psychological Association are the research directors of a creepy outfit that calls itself by the horror-name of Psycorp.

A psychological testing service aimed at providing companies with "clones" of their most successful employees was launched today  . . . the company aims to pre-select the personality types most likely to succeed in jobs ranging from airline pilots to cab drivers  . . . Using the Eysenck personality profile the aim is to come up with the "perfect" employee for a particular job.

Ignoring the professors' claims, let us look at what the owning class REALLY want from the working class. Here is the profile of the perfect worker.

Someone who leaves school at 16 years of age, works for 50 years, never complains about working conditions or wages; and on the first day he goes to claim his old age pension drops dead at the post office counter.

Obedience, diligence and lots of surplus value. Now that's perfection, Professor!

Breakfast With Jehovah

John Stalker, the former Assistant Chief Constable has many interesting things to say about his former boss James Anderton, Chief Constable of Greater Manchester in his book "Stalker". 

"He was aglow with excitement, like a child who was anticipating a party. He said that at breakfast that morning (11.12.86) he had been moved by the Spirit of God to speak out at the conference against modern morality, which he felt had resulted in the scourge of AIDS. I asked him how the message had manifested itself and he answered me in an almost detached manner. He said that he could describe it best by asking me to imagine an invisible finger writing out for him on the breakfast table what the Lord wished to say." (Page 228).

We learn later (Page 242) that despite this divine assistance . . . "the 1985 crime figures for Greater Manchester had shown a big increase in the crime rate and a fall in the detection rate . . . "

It appears that the invisible finger had failed to write out between Anderson's orange juice and Rice Krispies anything that would assist him with the crime figures. Truly the ways of the Lord are mysterious . . . and none too helpful.

Economics of Prejudice

A nasty development in northern Italy is the rise of the Lombardy League.

This outfit, which gained 635,000 votes and 2 MEPs at the recent European elections, wants to exclude a lot of people from Lombardy because, they claim, these people breed too much, figure prominently in crime statistics and are forever looking for government handouts.

Just another bunch of racists raving about black immigrants? No, their target is their southern Italian countrymen and women. Indeed, one of the League's MEPs stated-

I have nothing against the blacks and, in fact, I prefer them to souther Italians". (The Guardian 16 August)

The League's real complaint is that industrialised Lombardy pays more tax to central government than all the southern regions combined and that much of this tax goes to the underdeveloped south.

So whether it is gentile against jew, protestant against catholic, white against black or even white against white, what it boils down to is the economic rivalry spawned by capitalism.

Sounds Familiar

Here's another "socialist" party which has ditched its defence policy in order to catch votes.

This is the Socialist Party of Japan, an out and out reformist bunch. Until now they had adopted the strange idea that the world's second greatest economic power could be "unarmed and neutral", and its manifesto called for the abolition of the United States-Japan Security Treaty and the disbanding of Japan's armed forces.

That was until the last elections to Japan's Upper House of parliament when the SPJ made big gains. Now that it smells a share of power it is ready to maintain the treaty.

Takako Doi, the party's chairwoman, explained:

"The Socialist Party should take the road to gradual but sold reform which could be accepted not only by the Japanese people but by the world community." (Daily Telegraph 22 August)

Such cynical expediency should convince both Japanese and US capitalism that they have nothing to fear from these "socialists".

The Welsh Windbag

On the 6th September The Guardian devoted a full page to such matters as society, the state and the class structure in Britain and how it had changed in the last 10 years.

It was the usual mixture of confusion and journalistic nonsense, but one piece under the heading "Class and Power" by Seamus Milne recorded how politicians view the class structure.

Outsiders have traditionally regarded Britain as one of the most class-divided societies in Europe. But Neil Kinnock denies the existence of the working class, David Owen says that 90 per cent of us are middle class. And Mrs. Thatcher once asked "Aren't I working class? I work jolly hard, I can tell you."

Leaving aside Owen's crass stupidity, and the bizarre image of Thatcher as a member of the proletariat, the effrontery of Kinnock is truly staggering. Who does he imagine produced the food he eats, built the house he lives in or made the clothes he wears?

While the Welsh Windbag produces nothing but hot air and empty rhetoric, it is the working class that produce all the useful things in society  . . . and some of the useless things, like silly articles in The Guardian.

The sage of Merioneth (1970)

Book Review from the December 1970 issue of the Socialist Standard

Russell Remembered, by Rupert Crawshay-Williams, OUP. 40s.

The author was a close neighbour and friend of "Bertie" in his plushy retreat in deepest Merioneth and although he goes through the motions of noticing some of the great man's faults (his vanity, bad temper, monumental conceit, etc), he does not attempt to hide his hero-worship and clearly regards himself as supremely fortunate to have been able to cultivate the friendship of this intellectual paragon. Most of the book consists of small talk reported à la Boswell. But there is no rival to Dr. Johnson here; not a word that is worth remembering in fact. (Sample of the humour: Good, better, best, Bertie. This sort of thing, it seems, had the great Earl wiping his eyes with helpless laughter. Of such stuff is greatness made.)

The one thing that should have struck the author he clearly never even considered. The great philosopher occupied the public stage for the better part of a century. And at the end of it all, the books, the speeches, the lectures, what remained that was worth remembering Russell for? Even a cursory glance at Russell's career makes it obvious that his influence merely served to spread confusion in matters that concern human society. The contradictions are crass and speak for themselves. A pacifist in the first world war. A belligerent in the second. An advocate of a pre-emptive atomic strike by America before Russia got the Bomb (for which he was dubbed Atom-Bomb Russell by the Daily Worker). And finally a founder of the Campaign for Nuclear Disarmament, that great mass of "sound and fury, signifying nothing". He cheerfully lent his name to organisations which backed one side against the other in Vietnam (like so many "intellectuals", he became pathologically anti-American; which of course had nothing whatever to do with anti-capitalism). And to supporting vicious dictatorships like that of Nkrumah.

The evil side of all this is rendered worse when one thinks of the good that someone like Russell could have done had he been concerned to learn what was wrong with society and using his immense influence with whole generations of idealistic young people to taking the road towards ending the evil system of capitalism. But he preferred the road of easy fame and helped to lead the students and others into the hopeless blind alleys of movements like CND. So for that he must share the blame for the disillusion that inevitably followed. And which has left capitalism as securely entrenched now as on the day he first came into the world.  

L. E. Weidberg

Britain's Political Crisis (1975)

From the October 1975 issue of the Socialist Standard

Text of a letter sent by a member of the World Socialist Party of the US to the American left-wing magazine "Ramparts".

Matthew Blaire's article in the August-September Ramparts titled: "Britain in Between" laments "Britain's political crisis" and states " . . . it is very hard to see the left-wingers quitting a party machine (the British Labour Party) which confers national influence on what would otherwise be a minority splinter group." And he ends his article: "We may be at the beginning of the lean years."

Question: What is the political crisis now facing the working class? (Suffice it to say that though the term "working class" does not appear in his article, its context revolves around the interests of the working class. I'm sure he does not deny the Class Struggle.) Unfortunately, he overlooks that the "national influence of the British Labour Party is not now nor ever has been involved in the revolutionary struggle to get rid of capitalism and establish a Socialist society (except for lip-service on special occasions.)

Its programmes have been supported by the votes of the British Left, radicals and liberals, who advocate measures for reforming and administering capitalism — which are no concern to revolutionary Marxist Socialists.

The history and experiences of the last 75 years have amply demonstrated the futility of all the "practical" measures and immediate demands for removing or altering the deleterious effects of capitalism — which has already outlived its historic usefulness in the light of the vast strides in technology and science. (Capitalism laid the groundwork for Socialism.) And, sad to say, the dedicated attempts, energies, hard work of the leftist groups have been equally futile in solving the problems of capitalism. We are still confronted with the very same dilemmas: wars, economic crises, conflicts of interests on every level of society, not to mention housing and the host of other insoluble situations. Within the framework of capitalism it is impossible to remove these problems. It is obvious that the NEED still exists for abolishing capitalism and introducing Socialism!

More importantly, Blaire is aware of the principles and policies of the Socialist Party of Great Britain but prefers to ignore the fact that the SPGB has consistently, since its organization in 1904, stood alone on the proposition that the only objective of prime importance is:

The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Let me emphasize that the real political crisis of the British working class, and the workers of the world, as well, is the lack of class-conscious revolutionary Socialists! Socialism cannot be rammed down the throats of the workers against their wishes. We are not confronted, as Blaire thinks, with the "beginning of the lean years". Rather, we are confronted with the continuation of the lean years, until the workers wake up to their class interests and in their vast numbers win the political power to transfer the means of life from the parasites and transfer it to where it belongs, in the hands of society as a whole. And if I read the signs of the times correctly, such an event is on the horizon. I'm very optimistic about the prospects for Socialism.

Finally, I detect an inference in Blaire's comment on "minority splinter group" that he regards the SPGB as a dogmatic, sectarian party. Actually, the dogmatic sectarians are those who have not learned the lessons of experience of the futilities of attempts to reform and administer capitalism. Socialism is both possible and practical today, here and now. The great drive will be the product of NECESSITY. The alternative now is Socialism is chaos. The insanity of capitalism must be replaced by the sanity of Socialism, if mankind is to survive.

Isaac Rab

Action Replay: Money Corrupts the Beautiful Game (2015)

The Action Replay Column from the July 2015 issue of the Socialist Standard

On the 27 May seven current FIFA officials were arrested by the Swiss police at the luxury Hotel Baur au Lac in Zurich. They were there to attend the 65th FIFA Congress, scheduled to include the election of the President of FIFA. These executives are expected to be extradited to the United States on suspicion of receiving US$150 million in bribes.

Part of the investigation, initiated by the FBI, concerns collusion between officials of the continental football bodies for South America (CONMEBOL) and for the Caribbean, Central and North America (CONCACAF) and sports marketing executives seeking to become holders of media and marketing rights for international competitions including FIFA World Cup qualifying tournaments.

The CONCACAF President, Jeffrey Webb, who is also President of the Cayman Islands Football Association, and two sitting FIFA Executive members, Eduardo Li of the Costa Rican Football Federation, and Eugenio Figueredo, formerly of the Uruguayan FA, are amongst those arrested in connection with the investigation.

These arrests concerned alleged bribery, fraud and money laundering in connection with the awarding of media, marketing and hosting rights for FIFA games. An unnamed sports equipment company - subsequently identified as Nike - is alleged to have paid around $40 million in bribes to become the sole provider of footwear and equipment to the Brazil national team.

In the wake of this corruption case it was also reported that in 2008, the General Secretary of FIFA, Jerome Valcke, allegedly transferred $10 million given to FIFA by the South African FA to accounts controlled by Jack Warner, then head of CONCACAF. The payment is a key piece of the US prosecutors' indictment that accuses Warner of taking a bribe in exchange for helping South Africa secure rights to host the 2010 FIFA World Cup. The payment from the South African FA had been intended to support football development in the Caribbean. Warner, however, is accused of using $1.6 million of the South African payment to pay off personal loans and credit card debts.

With the amount of money to be made from televising, marketing and hosting in relation to FIFA games it is not surprising that corruption should thrive. In fact, given capitalism, it would be surprising if it hadn't. Football might be better called the Profitable Game than the Beautiful Game.

Kevin.

Utopian socialism (1999)

From the February 1999 issue of the Socialist Standard

Utopian socialism, properly so-called, is the name given to socialist aspiration in the era prior to the development of industrial capitalism. It refers to the yearning for an egalitarian society, but without the scientific analysis of social evolution that modern scientific socialism provides.

Before the coming of industrial capitalism, the yearning for an egalitarian society could only be a yearning, without any concrete analysis of social reality. Utopian socialism does not refer, therefore, to the vision of a William Morris, who was a scientific socialist, but to largely pre-capitalist visions of a socialist future. Under this heading come the mediaeval communists together with the Anabaptist and other religiously-motivated sects.

The decaying feudal society that produced the Hutterites and other pre-capitalist utopian socialists could only produce a vision, expressed usually in religious terms. An innumerable range of "heretical" Christian sects come under this heading, most of them expressing the yearning of peasants and the urban poor for "something better" than the world they suffered in. This is the principal reason for the Catholic Church's absolutely savage persecution of such "heresy". The Church represented the feudal ruling class, whose aim had to be to keep the serfs exploitable and in their place. Anabaptism and other communistic self-regulating communities were seen as a threat to that rule; as indeed many were, by emancipating their adherents from the ideological control of the Catholic clergy and hence of the feudal system.

The response of the pre-capitalist communists was to separate themselves from the dominant society. This was the only thing, apart from initiate or participate in widespread peasant revolt (which many did), they could do to realise their socialistic dream in an age in which the social and economic conditions were by no means ripe for converting the dominant society itself into a socialist one. The only answer was to separate oneself and set up alternative communities, in the manner of what we know as the cult, or the religious sect. Some of these sects were more or less democratic, others were authoritarian, but all challenged the existing order. (And in feudal, as in capitalist society, remember, even pacifist separation constitutes defiance.)

In continental Europe, the last great communist movement that accompanied the end of feudalism, that of militant Anabaptism, was bloodily crushed at Münster in Germany in the 16th century. Anabaptism, however, continued to play a part in the English bourgeois revolution of the 1640s, where political groupings such as the Diggers and Ranters aimed at building a communist society, expressing this aspiration in the only way they could as people of their time: in the language of the Bible and Protestant Christianity. In both central Europe and in England, the failure of these early utopian socialists to realise their hopes for an egalitarian society led inevitably to the pacifist reclusiveness and social separation which marks their descendants today: the Amish, Old Order Mennonites, Hutterites and other Anabaptist groups in America; and the pacifist, democratic English sect of the Quakers. These groups all represent utopian socialism "forced into retirement" by the social reality of feudal and early capitalist Europe.

Latter-day utopians

The descendants of pre-capitalist utopian socialism have been joined in our time, and throughout the three centuries which separate us from the militant Anabaptists, by new sects advocating intentionally communistic "alternative societies" consisting of people understandably disillusioned by the dominant society of our time—capitalism—and seeking alternative lifestyles to that of the modern wage-slave. These communities range from the genuinely democratic on the one hand, to the authoritarian and cultish on the other. Most, but not all, express their aspirations, like the pre-capitalist communist movements they emulate, in religious terms, Christian or otherwise. They are to be distinguished from scientific socialists not only in their policy of social separation (marked by greater or lesser degrees of reclusiveness), but by the fact that they emphasise the common ownership and consumption of goods, as in Anabaptist and early Christian injunctions. For scientific socialists communism (socialism) entails the common ownership of the means of production.

Scientific socialism comprehends the socialist task to be the transformation of society, now that the economic means for the establishment of a socialist society have been realised. For the past 100 years or so the means for the establishment of socialism as a society have existed. This was not the case prior to the industrial revolution, when socialism could only be utopian, as to its realisation at the time was socially and economically impossible. Likewise, the analysis of capitalist society and of the social development leading up to it provided by Marx in his book Capital could not have been made prior to the industrial revolution.

Today, utopian communities in separation from the dominant (capitalist) society which reigns in all countries court at best a deceptive bliss and, at worst, disaster. The pre-capitalist, utopian communism they espouse in all genuineness necessarily fights a losing battle everywhere against the destructive effects of world capitalism. A polluted river will carry its poison through all valleys; the hydrogen bomb respects no person's health. In a sense the true heirs of the militant Anabaptist and other pre-capitalist communists are not those who still seek to separate themselves from capitalist society but those who realise that a democratic society-wide revolution can at last achieve a society the original utopian socialists could only dream of.

Anthony Walker

Keeping us down (1970)

Book Review from the October 1970 issue of the Socialist Standard

The Irrational in Politics by Solidarity. 2s.

This short pamphlet largely consists of verbatim extracts from, and summaries of, the works of Engels, Freud, Reich, Michael Cattier and others, and it would be better to read their works yourself to draw your own conclusions. For those without the time or inclination to do this, however, the pamphlet is quite useful.

It sets out to give a partial explanation of why, given the availability of revolutionary propaganda and the logic of establishing Socialism, workers in general still reject, often violently, this alternative to the insoluble mess of capitalism. The smallness of revolutionary propaganda set against the capitalist monopoly of the mass media is accepted as a major factor in the conditioning of workers , but further reasons are sought to explain the contradiction between the self-evident economic logic of abolishing capitalism and the acceptance of this system by the mass of the people.

The crude outlook of many "left-wingers", who see a working class naturally revolutionary being thwarted by incompetent and bureaucratic leaders and the physical repression of the state machine, is from the start rejected:

It is obvious that if large sections of the population were constantly questioning the principles of hierarchy, the authoritarian organisation of production, the wages system, or other fundamental aspects of the social structure, no ruling class could maintain itself in power for long. For rulers to continue ruling it is necessary for those at the bottom of the social ladder not only to accept their condition but eventually to lose even the sense of being exploited. Once this psychological process has been achieved the division of society becomes legitimised in people's minds. The exploited cease to perceive it as something imposed on them from without . . . Only at times of occasional insurrectionary outbursts do the rulers have to resort to force, as a kind of reinforcement of a conditioning stimulus.

According to Solidarity it was left to Wilhelm Reich to explain " . . . the lag between class consciousness and economic reality, and the tremendous social inertia represented by habits of deference and submission among the oppressed". The explanation lay in the sexual repression of people and in the whole authoritarian upbringing of children associated in particular with the patriarchal family. Reich expressed it this way:

As the economic basis (of the family) became less significant, its place was taken by the political function which the family now began to assume. Its cardinal function, that for which it is mostly supported by conservative science and law, is that of serving as a factory for authoritarian ideologies and conservative structures.

From this examination of family relationships Reich concludes pessimistically that revolutionary propaganda seeking to explain the social injustice and irrationality of the economic system falls on deaf ears, because if people realised they were wasting their lives in the service of an absurd system they would either go mad or commit suicide:

To avoid achieving such anxiety-laden insight they justify their existence by rationalising it. They repress anything that might disturb them and acquire a character structure adapted to the conditions under which they live.

The writer of the pamphlet is aware of the inadequate nature of this conclusion since it implies totally malleable individuals in whom total sexual repression has produced total conditioning. It does not allow for the possibility (dictated by man's sexual needs themselves)  that a fight against sexual repression may well loosen this "character-structure". We might say furthermore that the choice depicted by Reich between madness and submission to capitalism's authority would only be real to the extent that the individuals who have begun to break loose remained isolated. The socialist organisation would enable a group-identity to be formed as a force against this. There are now also healthy signs that young people in struggling to achieve free-sex life are denting the repressive ideology of capitalism. The pamphlet outlines two main reactions to this movement. One is open, outward opposition, the other is an attempt at absorption and control through commercialising sexuality. Solidarity correctly describe the process whereby this is done but appear to attribute to it the status of a conscious capitalist policy which it definitely is not. Making profits from "consumer sex"  is not done for ideological reasons.

The last part of the pamphlet is an attack on the inner conservatism of Bolshevik ideology in relation to sex and family relationships. Unfortunately Solidarity are still handicapped in their examination of this subject by their acceptance of the myth that the 1917 Russian revolution was socialist. The material provided can nevertheless be used to the greater advantage by others.

Michael Bradley

Hull Students Debate: Is Russia Capitalist? (1968)

From the March 1968 issue of the Socialist Standard

Can nationalisation be socialist? And should the workers put their trust in leaders? These two crucial questions were raised during a recent confrontation between a Socialist and a Trotskyist.

Over 50 students attended a debate staged by Hull University Marxist Society and titled "Is Russia Capitalist?" Yes, said A. Buick for the Socialist Party of Gt. Britain. No,  said Tom Kemp (economics lecturer at Hull) on behalf of the so-called Socialist Labour League.

Mr. Kemp opened. He said that there were those who thought Russia was socialist, those who found it an enigma, and those (including the Socialist Party) who maintained a "sectarian aloofness." He disagreed with all of these. He didn't think Russia was Socialist, and he denounced the Russian government's crimes against the working class. But, he maintained, these crimes were not caused by the nationalised economy. They were alien to it. He thought there was a number of features of capitalism which did not exist in Russia: a disproportion between production and consumption goods; a falling rate of profit; financial difficulties of the sort which led to the 1929 crash.

Referring to the recent sterling crisis and devaluation he commented: "No international speculation against the rouble could conceivably affect the Soviet government's policy in that way. That would be utterly fantastic." Mr Kemp also thought there was no expansionist tendency in Russia—at least not of the imperialist sort as in the West. The ruling bureaucracy, though it lived in high style, was not a class, as it was so limited by the political set-up.

Our comrade Buick began by defining Socialism: a world without frontiers, democratically controlled, where production would be for use, not for profit. The Bolshevik coup of 1917 was neither a Socialist revolution nor a working-class takeover. The Bolsheviks used Marxist phrases but were really descended from a long line of Russian insurrectionaries who were conspiratorial and elitist. Their ideas could be traced back to the Jacobins.

State control did not mean that there was no ruling class. There were several cases in history where state ownership had been a form of class rule. The Catholic Church in feudal times was a ruling group which was not hereditary, from which people could be easily dismissed, and which was not based on individual ownership. All the same, it was still a property system with class rule.

Buick said capital was not a thing, but a social relation. It meant there was wage labour, massive production of commodities and accumulation out of profits. All these existed in Russia, and so did the falling tendency of the profit state.

In the open discussion session, supporters of the "Communist" Party argued that the government had done all it could, considering Russia had been so backward. It was pointed out, however, that Socialists didn't say the government ought to have a change of heart. On the contrary, they couldn't introduce Socialism. Only the majority of the working class could do that, and the Russian workers still wanted capitalism, like most workers of the world.

Some economics students, apparently unused to political argument, seemed amazed that anyone should think the workers were exploited anywhere at all. Shouldn't entrepreneurs be rewarded? Buick pointed out that wealth was produced by human labour. In capitalism, profit was derived from paying workers less than what they produced. In Socialism there would not be a "fair return" to workers. On the contrary, wages would be abolished and all goods and services would be free.

One student thought Russia was an "anti-capitalist bureaucracy," because of its Leninist ideology. However it was explained that since 1917 the ideology had not determined the social structure, but had been continuously altered to suit current policies.

On the whole, the open discussion was very poor, despite the good attendance. Winding up, the speakers agreed that the argument was not just a matter of applying labels to Russia. Deeper issues were involved.

The debate showed up two of these issues very clearly. First, the Trotskyists are convinced that state ownership has something to do with Socialism. Second, they place great emphasis on the concept of an elite, the "leadership" or "vanguard," to whom the workers are supposed to turn in time of crisis, whereas Socialists say that since Socialism will be democratic it can only be established democratically—when it is the will of the majority.

As a result of the debate, there was a lot of argument among students, which is all to the good. At Hull a growing number of students realise that Russia is capitalist—though there are many other falsehoods to be fought.

People often point to the rather slow growth of the Socialist movement so far. But, although the Socialist case in its entirety hasn't a very big following, certain parts of it are gaining ground fast. The blaze of publicity in celebration of 50 years' state tyranny in Russia has given added impetus to the view that Russia is not Socialist, nor a "workers' state", nor bureaucratic collectivist—but state capitalist. To encourage clear thinking about Russia is to help the spread of this truth.

Steele.

The Underwhelming Theory of Underconsumption (2015)

From the July 2015 issue of the Socialist Standard

Reformists are calling on workers to fight against ‘austerity’ (not capitalism), based on the flimsy old theory of underconsumption.

An economic theory can—and very often does—live on even after it has been debunked. Over a century and a half ago Marx exposed the fallacies underlying the theory of underconsumption, but the brains of living Leftists—as in a zombie film run backwards—continue to feed off that ‘undead’ theory. The most recent example of the doctrine’s continued influence can be seen in the views of the ‘anti-austerity movement’ on how to overcome the current economic crisis.

The theory of underconsumption posits that a root cause of crisis is the inability of workers to ‘buy back’ what they have produced. The spending power of workers, as represented in their wages, is far below the value of the commodities created.

So an obvious remedy, from this perspective, would be to boost consumer demand through government spending and wage increases. This would bring consumption and production back into a sort of equilibrium. Conversely, austerity policies are doomed to fail because they put downward pressure on consumer demand at the very moment it needs to be stimulated.

This viewpoint seems almost commonsensical. During a crisis, we can see examples of unsold commodities. And workers are well aware of their own limited spending power. The theory also appeals to anyone disgusted by the sight of the rich telling us to tighten our belts as they continue to live in luxury. No wonder that the theory of underconsumption is so compelling.

So what’s the problem with it?

That there is a problem with the theory might occur to anyone who considers why capitalists would not eagerly embrace a simple remedy for crisis that would have the added benefit of easing workers’ discontent. Are capitalists too greedy? Or just stupid?

All hail the consumer

As commodity sellers, capitalists obviously appreciate the merits of increased consumer spending. Producers of everyday consumer goods, in particular, would be able to sell more commodities if workers had higher wages. Any capitalist firm, in fact, would welcome wage increases that result in greater sales of its own commodities.

But the wages that a capitalist would like to see rise are those paid by other capitalists. Marx explains that capitalists would of course ‘like the workers of other capitalists to be the greatest possible consumers of his own commodity’ (Grundrisse). Higher wages for those workers is all fine and good. But no capitalist is eager to raise workers’ wages to benefit other capitalists. Whenever wages are raised it usually is the result of pressure from workers or the labour market.

The hypocrisy of capitalists only wanting higher wages for workers other than their own probably does not even cross their minds because those other workers are grouped under the reassuring mental category of 'consumer'. Apart from the capitalist’s own workers, Marx explains, ‘the whole remaining working class confronts him as consumer and participant in exchange, as money-spender, not as worker’.

Reformists might be encouraged when capitalists express approval for boosting consumer spending, spotting potential allies in their anti-austerity crusade. But capitalists are simply daydreaming about having more customers for their products, not fretting about the state of the working class.

The contrast between the capitalists’ deep and abiding love for the consumer, and their attitude toward their own workers, is stark. There is no room for illusions when it comes to the production process they oversee. ‘Every capitalist knows this about his worker,’ Marx wrote, ‘that he does not relate to him as producer to consumer and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible’.

In the end, that attitude of capitalists toward their own workers is decisive—because capitalists are not in a position to influence the wages of other workers, whereas they are quite capable of limiting the consumption of their own workers.

For this reason alone, the ‘simple remedy’ peddled by advocates of the underconsumption theory is going to remain on the shelf like an unsold commodity.

The premise of profit

The basic reason capitalists aren’t going to buy the wage-raise remedy is that capitalism itself is premised, in an important sense, on workers’ ‘underconsumption’. That is, profit depends on the value of wages paid to workers being less than the value of the labour workers expend in production. If workers were paid enough to ‘buy back’ all the commodities they produced, the source of profit would dry up.

That doesn’t mean that capitalists are incapable of paying workers a ‘fair wage’. All that the term really means, when used in a precise way, is that workers have been paid a wage more or less equivalent to the value of their ‘labour-power’, a term Marx defined as the mental or physical capabilities that a worker possesses.

The value of labour-power, as in the case of commodities in general, is determined by the labour-time necessary to produce it. More specifically, labour-power’s value is determined by the value of the commodities (or ‘means of subsistence’) consumed by the worker to reproduce the capacity to work: such as food, clothing, and housing, as well as more intangible things like education. 

But the value of a workers’ labour-power and the actual labour the worker expends in the production process are two separate quantities (comparable when reduced to ‘socially necessary labour time’). Profit stems from the value of the labour expended in production being greater than the value of the worker’s labour-power. This exploitation of the worker’s labour is concealed by the wage form, where workers are paid ‘fairly’ (sometimes, at least) according to the value of their labour-power.

This brief excursion into Marx’s theory of surplus-value was necessary to refute the basic assumptions of the theory of underconsumption. Understanding the source of profit reveals that ‘underconsumption’ is hardwired to the capitalist system. Capitalism is a system of production for profit, and profit is only possible through the extraction of what is essentially ‘unpaid labour’. If this relative underconsumption is a problem, the only solution is to do away with capitalism.

Consumer demand is important in capitalism, certainly, but profit is the system’s lifeblood. No commodity—however useful to society—will be produced unless that production is a potential means to profit. An increase in wages is tolerated up to a point—but there is a limit beyond which capitalism will not go because relative underconsumption is integral to the profit system.

A cure for crises that would effectively drain the system of profit would be as useful to capitalism as the ancient practice of bloodletting was once to the sick.

Useful idiocy

Capitalists are not going to introduce policies concocted on the basis of the theory of underconsumption. But the theory is still useful to them ideologically.

In presenting underconsumption as a cause of crisis, rather than a precondition for profit, reformists suggest to workers that capitalism can be improved to the point where the system adequately meets their needs. They also blur the reality of class conflict by saying that capitalists, too, would benefit from the increased demand that wage raises would bring.

Capitalists shouldn’t mind too much that they are ridiculed by reformists for resisting this simple solution. Far better for workers to imagine that their problems stem from a few boneheaded billionaires, than from a profit system that can never meet their needs. The irony, of course, is that the reformists themselves are the system’s useful idiots.

Reformist ideologues also can be trusted to misinterpret the criticism that socialists make of their theory of underconsumption. If a socialist points out the real limits under capitalism to expanding workers’ consumption, as we have here, it sounds ‘defeatist’ to their ears—or even like an argument in favour of austerity.

So let’s make the following point quite clear: Socialists recognize the importance for workers to continually struggle for better wages and working conditions. As wageworkers, we know only too well how capitalists are exerting the utmost pressure in the opposite direction. To abstain from that struggle—the class struggle that continues and will continue as long as capitalism exists—would be suicidal.

But socialists aspire to more than just winning the fairest possible wage under an unfair system. We think that workers should not only resist the efforts by capitalists to drive down our standard of living but also organize ourselves politically to end capitalism. The reformists dismiss this standpoint as ‘unrealistic’.

But they are the ones who have lost touch with reality. They ignore the limits of capitalism. The basic problem with their standpoint is not that they call for higher wages or reject austerity, but that they pursue those aims while treating capitalism as if it were just a mechanism for producing social wealth, rather than a system powered by profit. They spread illusions about the nature of capitalism in offering the enticing idea that there’s a ‘win-win’ solution out there for workers and capitalists alike—a simple way to expand consumption while surmounting crisis.

The theory falls flat—squashed by the reality of capitalism. And the sooner workers recognize just how thin and lifeless this theory is, the better for the socialist movement.

Michael Schauerte

Proper Gander: Taken To Taskers (2015)

The Proper Gander Column from the July 2015 issue of the Socialist Standard

How many of us get through the working day’s frustrations by dreaming about how better our jobs would be if the boss wasn’t around to make all the decisions? For the staff at the workplaces featured in Channel 4’s Running The Shop, this wish comes true, for a few weeks while the cameras are on them, anyway.

The show’s format sounds like it was ‘thought showered’ by a focus group mashing up The Fixer and Don’t Tell The Bride with The Apprentice. But apparently it came from ‘inspirational entrepreneur’ Hilary Devey, whose ‘brave solution’ for floundering companies is for the senior managers to take a temporary break and allow the employees to manage themselves and implement their own ideas. The programme treats this as a ground-breaking notion, as if no-one else has ever thought that workers are capable of running organisations.

The first episode visits Taskers The Home Store, which flogs furniture, appliances and DIY goods to the folk of Aintree. Its mission statement: ‘give people a BMW, charge them for a Ford’. Managing Director John Tasker is very hands-on, and keeps everyone else’s hands off all the important decisions. So while he’s away, the staff enjoy the opportunity to put into practice their new approaches to advertising, and different product ranges. Without being held back by hierarchies, they find more confidence and creativity in working together. Unfortunately, their motivation has to come from wanting to keep Taskers financially viable, and getting their boss’ approval when he returns, rather than doing a good job in and of itself. But squint a bit, and you can see something of what work could be like – people freely discussing ideas and democratically deciding what to do. Hopefully, later episodes will see the staff getting ambitious enough to think about how changing the workplace’s structure would be even more rewarding.

Mike Foster

Labour Government Wasn’t the Way to Socialism (2015)

From the July 2015 issue of the Socialist Standard

July, seventy years ago, saw the election of the first majority Labour government in Britain. Here’s what we said at the time in the Preface to our pamphlet Is Labour Government the Way to Socialism published in January 1946. We also republish a leaflet produced in Belfast, summarising what that government did to the workers.

The end of the Second World War saw the election of a Labour Government in Great Britain. There have been other Labour Governments, in 1924 and 1929-31, but this time the Labour Government was returned with an overwhelming majority of M.P.’s in the House of Commons. On the earlier occasions the Labour M.P.’s were in a minority and the Labour Government was consequently dependent for its continued tenure of office on the support of the Liberal Party. For this reason supporters of the Labour Government pleaded that Labour Party policy had not had a fair trial; it had always to be modified to please the Liberals. Consequently when things went wrong, the failure of the Labour Governments was excused on the ground that they were ‘in office but not in power.’

This time no such excuse can be pleaded. As a Labour M. P., Mr. Garry Allighan pointed out in an article in the Daily Mail (31^stJuly, 1945), ‘This time there can be no alibis.’ ‘Labour has no alibi left,’ he wrote, ‘If it fails to produce the goods – full employment, all-round national prosperity, international concord, health, homes and happiness for the whole people – it can fall back on no excuse.’

The Socialist Party of Great Britain does not support the Labour Party or Labour Governments. The S.P.G.B was founded in 1904 by working men and women who were convinced that Socialism is the only hope of the working class. Labour Governments cannot solve the workers’ problems. In 1924 and again in 1929 we placed on record in our official organ, the Socialist Standard, our certainty that the Labour Government just entering office was bound to fail, not because it was a minority government but because the whole idea of Labour Government is based on a wrong principle. We saw those two governments come to an inglorious end, as we knew they must, but the lesson was not taken to heart by the workers. This time there can be no good reason for failing to draw the correct conclusion. The Labour Government which entered office in 1945 cannot solve the problems facing the workers of this country. No matter how able and sincere the M.P.’s and members of the Labour Party may be they cannot succeed in making the existing social system work in the interest of the great majority of the population, the wage and salary earners.

To say this is not, however, a gospel of despair. The workers’ problems can be solved, but only by abolishing the capitalist system of society at one sweep and establishing Socialism in its place.

This great task can be brought to fulfilment, but first it is necessary to understand why “Labourism” is not and cannot be the means of doing it.

It is the purpose of this pamphlet to explain why ‘Labourism’ must fail and why Socialism will succeed.

EXECUTIVE COMMITTEE, S.P.G.B. January, 1946

************************************************************

LABOUR GOVERNMENT AND THE WORKERS (1960)

Your Labour candidate will advise you that you can improve your conditions of life by voting Labour. His Party, the Northern Ireland Labour Party, are at one with the British Labour Party. Below we give some details of Labour Government in Britain:

(1)     Used CONSCRIPT TROOPS to BREAK strikes.

(2)     Imposed a "PAY PAUSE" and "INDUSTRIAL CONSCRIPTION".

(3)     Used (in peace time) a wartime Order, 1305, in an effort to have striking trade unionists JAILED.

(4)     Had workers RESISTING BLACK-LEG LABOUR sentenced to IMPRISONMENT and FINES under old PROPERTY-PROTECTION ACTS of 1875.

(5)     Agreed to, and tried to justify, the dropping of the FIRST A-Bomb on Hiroshima.

(6)     Safeguarded the interests of British capitalism by nationalisation of bankrupt industries.

(7)     Sent British troops to AID DUTCH IMPERIALISM, and IMPRISONED and BANISHED African leaders.

(8)     Imposed the FIRST CHARGES on the "free" Health Services.

This is but a small part of Labour's black record when it waged war against the workers in the interests of British capitalism between the years 1945 and 1951. We challenge our Labour opponents to deny or "explain" these terrible happenings.

In this Election the UNIONIST AND LABOUR candidates stand for the MAINTENANCE of CAPITALISM. Only the WORLD SOCIALIST PARTY challenges the capitalist system and proposes an alternative―SOCIALISM.

BEFORE VOTING YOU HAVE A DUTY TO CONSIDER THE SOCIALIST ALTERNATIVE.

Printed by the Cranmour Press, 49a Mountjoy Street, Belfast 13, and Published by the World Socialist Party, 185 Donegall Street, Belfast 1.

Editorial: Labour's Strange 'Revolution' (2015)

Editorial from the July 2015 issue of the Socialist Standard

Labour's electoral victory, 70 years ago this month, was a strange sort of revolution.

Since 1940, the Labour Party had been in power as part of the wartime coalition. 1945 saw them merely increase their share of the political cake. Clement Attlee, for instance, previously Deputy Prime Minister under Churchill, moved up a step. Similarly, Herbert Morrison, who had run the home front during the war, continued to run the home front during the peace. Morrison, Home Security during the war, stepped into Attlee's shoes as Deputy Prime Minister.

Amongst rank and file Labour MPs elected in 1945, there were dozens of majors and lieutenants - the officer class – and not a single private. The very ordinary elite remained quite firmly in control of the political establishment.

Labour's crowning glory of '45 is seen as the creation of the so-called welfare state, in particular the National Health Service.

Although associated with the Labour Party, in fact all capitalist parties supported the drive for reorganisation of 'social security' – the provision of housing, health and education, and of unemployment and old age payments. Beveridge, whose report formed the basis for the social security reforms after 1945, was a Liberal. The Education Act of 1944, which established free compulsory secondary education for all, was the work of the Tory 'Rab' Butler.

To the capitalist class, it was evident that the existing system needed reform. A patchwork quilt of measures enacted over a century was unsystematic and hence inefficient – particularly in cost terms. Loopholes existed through which workers could gain more than they 'needed'.

And the welfare state also brought them benefits. The war had revealed serious flaws in the health of the 'nation'. The British Tommy, with his rotten teeth and pigeon chest, became an object of derision. This was a bad for fighting - and for working when peace returned. Something had to be done. In 1943, arch-capitalist Sir Samuel Courtauld freely admitted that social security 'will ultimately lead to higher efficiency among them and a lowering of production costs'. Healthy workers make healthy profits.

The welfare state, the promise of a 'better world' tomorrow was also a carrot, an incentive to increase production – and killing – during the war. The Beveridge Report honestly declared 'each individual citizen is more likely to concentrate upon his war effort if he feels that his Government will be ready in time with plans for that better world'. It was a promise that had to be fulfilled to avoid social unrest and conflict.

However, like all reforms, the measures that constituted the welfare state were always viewed by the capitalist class as subject to requirements. As early as 1951, the Labour government introduced the first charges on its own supposedly free National Health Service.

The welfare state and the NHS may have benefited the workers, but that was not the intention. The intention was to maximise profits, to increase the welfare of the capitalist class. So far as revolution was involved, the reforms were an attempt to avoid it.

Local Dignitaries (1998)

A Short Story from the December 1998 issue of the Socialist Standard

Many years ago when my daughter was young I was invited by her school, along with other parents, to attend an open evening. It was a small middle school in a tiny Norfolk market town and as we had lived in the area for only about six months I was looking forward to meeting the other parents as well as to soaking up some of the atmosphere of the place where my offspring spent every day of the week being trained to serve capitalism.

Readers who are parents will be familiar with school open evenings, events where we may scan exercise books for any signs of genius in our kids, examine pieces of artwork, and even hear about misdemeanours, lack of personal concentration, or accusations of "not trying". The impression I got that night was that my own little darling had her nose pretty much to the grindstone and would one day prove an excellent commodity in the job market. Much as I was concerned for her personal development I, nonetheless, knew that this is how it would be, how it is for us all, though the individual rewards we receive for it do vary.

After interviews with teachers I wandered off to see if I could get a cup of tea anywhere and make an unofficial exploration into areas of the school which were not, seemingly, open to parents. In a corridor I came upon a room filled with men and women, where a table was laid with biscuits, sandwiches, tea, coffee and wine. I was staring at the table when someone asked "Red or white?" and a glass of wine was shoved into my hand and I was told to help myself to food. Whilst sipping my wine I took a good look at the other people present. It struck me that they all looked incredibly smart, the men in suits, the women in dresses, one or two in evening dress, making me feel strangely out of place in my blue jeans and tee shirt. (I had been doing a spot of gardening only that afternoon and had not thought to change.) One or two curious glances were cast in my direction and an elderly man asked me who I was. When I told him he looked perplexed. "Heather who?" I shuffled off guiltily to seek out the peanuts.

The headmaster, Mr Wallace, appeared, his face wreathed in smiles as he greeted his guests. I reflected that on the couple of occasions I had met with him he hadn't smiled at me like that! He addressed a tall man as "Director" and shook his hand warmly—far too warmly I thought. A woman was wearing a good deal of hardware round her neck. Chains of office? A mayoress no less. It was at last beginning to dawn on me that I, a mere parent, was not meant to be a part of this little gathering. Not for the parents the effusive headmaster, the special room, the wine and the dainty sandwiches.

Suddenly Mr Wallace was by my side. "Ah. Rachel's mother, isn't it? How's it going?" he said with a sickly smile. Neither of us was comfortable with each other. I munched steadily on my peanuts while he told me that the room was reserved for "local dignitaries". There was something about the way he said it. Then he whizzed off to the other side of the room and was soon engaged in conversation with a man who wore a bow tie.

I took the hint. After two cucumber sandwiches and a second glass of wine I decided it was time I left. As I edged my way to the door, a hand on my arm detained me, though temporarily, "You must be Mrs Rogers," said a glamorously attired woman weighted own with jewellery. "No," I told her, "I'm only one of the parents", and quickly made my exit.

At this point in my story I may be expected to say that I hope the day will come when local dignitaries will no longer be separated off into special rooms away from the hoi polloi, but I would rather say that I hope the day will come when local dignitaries will no longer be. Period.

Heather Ball

Second Civil War (1969)

Book Review from the December 1969 issue of the Socialist Standard

Post-Prison Writings and Speeches, by Eldridge Cleaver. (Cape 35s.)

There may be those who, since the appearance of Soul On Ice, have been eagerly awaiting the next blast on the trumpet from Eldridge Cleaver. There may. Well here it is, with an introduction in the customarily ecstatic terms by Robert Scheer.—a collection of essays, speeches, articles and an interview with Playboy magazine.

The long suppression of so large a minority as the American Negro just had to call for a terrible response, one day, and the philosophies of what is called Black Power are part of that response. In the Playboy interview Cleaver muses on a " . . . guerrilla resistance movement that will amount to a second Civil War . . ." and the book is crammed with violence, some of it defiant, some of it couched in fashionable four letter words.

Cleaver thinks that we are witnessing only the beginning of the big fight and that when the American government is finished with Vietnam it will apply itself to a war against the black people at home.

This simple, Goody-and-Baddy, concept is carried into his rages against the white politicians who want a policy of overkill in the fight against Black Power—the Reagans, the Daleys, the Alioitos. And Cleaver blasts also at those whose concern for the modern fortunes of American capitalism has led them to embrace Civil Rights—like poor old LBJ, who ended up usurping the battle cry We Shall Overcome. Cleaver thinks Johnson would never have said We Want Black Power, which shows how even a Black Panther does not plumb the depths of a politician's cynicism.

Cleaver does not display the more obvious symptoms of racism which are evident among some black nationalists but even so this is not a constructive, nor even an analytical, book. Raking among its rubble—the fury, the romantic poetry of Che Guevera, the threatening excerpt from Mao's little red book—it is possible to come up with some useful chunks.

There is, for example, a passage from a speech by Abraham Lincoln which highlights the racial bigotry of the man who is popularly supposed to have been the Negroes' great friend and which shows why Lincoln is such a hero to the Ku Klux Klan. And who can argue against this:

Compare the thieves in our prisons with the big-businessmen of this country, who are in control of a system that is depriving millions of people of a decent life. These people — the men who run the government and the corporations — are much more dangerous than the guy who walks into a store with a pistol and robs somebody of a few dollars.

But if course it is possible, and easier, and cheaper, to get all of this—and more—elsewhere.

Ivan

Obituary: Jack Moore (1993)

Obituary from the July 1993 issue of the Socialist Standard

We regret to announce the death of our comrade Jack Moore in Evenley, the Northamptonshire village where he moved after his retirement. Jack Moore joined the Socialist Party in 1941 after a brief period in the Labour Party. After the war he was an active member of the old Bloomsbury and Camden branch. An architect by training, he lectured for many years on architectural acoustics at the Regent Street Polytechnic (now the University of Westminster). He was a recognised expert in this field and from time to time contributed articles on noise and on housing, but also on economic questions, to the Socialist Standard. He also designed the front covers of a number of pamphlets the Party produced in the 50s, 60s and 70s. After he moved away from London he continued to contribute to Party activity by becoming the secretary of the committee dealing with postal applications to join our Central Branch, and many of those joining this branch in recent years will no doubt recall corresponding with him.

Will there be too many pensioners? (2004)

From the November 2004 issue of the Socialist Standard

Last month the former head of the CBI, Adair Turner, presented his report to the government on future pension provision. It made for scary headlines. “Pension crisis looming for 12 million workers”, worried the Times (13 October).  “Harsh truth is that we must save more or risk retiring in penury,” and went on:

“The root of the problem is increasing life expectancy and lower birth rates. By 2050, the proportion of British people over the age of 65 will increase from 28 percent today to 48 percent. This will leave Britain with dwindling numbers of taxpayers to support a massive retired population.”

Is this true? Will society be unable to cater for future pensioners at the same standard of living as they have today? Is there going to be a sort of class war between the generations, between those at work and those who have retired over how the national income should be divided between wages and pensions?

    

The short answer is: No. These are scare stories put around by employers, who want to reduce the contributions they pay into company pension schemes and the taxes they pay for state pensions, and by insurance companies, who want to sell more private pensions.

    

They've got one thing right though: in any society those who don’t work have to be maintained out of what is produced by those who do work. Everybody would agree that this is fair enough as far as people over a certain age are concerned, as well as for younger people who for one reason or another are unable to work.

    

But, in present-day, capitalist society there is another group of people who don’t work, and have to be maintained by those who do, namely, those who live off what used to be called “unearned income”, income in the forms of rents, interest and dividends derived from property ownership. That in fact is a good starting definition of a member of the capitalist class: someone owning sufficient profit-yielding assets to be able to live without having to work.

   

The source of all such unearned income (and indeed of the fat cat incomes of top directors, which is only unearned income disguised as earned income) is what Marx called the surplus value produced by wage and salary workers over and above what they are paid, which generally speaking corresponds to what they need to keep themselves fit to work at their particular trade or profession. It is out of this unpaid labour that not only the idle rich but the whole non-productive superstructure of capitalist society (the armed forces, civil service, legal system, banks, insurance and other money-handling activities) has to be maintained. What allows capitalism to maintain an enormous – and still growing – non-productive sector is the high level of productivity in the productive sector, a productivity which increases slowly but steadily all the time, historically at a rate of one to two percent a year.

    

Pensioners too are maintained out of this surplus but pensions are not a transfer payment from workers to pensioners, as the scare stories suggest; they are not paid for by ‘workers paying taxes’ since the burden of taxes paid by workers is in the end passed on via labour market forces to employers. Pensions are a transfer payment from the profits of the capitalists, even if ultimately these profits come from what workers produce. So, even if the ‘over-burdened pension system’ was to be reduced, this would not benefit the working population since the capitalist class would not dream of passing this on as higher wages and salaries.

Growth of pension schemes

One of the non-productive activities that the capitalist State has to undertake is the maintenance of the poor, those members of the working class who are unable to work and therefore have no income from a wage or salary paid by an employer: the sick, the handicapped, the unemployed and of course the old. This used to be done under what was called, appropriately enough, the Poor Law, which required local parishes to maintain the poor from within their boundaries. The fate of poor old people was the workhouse.

    

The history of the “Poor Law” is the gradual nationalisation of the system, accompanied by changes of name such as social insurance, national insurance, social security, national assistance, income support, pension credits, and the substitution of money payments for so-called “indoor relief” in a workhouse. By the turn of the last century, the authorities began to discover that so-called “outdoor relief” – a monetary payment – was actually cheaper than “indoor relief” and in 1909 stingy old age pensions were introduced for some workers aged 70 and over. This was financed by contributions from employers and workers and from general taxation and was baptised “social insurance”. It is still the basis of the State Old Age or Retirement pension in Britain today.

    

The level of the basic State pension has always been fixed as below the official poverty line, with the result that an increasing proportion of pensioners are on means-tested benefits to bring them up to the poverty line. As these top-up “pension credits” are tied to average earnings, the number of pensioners on means-tested benefits is expected to go up year by year. Turner – and the so-called “pensions industry” – are against this scheme as it discourages people from buying private top-up pensions (what they mean by “saving”) since most of any such pensions are deducted from the State's means-tested benefit.

    

To start with and until 1948, the State scheme only applied to a section of the working class, essentially manual workers in private industry. A different situation had evolved for people working for national and local government – so-called “superannuation” schemes (superannuation is just another word for pension), under which in return for contributions related to their salary, workers received a pension also related to their salary. These schemes were not funded, i.e. the money from contributions did not go into a fund that was invested, but went directly towards paying existing pensioners, a system known as “pay-as-you-go”. The logic was that funding was unnecessary since it would always be possible to find the money to pay pensions as governments don’t go bankrupt.

    

Superannuation schemes were also introduced, for office and supervisory staff, in the private sector. Eventually, these all came to be funded, to separate the money for pensions from the firm’s capital and so stop it being raided if the firm ran into cash flow problems or went bankrupt (a protection which has exactly not proved 100 percent efficient in recent years.)

    

A funded scheme means that contributions from members and their employers are paid into a fund which is then invested in government bonds or in shares or in property, and pensioners are paid out of the interest and capital gains on these. In recent years, with the slump in stock market prices, there have been capital losses rather than capital gains and these schemes have run into financial difficulties. Employers have been using this as a reason for cutting benefits, at least for new entrants. Increasingly, these are being forced into schemes which offer smaller and less secure pensions that are no longer related to wages or salary but purely to the amount invested and to the vagaries of the stock market.

    

A third type of pension arrangement is an entirely personal one where the pension payable depends on the contributions (and the income from investing them) of  the individual person concerned. These are basically savings for retirement arrangements which also involve placing the money on the stock exchange and so have run into difficulties for the same reasons as funded pension schemes. They are the ones that are notoriously subject to so-called “mis-selling”.

    

Funded schemes are based on strict actuarial principles and have to be to remain financially viable in the sense of having enough money to be able to meet all their obligations to future as well as present pensioners. What actuaries do is to take statistics on life expectancy and a likely real interest rate over a long term to work out, given the pension benefits under the scheme, how much money needs to be paid into a pension fund to allow it to pay all the pension rights acquired at a particular time. Clearly, if people are living longer – as they are – that means pensions are going to be paid for longer, which means that the scheme is going to need more money to pay them. In actuarial terms, this means more money has to be paid into the scheme, i.e. contributions have to be increased.

    

In this sense, for funded schemes, the fact of people living longer does indeed mean that the pension contributions for working members have to increase. But actuaries have known for years about likely future population trends and pension schemes will have already taken this into account. What has caused the current financial problems for such schemes has been the unanticipated slump in stock exchange prices. This is mentioned by Turner but almost in passing, since he is all in favour of people’s pensions being dependent on the vagaries of the stock market.

    

One idea mooted by Turner to save money on pensions is for the normal pension age to be raised from 65 to 70. This of course would mean that pensions wouldn’t have to be paid for so long and, as the TUC has pointed out, no pension at all would have to be paid to those who die between 65 and 70, as one in five existing pensioners do (Times, 19 July).

The ghost of Malthus

But this problem only applies to invested, funded pension schemes and cannot be validly extended into a general social problem of “too many old people” or “people living too long” (even though it would be typical of capitalism to regard what is after all an improvement in the human condition as a problem). The fallacy is that the narrow financial criteria that apply to funded pension schemes don’t apply when it comes to considering the economy as a whole. Here the broad economic, rather than the narrow financial, position is what counts:

“Over the twentieth century the British population grew from about 36 million in 1900 to 56 million in 2000. People aged over 64 grew from about 1.8 million (five percent of the total population) to about 8.6 million (fifteen percent of the population). So the total number of mouths to feed and support rose by one-half, the proportion of elderly rose three times and the numbers of elderly rose nearly five fold. All these increases were dwarfed by the seven-fold rise in annual wealth production.”

And for the future:

“The long-term record of productivity growth alone undermines the claim of a demographic time bomb in the future. Even without any increase in the size of the active workforce, productivity growth at this long-run trend of about two percent a year means a near doubling of annual output over the next 40 years” (The Challenge of Longer Life: Economic burden or social opportunity?, Catalyst pamphlet, 2002, p. 28).

The “too many old people” doom merchants are making the same mistake as Malthus made two hundred years ago with his (completely wrong) predictions about “overpopulation”: they are ignoring that productivity also increases over time, so that whereas there are indeed proportionately less workers engaged in production they are able to produce proportionately more wealth. It is the increasing productivity that will go on between now and when existing workers retire that will mean that society, even capitalist society, will be able to support the expected increased proportion of retired people in the population. There is in principle no problem here.

    

So why the scare? Basically, because there’s a vested interest involved – the self-styled “pensions industry”. They want to reduce the State’s involvement in pension provision to paying a basic minimum pension so that they can themselves make money out of providing any pension over and above this. They’ve got their greedy eyes on the £57 billion a year “shortfall” mentioned by Turner and on the commissions they can make on this if the government forces both employers and employees to “save” this amount, or even a proportion of it, each year.

    

What in fact is ironic – or rather, it’s a bare-faced cheek – is that they are not an “industry”, i.e. not part of the productive sector, at all. They are part of the non-productive sector maintained, just as much as pensioners are, out of the surplus-value produced in the productive sector. Not one person working in insurance companies and other private companies engaged in pensions provision produces a single item of wealth. From an economic point of view they, too, are a burden on surplus value. But don’t expect any government report to point that out.

    

The real question facing workers is whether they should continue to support the whole non-productive superstructure of capitalist society when, if it were to go, along with capitalism itself, how we they going to survive in old age wouldn’t be a perpetual worry, since in socialism every member of society, including the old, would have free access, as a matter of right, to what they needed to live and enjoy life.

Adam Buick