Michael Foot: more of the same (1980)

From the December 1980 issue of the Socialist Standard

So Michael Foot is the new leader of the Labour Party. For some this is very good news, a new leader is just what the sheep require. “Foot is my shepherd, 1 shall not want . . .”. For others this signals a move to left-wing domination of the Labour Party which could lead to a party split. However it’s regarded, the fact is that to many workers the battle for the leadership, and its result, are very important issues. But cast aside the glib outpourings of the the “political experts”; cast aside the extensive coverage by the media of the two-ballot lead-up to the result and let’s examine this power scrummage through our own eyes, not those of the people who write Anna Ford’s script. When a uniform political analysis is pumped out of every media outlet in Russia this is correctly condemned as a symptom of totalitarianism. Yet when, for instance, an almost identical analysis of the same dozen news items appears on all three television channels on any given evening in Britain, there are only a small number who reject this brainwashing.

Imagine a fictional person who, not having been exposed to the media coverage of the Labour leadership contest, and unfamiliar with some political institutions, seeks an explanation of the issue from a socialist:

Q. The battle was over the leadership of the Labour Party, but what is this party? 

A. In Britain, as in all industrialised countries including Russia, there are two classes of people. Those who own and control the places where wealth is produced and distributed—the capitalists—they live off of rents, interest and profit, and those who work in those places—the workers—who have to survive on wages or salaries. Those two classes are pitted in a continuous conflict, and the Labour Party claims to be on the side of the workers.

Q. Does the Labour Party successfully promote the interests of the workers?

A. No, the Labour Party only has plans to administer this social set-up. This means first, that it intends the continuation of a class system where the label “worker” will still be applicable to those who are not “investors” or “industrialists”, and second that it has constantly to comply with the economic laws of the system it works within (the profit-system) which is inherently loaded against the workers. This is why Labour governments have had to re-introduce prescription charges (1965), withdraw free school milk, support wage-restraint policies, use troops to break strikes by dock workers and firemen, spend millions of pounds a day on armaments and in 1979 preside helplessly over 1,600,000 unemployed and 53,000 registered homeless as it cut public spending by 6.3 per cent.

Illustration by George Meddemmen.

Q. How was the leadership election run? 

A. The struggle at the top echelons of the Labour Party is characterised by the same back-stabbing and “bargaining” which must exist in any organisation operating on the basis of leadership, hierarchies, smoke-filled rooms and a hotch-potch of political persuasions chasing, apart from ambitions, a wide range of political objectives. Their political manoeuvrings are insulting to the people they ask for trust. Speeches by Foot and Healey in Northern constituencies a couple of days before the final ballot “. . .  used carefully chosen words designed more for the ears of the few Labour MPs who have not cast their vote than for their audiences”. (Guardian 7.1 1.80) After the first ballot “campaign managers” from both camps were desperately trying to capture the support of those who voted for Shore and Silkin in the first ballot. What sort of promises or persuasion can be used by a campaign manager to secure the vote of a waverer is anybody’s guess, but an appeal to principle is probably not a trump card.

The tension mounted, Ladbrokes and Corals declared their best odds and Michael Foot fetched up as Thatcher’s new sparring partner.

Q. What is Foot’s record as a Labour politician? Is there hope for the working class in his rhetoric?

A. In 1945 we find Foot as a Labour MP arguing insistently for nationalisation and the working-class tightening its belt and increasing productivity for BRITAIN to recover after the war. Good news for the Duke of Buccleuch who owned 268,000 acres of it, but not much incentive for the 90 per cent who had nothing but rent-books or mortgages. “If that abundant life is to be assured in the future certain immediate privations will have to be endured in order to re-stock capital industries. No Tory government could make this appeal, for the worker would suspect that the summons to hard work, discipline and abstinence would result only in fortunes for the few and the later wastage of unemployment. The new government is in a different situation. It also must appeal for hard work, discipline, and for a short period, continued abstinence . . . But a Labour government at the same time can give concrete proof of its resolve to use this wealth for the benefit of the whole community.” (Daily Herald 8.7.45) Concrete proof of “resolve” perhaps, but not concrete proof of results. We wonder whether Foot’s Tory-trouncing accusations, “fortunes for the few” and “wastage of unemployment” echoed to him in 1979 when after seventeen years of Labour government since his exhortations, the top 1 per cent of people in Britain owned more accumulated wealth than the bottom 80 per cent (Royal Commission on the Distribution of Wealth and Income) and 1,600,000 were unemployed.

Either you run capitalism, in which case you play the tune of the Stock Exchange, the Treasury and the IMF, bending to the profit priority, or else you organise the production of wealth to benefit the whole community. There is no half-way house, and Foot’s Robin Hood politics are doomed to failure.

The “closed shop” is of doubtful assistance to the working class in the industrial struggle against capital. Workers compelled to join a union will not make good members and many employers prefer such an arrangement because it strengthens trade union leadership and thereby improves union discipline. Yet Mr. Foot is a firm supporter of the closed shop. When six men were dismissed from Ferrybridge Power Station in 1976 because they violated a one-union agreement by joining a breakaway union, and were refused Unemployment Benefit under the “misconduct rule” in the Social Security Act, Foot as Secretary of State for Employment issued a statement that he found nothing wrong with the procedure. Not satisfied with this, Foot decided to really put the boot in, and he tried to engineer an amendment to the Trade Union and Labour Relations Act (1974) removing all “safeguard provisions” against the closed shop. The principle safeguard was the right of appeal to an Industrial Tribunal which had the power to award compensation for unfair dismissal. Foot’s amendment was designed to leave a worker who had been sacked for not joining a specified union, denied the dole and without recourse to a tribunal.

Q. What does Foot now plan as prominent Labour Party policy?

A. According to his speeches leading up to the leadership election he believes that the Labour Party should seek, if it gets office in time, to stop the arms race through a “unilateral British lead”. Don’t stop the cause of nations producing weapons, don’t put an end to the profit-system, the cause of war, but stop the arms race as there are already 4 tonnes of explosives for each person on earth. Also Mr. Foot, along with Enoch Powell and the National Front, would like to lead British capitalism out of the Common Market.

Q. Is there a glimmer of hope for the working class in either of these policies?

A. No. Whether Foot cares to admit it or not, wars are fought to capture or protect markets, territories rich in natural resources and manpower, trade routes or strategic areas on the trade map. You cannot keep capitalism and request that the owners of capital desist from protecting their markets, by whatever means they choose, and forget economic expansion. Rather than plead with the owning class, or more accurately their representatives in the state machine, to make the right decisions we must remove the privilege of the few that enables them to play havoc with humanity. At Vienna, the governments of the world have been negotiating a reduction of conventional weapons of destruction. After six years they have not agreed on the removal of a single rifle. Canada claims to have disarmed its most devastating armaments, but what good is this if the cause of war is left intact? International ferocities in warfare are no respecters of such political gestures any more than they are respectors of pious prayers (except perhaps when the padres bless the bombs) or signed pieces of paper.

What of the EEC? Begotten as an economic bloc to compete with America and the Eastern bloc, it has produced all of the miseries of capitalism elsewhere poverty, inflation, unemployment ad nauseam—and solved none of them. While 28 human beings die from hunger across the world every minute of every day (1977—The National Academy of Sciences Research Project) the EEC is annually destroying thousands of tonnes of fresh fruit and vegetables which cannot be sold at a profit—not to mention the mountains of butter and beef and the lakes of wine. Foot, forgetting the plight of the international working class and performing his theoretical role as a guardian of the interests of British citizens, believes our condition would stand to be improved if we withdrew from the EEC. Do he and his disciples forget so easily the years [1924], 1945-51, 1964-70 when Britain was not in the EEC (it was only formed in 1957) and Labour, in the seat of power, was just as incapable of solving the problems of the working class as it was from 1974 to 1979 when we were in the EEC?

While Foot and his opponents in the Labour Party bandy words about whether British industry and farming (British industrial investors and land owners) are best served by membership of the Common Market, we are campaigning for our fellow workers to organise democratically to establish Common Ownership of the places where wealth is produced and distributed.

Q. Where do Foot and his supporters go from here?

A. Mr. Foot does not seem to have learnt much after nearly half a century of political experience, even if he learnt nothing from the history he has read. He announced after his triumph that he intends to lead a gigantic Labour demonstration against unemployment, in Liverpool in late November. What was gained by the Jarrow marchers? Why should the owners of Capital invest in production, if goods, if they were to be produced, could not be sold at a profit? Foot was also emphatic that the Labour Party was not in favour of withdrawal from NATO. A peculiar allegiance for a man, and a party, so ardent to “maintain” what is labelled “peace”, (ignore: Iraq, Iran, Afghanistan, The Middle East, Northern Ireland) except of course when Labour has to lend a hand with recruiting workers to butcher their fellows abroad, as it had to in the last two world wars.

The disastrous failures of once wild- eyed militants (Attlee, Wilson et al) to make capitalism operate in the interests of the working class may be receding beyond memory. They should not. There are no instant solutions to the profit system. No one-man remedies. The Socialist Party of Great Britain and its companion parties abroad are democratic instruments to be used by a politically conscious, leaderless working class to organise to take control of the means of life. Everyone is of equal standing in this party, young, old, male, female, black and white as we campaign co-operatively and actively for more support. Will you devote your energies to the giddy task of trying to bring order to this system of relentless chaos or will you dissent and act to change the basis of the society in which you live? We are in an agonising crisis and under the threat of another war. There isn’t time to put a foot wrong . . .  

Gary Jay

Running Commentary: Times past? (1980)

The Running Commentary column from the December 1980 issue of the Socialist Standard

Times past?

It was bad enough Lord Matthews laying the Evening News to rest but the possibility of closing down The Times was a threat to this thing called the British Way of Life nearly as grave as Tony Benn’s daft promise to create a thousand Labour peers.

Without “the Thunderer” the clubs of Pall Mall and the better class breakfast tables throughout the land would never be the same again. Little wonder that there was such agonising; the gutters of Fleet Street ran deep with the bibulous tears of potentially redundant hacks.

The Times, set concrete hard in smug self-esteem, could hardly have been expected to appreciate a certain irony about its plight. As a world famous pillar of support for capitalism, it has sounded some of its loudest thunder in defence of the system’s basic principle by which production depends on the chances of a profit being made.

The great newspaper itself is now caught in the net of this inexorable demand of property society no profit, no production. For years The Times has been published at a massive loss which has been smoothed over partly by profits from other parts of the parent group and partly by the Thompson family’s private wealth.

Now that the bleeding has to stop, The Times—and its nervous sisters in Fleet Street are predictably laying the blame on allegedly greedy and irresponsible workers. Of course if those workers had been prepared to work twenty-four hours a day without eating they could have gone without wages and The Times would have been profitable enough to satisfy even the Thompsons.

For the Thompson Organisation to blame workers who press wage claims which might be unwisely timed is as irrelevant as workers who become redundant blaming incompetent management. In these matters the capitalist system is the culprit and in asserting its profit prioritites it does not discriminate not even in favour of its most ardent supporters.

Fallen star

Even more shattering that the possible loss of The Times was the actual death by suicide of Lady Isobel Barnett whose famous charm, wit and intelligence earned her the admiration and gratitude of countless television-addicted workers throughout the land and so also contributed to the enrichment of this British Way of Life.

The downfall of so glittering a star

(who was also rich, which is often calculated to win the admiration and gratitude etc. etc. . .) was bound to provoke a flood of sorrow. There were many hints that it was somehow indecent to have prosecuted her for shoplifting and some questioning about the whole of this practice. (Shoplifting, when all is said and done, is outlawed by capitalism as theft; many shops display brusque notices “Thieves Will Be Prosecuted”.)

The offence is most typically committed by females who are under acute emotional and financial pressure single mothers struggling to feed and bring up a family on the laughable benefits of Social Security, elderly women who, because their children have grown up and left home and they are no longer readily employable, fear that their useful life is at an end.

Lady Barnett did not come into that category. The Daily Telegraph, which customarily has little sympathy for “public figures” who fall from grace, was unkind enough to indicate that she was an habitual, compulsive shoplifter, someone who may have been classifiable as needing treatment to programme her into conformity with capitalism’s property laws.

Except that she should not have needed that. She was, after all, once a magistrate who sat in judgement on others who had broken those laws. On this point, she seemed to have suffered some confusion; in the dock herself, she chose trial by jury rather than trust her fate to the local bench in which she might have been expected to have more confidence.

The point will not be lost on the sort of people Lady Barnett once dispensed the “justice” of capitalism to—the wretched, frightened, confused workers who, having broken capitalism’s law, are daily paraded through the courts and, having tremblingly accepted their punishment, are forgotten. Unlike Lady Barnett.

Turning the screw

Whose heart did not bleed for his shareholders, when Lord Matthews appeared on television to insist that, unless the Cunard seamen agreed to the line registering two of their ships under a flag of convenience, the company would sell the ships—and eventually even the QE2 as well.

Matthews argued that this was unavoidable because the ships could pay their way only by employing the cheaper workforce available under a flag of convenience one way of tapping an international pool of labour in order to bring down wages. Under this pressure the seamen accepted what Matthews, in his genial way, described as a “good old British compromise” and agreed that one of the ships would be registered.

On shore, workers in British Leyland did not have even a compromise open to them when they tried to resist the company’s 6.8 per cent pay offer. In yet another episode in their long retreat before the onslaught on their conditions by the Edwardes management, they accepted the terms. Had they resisted, the company was promising to shut down within 48 hours.

The Ford Motor Company, whose recent publicity campaign urged buyers to “share in our successes”, is in process of imposing a new code of discipline on their workers which will involve the sacking of strikers and the suspension without pay (which is not sacking) of anyone who refuses to do a striker’s work.

And over all this looms the government’s determination to keep essential workers like firemen and hospital staff and water and sewage workers to a 6 per cent rise — that is, to impose a severe cut in their living standards.

That the screw can be tightened on the workers in this way is a grim symptom of the deepening slump in world capitalism. Mounting unemployment is remorselessly undermining the workers’ bargaining strength, depriving them of many of their weapons in the struggle to maintain their standards and so leading to further turns of the screw.

The immediate future for the working class is grim. It promises that the class division of capitalism, with its unending strife, its disruption and its wastefulness, will never be more clearly, nor more harshly exposed.

Unequally poor (2007)

Book Review from the February 2007 issue of the Socialist Standard

Branko Milanovic - Worlds Apart: Measuring International and Global Inequality, (Princeton University Press £22.95)

How unequal is the world, and is inequality getting worse? Has globalisation increased or reduced inequality? These are some of the questions that Milanovic deals with here, but he starts by discussing how inequality should be measured. Three different ways of doing so can be distinguished. The first is unweighted international inequality: examine the per capita income or GDP of a country, irrespective of its population.

The second is population-weighted international inequality: do the same, but take account of the fact that different countries have different-sized populations. The third is world income distribution: measure the incomes of all individuals in the world. This last is the most informative, but it requires a great deal of information for every country, much of which is simply not available. So it is the first as well as the third concept of inequality that Milanovic makes use of.

Even then, though, there are varying ways of quantifying inequality - but the contrasts between Gini co-efficients and Theil entropy indices can probably be ignored for present purposes. Between 1982 and 2000, unweighted international inequality increased, i.e. countries diverged in their economic  performance, with poor countries doing on average less well than the rich. One interesting way of looking at events is to classify countries in terms of wealth (i.e. GDP per capita) and compare how they fared between 1960 and 2000.

Milanovic divides countries into four groups in 1960: 41 rich countries (all at least as rich as the poorest country in Western Europe), 22 'contenders' (no more than a third below this poorest Western European country, and so within striking distance of joining the rich), 39 in the Third World (between one-third and two thirds as well off as this same poorest Western European country), and 25 in the Fourth World (GDP per capita less than one third of the poorest country in Western Europe).

By 1978, only three contenders had made it into the rich group, while eight rich countries had fallen into the class of contenders and three into the Third World. Of the Third World group, just two had become contenders and 14 had joined the Third World. None of the Fourth World countries had moved into a higher group.

Between 1978 and 2000, a further eleven contenders had fallen into the Third World and two into the Fourth World. Milanovic gives a lot more figures, but it is plain that there was far more downward than upward mobility. Algeria, for instance, counted as a rich country in 1960, a contender in 1978, and a member of the Third World by 2000. Bulgaria was a contender in 1960, in the Third World in 1978 and the Fourth in 2000.

In 2000 all African countries bar five were in the Fourth World: Milanovic refers to 'the unremitting downward mobility of the entire continent', a picture more or less repeated in Latin America. But of course this says little about the incomes of actual people, since even poor countries can contain rich individuals.

This is where the third concept of inequality, world income distribution, comes in. In terms of purchasing power parity, the top 10 percent of the global population receives about half of world income. Between 1988 and 1993, the poorest 85 percent of the world saw their real incomes decline; things were not quite so bad between 1993 and 1998, except for the very poorest 10 percent.

Milanovic's book contains a lot more information that we can't summarise here. While all the statistics, tables and charts mean that it's often hard going, it certainly gives a vivid picture of the unequal condition of the world today, and the fact that things are not in the process of changing.

Paul Bennett

Editorial: Away with leaders (1980)

Editorial from the December 1980 issue of the Socialist Standard

Much ink has been spilled over the American presidential election and over the battle to elect the leader of the Labour Party in succession to Callaghan who may, if the Thatcher government continues as at present, find himself Prime Minister rather sooner than he now expects. The issue under debate, in America and among the Parliamentary Labour Party, has been leadership.

The first assumption in the debate, the common ground on both sides, is that the personality, the background and the abilities of a leader is of such significance that the election should turn on it. Was Carter too indecisive and erratic? Is Reagan too old, too belligerent, a Hollywood cowboy out of his depth?

Has Michael Foot really recovered from his time of callow leftist loonery and in any case would this man who habitually wears sports jackets and anoraks pay proper respect to the ceremonial roles of being Prime Minister?

It is on such matters that workers vote for or against a leader—which means that they vote for capitalism, under the delusion that by changing a leader or two they are changing the system for the better. Thus American workers are now congratulating themselves, that Reagan will bring them security and prosperity (as well as showing the Iranians who is boss). Labour MPs are hoping that Foot, when the voters allow him to try, will so effectively grapple with the crises of British capitalism that their party will hold power for evermore.

If there was any realistic basis to those ideas, capitalism would have a very different history. We can assume that political leaders are aware of the problems which plague capitalism (indeed Thatcher seems unable to talk about anything else) yet clearly they are powerless to eliminate those problems. If leaders were successful, each one would be part of a progress towards a safer, abundant, stable world. In truth, each new leader is confronted with the same mess as their predecessors. And as each one relinquishes leadership they hand on to their successor those same problems: thus Callaghan has handed to Foot the same parcel of despair as he inherited from Wilson, who took it over from Gaitskell . . .

To make some sense of this it is necessary to look to the basis of the situation. It is not to state the obvious — because to most people it is not obvious — to say that leaders exist only by virtue of their followers. They exist because the overwhelming majority of the working class shrink from recognising their own knowledge and experience of society, preferring to put their faith in others who, it is assumed, have some special knowledge and ability.

Workers in this frame of mind, who do not admit to their capacity and their achievements in organising and operating modern society, are workers who support the class privilege social system of capitalism. In most cases, they can conceive of no other way of running human affairs and are suspicious of anyone who discusses a world without poverty, war — and leaders.

But capitalism cannot exist without its inevitable problems; it traps its leaders just as surely as it does those who are led. Even if a leader may wish to be different, to stand out for some apparently novel policy, they are similarly ensnared and quickly exposed for their inability also to climb out of the trap.

Yet all the time there is a way out, the propagation of which has been the work of the Socialist Party of Great Britain throughout our existence. As a first step out, the world working class must recognise that they have the knowledge and the ability to administer and operate a modern society — its machinery of production, distribution, communication. They will then realise that in fact they do all of this already, but in the interests of a minority ruling class when they could do it in their own interests, to the benefit of the majority.

From this basic knowledge it is but a short step for the working class to see that they must act for themselves in the overthrow of capitalist society and its replacement with socialism. For this, because it will be the act of a conscious majority, no leaders are necessary — indeed, socialism cannot be imposed on the majority of society by a minority of allegedly better equipped leaders.

Socialism will be a democratic, participatory method of organising human affairs. It will be a society in which all human knowledge will be freely available to help the decision making processes; its democracy will be real and meaningful, ensured by the very consciousness which brought socialism into being.

These principles are operating, as far as it is possible under capitalism, within the Socialist Party of Great Britain, the only political party in this country which insists that its membership understands and supports the principles of socialism. The Socialist Party is without leaders; it is a democratic party whose members cooperate and participate in the work of socialist propaganda in equal standing.

Workers who despair of the apparently endless procession of cynical, futile leaders and candidates for leadership should consider the proposition that the alternative is not to switch their support from one leader to another but to join the socialist movement, where in the struggle to bring in the society of common ownership and free access they can have, and express, full confidence in themselves.

Open Secret (2016)

Book Review from the September 2016 issue of the Socialist Standard

'Wealth Secrets of the 1%', by Sam Wilkin. Sceptre £9.99

There’s no secret, really, is there? The one percent get their wealth by exploiting the rest of us, by paying us less in wages than the value of what we produce. This is not, however, the kind of thing that Sam Wilkin deals with here, since he is really concerned, not with how the capitalist class in general become rich, but with how and why some capitalists, in contrast to others, become very rich indeed. His answer is by ‘gaming the system’: by having the government introduce regulations that make competition difficult, and by making it more or less impossible for companies, especially banks, to lose money.

One chapter deals with the robber barons, the common term for a number of American capitalists who made vast fortunes in the last few decades of the nineteenth century: the likes of Carnegie, Rockefeller, Vanderbilt, Pierpont Morgan. As a comparison, Bill Gates’ wealth is less than one percent of US economic output, whereas John D Rockefeller’s net wealth was nearly two percent of US economic output at the time. The robber barons all despised competition, as it reduced their profits, and were able to acquire valuable patents and enforce vastly-profitable monopolies. For instance, Vanderbilt controlled all the railway lines into New York, while by means of a cartel Rockefeller owned nearly all of the oil-refining business. Morgan’s US Steel made tremendous profits by buying up other steel companies, eliminating competition and keeping prices high.

Wilkin also examines the methods used by Gates and Microsoft, focussing on the way they employed intellectual property ownership to gain a monopoly on some lucrative technologies. Microsoft did not create DOS, the operating system it originally made its money from; it just used its power and cunning to obtain a contract to sell DOS, helped by the fact that Gates’ father was a lawyer, so he had some background in legalese. As Wilkin says, there are two distinct issues: coming up with technological innovations and making money from these innovations are by no means the same thing. And profiting from a technology product has more to do with it being widely used than with it having the best features.

One point that emerges from the book is that there is no basis for claims that capitalism used to operate by means of a free market with unfettered competition, with this having been replaced by crony capitalism, where the state provides licences and protection for some companies. There has always been state interference with the workings of the capitalist economy, and competition has always been limited in various ways.

We mentioned earlier that Wilkin is not concerned with exploitation and the real origin of profit: those who produce the wealth receive little attention here. He does refer to the Homestead strike and lockout of 1892, at the works of Carnegie Steel, in which nine workers were killed by thugs employed by Carnegie and Henry Clay Frick. This is given the euphemistic description ‘an exceptionally heavy-handed crackdown on striking workers’. 

Paul Bennett

Editorial: The Labour Government and Socialism. (1930)

Editorial from the November 1930 issue of the Socialist Standard

WHO ARE THE "IMPOSSIBILISTS”?

It has been an argument of long standing among Labour Party supporters that the activities of their party, even if not directly concerned with Socialism, are justified because they are leading towards it. They have ridiculed our policy of working directly for Socialism as “ impossiblism. ”

Mr. Ramsay MacDonald repeated this justification for the Labour Party at its Conference held at Llandudno in October. He said:—

The Government’s pledges were those of Socialists convinced that the capitalist system cannot be made to work. If his opponents objected that the Government had not reached the Socialist goal, he answered, “ No, we haven’t, but we are going to get there.”

                                            (News-Chronicle, 8th October.) 

Mr. MacDonald’s statement is hardly compatible with Mr. J. H. Thomas’s admission at the Conference of the National Union of Railwaymen on 5th July, 1929, that the Government proposed to tackle the unemployment problem while “accepting the present order of society.”

Nor does it fit in with the significant fact that the Liberals put the Labour Government into office, keep them there, and are carrying on friendly secret discussions with them. Are we to believe that Mr. Lloyd George and his party would support a Government which is going towards Socialism ?

A direct negative to Mr. MacDonald’s claim has been made by one of the members of the Labour Government, the Earl de la Warr, who is Parliamentary Secretary to the Ministry of Agriculture.

Speaking at Crewe on October 12th, to a meeting of farmers and landowners, he dealt with the plea that the Labour Government is "going to get ” to Socialism. He said :—

The first criticism of the [Labour Government’s] Marketing Bill . . . was that it was a step to Socialism and involved nationalisation of the land . . . “Really,” said the Earl, “I must confess that for sheer drivelling nonsense and attempted appeal to prejudice I have never read the like of this.”

(Daily Herald, 13th October.)

MR. MORRISON'S  “CAPITALISTIC SOVIET."

Then there is Mr. Herbert Morrison, Minister of Transport. Under his London Traffic Scheme the railways, buses, tubes, and trams are going to be placed under the control of a statutory public body. The organisation is to be managed by 

a small board consisting of persons of proved business capacity . . . such as would command the confidence both of the investing public and of the users of transport in London . . . Such a board should function as freely as possible from political interference.

(Daily Telegraph, 3rd October.)

The shareholders are, of course, to be given shares in the new organisation, in place of their present shares; they are to lose nothing.

The official statement from which the above extracts are taken, was issued by Mr. Morrison, and in it he justifies his scheme by referring to the precedent of the Port of London Authority.

It is not so long ago that Mr. Herbert Morrison explained just what sort of thing the Port of London Authority is. In a letter to the Daily Herald on July 30th, 1923, he protested against Labour supporters showing approval of the P.L.A. He wrote :—

The Port of London Authority was established by Mr. Lloyd George some years ago to enable the capitalists of the Port to have the advantages of public credit and to do for themselves collectively what they and a number of private companies had been unable to do with success individually. . . . The Port of London Authority is a capitalistic Soviet . . . the constitution of which is thoroughly objectionable from the Labour and Socialist point of view, and which has certainly not been as friendly to the workers of the Port of London as it might have been.

In face of the actual legislation carried out and proposed by the Labour Government, it is difficult to understand how its members can still believe that they are moving towards Socialism. Once in office they have found, as we foretold, that the capitalist system cannot be run except upon principles which, save in matters of detail, are the same as those which guided the Conservatives and Liberals when they were in office. To retain capitalism is a practicable policy, although an unsatisfactory one from a working class standpoint. To abolish capitalism and establish Socialism will be practicable as soon as the working class have been won over to Socialism. The Labour Party has sought to justify a third policy, which is that of trying to abolish the evils of capitalism while keeping the system itself. Events are proving that the task is an impossible one.

What is marxian economics? (1980)

From the November 1980 issue of the Socialist Standard

At the moment output is falling, unemployment is growing, prices are rising all things that no one wants to happen, but which nevertheless do. What this means is that the human social activity of producing and distributing wealth is not under the conscious control of human beings. They do not control the conditions under which they produce and distribute wealth but, on the contrary, are subject to laws which, while not themselves laws of nature, operate as if they were, as an external force governing human activities. Economics is precisely the study of “the laws” which govern human activity in the field of wealth production and distribution.

An important point must be made straight away: economic laws only come into operation under certain social circumstances—when, in fact, the production and distribution of wealth is not under conscious social control. When, as today, the means of production are monopolised by a section only of society and are used to produce wealth to be sold on a market with a view to profit. In other words, economic laws are the laws of capitalist production and they will not operate when capitalism has been abolished through the establishment of socialism (when production will be for the direct use of the whole community). This is why we said that these laws are not natural laws.

To say that they are would be to assume that capitalism was the natural form of human society. Which is the mistake made by the early theorists of economics or “political economy” as it was then called, such as Adam Smith and David Ricardo who Marx criticised for doing so. Indeed this is what Marx’s Critique of Political Economy (the title of a book he published in 1859 as well as the sub-title of Capital) basically amounts to. Nevertheless, as long as capitalism exists, these laws exist and operate just like natural laws; they govern human activity in the field of wealth production and distribution and act as external constraints on what humans can do.

An understanding of these laws is very important; it is in fact a basic part of our case since it leads to the conclusion that capitalism just cannot be reformed so as to serve the common interest and therefore must be abolished if today’s social problems are to be solved. Our interest in economics is simply to understand how capitalism works, and not at all to recommend policies for governments to pursue. This is an important point since “economics” and “economists” today are regarded, and regard themselves, as policy advisers.

How, then, does capitalism work? The man who first analysed this in an adequate way was Karl Marx in his work Capital, first published in German in 1867. He wrote a number of other works on economics too, but the best introduction is the talk he gave in 1865 which was published after his death under the title Value. Price and Profit (also known, in some reprints, as Wages, Price and Profits). As far as economics is concerned, we are Marxists as Marxian economics is an integral part of our theory.

If you look at the way capitalism works, the first thing that strikes you is that everything is bought and sold. Goods are all produced to be sold and nobody can get what he wants or needs except by buying it. Capitalism, then, is a buying and selling society in which wealth takes the form of an immense accumulation of items for sale, or commodities. This is why Marx begins his analysis of the capitalist mode of production by examining the commodity. A commodity is not simply an item of wealth, something useful; it is an item of wealth that has been produced for exchange, for sale. Commodities were of course also produced before capitalism existed, but in the past were only a secondary feature. Capitalism is the commodity society par excellence, where everything, including the mental and physical energies of human beings, is bought and sold.

Commodities exchange with each other in fixed proportions and Marx set out to discover what determined the exchange-value of a commodity, what determined, in other words, the proportions in which they exchange one for another. He came to the conclusion that the exchange-value of a commodity was determined by the amount of socially necessary labour needed to produce and reproduce it. This Labour Theory of Value is the basis of Marxian economics and without a knowledge of it it is impossible to adequately understand the other aspects of capitalist economic life such as money, prices, the rate of profit and crises.

This theory is explained in the pamphlet Some Aspects of Marxian Economics which we have just published and which is available for 40p from our Head Office, 52 Clapham High Street, London SW4 7UN.

Against capitalism's wars (1980)

Editorial from the June 1980 issue of the Socialist Standard

It does not need a detailed knowledge of modern war to be able to discern, in the present unstable international situation, some ominous parallels with the past.

There is, to begin with, the presence of oil—a vital mineral with its processing points and the trade routes to connect these with the markets. These things have been negotiated over, and fought over, for a very long time. The overriding interests concerned are those of the super powers—in this case America and Russia but with others such as Britain and China taking sides as they see their interests dictate.

Then there are the peripheral elements. As in 1914 and again in 1939 there are leaders on both sides who are represented as bogy-men. These people are used by the propaganda machines to induce a war hysteria among their people. In America, the Ayatollah Khomeini now occupies the role of the ruthless megalomaniac that was previously taken by the Kaiser, then Hitler, then Stalin. To the fanatical students of Iran, Carter is the embodiment of all the world’s possible evils. On both sides, workers are declaring their readiness to die to rid the world of the enemy's villain.

Keeping this hysteria on the boil are the incidents, some of more importance than others, that again are exploited by the propaganda machines in their own, selective way. To the west, the Russian move into Afghanistan was the intolerable rape of a small, peaceful, independent state. To the Russians, it was a necessary succour of a people threatened by the depradations of a counter-revolution. The hostages in the embassies in Tehran and in London have been similarly treated, cynically used to agitate the hysteria to fever pitch. Like the Hitler Youth, like the Kamikaze pilots, many Iranians now openly express their desire to die for their ruling class, comforted by the assurances of their religious leaders that a martyr for Islam goes straight to heaven.

This war fever is ugly, not just for itself but also for what it- springs from. Once again the world is in balance—after all the past assurances that capitalism could solve the problem of war with a little more good intention, a few more patient and skilful diplomats. This has happened many times, since the massive blood-letting of 1939/45 brought what has been described as peace. In 1948, in the dispute over Berlin, the two power blocs seemed likely to take the conflict onto the battlefield. The crisis over Cuba in 1962, when the world seemed to have no tomorrow, is fresh in many memories. Do we now have the elements of a similar conflict—in, say, Yugoslavia, where the death of Tito may be the occasion for the Russians to enforce a military remedy to this longstanding irritant to their East European design? 

The Middle East is a sensitive spot because of the presence there of the great oil fields, on whose produce depend many of the industrial states of modern capitalism. But that is only part of the story; why, we should ask ourselves, should the world fight—even contemplate destroying itself—over a mineral which has so vital a role to play in its efficient working? If oil is essential to modern society, why can’t it be freely available to all?

The answer is to be found in the basis of the society which we live in. Capitalism is a social system which by its nature prohibits co-operation; free access to its wealth goes against its basic principles. It is a system in which the means of production and distribution are monopolised by a minority and used to produce articles for sale on a market with a view to profit. In order to make profit those articles have to be marketed in competition with those of rivals. It is this competition that leads to war in the modern world: in the last resort capitalism’s trade struggles to acquire or defend markets, territories rich in minerals and other resources and exploitable populations—and the trading routes to connect these—lead to armed conflict.

Although these struggles are carried on between rival groups of capitalists, they need to persuade the other class in society the working class actually to prosecute the struggle. It was workers who endured the mud and the slaughter of 1914/18; it was workers who died in the great battles of Europe and the Far East, and in the air raids of 1939/45. If there is a Third World War, it will again be workers who will suffer, who will be maimed and shattered and who—and perhaps in a nuclear war they will be the lucky ones—die in the fireball.

Yet there are no working class interests involved in the struggle. It is of no account to American or Russian workers who controls and exploits the oil of the Middle East, for whichever group of capitalists win the workers lose; their exploitation and poverty continue. Such is the evidence of history, of our own experience, of the millions who have died in the delusion that a better, safer world would emerge. 

For the people who fight them, the wars of capitalism are a futile shedding of much blood. There is a greater task awaiting them: the abolition of capitalism and its replacement by a socialist society, in which the means of life will be the property of all. Socialism will be a co-operative society in which everyone will stand equally and there will be free access to the world’s wealth. It will be the constructive society. It is the only struggle worthy of working class energy—even of their sacrifice.

What is behind the Naval Conference? (1930)

From the February 1930 issue of the Socialist Standard

At the moment of writing the stage is being prepared for the Five-Power Naval Conference, whose object is to solve the problem that could not be solved at the 1927 Geneva Conference.

What is this problem? To those who have not given much thought to it, the problem appears to be the question of the peace of the world, and this view is supported by the frequent references in newspapers, pamphlets and books, to the "spirit of peace," the “spirit of humanity," the “spirit of the Kellogg Pact,” and various other spineless spirits. Now one can hardly attribute any of these forms of “ spiritualism" to governments who are prepared to use the latest forms of warfare against striking workers; and who are prepared, as in England, to allow the bulk of the workers in a dying industry, the coal industry, to starve or depend upon individual charity.

In fact, the problem is not the peace of the world but an attempt to set a limit to the ruinous expenditure upon armaments. A writer in the “Sunday Times” for January 19th put the problem in a nutshell when he wrote : “Good will come out of the Conference if only in the Budgets of the nations.”

The naval armament position is similar to the military and aerial. It is a race between attacking and defensive forces.

A hundred years ago the warship was a wooden vessel propelled by the wind and armed with a quantity of small cannon. The projectiles fired by these cannon could have been carried about by the crew. The cost of such men-of-war was so small that they could be built and fitted out by private people. The increase in cost came with the increase in weight and explosive power of the projectile. This brought with it necessary improvements in the construction of ships to withstand the shock of firing and also improvements in defensive armour to resist the enemy’s fire.

Towards the end of the Crimean War the ironclad warship was devised, driven by steam. At first it was slow and clumsy and the iron plates were only a few inches thick, though this was quite sufficient to resist the projectiles of the times. The wealth and science of each nation was then called upon in the headlong race to produce a navy capable of holding the sea against all others. As wealth and scientific knowledge grew, the expenditure upon naval armaments grew even more tremendous and the giant battleship was still supreme.

By the end of the last century the wealthiest nations had succeeded in building floating castles that cost millions of pounds to construct and keep in fighting condition. Steam drove them, steered them, raised and lowered the boats, and accomplished many other feats formerly done by the unaided hands. Their armour plate was several feet thick; their heavy guns weighed over two hundred tons each, and they hurled projectiles over two thousand pounds in weight to tremendous distances. At the outbreak of the war in 1914 one of these heavy guns could fire at and hit a target' over twenty miles away.

But still the building of heavier armed and more expensive ships goes on, with oil as the motive power. Improvement proceeds at such a rate that a battleship is rendered obsolete almost as soon as it leaves the slips. Each capitalist nation, therefore, sees with agony a huge part of its wealth going into the bottomless pit of battleship building, and is looking in every direction for some means to end the increasing drain on profits.

In the meantime a fresh war horror had come into existence at the end of last century—the submarine. Its early growth was a subject for curiosity and schoolboy tales. Then 1914 finally demonstrated the value of the submarine and small fast war craft, and showed that the battleship was little more than a white elephant, the torpedo found the weak spots in everything.

Towards the end of the war, yet another and more efficient arm was added to the Navy as a defence against the submarine, and that was the aircraft carrying torpedoes and bombs. The submarine was slow, but it was invisible, and herein lay its strength. The aeroplane high up can “spot” a submarine at the lowest depth it can safely sail. On top of this, submarine building has become more costly as the submarines have grown larger and more heavily armed. France has just completed a submarine vessel of 3,000 tons—a small battleship, the cost of which was over a million pounds.

The latest improvement in the aeroplane is direction by wireless. By this means an aeroplane carrying gas bombs and torpedoes can cruise over a wide area dealing death in all directions while its operators remain practically immune from damage. So we may now expect a further development to meet and render useless this latest weapon of horror. Where will it all end? The capitalist can see no end but the continued production of ever more terrible means of causing destruction. He is not concerned with the scrapping of implements of war, but only with decreasing their cost.

So, finally, the high ideals of the Naval Conference are really £ s. d., and have as much concern for real warfare of humanity as the capitalist has for the general welfare of his wage slaves. This was made perfectly clear in one of the resolutions of the League of Nations Economic Conference at Geneva in May, 1927, which affirmed :—

The world as a whole still devotes considerable sums to armaments and to preparations for war, which reduce the savings available for the development of industry, commerce, and agriculture, and are a heavy burden upon the finances of the different States, entailing heavy taxation, which reacts upon their whole economic life and lowers their standard of living.

—("The Economist Supplement,” 28/5/1927.)

It will be noticed that in all the official arguments on the question of armament, with the exception of Russia, there has been ho suggestion of the absolute abolition of all armaments—it has only been a question of limitation. And from the English side there has been no hint of limiting its most effective weapon—the bomb and torpedo-carrying aeroplane. This is significant of the ideas behind the talk—although we have a Labour Government!

There are, however, elements of humour in the situation, and one has been provided by the “New Leader” of January 17th. In its editorial columns we read:—

The memorandum signed by 77 Labour Members of Parliament! urging that the delegates of the Government at the Naval Conference should make the abolition! of battleships and warships over 10,000 tons one of the principal aims of their deliberation, has our heartiest approval.

What imbecility! One might as well urge that each ship should have one gun less. The net result of the adoption of this recommendation would simply be the setting of the problem to naval experts of making the 10,000-ton ship as destructive a weapon as the 20 or 25 thousand ton ship, and America has already demonstrated that it can be done. But apart from that side of the problem, what has become of the alleged peaceful aims of the I.L.P.? They approve a Memorandum which says : "One of the principal aims is to be limitation.” Has it not occurred to the I.L.P. that there is such a thing as total abolition?

But then, of course, the I.L.P., by its support of the Labour Party, anticipates the indefinite continuance of capitalists whose interests are at present being so well served by MacDonald, Thomas, Snowden & Co.

Armaments are the fighting power of the State and the State in the hands of those who resist Socialism is the bulwark of Capitalism. It, and its fighting forces will last as long as Capitalism lasts, because Capitalism signifies the existence of a subject class to be held in bondage.

Gilmac.

Editorial: Labour Party's Main Plank Gone. (1930)

Editorial from the January 1930 issue of the Socialist Standard

The principle which above all distinguishes the Socialist Party from the Labour Party is our realisation that there are no short and easy cuts to Socialism.

Only a party whose members understand and want Socialism can work to that end, and the growth of such a party cannot proceed faster than the work of spreading socialist knowledge. It was in protest against the view we hold that the I.L.P. and the Labour Party were formed. They have always proclaimed their belief in the possibility of building up a party on a non-socialist basis, becoming the government of the country and introducing large measures of reform—old-age pensions, minimum wage acts and the like, and so retaining the support of the electors while leading them, almost without their knowledge, on the road to Socialism. The fallacy of that position, briefly stated, is that until we have Socialism, we shall continue to have Capitalism and Capitalism can be run only on Capitalist lines. You cannot retain capitalist private ownership and control, and yet administer the system in a way which will prevent it from producing its normal effects. You cannot have Capitalism without a subject class of wage and salary earners struggling incessantly against the pressure which tends to make them more insecure and badly paid, drives them to harder work and reduces them in greater numbers to unemployment. The success of their theory rests upon the ability of a Labour Government to satisfy the electors; but the electors will want the results which they were led to expect and the Government cannot deliver the goods. For years we have been told by Labour Party supporters (who had never tried to teach or even to understand Socialism) that the working class did not want Socialism, they wanted “something now." We return the jibe and ask when the Labour Government is going to give it to them. We were told that “half-a-loaf is better than no bread” and that the way to get Socialism is to build it up piecemeal, adding one gain to another until some day we shall wake up and find that Capitalism has imperceptibly changed into the co-operative commonwealth. One “ half-loaf " has already been delivered to the cotton workers by the Labour Government—a 6¼ per cent, reduction in pay instead of the 12½ per cent, asked for by the employers. May we ask how many such half-loaves will be required to produce Socialism?

Mr. J. H. Thomas, addressing the annual general meeting of the National Union of Railwaymen at Southampton, on July 5th of this year, threw overboard the main plank of his party's policy when he said:—

We ask you not to expect too much, nor attempt to force from us, because we are a Labour Government, what you would not force from a Capitalist Government.—(Daily Herald, 6th July, 1929.)

A few months before the Labour Government took office, Mr. Philip Snowden, now Chancellor of the Exchequer, wrote a pamphlet, “Wealth or Commonwealth," in which he stated his party's intentions. He wrote that

The taxation of the rich for the purposes of national reconstruction and for social reforms is a means of re-distributing the national income so as to lessen social evils and inequalities.—

(Quoted in the New Leader, 20th December.)

Qn October 24th Mr. Snowden returned to the subject in a speech at Sheffield, reported in the Manchester Guardian on October 25th. It will be noticed that Mr. Snowden administering Capitalism does not see eye, to eye with Mr. Snowden seeking non-Socialist votes. He stated on this occasion that he had no wish to extract from the Capitalist class concessions to improve the position of the workers.

The last thing a Chancellor of the Exchequer wants to do is to add to the burden of taxation, and this assurance at least I can give you, that, if I should be in the painful circumstances of having to do that it will be from sheer necessity and not with any desire to inflict new taxation upon what I have sometimes described as “the idle rich."—(Manchester Guardian, 25th October.)

Then Mr. J. H. Hudson, M.P., the Parliamentary Secretary to the Chancellor of the Exchequer, writing in a Sunday newspaper, supplemented his chief’s remarks and explained why it is impossible for the Labour Party to carry out its programme within the Capitalist system. If heavier taxation were imposed on the rich, they would, according to Mr. Hudson, invest abroad, let their factories fall into disrepair, and find devious ways of nullifying the intentions of the Government.

International complexities are driving us to see that our expectations of deriving from Capitalists and financiers the means to support our schemes of social improvement must give place to the better Socialist plan. When we really control our own industrial machine, we can then decide how the surplus shall be spent on the communal welfare without reference to the evasions of those who now add so greatly to our difficulties.— (Quoted in The New Leader, December 20th.)

It will be noticed that the three spokesmen of the Government do not use exactly the same form of words for their declarations. Mr. Thomas says that the workers must not ask for their "something now"; Mr. Snowden says that he won’t try to get it for them; and Mr. Hudson says that it can’t be got—three different ways of saying that there isn’t going to be any half-loaf. But if the Labour Government cannot save the working class from the effects of Capitalism why are they in office? And if, as Mr. Hudson says, the "Socialist plan” is the only practicable one, what is the Labour Party’s justification for going into Parliament without obtaining from the electors a mandate for Socialism? In short, what becomes of the case against the Socialist Party?

Taking the tube (1980)

From the November 1980 issue of the Socialist Standard

Public debate concerning the ills of London’s transport network has been aroused by the recent publication of a PA Management Consultant’s report condemning as inefficient the eleven-man London Transport Executive, appointed by the Greater London Council. Discontent with the service has been heightened by the Holborn train crash of July 9, in which twenty people were hurt. But what is the real nature of the underground train service on which 594 million journeys were made during 1979?

In the areas of concentrated industry which the present economic system creates, it is necessary to have a similarly concentrated, fast and cheap method of transporting workers to and from the offices, factories, plants and warehouses with a minimum of fuss.

In 1863 the Metropolitan Line was opened, running from Paddington to Farringdon Street. The District Line opened five years later. Both lines at first had steam trains and, despite occasional surface sections and ventilation gratings, the smoke made travelling very uncomfortable indeed. Electrification of both of these lines, later considerably extended and interconnected, was completed in 1905. Underground railways, which extend the process of concentration of work in specific areas below the ground itself, swiftly followed in Glasgow, New York, Paris and Moscow, and are now to be found in most of the world’s centres of capital accumulation.

The London Underground now consists of some ten lines. Under an Act of 1933 the entire network, together with the trams, buses and trolley-buses, was transferred to the ownership of the London Passenger Transport Board. In 1948 this became known as the London Transport Executive, a group of the nationalised British Railways. In 1979, the GLC invested £110.7 million in London Transport, over which it now has full control. Although fares have increased by 58 per cent over the last four years, London Transport has been running at a loss of several million each year.

But any profit made by such a concern would be less significant than the service it does capitalism in general, for London Transport is held responsible by London’s employers for transporting the bulk of their workers to and from work each day. This is the case for transport services of this kind to be nationalised; the state which runs them is the collective expression of the interests of the employing class. This transportation must be carried out under conditions suited to those who are on their way to donate their daily dose of surplus, unpaid labour to the capitalist class. Neither comfort nor dignity is important.

On entering the tube you are overwhelmed by the choking, stuffy atmosphere created by many people hurrying in all directions in a confined, subterranean space. Every morning between 7 and 10, 458,000 people enter central London on the Underground and at Piccadilly Circus one line is as far as 102 feet below ground level. Bleary-eyed, dazed and tense, the working class jostle each other as they file down the escalators, sweating before the working day has even begun. The advertising process begins as blinking beings suck up the images of corseted crotches; blazoned, buxom breasts and bubbling beverages. Futile feminist stickers proclaim that “This Degrades Women”. Certainly, sticking up reformist slogans on the walls does degrade the women who do it, but as for the adverts, capitalism will inevitably degrade anything and plunder all human dignity in the quest for profit.

Down below, the advertising hoardings are full size,, and the bodies are moving even more quickly. The uniform tunnels serve to accentuate the drab existence of those who tread, with symbolic import, along them. Having handed some money to a uniformed fellow worker who passes it to his or her state capitalist employer, you wait as the train approaches, fuller than a cattle-truck on market day. The workers, anxious to go and offer their energies to the enterprises which employ them, try to squeeze into the carriages, cheek to check with one another. Station guards throw along the platforms the authority invested in a grimy grey, shapeless suit with a little metal badge, as they order the passengers to “Get right down into the car”. The electric doors close and by breathing in and standing on tiptoes the human commodities manage to fit into the compartment. At each stop, London Transport’s pampered passengers fight through the sweaty crush to get to the doors; missing their stop means being late for work and risking trouble from the boss. Finally the passengers are spewed on to the streets. Blinking at the daylight we march to clock in for our day’s service to our Users.

Every aspect of these journeys is humiliating. The frenzied hurry of the poorly constructed train along the poorly constructed and maintained lines sometimes produces a violent jolting effect, reminding the passengers which social class they were born into as they are thrown together in the carriages. Harshly glaring white neon strips illuminate grotesquely grimacing advertisements advising what can be done with everything from unwanted hair to unwanted pregnancies. Unwanted social systems can only be removed by political action, though, and if these travellers paid half as much attention to the way in which they live and die as they do to the toupees and brassieres, such action would not be much delayed. In the “Smokers” carriages, surrounded by fag-ends, people peer out from behind the protection of newspapers, staring into space as they suck on cigarettes. In “No-smoking” carriages, the air is clearer but not the minds.

Underground railways typify the needs of capitalism. They crystallise the requirements of a system of concentrated industry run by men and women who do not own it and are therefore not able to determine the conditions in which they work or travel to work. They also amply demonstrate the stupidity of proposing nationalisation as a solution to the problems produced by the profit system. Try to pass a barrier without a ticket and the LT worker will soon show you in whose interests the transport system is run. By contrast, common ownership of the means of transportation will allow free and unlimited access to it, as with all other goods and services produced by society. In socialism, transport systems will for the first time be designed according to the wishes and needs of people using the transport, not of the people using the passengers.

Clifford Slapper

International money chaos (1980)

The Briefing Column from the November 1980 issue of the Socialist Standard

A currency unit is always in the end the name for a specific amount of gold (or silver). At one time—when paper currency was convertible on demand into a fixed amount of gold—this was obvious but has now become obscured in the system of “managed currencies’’ which grew up between the wars. In nearly all countries today the currency—the actual medium of circulation—is not gold nor even a paper currency convertible into gold but inconvertible paper notes and coins. Such a currency is said to be “managed” because the amount of it in circulation depends entirely on political decisions.

Before the era of managed currencies the link between a currency and gold was always clear. A law defined the meaning of the name of the currency (pound, mark, franc) in terms of a certain amount of gold (or silver, or both). This is no longer the case but the pound and other currencies continue to represent in economic reality a certain amount of gold. Gold is still today the money-commodity, the only real money, even though it has been replaced as the medium of circulation by paper and metallic tokens.

With a managed currency a government institution (Ministry of Finance, Central Bank) has to decide how much is put into circulation. The amount of currency needed to maintain a stable price level, however, is fixed by economic factors outside of government control, such as the total amount of buying and selling transactions, debts to be settled, velocity of circulation of the currency. The government is of course free to issue more (or less) than this amount, but if it issues more then the currency will depreciate.

The effect will be the same as if, under the old system, the government had passed a law re-defining the meaning of the word pound in terms of a lesser amount of gold—which is equivalent to increasing the prices of all goods expressed in the currency unit. This—overissuing an inconvertible paper currency—is what has caused the inflationary price rises which have gone on continuously in Britain since the beginning of the last world war. Inflation (properly understood as inflating, or overissuing, the currency) means that the currency has come to be defined in terms of lesser and lesser amounts of gold.

A managed currency only has a circulation within the borders of the state which manages it. No state can enforce the use of its paper currency outside its borders, though people there may choose to accept it. Paper currencies, however, can still be exchanged with each other. What determines their rate of exchange?

What we have said about the paper pound being the name for a certain amount of gold applies equally to the other paper currencies. The paper mark and the paper franc are also names for amounts of gold, though different amounts of course. In fact up until the end of 1971 the currencies of the member states of the International Monetary Fund were declared to the Fund in terms of weights of gold. Thus if the French franc was defined as 3gm of gold and the English pound as 39gm, then the rate of exchange between francs and pounds was £1 = 13 francs. The Member states of the IMF were supposed to maintain a more or less fixed rate of exchange between their currencies and those of the other members.

Had it not been for the inflationary policies pursued by all states this would have proved a relatively easy task. But in fact all states inflated their currencies, though not to an equal extent, so that the parities declared to the IMF came to no longer correspond to the economic reality. Those countries which had inflated their currencies more than average were sooner or later compelled to declare to the IMF that their currency should now be officially regarded as representing a lesser amount of gold. This devaluation meant that the exchange rate with other currencies had altered: their currency would now exchange for a lesser amount of all other currencies. On the other hand those countries which had a below average inflation were compelled to up-value their currency, known as revaluation, as happened a number of times to the D-mark and the Swiss Franc.

A devaluation then was a recognition on the international level of a currency depreciation that had already occurred internally. This was why Wilson was in a sense right when he declared in his famous 1967 statement that devaluation left unchanged the value of the pounds in our pockets. It did, because the depreciation had already taken place before! (As the Wilson government continued the policy of currency inflation, the pounds in our pockets did in fact continue to shrink, but because of the continuing inflation of the currency rather than because of the devaluation).

At the end of 1971 the IMF system of fixed parities, with periodic devaluations and revaluations as necessary, broke down. Instead countries just let their currencies float. What this means is that an internal depreciation of a currency resulting from its inflation is now immediately reflected in its rate of exchange with other currencies instead of building up towards an eventual devaluation.

Some countries link their currencies to others, agreeing that they will not let their currencies fall or rise above or below a certain margin compared with the other currencies in the system. One such system was the famous “snake” of European currencies, of which Britain was a member for a short while. The European Monetary System (EMS) is another such system.

For such systems to work each of the states involved has to have more or less the same rate of inflation. For if one state had a greater rate of inflation than the others, then its currency would tend to fall below the lower limit and in order to maintain itself in the system it would have to use up its reserves to buy its own currency so as to maintain its price (exchange rate with the others). The EMS does provide for the establishment of a special fund to help states in difficulty but its clear aim is to try to keep inflation rates down to the German level.

The last Labour government, presumably anxious to have a free hand to continue inflating the pound as it wished, refused to give an undertaking to keep inflation down that much and so Britain didn’t join. The present Conservative government has announced its intention to join, but is waiting for the time when (if!) the rate of inflation in Britain is at a more internationally acceptable level.

All these “systems” in the end are just makeshifts since none of them openly recognise that the only real money in the world today remains gold. Capitalists are more realistic—which explains the rise in the price of gold, and why it likely to keep on rising: nobody wants to be left holding worthless paper money as the international monetary system staggers from crisis to crisis.

Adam Buick

Are They Job-Creators? (2016)

From the September 2016 issue of the Socialist Standard

The employing class create jobs, people sometimes say, so we cannot do without them. Opening a new office or factory or supermarket leads to jobs being created, it might seem.

Is this really an argument for capitalism, and for the existence of a class of capitalists who own companies and the land, factories, and so on? Emphatically not, but to see this we need to step back a bit and look at how society and production are organised.

In order to work, people need to have access to raw materials, a workplace, equipment, machines and other tools. This applies not just to digging your garden or doing a spot of DIY, but also when someone is working in a factory, building site, office, call centre, hospital, school, restaurant, shop, etc. In the case of someone working for an employer, the real question to ask is: what stops them from having access to the means of production, to use the formal term for the various kinds of machines and so on, in the first place? Why can people not get together and co-operate to make phones or serve coffee or build homes?

This is where the whole way that society and production are set up enters the picture. People cannot just work together without the materials they need, precisely because the employing class own and monopolise, and so control access to, the means of production. They say in effect, ‘You can’t work here and produce that without our say-so.’ This is not a matter of what individual capitalists state but of what the collective power of the capitalist class implies. They can sack workers or reduce their working hours or alter their working conditions or simply refuse to employ people who are willing to work, all because they cannot make a profit (or enough of a profit) from employing them. They are in a position, then, to stop people working, so at the very least ‘creating jobs’ means they don’t prevent people from working and producing useful goods and services.

What about the claim that the capitalists produce the ideas and inventions that people make use of? This is hardly ever the case, as most technological developments are the results of the combined efforts of many workers (scientists, engineers, technicians, and so on), not of the capitalists. And nobody could seriously argue that it is the owners who produce the machines that workers use: it is the working class who produce the lathes and tractors and computers and software that are used in the production process.

So the capitalists do not create jobs, and workers do not need a class of employers. Rather, they need us in order to produce their profits. A classless society will have no place for a separate set of employers to make production possible: people will just get together, organise things by and for themselves, and perform useful and satisfying work.

Paul Bennett