Is the crisis over? (2011)

From the July 2011 issue of the Socialist Standard

“Once a crisis is in full swing, then the argument starts about who is to blame for it. The businessmen blame the abrupt credit refusals by the banks, the speculative mania of the stockbrokers; the stockbrokers blame the industrialists; the industrialists blame the shortage of money, etc. And when business finally picks up again, then the stock exchange and the newspapers note the first signs of improvement with relief, until, at last, hope, peace, and security stop over for a short stay once more. Modern society notes the approach of crisis with horror; it bows its head trembling under the blows coming down as thick as hail; it waits for the end of the ordeal, then lifts its head once more—at first timidly and skeptically; only much later is society almost reassured again.”

These words could have been written yesterday, but are in fact the (slightly edited and paraphrased) words of Rosa Luxemburg, written a century ago, shortly after the crisis of 1907 (What Is Economics by Rosa Luxemburg. See ‘Is The Economic Crisis Over?’ here). The question is, what stage are we at in the crisis that arrived 100 years later? Is society beginning to ‘lift its head once more’ and look toward a future of hope, peace and security? Or should we bow our heads and expect more blows?

Regular readers will have noticed that, in the pages of this journal, we are still talking about crisis as if we’re in the midst of one (and we will be discussing the issue again at our annual summer school in July). Followers of the official story might be confused by this. According to the mainstream account, the crisis, which began with a financial blow-up in America in 2007 and threatened a cataclysm as serious as the Great Depression of the 1930s, was over by the middle of 2010 thanks to the government policy of providing ‘stimulus’ (printed money). As if to consign the experience to the historical memory once and for all before moving on to business as usual, the crisis has even been given a name. It was the ‘Great Recession’. And now, it’s over.

The good news

But is it? The official story says yes. But then, the authors of that story, mainstream economists and representatives of the capitalist class, hardly ever expect crises and are shocked by them when they appear out of the blue. This is despite the fact that there have been major downturns in every decade since the 1820s, and regular financial panics since the 17th century. Given this failure to notice still less predict what is obvious to anyone with the briefest acquaintance with history, we can be forgiven for treating their pronouncements with extreme caution.

Still, the question is a tricky one. Commentators still can’t decide when the Great Depression of the 1930s ended, for example. Was the upturn of 1933 the conclusion of the crisis, and the recession in 1937-8 a separate event, as some argue? Or was the 1933-7 recovery merely an artifact of government spending (‘stimulus’), with the depression ending proper with the start of war production in 1939? Or should even the war production period be seen as a kind of government stimulus, with true, capitalist-based recovery delayed till 1946? To consider this problem is to see that, to some extent, history may be repeating itself.

At the present time, followers of the mainstream press will find confident pronouncements of recovery and positive (or, at least, not too badly negative) news from various economic indicators sitting side by side with accounts of deepening state debt crises, stockmarket slides, soaring inflation, falling wages and standards of living, and battles to impose austerity on the working class (including vast swathes of those who tend to think of themselves as ‘middle class’).

America, for example, the world’s biggest and most important economy, is officially out of recession. Yet manufacturing surveys show that global growth is stuttering and stagnating once again. US growth slowed to an annualised 1.8 percent in the first quarter of the year, down from 3.1 percent in the previous quarter. The housing market is already in ‘double dip’ territory, inflation is on the rise (it could already be as high as 7.4 percent, according to a new index from professors at the Massachusetts Institute of Technology) and wages remain stagnant – average hourly earnings of production and non-supervisory employees, who make up 80 percent of non-government workers, are lower than they were in the depths of the recession, adjusted for inflation, according to Robert Reich, a professor of public policy at the University of California at Berkeley (Robertreich.org). Relative wages have, anyway, been stagnant or falling since the 1970s.

Initial confidence in the rising number of new jobs was squashed by the start of June when it was reported that the rise in the number of jobs was far lower than predicted: just 54,000 jobs were added to the total in May against an expected 165,000, according to the Financial Times, and the unemployment rate ticked up to 9.1 per cent. State debt continues to rise to historically unprecedented levels, which has prompted the credit-ratings agencies Standard & Poors and Moody’s to threaten to downgrade it. At the same time as we hear the crisis blamed on banks’ reluctance to loan businesses money, businesses themselves are hoarding cash – almost $1 trillion of it, according to a report in the Wall Street Journal published at the end of last year. This cash pile is the highest for half a century and “shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers’ ability to spend”.

The story is much the same around the world. Certain economies in Asia, particularly China, provide the most obvious apparent exceptions, but the health of these are still, for now at least, partly reliant on the health of the US and other Western economies. Commentators are currently watching China’s booming real-estate sector with particular concern – it is another debt-fuelled ‘success’ story, and a key driver of demand for commodities from other economies. But it is inevitably heading for a big crash, according to Nouriel Roubini, a bourgeois economics professor at New York University whose star rose when he correctly predicted the current crisis.   

Of more immediate concern the eurozone – most particularly Greece, Portugal, Spain and Italy – also remains in deep trouble. For now, all eyes are on Greece. Despite already having agreed a €10bn bail-out package last year, it is now obvious that that was not enough, and the EU, European Central Bank and IMF are having to bail out the bail-out, as The Economist put it. By 2012, Greece was supposed to be well on the road to recovery, but in reality, as austerity reforms stalled and the economy shrank (by 4 percent last year), state debt continued to soar. It’s now near 160 percent of GDP. The consequences of default are currently deemed too dangerous, so other options are being considered, such as lending Greece yet more money, and extending the repayment dates on the debt. But some commentators, including Lex in the Financial Times, think that default is, sooner or later, ‘inevitable’. The European debt crisis, says economics analysts Capital Economics, “may be entering a new and more dangerous phase”. Meanwhile, as in the US, the biggest companies in Europe, not including the major banks, are sitting on £445bn in cash, according to a Bloomberg report at the end of last year.

Britain has been spared some of the worst of the troubles afflicting Europe because it is still in control of its own currency and can therefore engineer some fiscal wriggle-room with low interest rates and money-printing and so on. It has also recently elected a government committed to radical reforms that will impoverish sections of the working class but also, capitalists are hoping, reduce the deficit and restore profitability. But the picture is far from rosy for the capitalists. The British economy grew by only 0.5 percent in the first quarter of this year following a contraction of the same amount in the last quarter of 2010. Household disposable incomes are predicted to fall by 2 percent in real terms this year, and the TUC trade union body has warned that wages – already stagnant over the past 30 years while the economy doubled in size – are likely to trail behind inflation for years to come, putting low and middle-income earners into a “livelihood crisis”. Growth has fallen off in the services sector, house prices continue to slide, retail sales are down, and the Bank of England has been forced to cut its growth forecasts and up its inflation outlook. And with interest rate rises mooted and surely inevitable sooner or later, things can only get worse in the near term. At the same time, as in Europe and America, British companies sit on vast cash hoards as the prospects of profitable investment remain small and risky.

The bad news

There are really two questions here. The first is, is the crisis over in the narrow, technical sense, i.e, is the economy officially out of recession according to conventional definitions and measures? Here the answer is yes, though the shakiness of the recovery is signalled even in the mainstream press by the constant reference to the fear of a ‘double dip’, the return of recession, especially if or when stimulus measures end and austerity measures kick in (dampening effective demand), or both. Luxemburg’s ‘first signs of improvement’ are certainly there, but it’s still way too early to say that society is ‘reassured again’.

The second is whether the crisis is over in a broader sense, and here the answer is, almost certainly not. Take a historical and Marxist view, and it seems clear that we are merely at the start of a major global restructuring.

Apart from a socialist transformation of society, the only solution to the problems of a depression is the depression itself. If capitalism is to return to profitability, unprofitable concerns must be closed, workers laid off, wages suppressed, and capital devalued. This restores profitability and lays the basis for a new round of capitalist prosperity. The trouble is, despite a number of serious recessions and wobbles, capitalism has not had a proper and necessary clearing of the decks since the 1930s.

As the Marxist economist Paul Mattick points out, that depression, and the war that followed it, laid the basis for the ‘Golden Age’ of 1950 to 1973, an ‘economic miracle’ built on the destruction of the war and the corpses of 50 to 60 million people. This period of capitalist prosperity ran into serious trouble in the 1970s, and the result was the stagnation and inflation (‘stagflation’) of that period, a reliance on unprecedented levels of state involvement in the economy, an excess of printed money and soaring debt. The idea was that this debt would be paid back in the good times as depression was averted and capitalist prosperity returned. The reality was that the debt and spending had to continue to rise to subsidise capitalist industry and buy social peace.

Despite the rhetoric and ideological determination, and some major attacks on working class living standards through the 1980s, it has proved impossible to roll back the state and cut spending and debt while keeping capitalism buoyant. The working class seemed to be boosted for a while with the credit card explosion and rising house prices. That prosperity, too, was obviously unsustainable for capitalism, and it ended in 2007.

But could the full force of a depression be delayed with a combination of yet more debt and spending? Governments around the world are betting that it can. But they are also hedging their bets by preparing and implementing austerity measures as it must be obvious, even to them, that the historically unprecedented expansion of state spending and debt cannot go on for ever if capitalism is to survive. Keynes himself famously ignored this problem. “In the long run, we’re all dead,” he said. Over the next decade, we’ll discover what happens in the ‘long run’.

The probability is that previously taken-for-granted entitlements (to education, jobs, retirement, health care, an income during periods of illness, joblessness or disability, and so on) and standards of living will end. There will be continuing struggles both within the capitalist class and between the capitalist and working classes over who is to bear the brunt of the losses. The hegemony of the United States may be challenged in the not too distant future, with potentially catastrophic consequences: bear in mind that it took a world war to completely end the last truly major depression. And the depression, if not rescued by a major war, could be deeply exacerbated by the falling off of cheap and easy oil and energy supplies and the possibility of ecological catastrophe.

Yes, in the long run we’re all dead. But in the short run things are not looking too great either. At an underlying level, this economic crisis is not over. And neither is the increasingly desperate urgency and need for the socialist alternative.

Stuart Watkins

Pedalling in Ever-decreasing Circles (2011)

From the July 2011 issue of the Socialist Standard

Cycling is popular again but what happened to the old Clarion Cycling Club?

The metamorphosis of the precarious Ordinary – “Penny Farthing” – into its essentially present-day “Safety” format in the 1880s and a steady reduction in manufacturing costs, saw the bicycle by the following decade fast-becoming the main means of personal working class transport. Villagers and townies, hitherto isolated, could now venture healthily afield, widening geographical and social horizons, seeking erudition and enlightenment, diversifying and enriching the gene pool.

Devastating as it undoubtedly was for “High Wheeling” aristocrats and toffs to find their pastime suddenly infested with hoi polloi, salvation, at least for the seriously affluent, was nigh: the internal combustion engine was already spluttering into life.

The latter decades of the century had seen also a renewed interest in the radical ideas that had faded somewhat in the wake of the Chartist Movement of the 1850s. In particular, Hyndman’s Democratic Federation, established in 1881, swiftly proclaimed its socialist tendency, renaming itself Social Democratic Federation by 1883. Ever an uneasy coalition, it suffered breakaway the following year when a revolutionary group that included Eleanor Marx, Belford Bax and William Morris left a fundamentally reformist organisation to found the Socialist League.

Around this same time, Sunday Chronicle journalist, Robert Blatchford – “Nunquam” – was winning acclaim with an impassioned weekly exposé of conditions in the slums of Manchester. Openly declaring for socialism however, proved just too much for a nervous proprietor and following an enforced resignation in 1891, he set up his own penny weekly, The Clarion. On relocating south to Fleet Street some four years later, circulation rose steadily eventually, by 1908, doubling to 80,000.

The Clarion’s ideals were indeed lofty: to “make socialists” by writing fearlessly and honestly about injustice and inequality, to do so unpretentiously and humorously avoiding dogma and theory and to provide a forum for divergent viewpoints. This was its mission statement and – as time would ultimately prove – its suicide note.

Perhaps inevitably, cycling men and women, enthused by these ideas, would see the obvious advantages of the bicycle in spreading the message and at an 1894 meeting convened by young Brummie Tom Groom, a “socialist Cycling Club” was created; its name promptly amended to “Clarion” in honour of the journal. Reports of the club’s early activities – joyful, propagandising excursions requiring “boozometers rather than speedometers” – led swiftly to the formation of Clarion clubs elsewhere and an Easter Meet was arranged at Ashbourne in Derbyshire the following year to organise a national body.

The inaugural conference held there was an unpromising, damp, outdoor affair and the accompanying public rally fared little better; speakers harangued throughout by a “beery person”: “Aw don’t know nowt and Aw don’t want to know nowt.” Conference duly obliged by delivering…er, nowt. Notwithstanding agreement on a set of rules and adoption of a national badge and slogan – “Fellowship is Life; Lack of Fellowship is Death” from Morris’s A Dream of John Ball – no attempt was made to actually define socialism other than in the vaguest of “caring-sharing”, “happy-clappy”, “ethical” terms. Contentiously too, membership was opened to professed non-socialists, Groom strongly maintaining that “Clarion reasoning and comradeship” coupled with “physical exercise and glorious countryside” would effect speedy conversion.

The rest, as they say, is history. Whilst number-wise at least, the Club blossomed – membership nudging 7,000 in 1913 – and did despite Blatchford’s hankerings for informality, bring some order to its administrative procedures, this collective failure to achieve understanding and consensus over the actual meaning of the term “socialism” and how it might be implemented, rendered it politically impotent; tyres well and truly punctured at the bikeshed door. Ironic indeed since by 1914, the Club badge now also incorporated a proud “Socialism the Hope of the World”.

And as for the redoubtable Blatchford, it was terminal decline; his initial demand for “common ownership” and boast of “converting England to Socialism in seven years”, soon becoming a plea for “brotherly love and respect”, before plummeting to an outrageous exhortation for young Clarionettes to both shed and spill their working class blood in the Imperialist Cause, firstly in Transvaal and subsequently Flanders. In later life, embittered and disillusioned – “The Working Class is not yet ready for Socialism” – he embraced Conservatism, supporting Stanley Baldwin, “the finest British politician”, in the 1924 General Election.

The Clarion remained popular until 1914 but its jingoistic stance, abhorrent to so many, saw circulation collapse from sixty to ten thousand. Hostilities ended, it emerged as a smaller threepenny weekly but readership continued to haemorrhage in the wake of the 1917 Russian Revolution and the seductive pull of the new-born Communist Party of Great Britain. Repackaged in 1927 as a sixpenny monthly, life became increasingly difficult for a self-styled “independent Socialist review” supporting a Labour movement “as opposed to Bolshevism as it is to Fascism” and after a last brief tango as The New Clarion, it disappeared in 1934.

Oddly, the journal’s demise coincided with an upturn in Club numbers. Despite serious economic recession, bicycle ownership was increasing and on the back of the 1930s “outdoors/fitness” craze, membership soared to an all-time high of 8,300. To what extent the Club’s politics contributed is, of course, debatable: other pastimes, rambling and hiking for example also flourished and besides, activism within the ranks, by no means universal from inception, had continued to diminish. For that minority who remained otherwise, there was little evidence of improvement in the calibre of that activism.

Discord reigned between the pro- and anti-war camps, whilst both the Workers’ Sports Movement and Esperanto language were lauded as the keys to “developing solidarity”, “dismantling international prejudices” and “eradicating misunderstanding”. Never, throughout decades of fresh air, camaraderie and carousing, did there ever appear to have entered into the broad Clarion psyche, a recognition of the single global root cause of Humanity’s multiple socio-economic problems and therefore of the single global remedy required. It really was, and is, that straightforward.

Post-war, a brief membership boom was followed by serious decline as growing affluence brought with it mass car-ownership and in the prevailing Cold War environment, there began an inexorable process of airbrushing out its political roots. The Constitutional “propagation of the principles of Socialism” clause became “support for…” and office bearers, once required to actually belong to “an approved Socialist organisation”, could now be simply avowed socialists. And so it continued.

These days, the Clarion Cycling Club survives as a 600-strong rump and – lest it deter potential sponsors – presents itself as “The Club for Wise Cyclists”. May it prosper: pro-Human sentiments are, after all, preferable to none. It is tragic, nevertheless, that so much benevolence, enthusiasm and integrity should, for want of a bit of clarity and direction, have gone to waste; doubly so because in terms of its sloganeering at least, the Club had it pretty-well nailed all along.

And since the Socialist Party remains – on several levels – untroubled by commercial considerations, we are pleased on behalf of countless long-departed and intrepid wayfarers to brandish the muddied Clarion banner one final time: “Fellowship is Life” and “Socialism” – properly defined and understood, is indeed – “the Hope of the World”.

Andrew Armitage

Proper Gander: Choosing To Die (2011)

The Proper Gander Column from the July 2011 issue of the Socialist Standard

These days, the word ‘controversial’ is used more as a selling-point for television programmes than to describe their content or any reactions provoked. So, the BBC’s documentary on assisted suicide Terry Pratchett: Choosing To Die was promoted by slots on their website, Breakfast and Newsnight telling us how contentious and important the show would be. There was even a lurid Radio Times cover announcing it would contain “5 minutes of television that will change our lives”. This referred to its scenes of businessman Peter Smedley’s final moments in Switzerland’s Dignitas centre.

Although some of the publicity gave the impression that we would be watching a video nasty, the programme itself would best be described as genteel. Presenter Terry Pratchett has advocated assisted suicide for those able to decide since he was diagnosed with Alzheimer’s disease, making the documentary more personal than most. He met up with three people with incurable conditions, two of whom decided to travel to Switzerland, where assisted dying is legal. Those thinking about using Dignitas to end their lives were shown calmly and rationally discussing the issue with their families. Their bravery in choosing how to die was, paradoxically, life-affirming.

According to the Daily Telegraph, the vast majority of complaints were made before the programme was aired. Many of Choosing To Die’s opponents accused it of being “pro-assisted suicide propaganda”, as if every programme should blandly present both sides of an argument. The Newsnight discussion attempted to be more balanced, with Jeremy Paxman uncomfortably chairing an unfocused discussion with campaigners on each side. Some interesting criticisms were made by disability rights campaigner Liz Carr. Her arguments apply to the issue as it exists within capitalism rather than assisted dying per se. She was concerned that assisted suicide is dangerous in a society which sees disability as negative, and that it could be a tempting option for those who can’t afford specialist support for life-limiting conditions. However, as Dignitas charges over £3,000, their service is only open to those wealthy enough to afford their own palliative care anyway. In capitalism, it’s not only your quality of life which is dictated by how rich you are, but also your quality of death.

Mike Foster

Editorial: Socialism is vital (1979)

Editorial from the July 1979 issue of the Socialist Standard

Socialists will not be waiting with bated breath to see how the new Conservative government shapes up. We will not be losing any sleep wondering whether they will increase — or reduce — taxes and state spending, or whether they will clamp down on law-breakers; or whether they will in the end so arrange the affairs of British capitalism that the great, conquering days of the British Empire return and the very name of Thatcher sends a chill down the spines of her enemies.

Such matters, which are an outsize preoccupation to anyone who supports the capitalist social system, are of supreme indifference to socialists. This is not because we try to cut ourselves off from the everyday problems of capitalism. The reason is that we judge such issues on the single ground of working class interests and how they are affected.

Elsewhere in this issue of the Socialist Standard, we deal in some detail with the prospects for this new government, and show how the working class can expect the same treatment as they got from Labour. They can expect to have to resist pressure to reduce their living standard, an attack on the bargaining power of the unions, a continuance of the propaganda aimed at convincing them that capitalism is the most efficient, benevolent and enduring society in the history of the human race.

No Basic Difference

The manifestos of the parties of capitalism during the last election showed clearly that there are no basic differences between them. This is due to the fact that they all stand for capitalism, although they might at times give their policy some other name. Yet after we have experienced them in power, the fact is that capitalism endures as before. Whatever their minor disagreements, they are all at one in their determination that that shall always be so.

This is predictable, since all of the other parties campaign for votes to keep capitalism in existance. They tell the working class that capitalism is essential and that it needs only a few minor changes — a readjustment here, a patching-up there — to make it work in the interests of the majority of its people. At times, their speech writers become positively entranced with their own spurious vision of what life will be like under this mythical version of a social system which has never brought anything other than misery and degradation to most people.

This propaganda is attractive enough to the voters for them to support capitalism in their millions; they are content to keep chasing the dream rather than face reality. And part of that reality is the fact that the arguments between the Labour and Conservative Parties are over trivial reforms or rather attempts at reform in many cases — of capitalism. Such differences are not worth voting about, and now that the workers have chosen to have the Tory version of capitalism instead of the Labour variety, the outcome of it is not worth concerning ourselves with.

Capitalism will always bring problems to the working class. Although the other parties claim to be able to do something about them, experience tells us that these problems are insoluble within capitalism. We live in a social system which is based on the class ownership of the means of wealth, production and distribution. One effect of this is that the wealth we turn out is made, not to satisfy human needs, but to serve the interests of the class who own the means of production.

The interests of that class are in the production of wealth to be sold so as to yield them profit with which their capital can be developed and expanded, and so buttress their privileged position in society. This process takes place through the exploitation of the other class — the working class, who do not own the means of production and who have to sell their labour power in order to live.

The lot of this class is one of exploitation and poverty. Whatever the wealth they consume — whether they move around on buses or drive a car, whether they wash their clothes in a tub or a washing machine, whether they read books during their time off or gaze at a television set — it is always restricted to what they can afford from their wage. And it is always inferior, sub-standard, made so that it comes within the purchasing power of a wage packet.

This is what is meant by working class poverty. At no time under capitalism will the working class have the freedom to enjoy the best that society can produce, and have unrestricted access to it. Yet without that freedom, they must always be said to be living in poverty.

This poverty manifests itself in several ways, many of them the subject of attempts at reform, and therefore the substance of the election programmes of the capitalist parties. Housing, for example, is a continuing sore which the parties of capitalism cynically aggravate in their drive to pick up votes. Yet inadequate housing afflicts only those who can afford nothing better; it is not a problem experienced by the capitalist class.

Denied Access

Medical and social services are also restricted when they are applied to the working class (not that the capitalist class need the attentions of social services; they have their own ready-made version). But the point is that the workers must always rely on the less-than-best, and very often the downright shoddy. Yet they are the class which produce all the world’s wealth; they make the very objects and services to which they are denied access.

The outcome of all this is disillusionment and despair. At one election after another, the working class turn to various parties in blind faith that their promises mean something and that somehow capitalism can be made to work in their interests. When these hopes are shattered, there is often a deeper disillusionment, with democracy itself or with the principle of political action to change society.

Socialism, in contrast, is the idea of hope. Socialists do not offer themselves as leaders, putting forward a better version of the same old discredited policies. Our case is that the working class can get rid of their problems; to do this they have to abolish capitalism and replace it with a society based on the common ownership of the means of production and distribution. We go further, and say that the working class can and must do this for themselves; no leaders can drag them by the nose into the new society.

Until that is a reality, socialists have no interest in the drab machinations of capitalist politics, except to offer them unremitting hostility and to expose them for the sham they are.

Brave New Tory World? (1979)

From the July 1979 issue of the Socialist Standard

At the General Election in May the voters, after five years of capitalism run by the Labour Party, decided by nearly 14 million votes to 11½ million that they prefer to have it run by the Tories. Who are these Tories? Peregrine Worsthorne, a Tory supporter, tells us:

 In terms of personal wealth Mrs. Thatcher’s government does not compare all that badly with pre-war Tory administrations, or even 19th century ones. It is quite marvellously well-heeled. Most of its members have either made, married or inherited splendid fortunes. Some are even the proud owners of great ancestral country estates. [It is] encouragingly full of hereditary peers, self-made and hereditary millionaires, wealthy landowners, scholarly products of Oxbridge, headed by a lady who has married money.

(Sunday Telegraph, 13 May 1979)

So what difference will it make to have a Cabinet full of rich people in place of the Labour Cabinet, which had only some rich and very rich men? To the living standards of the working class it will make no difference at all; what happens to them is the result of capitalism itself, not of the party labels of the ministers.

Right Policy
That is, of course, not the way the Tories or the Labour Party see things. They both believe that a government by adopting the right policy, can guide capitalism into a course of continually expanding production, low unemployment and a stable price level; where they differ is about what is the right policy.

The Tory line is to cut government expenditure (but not on armaments), reduce income tax, and increase VAT. The chief argument behind it is that manufacturers, retaining a larger amount of profit, will more readily invest, expand production and employ more workers. Sir Keith Joseph, Minister for Industry, declared during the election campaign: “Cut government expenditure by £400 million a year and unemployment will decrease.” On the other hand, the Labour Party believe that the way to reduce unemployment is to increase government expenditure. The TUC sent a deputation to the Chancellor of the Exchequer stating the case for the government to spend more. And the National Association of Local Government Officers published its own plan calling on the government to spend £7,200 million more in the next three years, which would, they say, reduce unemployment to 800,000.

The rival policies ignore past experience, which shows both of them to be a delusion. In the 19th century, government expenditure in relation to total national income was only a fraction of what it is now, but it did nothing to prevent continuing unemployment and periodical crises and depressions, with unemployment rising to peak levels. And under the recent Labour administration, government expenditure rose from £20,000 million in 1973-4 to £44,000 million in 1977-8. Unemployment did not fall; it rose by more than 800,000.

The only reason some governments seem to be more successful than others is that some have the luck to come into office when a depression is lifting. The unlucky ones come in at the start of a depression. There is, however, one thing governments can control — inflation. Liberal and Tory governments ran capitalism without inflation for a hundred years before 1914, and some of the Tory ministers have said they intend to get back to that state of affairs. It remains to be seen whether they will have their way. The Tory leaders arc not united on this, and every government since World War II has started off with promises to curb the rise of prices. At the October 1974 election, the Labour programme said: “The first priority must be a determined attack on inflation”, and the Labour Prime Minister, Harold Wilson, had explained in his Remedies for Inflation how he would do it. Hie method, he said, was to have a balanced budget, obviating the need for government borrowing. In the event, the Labour government in 1978 borrowed about £8,000 million. The new Tory government has, however, ended the farcical attempt at holding down prices by the Price Commission. Its total effect was estimated to have been to keep the price level one-half of one per cent lower than it would otherwise have been: this after the same government had put up prices by over one hundred per cent in its five years of office.

Conflict
Cutting government expenditure rests heavily on reducing the size of the Civil Service and local government services, bringing the government into conflict with all the unions involved. Another area of conflict with the unions is the government’s intention to tighten up the law on picketing, outlaw the closed shop, and require unions to pay more towards the maintenance of strikers' families instead of relying wholly on Social Security.

The Thatcher government is also giving prominence to an attack on the Labour Party’s sacred cow, nationalisation, and intends to sell off parts of the nationalised industries and some of the government’s shareholdings in private companies, including British Petroleum. It will be a rallying point for Labour Party and trade union opposition to the government, but it contains nothing of concern to the working class. Nationalisation — or state capitalism — does not alter their position in capitalist society, it is immaterial whether they are exploited by private companies or government-appointed boards.

The outgoing Prime Minister warned that the Tory government will be a “national catastrophe”. Capitalism is always a catastrophe for the working class, and how will the Tory variety differ from the Labour one? Will employers, with government backing, try to keep wages as low as possible and only employ workers when they can make a profit out of it? But so they always did. Will the Tory government try to smash strikes by invoking emergency powers and using troops as strike-breakers? But so did the Callaghan government. Will ministers cross picket lines and encourage others to do so? But so did Callaghan. Will unemployment increase by hundreds of thousands as it did under the Labour government? Will private companies and nationalised industries close down unprofitable sections of their industries and make workers redundant, as they have done in the past five labour-governed years? Will the Tories propose amendments of trade union law against the interests of the unions, as did the Wilson government with its In Place of Strife Bill in 1970? Will the Tories ‘confront’ the unions, as did Callaghan in the massive strikes of the early part of 1979? Will the Tories inspire a 'wage freeze’, as Mrs. Thatcher says she may do? If so, they have the precedent of the Wilson six-month freeze of 1966. Will the Tories manage to keep wage increases below the rise of the cost of living so that the workers’ standard of living falls, as happened in the years 1974 to 1977 under Labour?

Nothing that can happen under the Tories will be new: it has all happened before under Labour government.

Edgar Hardcastle

Profitable pollution (1979)

From the July 1979 issue of the Socialist Standard

The main factor involved in accidents to oil tankers and in creating oil pollution at sea is the profit motive. “Pollution is an economic phenomenon . . . Deliberate discharges of oil, and the main causes of accidents to ships and offshore installations can both be explained by economic considerations”, writes Dr Viktor Sebek (New Scientist, 1.3.79).

An “inexplicable tragedy”
                   - Premier Lynch.

The Betelgueuze exploded at midnight while unloading at Bantry Bay. Forty-three crew and seven terminal workers were killed, and sixty-one families fled in small boats from Whiddy Island to the mainland. This ‘accident' was avoidable. From 1968 to 1977 tanker explosions killed 291 people, besides representing enormous financial losses to their owners. An inert gas safety system is now fitted to new oil tankers, but four-fifths of the 3,500 tankers now operating still do not have this system, nearly ten years after the danger of explosive gases became known. “Because of its age the Betelgueuze was not fitted with the inert gas safety system.” That would have cut into profits.

Jetty firefighting equipment checked in December was faulty and not subsequently repaired. Life rafts — the only means of escape from the jetty — had never been tested. Gulf Oil’s first five years’ profits at Whiddy were about £40 million. “We had a terrible tragedy. But we have to face one fact of life — business is business”, said a Gulf executive, explaining why Gulf is now sueing Total Navigation over the £30 million compensation.

Accidental Pollution
The ‘accident’ at the Sullom Voe terminal, when the Esso Bernicia collided in harbour, spilling fuel oil and causing the deaths of sheep and otters as well as thousands of rare sea-birds, was foreseeable and need not have happened.

Delay in using equipment, inadequate maintenance of emergency equipment, inadequate supply of available equipment, the lack of a fourth tug on standby when the tanker berthed — all combined to produce a predictable ecological catastrophe. “The possibility of an oil spillage always exists because of failure or malfunction of mechanical equipment or as a result of human failure . . .” a report predicted in 1976.

Deliberate Pollution
‘Operational’ pollution occurs when a tanker captain illegally dumps ballast water at sea, knowing that the terminal he is approaching has no ballast water treatment plant. When Sullom Voe opened in November 1978, its ballast water treatment plant was not expected to be ready until May 1979: during those months, ballast water dumping created a serious ecological problem. Yet the Load On Top system used by many tankers and the segregated or clean ballast systems fitted into new tankers prevent such pollution.

With the ballast water treatment plant at Sullom Voe not yet in operation, there was, according to a director of BP Tanker Co., “a financial incentive for a tanker skipper on a voyage charter to dump ballast when approaching Shetland and thereby take on more oil” Captain Lucas of the Mercantile Marine Service Association alleged that “very few of the world’s ports are equipped to handle the waste products from any ships, let alone tankers.”

Accurate pollution-measuring techniques have been developed and are in use. But enforcing pollution control presents problems: “The economic implications of these pollution control regulations to the major shipping companies are large, and intense international maritime political lobbying is now under way.”

Cutting Corners
Navigational errors, such as caused the Christos Bitas disaster off Pembrokeshire, are common. Near Sullom Voe there have been “repeated reports of tankers cutting corners”. In January, February and March large tankers have been observed within one to one-and-a- half kilometres of the coast, which is at all times difficult but especially hazardous in winter.

To Shetlanders, a tanker is “a floating disaster waiting for somewhere to happen”. Scientist Ritchie Calder declared that Whitehall’s policy is “government by catastrophe”. “All measures to control pollution inevitably reduce profit margins” comments Dr. V. Sebek.

Nuclear Power—Very Hush-Hush

Nuclear technology risks are aggravated by political factors. Government-imposed secrecy shrouds everything nuclear: in the early fifties the Official Secrets Act silenced press reports of “gross negligence during construction work at Windscale”. All Windscale (British Nuclear Fuels Ltd.) and Dounreay (Atomic Energy Authority) staff are ‘positively vetted’ by security; such installations are cloaked by the Official Secrets Act. Though Article 10 of the European Convention on Human Rights lays down the ‘right’ to publish information and ideas, this is always subject to “the interest of national security”. The same principle governs public disclosure of accidents, risks and the like in the Soviet Union, where people live next to nuclear installations “without any protest or without any knowledge of them”.

Fears of terrorism — sabotage of installations or theft of plutonium — increase the secrecy surrounding all nuclear installations. The ability to cover up negligence and to conceal even serious ‘incidents’ presents a risk to the whole community.

Energy production is a dirty business. But accidents in coal mines and oilfields do not put at risk the health of the human species for generations to come. Under capitalism, the social — political, economic and military — hazards compound the risk inherent in nuclear technology. “When you build a plant, you look to see whether there are any earthquakes. But you don’t know about social earthquakes.” (Dr. Jungk).

Aldermaston

Staff at the Atomic Weapons Research Establishment were last year found to be exposed to dangerous levels of plutonium contamination. Outdated monitoring methods were in use, the number of safety staff was inadequate, only a hundred personal air samplers were in use, with 250 still on order — although these were recommended in 1972. Levels of plutonium in the air were found to be over the International Commission for Radiological Protection limit in every building, sometimes four times the 1CRP maximum. The Ministry of Defence delayed introducing chest monitoring until ten years after this was in routine use elsewhere.

A 1976 Health and Safety Executive inspector raised only one minor safety point. But if the HSE had demanded improvements the AWRE enjoys Crown Immunity from prosecution. Unfortunately, workers do not have ‘Crown Immunity’ from lung cancer.

Livermore, USA

Livermore, like Aldermaston a nuclear weapons development centre, is sited near San Francisco, right on top of an active earthquake fault. Although a large earthquake is believed imminent in California, evacuation plans are “inadequate and unrehearsed”, claime Friends of the Earth. The Nuclear Regulatory Commission closed down a nearby reactor but cannot control Livermore.

Karen Silkwood

vs. Kerr McGee Corp, Oklahoma

The case of Karen Silkwood exposed the sloppy and dangerous practices at Kerr McGee in producing plutonium fuel rods for nuclear reactors. She provided evidence that faulty rods were habitually approved, and told how dirt was simply “swept up with a broom”.

Windscale’s Wastes

Windscale, where BNFL reprocess spent fuel rods from power stations, is constipated. Many fuel rods are corroding under water. Reprocessing machinery keeps breaking down. One hundred gallons a day of radioactive sludge has been leaking from silos since 1976. The site is “nasty". No sound method has yet been found of dealing safely with nuclear wastes.

Harrisburg: “Nuclear accident raises dividend fears” (Financial Times)

Human error causes scores of incidents at American nuclear power stations. At Harrisburg a valve was left open accidentally. It later emerged that there was not one operating engineer on the site.

Repercussions were widespread. A complete population health check has started. Plants in Canada, Japan, Belgium and the UK (Dungeness) have been reported closed for checks. In the USA, all ten Babcock and Wilcox reactors have been shut down.

Many questions remain unanswered. How much radiation was released? What is the risk? How safe is ‘safe’ — the ICRP and many scientists now think zero is the only ‘safe’ level of radiation exposure. Who is telling the truth?

The near-meltdown at Harrisburg was closely described in the film The China Syndrome: Newsweek dismissed this contemptuously as based “on fantasy rather than fact”. The cover-up industry has been hard at work persuading the media to ‘cool it’. The choice for American capitalism is between growing dependence on the hazards of nuclear power with growing costs and increasing public hostility, or a return to ever-costlier dependence on Arabian oil.

The USA’s soaring trade deficit leaves little choice. Nuclear generating costs are half those of oil, less than two-thirds those of coal-fired plant. In the balance-sheet. costs weigh against profits. People do not appear on boardroom balance-sheets. The board is answerable to shareholders, not to the community. A shareholder’s concern is his dividend, not the health of humanity.

We do not claim that there could be such a thing as zero-risk technology. But technical problems are small compared with political and economic factors. Capitalism’s disaster record is no accident.

Charmian Skelton

Postscript

Our first article discussed some air crashes. “The only thing that forces a Federal Aviation Authority ruling is when enough people get killed.” The FAA has now grounded all USA DC 10s. We also pointed to the appalling fire risks of polymeric materials used in furnishings. The Woolworths fire in Manchester gives us a reminder of how lethal these cheap materials are: ten people died.

References

Oil pollution — New Scientist. 1.3.79. (Dr. Sebek is secretary to the Advisory Committee on Oil Pollution of the Sea.)
‘Betelgueuze’ The Guardian, 9.1.79; The Observer. 14.1.79; New Statesman. 1.6.79.
‘Esso Bernicia - Sullom Voe Environmental Impact Assessment Report, June 1976, cf. New Scientist.

19.4.79 and 26.4.79.
Deliberate pollution — New Scientist. 29.3.79 and 19.4.79.
Cutting Corners — New Scientist. 1.3.79 and 26.4.79.
Nuclear power — Franks Report, 1972, quoted in Nuclear Prospects by Flood and Grove-White (FoE), 1976; Zhores Medvedev in New Scientist, 17.5.79; Jungk in New Scientist, 5.4.79. Aldermaston — New Scientist, 7.12.78.
Livermore — New Scientist, 26.4.79.
Karen Silkwood Panorama, BBC1. 5.3.79.
Windscale — The Listener (from Horizon), 26.4.79 and The Listener, 7.6.79.
Harrisburg — The Nugget File 1950-1976, cf. New Scientist, 1.2.79; John Lyons, general secretary. Electrical Power Engineers — The World This Weekend, BBC Radio 4, 27.5.79; The Economist. 5.5.79; Herald Tribune, 31.5.79; Newsweek, 19.2.79 and 2.4.79; New Scientist, from 5.4.79 to 31.5.79.

Pay now, live later. (1979)

From the July 1979 issue of the Socialist Standard

My future husband mentioned in a recent conversation that he had a life assurance policy, and if he died the benefactor would get a rather large sum. Of course I don’t want him to die, but it’s been worrying me because I'll be all by myself if he goes . . . is it up to him to whom he leaves the money? . . . Should I ask him?

This recent Agony Column letter, loaded with what seems premature anxiety, is in fact a proper response to the insurance companies, who seek to sell their wares by applying a subtle mixture of comfort and neurosis.

Consider, for example, the case of the leaks of radioactivity from Windscale. The Central Electricity Generating Board, clearly an organisation which unflinchingly faces reality, admits that radioactive material can escape from nuclear power plants. But ordinary insurance policies on houses specifically exclude liability for radiation damage. So, in the event of a ‘major’ leak, the insurance industry has agreed to pay the first £5 million of any claims to people they describe as householders: the rest would be up to the government.

Which sounds very reassuring and protective, except that a major leak would probably leave very few people to make a claim, let alone capable of working out who is responsible for paying what. An apt illustration of the confidence trick which goes under the name of insurance.

From the day we are born, we are assailed by insurance companies trying to make someone pay out on a policy on us. Just let a baby emerge from its mother’s womb, and there is a salesman genially suggesting that the parents take out a policy payable on their newborn infant’s death.

Such practices are rooted in a disreputable history. The first known policy on a life was taken out on one William Gibbons in 1583; it ended with the fervent wish, “God send the said William Gibbons health and long life’’, which at least showed that the underwriters were leaving nothing to chance. As life assurance grew there was widespread speculation in lives; anyone with the money could take out a policy payable on the death of some well-known figure, presumably then praying that health and long life would not attend that said person.

Racket
This racket was ended by the Life Assurance Act of 1774 (known appropriately as the Gambling Act), which voided life policies in which the insurer did not have an interest. This remains the situation today, when there are insurances to cover accidents at home, at work, on holiday, playing sport. Others are a form of saving which give a lump sum when you have been paying over a long enough period; others can pay for a private education or, say, a weather-wrecked vacation.

All of this is expressed in the industry’s advertisements, which tell us that the only secure, contented person is one who is almost suffocating beneath insurance policies. These ads sometimes work through menace —‘Think how you’ll almost starve to death if you ever have an accident/fall ill/ set fire to your home/grow old . . .’, and sometimes through comfort - ‘Nothing terrible is going to happen to you, but if it does and you drop dcad/lose your job/need some money in a hurry, your family will be taken care of . . .' One insurance advertisement puts it neatly, unctuously, threateningly —

It’s quite likely your insurance can no longer do what you bought it to do. Namely, to give your loved ones an ample sum of money for your last expenses and unpaid debts . . . an ample sum of money which can help replace your earnings.

This all sounds very welcoming, so it comes as a nasty surprise to someone who wants to take out a policy to find that it can be rather difficult. The premiums are worked out by using a mortality table — a grisly process of fixing the likelihood of someone dying according to their age, occupation, where they live, and so on. (There is a profession which trains people to do this; when they’ve passed all their exams they are called actuaries.)

Bad risk
The insurance companies need to be reassured that they are not taking on a bad risk, the hopeful customer must submit to a medical examination, fill in forms which ask searching, intimate questions, and agree to reports on their habits, manner of living, finances. Some jobs find lesser favour with the insurance firms — butchers in slaughterhouses, for example, or grocers in Scotland and Ireland. A publican hoping to insure his life will find problems: “Most offices do not encourage proposals on the lives of publicans, and even in the most favourable circumstances may charge an extra premium.’’ (Life Assurance from Proposal to Policy, L.J. New).

At the end of this process the subject’s life will be classified. If it rates ‘good’, the company will happily welcome them into its band of premium payers; if ‘sub-standard’, they will get in only with difficulty and then probably by paying extra. It is better not to discuss the fate of those outcasts who come out of their assessment as 'uninsurable’.

In spite of all this, workers practically queue up to force money into the insurance companies’ coffers. During 1977, companies in the British Insurance Association (which excludes members of Lloyds) collected premiums for fire and accident (excluding motor) policies amounting to £1,463 million. Premiums for life insurance came to £3,510 million. Last year the industry was booming:

Guardian Royal Exchange — All Premiums £619.7 million. Pre-tax profits £83.3 million. (“An excellent year. . .”)
Sun Life — All Premiums £163.4 million. (“ . . . exceptionally high level of business.)
Royal Insurance — All Premiums £1,220.1 million. Pre-tax profits £153 million. (“A substantial rise in profits for the fourth year in succession.’’)

Compelled
Apart from the private sector of insurance, there is the massive state-organised scheme in which most workers are compelled to participate. This had its origins in this country in 1912, and now covers medical treatment, unemployment pay, social security benefits, pensions . . . all in all, it leaves the working class to go about their daily lives under a massive blanket of insurance which, they are encouraged to believe, gives them security.

The theory behind this is that workers can function under capitalism only if they exercise thrift. Pay now, live later, is the message of insurance. There is no mention that we pay during what may be called the best years of our lives, when we are healthier and more active and hope to live easier during the worst years when we are frail and liable to be sick. In Britain, men retire at 65 and women at 60, after having paid insurance of one sort or another for something like 45 years. The general life expectancy of British men is a little more than 68 years, which means that statistically they can expect to enjoy the rewards of their thrift for about four years.

This illustrates the cruel deception of the insurance business. We can take the matter further by asking why such a deception should be so attractive to millions of people? Why should we save money in fear of natural events like death? Why should the birth of a baby be something like a financial catastrophe, or illness bring added worries about money?

It does not need a very perceptive mind to realise that such problems are confined to certain people in society. Those who, in simple terms, have enough money, are not troubled about the cost of bringing up children; if the baby is a boy, the only niggling worry might be whether there is time to reserve a place for him at Eton. When someone dies, their only concern must be whether the will has been so composed as to avoid all possible death duties (that of the late Duke of Westminster was said to be a masterpiece of such subtlety). Retirement is also no bother, since this social class does not need to work for their living and in most cases demonstrate their freedom most obviously.

Thrifty
The pressure to be thfifty, to insure their lives, is really on the working class, who do not go to Eton and who do not need to write elaborate wills in order to dispose of the right to pay their HP debts. These are the people who depend on working for a wage in order to live — and, again, we do not need to be very perceptive to realise that they make up the vast majority of the world’s population.

When workers are unable to work, their wages disappear; they are barely able to survive: As we have seen, the state now makes sure that they do survive — just — which at least prevents the streets being clogged with destitute people. This is the pressure upon workers to practise thrift, to put something by for a rainy day, to organise their budget, to accept the rightness of their place on the lower rungs of the social ladder. Put in another way, this is the pressure on the subject class under capitalism to comply with that social system with its private property, its degradation and its insecurity.

Most workers view the stigma of their class uncomplainingly, even cheerfully. Most of them regard their exploitation as natural, when in reality it is inhuman and distorting. There are many symbols of working class degradation and of their blindness to it. That famous Man from the Pru, with his smooth talk and his briefcase full of Pay Now and Live — if you’re lucky — Later, is one of them.

Ivan

50 Years Ago: Why War? (1979)

The 50 Years Ago column from the July 1979 issue of the Socialist Standard

During the last war, representatives of the Liberal, Labour and Tory parties held office in a coalition and assumed the responsibility for making the machinery of warfare as efficient as possible. They now have quite sufficient contempt for the memories and intelligence of their supporters to ask them to trust them to see that there is no more war. The emptiness of their claims and promises is enhanced by recent developments in the art of warfare.

Modern states exist because of the conflict of interests in modern society. This conflict is due to the capitalist ownership of the economic resources of society. The international capitalist class is divided into competing groups endeavouring to secure control of the raw materials, trade routes and markets of the world. The most powerful of these groups use the machinery of the various states as weapons in the struggle.

The solution of the conflict lies not with an ‘amorphous’ people but with a working class organised to emancipate itself, internationally. In the place of capitalism, with its economic chaos and political strife, it will establish a social order based upon the common ownership of the means of life and their democratic control in the interests of a classless community.

(From an article, ‘The meaning of disarmament’ by E. Boden, Socialist Standard, July 1929.)

Four wheel oil crisis (1979)

From the July 1979 issue of the Socialist Standard

So is there another oil crisis or not? The government, and the motoring organisations, insist that there is not — yet. During the recent Spring bank holiday garages were shut, and those that did open were charging up to £1.50 a gallon for petrol.

So is the motor car doomed? What of alternative energy? Questions like these seem to be commonplace these days, but really, what is the situation?

Demand for petrol is rising at a time when oil companies are saying they can only meet last year’s delivery levels. With Iran going ‘off stream’ and exporting no oil at all for some months, and the oil-producing countries (OPEC) seizing their chance to increase prices by varying amounts (dependent on how ‘moderate’ their governments are), the hopes of British capitalism turn again to the North Sea.

The situation became such that a meeting of energy ministers was called in Paris in May to decide the appropriate action to be taken. This meeting only served to emphasise the problems of trying to get agreement between capitalist countries on something so vital as their access to sources of oil. Its result was a relatively ineffectual statement that a cutback of five per cent would be attempted.

America, which consumes twice as much oil as others, is a prime victim for expected cutbacks. But American workers regard their cars as almost sacrosanct. And politicians rely on motorists’ votes, just as the motor industry relies on a market. So much of the American economy relies on the motor industry that a cutback in oil consumption, at this time, is highly unlikely.

Transition to obsolescence
So where does the problem lie? The capitalist world relies on its oil supplies. Industry and the domestic scene is almost as dependent on oil as we are on the air we breathe and oil is running out! In fact, the oil-powered car was doomed at its outset and has long been living on borrowed time. The internal combustion engine was developed at a time of seemingly unlimited supplies of fuel. It is uneconomic, inefficient, and is now making the hard transition to obsolescence.

The internal combustion engine and its petroleum fuel (with additives) is a major source of modern-day pollution. Lead from exhausts, hydrochloric acid, carbon monoxide, noise, accidents, and so on, are direct sources of pollution. Add to this the indirect sources in associated industries like rubber, steel and chemicals, and some measure of the problem can be imagined. This observation also gives some indication of the capital investment involved. And here is the crux of the matter.

Alternative Fuels
So what is to happen to the motor car? It has become such a necessity to so many people that its withdrawal would cause a major upheaval in society. It has undermined the profitability of so-called public transport, with the result that services have been cut and geared to their profitability rather than usefulness. So, returning to the matter of the motor car, are there alternative fuels and propulsion units?

Hydrogen, electricity, even nuclear fuel, are suggestions. No doubt the motor industry will become even more cut-throat as the oil situation worsens. Some industries will fold up, others will emerge. New technologies will probably result, and slowly and painfully the motor industry will change to a new fuel/propulsion system or transport concept.

This is the standard day to day, year to year running of capitalism. Crisis to crisis. And it is the workers, the majority of people in this world, who suffer. As capitalism survives it will continue to cause hardship, anxiety and stress to the working class. Fuel/propulsion systems, the oil crisis, other industrial/domestic problems, will all come and go, but always as dictated by capitalism’s drive for profit. And this crazy, inefficient, polluting system will last until those workers act to abolish it. Something to think about in the traffic jam — or the queue for the petrol pump.

MJSP

Cooking the Books: Wages, prices and profits (2005)

The Cooking the Books Column from the July 2005 issue of the Socialist Standard

Mervyn King, as Governor of the Bank of England, is supposed to know all about inflation. After all, his remit, now that the Bank no longer takes direct orders from the government, is to keep inflation below 2 per cent a year.

Inflation proper, as the name suggests, is not just any rise in the general price level but a rise caused by over-issuing the currency, something which is entirely under the Bank’s control. However, the word has come to mean, even to the Bank’s Governor, any rise in the general price level whatever the cause.

Judging by his comments in a speech he gave in Bradford on 13 June, King also subscribes to the view that wage increases cause inflation. The Guardian (14 June) reported his speech under the headline “Migrants hold down inflation says governor”:

  “Mr King said that the 120,000 eastern Europeans who had arrived in Britain since 10 more countries joined the European Union in May 2004 had kept the lid on wages and prevented inflation from rising . . . ‘Without this influx to fill the skill gaps in a tight labour market it is likely that earnings would have risen at a faster rate, putting upward pressure on the costs of employers and, ultimately, inflation,’ he said.”

At least King had the honesty to make it clear that employers (whatever vote-catching politicians might say) welcome immigration of workers from other countries to help both ease skills shortages and keep wages down, but he seemed to be suggesting that, faced with a wage increase, employers can simply pass this on as increased prices.

Later on in his speech, however, he had to admit that employers are not at liberty to raise prices at will:

  “May’s figures for producer prices showed the cost of the fuel and raw materials used by manufacturers still growing strongly but the increases being largely absorbed in lower profit margins. According to the Office for National Statistics, input prices increased by 7.8% last month compared with a year ago and increased by 0.2% compared with April. In contrast, the weakness of demand and the strength of competitive pressures meant the price of goods leaving factory prices fell by 0.2% last month.”

But why, if employers couldn’t pass on increases in energy and materials costs, why could they have done so if wages had increased? The answer is that they can only increase their prices, when their costs increase, if the market will allow this. Otherwise the cost increase, including wages, has to be “absorbed in lower profit margins”.

Marx made the same point 140 years ago in a speech he gave to British Trade Unionists.  “A general rise of wages would”, he said, “result in a fall in the general rate of profit, but not affect values” (Value, Price and Profit, chapter XII).

Iraq, imperialism and the anti-war campaign (2005)

From the July 2005 issue of the Socialist Standard

The anti-war campaign agitates for withdrawal of all Australian and US troops from Iraq, but this is not a demand for no war in Iraq (although the campaign organisers seem to think that it is), it is a demand that the existing civil war be allowed to continue without the US and Australia backing one side or the other. The fact that the civil war started because of the US invasion does not change this.

It is wildly unlikely, but just possible, that the US would indeed withdraw. They have done something loosely similar in Vietnam, Somalia and Lebanon. Conceivably, it could happen in Iraq. However, Iraqi oil is an enormously rich prize, and the strategic leverage that it would grant to the US over the EU, China and Japan is an even richer prize.

The US invaded Iraq to gain control of the most cheaply accessible large oilfields in the world. It will withdraw only if the insurgency makes the military costs of controlling Iraq (which increase the effective cost of producing the oil) so great that these costs become an intolerable burden on the US capitalist class as a whole, or if popular resistance in the US and throughout their allies produces the same effect.

Almost certainly, the insurgency would have to get much, much worse or popular resistance massively increase, before that point was reached, because the US does not want the oil of Iraq only for the sake of the profits to be gained from it.

They also want it because having control over the two largest oil producers in OPEC (Saudi Arabia and Iraq) would mean that the US would have something approaching a veto over the industrial development of their three main world rivals; China, Japan and the EU.

The justifications for the invasion are entirely hypocritical, both the pre-invasion claims about the weapons of mass destruction, and the post-invasion ones based on the blood-soaked repressiveness of Saddam Hussein’s regime and the story that “We did it to bring democracy to the Iraqis”. We may begin to take Iraqi democracy and sovereignty seriously when the US government is willing to accept an order from an elected Iraqi government that US forces leave Iraq.

The Ba’athist regime was, indeed, one of the world’s worst tyrannies, but that didn’t bother the US while Iraq was a US ally, during, for example, the Iran-Iraq war. The US has no objection to blood-soaked tyrannies, provided that they are useful (meaning profitable, directly or indirectly) to the US ruling class. The chemical and biological WMD, or the facilities for making them, were originally supplied by the US and Western European governments, at a time when there were certainly terrorist outfits headquartered in Baghdad; Abu Nidal’s, for one. So, the possibility that Iraq would pass WMD to terrorists (a possibility that the US and other Western governments helped create), only became a threat when the US needed an excuse for an invasion.  Andrew Wilkie, who was in a position to know, developed the real point:

  “Superimposed over specifics like oil, however, was a much bigger issue – the US’s determination to safeguard and enhance its global ideological, economic and military hegemony. This is the big one: the grand strategy of the US to reign supreme permanently, as espoused by the so-called ‘neo-conservatives’ and articulated bluntly in September 2002 in The National Security Strategy of the United States of America. In this quest, Iraq was as much a demonstration as a consequence – an almost theatrical performance against a country consequent enough for people to notice, for reasons alarming enough for people to care, on terms lopsided enough to guarantee a crushing demonstration of US military muscle. Or at least that was the idea.”

However, even if the US did withdraw, then almost certainly, Iraq would not be left to its own blood-letting; there would very probably be other invasions, Turkey and Iran being the obvious candidates, Syria and Saudi Arabia other possibilities.

Even if, through some miracle, there was no further foreign interference in Iraq after a US withdrawal, there is no reason for confidence that the civil war would stop anytime soon or even that it would be less bloody in the absence of US and Australian troops. One of the bloodiest civil wars of the twentieth century occurred only a little over ten years ago, without any obvious interference from the West, except for a French intervention to protect the perpetrators of the genocide; we refer, of course, to Rwanda.

That civil war fed directly into what must be the worst war in the world; in the Congo there have been an estimated 3 million dead and it’s still going on. Almost certainly, the riches that can be looted from Iraq, and the strategic advantage that can be gained from that looting, exceed those that can be had by looting from the Congo; which is one reason why the West is not directly involved in the Congo. (Although all the states surrounding Congo, plus Zimbabwe, are) It is also why Iraq will not be left alone; any state that can see an opportunity to interfere, will.

No one, least of all anti-war demonstrators in Australia, should pretend that any of these possibilities are in any way in the interests of the people of Iraq.

Virtually all the left-wing agitation about Australian foreign policy, and US imperial policy, is based on the underlying assumption (or rather, fantasy), that the natural order of capitalism is a world of independent, sovereign, mutually-respectful nations. What is thought to be necessary to achieve this is that the US stop acting as an imperialist thug, and that Australia stop helping them do it. Nice idea, but capitalism just ain’t like that.

It’s a world system of interdependent, not a worldwide collection of independent ones.

If the US declines as an imperialist power, others will take their place, China being an obvious candidate and, given the Chinese government’s record of racist, genocidal colonialism in Tibet, they may even make the US look moderate by comparison. An obvious target for the first major Chinese imperialist adventure is the group of oil-and-natural-gas-rich states between the Chinese Western border and the Caspian Sea.

Capitalist states (of which China is one) are not moral entities, and their ruling classes do not react to attempts at moral persuasion. They perpetually seek profit and react to what could loosely be called profit-and-loss calculations. If profit requires that they dominate other countries (to the extent that they can), so be it.

The consent of the ruled (us!) is essential to the continued functioning of capitalism (in both its state-capitalist and private-capitalist forms). Our consent, or our resistance, is part of our rulers’ profit-and-loss estimates.

We can make this particular imperialist adventure too difficult or too expensive for the rulers of Australia, which is, after all, a junior partner of US capitalism.

The people of the US and the rest of the world, by huge efforts, could make the Iraq occupation too difficult or too expensive, even for the dominant capitalist power. But as long as we, all of us, consent to the capitalist system as a whole, in other words, so long as we resist only this particular imperialist adventure, then there will be more imperialist adventures, by the US and others, more bloodshed, and more terrorist atrocities.

There will also be more poverty, ecological devastation, and more lives spent on mostly-meaningless work and totally meaningless consumerism.

All that the protest organisers can offer, fundamentally, is the prospect of more problems within capitalism, including more wars caused by imperialist adventures, and by rulers using “ethnic tensions” to grab territory, etc., and more protests against those problems and wars. And so on, and on, and on.

There’s got to be a better way, and there is; abolish capitalism. That’s what we are working for.

The only solution is to work for a world system based on common ownership, and moneyless, free access to wealth. Only then can we have genuinely democratic economies, and therefore genuinely democratic societies. We call this socialism. (which has nothing to do with the deeply repressive and now-failed variant of capitalism invented in the former Soviet Union, and adapted in China, Vietnam, etc.)

The precondition for this society is a majority who understand and want socialism, and understand and reject capitalism. Nothing less than this can give us socialism. Leaders certainly can’t.

Huge efforts are required. Let’s make sure that they are directed towards getting off the treadmill that is capitalism, not towards trying to turn it into something it can’t be.

World Socialist Party of Australia leaflet.

Open letter to some anti-capitalists (2005)

From the July 2005 issue of the Socialist Standard

MAKEYOURMARK are part of the Dissent! Network of resistance against the G8.  The group adheres to the Hallmarks of Peoples’ Global Action which call for a rejection of capitalism through civil disobedience and non-violent direct action.

Dear Friends,

I attended your meeting in Carlisle last night.  It was good that so many people had turned out.  I have sympathy with your organisation’s objectives, but a few comments about your strategy.

I thought much of your analysis of capitalism as a system that can only put profit before people was correct, as well as the relation of capitalism to the issues of AIDS, water availability and poverty in Africa and South America.  However, I have problems with the idea of nations as victims of capitalism.  Less developed nations are the losers in competition against large industrialised nations and the majority of people in those countries suffer because of it, but the state in either type of nation represents the dominant economic interests.  Indigenous capitalists in the less developed nations are fighting for themselves, for domination of local resources against multinational corporations – both of which wish to continue the exploitation of people and natural resources.  The corollary is that you are supporting small nations against big nations, small capitalists against big capitalists, Robert Mugabe or King Mswati III against George Bush or Silvio Berlusconi for example – and in that I fail to see a rejection of capitalism. 

You made an excellent point in your presentation about the man-made laws of capitalism being assumed to be natural laws and therefore unchangeable.  I believe that this point also applies to the nation and inseparably the state which are also man-made constructs that have arisen to their present form with the need to manage the conflicting interests within capitalism.  In short, the state is part of capitalism not separate from it.  Which leads to another point in your presentation where you considered that state-owned industries are worth defending.  The experience of state-run industries in this country and elsewhere is no utopia, in fact in some cases it has been a disaster.  State-owned industries mostly don’t have much difference in character to private industries, they consist of capital put forward by the state which wage or salary workers operate and the goods or services they produce are either sold or rationed out by bureaucrats.  Neither for the consumer, as goods or services are still allocated according to ability-to-pay or by handout, or the producer, still embroiled in the labour-capital conflict, is the state ownership of capital a rejection of capitalism.

In one of your slides you asked whether the G8 should be reformed or abolished, I don’t think either will ‘make poverty history’ or allow people to come before profit, nor will ‘dropping the debt’ or rearranging trade rules.  Capitalism existed before the G8 and it would exist without the G8.  You’ve recognised that asking for reforms won’t work, but I don’t really see how making your own reforms through civil disobedience and direct action will change the fundamental social relations of capitalism.  It is capitalism – the system of minority ownership of the means of producing and distributing goods and services and allocation according to ability to pay – that causes poverty and war, breeds racism and alienation, and hampers social organisation.  If you were to abolish the G8 then another organisation could take its place or they could meet in secret – back to square one.  I feel what is important is not challenging aspects of capitalism and trying to change them, but challenging the system as whole.  

One of the slogans you displayed in the meeting room was about a small number of committed people making a difference.  However well intentioned, I don’t believe a minority of society can run society in the interests of the majority.  The goal of those who reject capitalism should be to break the consensus that supports capitalism and organize politically – democratically – to a replace private ownership of the means of producing goods and services with common ownership, production for profit with production for need and ‘can’t pay, can’t have’ with free access – that is to replace capitalism with socialism.   I think that a society run for the majority must be made by the majority and the shortest distance between capitalism and an alternative society is a straight line.  Let’s campaign for the abolition of capitalism and not misdirect our energies in trying to humanise capitalism, which can only – as you recognise – put profit before people.

I’m hoping to get to Edinburgh for the G8 protest but not to beg for, or batter, a nicer kind of capitalism out of the G8 leaders. I’ll be trying to get socialist ideas across to all those there who recognise that the world is in a mess and are willing to do something about it.  I hope I’ll see you there, maybe I’ll give you a leaflet or a copy of the Socialist Standard.

Yours for world socialism

Piers Hobson

50 Years Ago: Is it Foolish? (2005)

The 50 Years Ago column from the July 2005 issue of the Socialist Standard

The following appeared in the Stratford Express (3 June 1955):-

“HOW FOOLISH”

“It seems so simple to put a cross against the name of a chosen candidate – so simple that it is almost impossible to go wrong. Yet in these local divisions scores of people wasted their votes by spoiling papers in one of a variety of ways. In one of the West Ham divisions, for instance, there were 40 spoilt papers. Some people had added their name and address; some had scrawled the letters S.P.G.B. (Socialist Party of Great Britain) on the paper, while others had voted for each of the candidates and a few had put the paper in the ballot box completely blank. An indication of their state of mind, perhaps!”

It is, of course, the reference to the S.P.G.B. that concerns us, and it has to be taken in conjunction with the statement that it is “so simple to put a cross against the name of a chosen candidate.” But suppose you don’t choose either candidate. Suppose you are one of the million and a half former Labour voters who could discern so little difference between the parties that it wasn’t worthwhile voting.

Or, again, suppose you are a Socialist and do not want Capitalism at all, not Labour-administered Capitalism or Tory-administered Capitalism? What should you do then? Is it foolish to show on the ballot paper what you do want? It has any rate had the merit that it caught the attention of the Stratford Express.

Of course Socialists would prefer to have their own Socialist candidates to vote for, but the Labour, Tory and Liberal parties, by agreement on the £150 deposit, made it very difficult for a small organisation to enter the field.

(From The Socialist Standard, July 1955)