"This worlds ok - you're the problem."

Weekly Bulletin of The Socialist Party of Great Britain (93)

Dear Friends,

Welcome to the 93rd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1484 friends!

Recent blogs:

Capitalism's reserve army of labour

The health of wage slaves

Guess whoís not getting that rose garden?

Quote for the week:

"This boundless greed after riches, this passionate chase after exchange-value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser." Marx, Capital, Volume I, Chapter 4 (1867)

Continuing luck with your MySpace adventures!

Robert and Piers
Socialist Party of Great Britain

Socialism: an open source society (2009)

From the April 2009 issue of the Socialist Standard

A socialist describes his personal experience of open source software - and its socialist implications.

A little over a year ago I started to use something in my daily life “that'll never work” because “it's human nature, mate”; “No such thing as something for nothing, a free lunch”; “People don't work for pleasure, you know, they only work because they have to or to make money”. Yet here I am, totally chuffed with this thing that is so opposed to much of the preconceived notion of “Human Nature” and the ways of this wicked world that it can't possibly exist let alone bring some pretty unbridled pleasure to this 65 year-old anorak.

Any idea what I'm talking about?

Here're some more clues. Thousands of people enthusiastically cooperate on thousands of collaborative, inter-related projects that bring new “products to market” whilst constantly upgrading and improving existing core “products”. Many of those people work for little or no financial gain, indeed, some have worked to the deficit of their own financial situations. They don't just collaborate in “the office”, they collaborate across the borders of nation states, religious divides and the apartheid walls of economics and race; Russian with Chechen, Iranian with American, Palestinian with Israeli . . , they do it without seeking permission from priest or politician. They do it to fulfill a passion for the skill and knowledge they bring to the work they do and a shared ideal of bringing the very best in computer operating systems and software to the ordinary people of this world . . . free!

I'm talking about Linux based Open Source and Ubuntu in particular. Ubuntu is an ancient African word that means “humanity to others”.

Based on personal experience, there isn't a better or more “socialist” way to do your computing. You can download the whole caboodle if you have the wherewithal free of charge or do as I did and order an installation disc which is also free. And free really means free, Ubuntu is shipped to anywhere in the world post free . . . you're free, and even encouraged, to make copies and give them away . . . as long as they're free!

Installation is seamless and painless; upgrading is seamless and painless. All of the basic programmes you could need and a few more beside are pre-installed, all are Open Source and free (of course) and because they are created by enthusiasts they are fully featured, look attractive and work.

So, now you're up and running and you want a few extra trinkets to handle all those quirky things many of us like to do with our computers. Things like doctoring perfectly normal snap-shots so that they look like something from the crazed world of Dali or personalising our “desktops” (something I'm convinced goes back to school desks, penknives and being summoned forward for institutionalised ritual humiliation). With Ubuntu there's no digging out those CDs you've saved for years from computer mags to see if there are any freebies that'll maybe come close to meeting your particular fantasies . . , you just click on “Add/Remove Programs” (these things always have US spelling) and browse through what seems like thousands of programmes in various categories. Each has been created by an individual or team that loves computing and has poured their passion into making each offering the best it can be. Better still, from the average user's perspective, everything is, yes, you guessed it, free.

I suppose I'm a bit like a new convert or a former smoker, on the one hand full of enthusiasm for the new “reality” and on the other filled with scorn for what had gone before. The enthusiasm is not without foundation; Ubuntu claims to “work out of the box” and it does just that – perfectly. There are no annoying screens telling you that you have to register this or that, no registration keys to be pasted in, no time limitations before you have to pay up and no intrusive demands for personal information or email addresses so you can be deluged with stuff you don't need or want. Under Ubuntu my computer “talks” to all of my cameras and cards without recourse to specialised programmes, something it never did under Windows and my “Photo Shop” type programme is as beautiful on the eye and as functional as the one that ships with Mac. Programmes install and uninstall without leaving behind digital detritus to slow or crash the system and such is the make up of Ubuntu that it is simply not open to outside attacks by virus, root-kit and much else in the way that Windows is. It's like taking a cool shower on a hot day . . . so refreshing! How can something so good be free? I mean, it's not the way of the world, is it? It's not human nature to do something for nothing, is it? Without “market forces” quality goes down the drain and mediocrity becomes the norm, doesn't it?

Look at Microsoft; based on size of usage they must be the world's standard. I've used their products for years in many different incarnations. They've built their fortune off my back . . . have you checked lately what one of their products costs? And not just them. I've lost count of the number of programmes I've paid for to try and improve or protect their bloated, worm-holed operating system from all the nasties out there in cyber-space only to dump them a few months or years down the road. Or worse still have them destroy my set-up and data that I should have backed-up but had put off yet again! Been there? Hey! That's the way it is in this techno-corner of the capitalist world, let the buyer beware; you pays your money and takes your choice. Not any more, comrades. There really is a better way out there and it's called Open Source, it has superior “products” and an ethos that we can each embrace. Computing for human beings.

Is this beginning to sound like a promo for a socialist computing Utopia? Or is it a preview of how the world really ought to be? Much of Open Source is at the real cutting edge of technical development; a huge percentage of the servers around the world, machines that run those multi-national companies and the Internet run on Linux based software. They pay a lot of money for that privilege, money that keeps Open Source afloat and enables we plebs and peons to receive our free CDs mailed free of charge, to freely download free applications and freely make use of this wonderful working example of human co-operation. In fact, every individual user of Ubuntu is encouraged to join the community and contribute in any way they can, from translations to critique to ideas to programing skills; use what you need and contribute what you can . . . where have we heard that before? Next time someone throws “human nature” in your face or tells you that socialism will never work offer up Open Source as proof that human beings are better co-operators and contributors than many give them credit for.

Alan Fenn

Cooking The Books: Saved by the slump? (2009)

The Cooking The Books column from the April 2009 issue of the Socialist Standard

When the last report of the Intergovernmental Panel on Climate Change (IPCC) was published two years ago, we pointed out that its assumption of a “very rapid economic growth” between now and 2010, on which the more realistic of their assumptions was based, was unrealistic:

“Ironically, the only thing that may save the world from the problems that a 2.8 percent rise [in average global temperature] would cause is that the economic growth and technological innovation will not be as rapid as the IPCC report assumes.( . . . ) The assumption that there will be no world economic slump or prolonged period of stagnation between now and 2100 is quite unrealistic. Given capitalism, something like this is bound to happen during this period, so that the use of fossil fuels won’t be as rapid as this IPCC’s scenario assumes.” (Socialist Standard, March 2007)

We must confess that we didn’t expect to be proved right so soon.

There is, however, another side to this. While the current interruption of growth is reducing energy consumption it has also made coal relatively cheaper compared to its non-CO2-emitting alternatives, nuclear and the renewables (wind, tide, solar, etc). Not so long ago, burning coal was less profitable than burning natural gas (which gives off less CO2) – the non-renewables don’t get a look in here – but now the situation has changed:

“The margin earned from burning coal, according to Société Générale, is about €15 per megawatt hour, compared with €7 from natural gas. ( . . .) At Deutsche Bank, Mark Lewis, the head of carbon research, fears that the price may have fallen to a level at which some utilities may be tempted to invest in conventional coal-fired power stations” (London Times, 18 February).

The slump is also wreaking havoc with the EU’s “carbon trading” scheme, which was touted as the market way to reduce CO2 emissions. Under it power stations are given an allowance of how much CO2 they can emit without being penalised. If they succeed in reducing their emissions to below this level they can sell the unused part of their allowance to other firms that want to exceed theirs. These allowances are in effect licences to pollute and a market in them was supposed to develop, and did tentatively.

What is happening now is that, with the reduction of production and so of energy consumption, power stations can easily reduce their emissions below their allowance and so have been trying to sell them. As most of them are in the same position, supply is exceeding demand and the price of these licences to pollute has collapsed. According to the Times, “in July a tonne of carbon sold for €35, but today it fetches less than €9”. Which means, of course, that it’s now cheaper to pollute.

That’s the way the market works. As the current depression is confirming, the market is far from being, as taught in textbooks and proclaimed by businessmen and politicians, the most efficient way of allocating resources. The magic of the market is a myth. The madness of the market is nearer the truth.

It’s election time again (2009)

The Socialist Party's Election Address for the forthcoming European Elections, which was cut and pasted from the SPGB election blog, Vaux Populi

It’s election time again
Every few years groups of professional politicians compete for your vote to win themselves a comfortable position, this time in the European Parliament. All of the other parties and candidates offer only minor changes to the present system. That is why whichever candidate or party wins there is no significant change to the way things are. Promises are made and broken, targets are set and not reached, statistics are selected and spun.

All politicians assume that capitalism is the only game in town, although they may criticise features of its unacceptable face, such as greedy bankers, or the worst of its excesses, such as unwinnable wars. They defend a society in which we, the majority of the population, must sell our capacity to work to the tiny handful who own most of the wealth. They defend a society in which jobs are offered only if there is a profit to be made.

Real socialism
The Socialist Party urges a truly democratic society in which people take all the decisions that affect them. This means a society without rich and poor, without owners and workers, without governments and governed, a society without leaders and led.

In such a society people would cooperate to use all the world’s natural and industrial resources in their own interests. They would free production from the artificial restraint of profit and establish a system of society in which each person has free access to the benefits of civilisation. Socialist society would consequently mean the end of buying, selling and exchange, an end to borders and frontiers, an end to organised violence and coercion, waste, want and war.

What you can do
You can vote for candidates who will work within the capitalist system and help keep it going. Or you can use your vote to show you want to overturn it and end the problems it causes once and for all.

When enough of us join together, determined to end inequality and deprivation, we can transform elections into a means of doing away with a society of minority rule in favour of a society of real democracy and social equality.

If you agree with the idea of a society of common and democratic ownership where no one is left behind and things are produced because they are needed, and not to make a profit for some capitalist corporation, and are prepared to join with us to achieve this then vote for the SOCIALIST PARTY list.

Weekly Bulletin of The Socialist Party of Great Britain (92)

Dear Friends,
Welcome to the 92nd of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1480 friends!

Recent blogs:

What is to be done?

Never say oil

Financial wizards or great pretenders?

Quote for the week:

The grabbing hands

Grab all they can
All for themselves, after all

It's a competitive world

Everything counts in large amounts

Depeche Mode, Everything Counts (1983)

Continuing luck with your MySpace adventures!
Robert and Piers
Socialist Party of Great Britain

Capitalism’s reserve army of labour (2009)

From the April 2009 issue of the Socialist Standard

When Ramsay MacDonald’s second Labour government came to power in 1929, unemployment had been at a steady 10 percent of the working population for several years, around 1 million. Within a year, the effect of the Great Depression was to send unemployment rocketing to 2.5 million, causing the collapse of that second Labour attempt to reform capitalism.

MacDonald held steadfastly to classical economic views. He frowned on the dole as a cause of indolence and unemployment, and believed that equilibrium in the jobs market could be found. That is, full employment will come if barriers to wages finding their “natural” level are removed. He was, thus, content to agree to the May Report which included cutting the dole to those two and a half million, in order to balance the government’s budget. That was the move that caused his government to collapse, and for MacDonald to go down in Labour Party history as the great traitor, as he jumped ship to form the National Government.

Manifestly, this did not work, and unemployment remained steadfastly high. Dole or low dole, workers were simply unable to find jobs because the capitalists of the time held steadfastly to their principle of “no profit, no employment”. Their mistake had been to cling to the myth, exploded by Karl Marx more than 60 years before, that full employment is the normal state of capitalism, and unemployment the exception.

Entirely to the contrary, Marx demonstrated that not only was a pool of unemployed workers the norm under capitalism, it was in fact intrinsic and essential to the workings of the wages system for there to be such a pool. He referred to it was the “industrial reserve army”. For Marx, the relative size of this reserve had a direct effect on the level of wages – as it increased, wages shrank, and vice versa. The upward limit of wages was the point at which they began to unduly impact on profitability. High wages would lead employers to either discover labour-saving processes, or simply lay off staff and cut back operations.

This indicates how the industrial reserve army works both ways. Economic historians attribute the rise of the United States as an economic and industrial power house to the relative scarcity of skilled labour in the nineteenth century (exacerbated by the fact that workers could strike out to find frontier land, rather than accept unemployment). This compelled American capitalists to improve the intensive exploitation of their capital in order to be able to effectively use the labour resources to hand. That is, that capital has an incentive in not letting the reserve army get too large.

Another feature of Marx’ theory was that the unemployment is not a function of population. That is, it is not simply growth in the number of mouths to feed that causes unemployment, but that it is a wholly determined variable based on the state of the investment of capital. As more capital is brought into play, so too is more labour. Unemployment is a relative phenomena based simply on the ratio of employees to those seeking work. This can clearly be seen in UK statistics. In 1900 the population was around 38 million, and unemployment stood at around 5 percent, at the end of the Twentieth Century the population was close to 60 million, and unemployment was still only around 5 percent, its changes do not track population growth..

People can be taken out of this reserve army. For example, in the 1960’s Harold Wilson’s Labour government had to seriously debate whether the country could afford to raise the school leaving age to 16, drawing all those young workers out of the labour force at a time of nearly full employment. Nowadays, under the current Labour administration, they have a policy of keeping at least half of school leavers in full time education until they are 21. Many commentators have noted that incapacity benefit has become prevalent in areas of large stagnant unemployment over the years. That, and the dole, allow some sections of the workforce to become economically inactive, and thus no longer contributing to the labour pool and the reserve army.

Interestingly, the latest figures from the Office for National Statistics in the UK suggests that as times become more straightened, these economically inactive people are entering the labour market. At the same time, underemployment has grown. People are working fewer hours (and thus making less money) in order to retain some sort of employment. Although they are not unemployed, they are part of the reserve army, in as much as many of them would, if they could, convert to full time work if it was available.

The latest figures, for January, show that unemployment in Britain has now passed the 2 million mark. Although in absolute terms those numbers are similar to the level of unemployment that destroyed MacDonald, because the total and working populations have increased it is not yet as drastic. Those figures, though, only represent a return to the levels of the late 1990’s. Indeed, in the Thatcher years, figures of nearly three and a half million were seen (and that resulted in collective bargaining by riot in some particularly hard hit areas). It should also be noted, though, that national figures vary regionally, and poor areas, like inner city London, the North East and Glasgow, say, already had higher than national average unemployment, and are likely to be more swiftly affected by the current rises than elseplace.

One new aspect of the current round of unemployment is the role of EU migrant labour. As a highly mobile workforce with little by way of invested roots, it may well soak up some of the costs while leaving the resident workforce of the UK less hard hit, although the figures above seem to indicate, so far, otherwise. Indeed, British citizens are emigrating less, and this off-sets any trend. In the days of the Empire, one way of regulating the reserve army of labour was emigration, and it seems the EU fulfils a similar role today. That said, unemployment is unevan across the EU, and is itself growing.

Pik Smeet

Weekly Bulletin of The Socialist Party of Great Britain (91)

Dear Friends,

Welcome to the 91st of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1480 friends!

Recent blogs:

All You Need is Money?

Council tax or free access?

The Tolpuddle Martyrs

Quote for the week:

Man is the only animal that deals in that atrocity of atrocities, War. He is the only one that gathers his brethren about him and goes forth in cold blood and calm pulse to exterminate his kind. He is the only animal that for sordid wages will march out ... and help to slaughter strangers of his own species who have done him no harm and with whom he has no quarrel ... and in the intervals between campaigns he washes the blood off his hands and works for "the universal brotherhood of man" - with his mouth. Mark Twain

Continuing luck with your MySpace adventures!

Robert and Piers
Socialist Party of Great Britain

Socialist Party debate: 'Should capitalism have a future?'

PUBLIC DEBATE
Thursday 23 April, 7.30

SHOULD CAPITALISM HAVE A FUTURE?

Yes: John Meadowcroft (Author of 'The Ethics of the Market')
No: Richard Headicar (Socialist Party)

Brockway Room, Conway Hall,
Red Lion Square, London WC1

Northern Ireland: a return to violence? (2009)

From the April 2009 issue of the Socialist Standard

Two British soldiers shot dead at Masserene Barracks in Northern Ireland, and a policeman shot dead in Craigavon, by dissident Republicans who want to re-draw the present political frontiers. Instead of dividing the six counties from the rest of Ireland, the frontier (they demand) should be moved and instead divide Ireland from the somewhat larger island to the east, containing the capitalist entity known as Great Britain. But socialists do not want to re-draw any frontiers: they want to abolish frontiers. Frontiers are entirely artificial boundaries, whether by land or sea. All a frontier does is to mark out one bit of the Earth’s surface where one ruling class has power from the next bit of the Earth’s surface where another ruling class has power. Since socialism would put an end to the ruling class of every state, frontiers would cease to have any meaning, and would therefore cease to exist.

No violence, no death or injury, will bring socialism any closer. Socialism will be brought about when the great majority of the world’s people want it to be brought about. We want to change people’s ideas. Violence will not make people into Socialists. Banging a cudgel down on someone’s head is not going to alter the ideas inside that head, at least in any worthwhile way. Rational discussion will finally make Socialists. We believe that by considered argument we can show how co-operation and mutual assistance will achieve what we all want to achieve – a peaceful, harmonious, and contented existence. Violence we leave to others.

People who support a capitalist state, people who support a capitalist party, are led remorselessly into supporting violence. But it is interesting how often politicians and journalists who steadfastly support violence when it comes from what they think is “their own” side, nevertheless quickly explode with anger when it comes from someone else. One columnist on the Times, David Aaronovitch, champions Israel against the Palestinians; he therefore has had to write torrents of words trying to show that the deaths of well over a thousand men women and children in Gaza, killed by Israeli bullets and bombs, are excusable, because it is only in retaliation for the Israeli civilians killed the rockets fired by Palestinian militias. He also supported the invasion of Iraq by the Americans and the British. So he has had to write more floods of words defending the deaths of some hundreds of thousands of Iraqis, as well as many British and American soldiers, because all that was merely a by-product of getting rid of Saddam Hussein, a brutal dictator who was hostile to the Americans. (Let’s not mention all those brutal dictators friendly to the Americans, who the Americans have propped up.) It’s hard to say how many Iraqis have died, of course. As the American general who led the attack on Iraq said about Iraqi casualties, “We don’t do body counts” (though American casualties were reported with great care). But the lowest figure that the most dedicated warmonger has come up with is 100,000. Other people have said the number of violent deaths since the invasion is 600,000 – some contend that the true figure is a million. And that is not counting all the other hundreds of thousands of Iraqi civilians who have been injured, but have survived, all the maimed and the handicapped, all those who will never walk again, all those who will never see again. The boy whose whole family was killed, and both of whose arms were blown off by a bomb, was still alive, so did not himself add to the total of deaths. Never mind! If you support one capitalist state against the other capitalist states, supporting violence is what you have to do: and that is what this columnist has had to do.

After writing reams of comment justifying the deaths, the injuries, and the destruction in Gaza and in Iraq, and no doubt having felt very uncomfortable having been forced, by his political beliefs, to do it, he has leapt with avidity on the deaths of the two British soldiers in Northern Ireland. (He wrote his column before the death of the Craigavon policeman.) Now, at last, he obviously feels, he can be on the side of the angels (Times, 10 March). The two deaths are “terrorism”, and a return to “the ‘armed struggle’ ” which is only “a euphemism for strolling up behind someone and blasting their brains out all over their children”. He poured scorn on the idea that any “grievance” that “springs from real social and political conditions” can ever justify such “an act of terror”. The suggestion that the shooting might be revenge for the recent re-introduction into Northern Ireland of “army intelligence” operators, or perhaps “spies” as some might call them, led to an eruption of anger on the columnist’s part. “Rubbish. Really, absolute rubbish.” This action merely shows that “violent republicanism is back in a new, potent, death-dealing guise”, a “return to killing in Ulster”. This is merely “the first atrocity in a desired new cycle of attacks, arrests, martyrdoms . . . and crying children”. Those supporting the killing are merely “unattractive men with bald heads and pallid skin”, who “imagine themselves to be Wolfe Tone or James Connolly reborn”, or else “middle-aged matrons, brought up in the purple of Republicanism, but now with roots showing through the dye”. Any supposed “grievance comes second. The desire to hate and kill comes first, and then grubs around in the shit for its excuse.” Strange to think that in 1798 Wolfe Tone, and in 1916 James Connolly, would have been the target for similar attacks by writers in the respectable newspapers, though perhaps this writer has broken new ground with his scatological language, and his fevered imaginings about the supposed physical unattractiveness of his opponents.

The shootings at Masserene Barracks and at Craigavon were indefensible, the deaths were indefensible, the motive (the redrawing of capitalism’s frontiers) was indefensible. But how a man can write many pages justifying the deaths of half a million or more, and then work himself up into a rage of furious indignation over the deaths of two, defies any rational explanation. People who oppose all violence, all killing, are at least being consistent: but people who support capitalism, who support this or that capitalist state, will find that they are defending violence, and defending killing, whether they want to or not. So they cannot help sounding hypocritical when they then jump over the fence and try to denounce violence.

Alwyn Edgar

Editorial: What is socialism? (2009)

Editorial from the April 2009 issue of the Socialist Standard

This may come as a surprise to regular readers of the Socialist Standard, but apparently “we are all socialists now”. A claim made (incorrectly) on various occasions during the last century has resurfaced.

On both sides of the Atlantic, western-style capitalism has supposedly succumbed to a socialism of sorts. UK Prime Minister Gordon Brown is a socialist again according to some in the media, and not only the new US President Obama, but also some of the final regulatory activities of the Bush administration have been deemed in some quarters as “socialist”.

The Socialist Standard and the World Socialist Movement have however decided not to shut up shop in triumph at this speedy success. This use of the term socialism to describe a few mild amendments to capitalism is of course just lazy thinking and sloppy journalism. It is also partially the legacy of a century of supposed revolutionaries and radicals – from V I Lenin to K Livingstone – who have viewed state control of productive resources as somehow a part of a genuine revolutionary project, and who have in the process served to confuse the case for socialism as a genuine alternative to capitalism.

The “socialism” being referred to relates then, to nothing more than the fact that governments in North America and Europe have bailed out the banks and are in the process of doing the same for the car industry and various other struggling sectors of the economy.

This attempt to position socialism as a mere version of capitalism – rather than a fundamental alternative to it – defuses it. This is why we strongly argue that these terms should be used accurately. World socialists argue – and have done consistently for over 100 years – that nationalisation of sectors of the economy (e.g. manufacturing, mining, oil and gas extraction, power distribution, transport), or “socialisation” as its termed in the US, is a measure used to differing degrees by every capitalist economy in the world.

Indeed, far from somehow being in some sort of contradiction with capitalism, government ownership is in reality an absolutely essential aspect of capitalism in all regions around the world. Some parts of the economy are simply too central, too important to all the other parts of the economy, for their survival to be left to chance or the vagaries of the market.

For example, during the First World War, many pubs located close to munitions factories were nationalised. This wasn’t an example of early government concern with the binge-drinking menace that is currently preoccupying politicians, but was undertaken in order to enable the watering-down of the beer and other means of controlling consumption by workers in these factories, thereby minimising the risks of accidents with serious consequences for this critical industry in time of war. Left to its own devices, the market system would bite off its own (invisible) hand and happily unleash drunk workers into explosives factories.

For world socialists, socialism means a moneyless, wageless, classless and stateless society. Socialism is not just a “nice idea”, nor a change of name. It doesn’t refer to tinkering on the margins of the profit motive, but – in contrast to the phoney ideological debate over “nationalisation” – represents a genuine alternative to capitalism.

Weekly Bulletin of The Socialist Party of Great Britain (90)

Dear Friends,

Welcome to the 90th of our weekly bulletins to keep you informed of changes at Socialist Party of Great Britain @ MySpace.

We now have 1472 friends!

Recent blogs:

Boom, boom, Brown

The death of ideas?

Threats and threats

Quote for the week:

"Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal - that there is no human relation between master and slave." Leo Tolstoy, What shall We Do Then? 1886

Continuing luck with your MySpace adventures!

Robert and Piers
Socialist Party of Great Britain

Guess who’s not getting that rose garden??? (2009)

From the World Socialist Party of the United States website

You would have to search long and hard to find someone who was better at sticking it to the working class than The Economist. It has perfected one of the most truly remarkable posturing acts in the annals of propaganda. When times are good, its contempt for working-class aspirations borders on the domineering, despite the fact that the working class not only runs capitalism from top to bottom but also compliantly does its bit to legitimate the system during elections.

When times are bad, however, The Economist sings a different tune. It trades its contempt in for what might be called “regrettable realism,” a syrupy pietism that sighs for the misfortunes of the poor working class while giving no quarter in the chronic warfare that goes on between labor and capital:

[America’s] flexible labour market has shed 4.4m[illion] jobs since the downturn began in December 2007, including more than 600,000 in each of the past three months … An American who loses his job today has less of a chance of finding another one than at any time since records began half a century ago. That is especially worrying when the finances of many households have come to depend on two full incomes … In the emerging world … the World Bank expects some 53m people to fall below the level of extreme poverty this year. (The Economist, “The Jobs Crisis,” March 14-20, 2009)

Asserting that “unemployment rates in many European countries are below America’s … because their more rigid labour markets adjust more slowly to falling demand,” the writer goes on to concede that capital’s taking such a large share of the profits for so many years has ultimately provoked a swing of the pendulum back in the direction of energetic intervention. Apparently this was not a question of “flexible” capital markets.

The dismal solution to the “jobs crisis”? Give the capitalist class greater freedom to hire and fire — flexible labor markets. Playing god was never so much fun:

That will mean abolishing job-subsidy programmes, taking away protected workers’ privileges and making it easier for businesses to restructure by laying people off. Countries such as Japan, with two-tier workforces in which an army of temporary workers with few protections toil alongside mollycoddled folk with many, will need to narrow that disparity by making the latter easier to fire.

Well, they never promised us a rose garden … or (ahem) did they? No matter. It’s all about destroying jobs, the more easily to create new ones, you see. When you think that anyone from this rat’s nest of élitists might have been in our shoes but for an accident of birth (or fluke of the marketplace), you begin to realize how deeply ingrained is their sense of innate superiority. It just goes with the turf. Anyone who gets up there simply goes mad with power.

The writer signs off with the robot equivalent of a salt tear:

However well governments design their policies, unemployment is going to rise sharply, for some time. At best it will blight millions of lives for years.The politicians’ task is to make sure the misery is not measured in decades.

Not with a bang but a whimper
What are we to make of this Depression-proof recession, then? After the Century of Liberalism promised us the world in return for our free time, our compliance and our votes (liberté, fraternité, égalité), the Corporate Millennium rises up to remind us that capital is not after all bound by its own promises. It can take away what it gives us, with no questions asked (or, in all too many cases, not even allowed). It will continue to undermine the best intentions of reformers, who, although they can ride the profit-tiger, can never tame it. The Great Captains will deliberate in their Central Committee; perhaps they will, like Leonid Brezhnev, thank us for the Big Harvest. But keep your hands off their stash! For they are no longer in such a generous mood.

In the context of the century to come, with its threat of unprecedented natural disasters (which capital is by its very nature reluctant to pay for), this is much worse than cold comfort. It is an implied death warrant for the unlucky suckers who just happen to be in the wrong place when a panicky mob of profit-makers goes berserk. For in a global economy under continuous assault from Mother Nature and her gang of elemental forces, those who drop into the shadows will be at high risk of also dropping out of sight.

Capital has no pity for its human progenitors. It has gotten us to cut ourselves off from our own source of real abundance and creature-feeling, the human community, and when in due course it has had its falling out with us, it will shoot humanity in the back as soon as look at it. The virtues of being down on bended knee no longer seem obvious. Getting back to the Garden never looked so good.

Let us rise.

Roel

Inflation Monster (2009)

Book Review from the March 2009 issue of the Socialist Standard

The Origin of Financial Crises. George Cooper. (2008. Harriman House)

Even though this book isn’t written by a Marxist but by someone taking much of his inspiration from Keynes, it is for the most part well worth reading as an explanation of asset price bubbles. It is also, at root, a good attack on ‘efficient markets hypothesis’ – the view that prices accurately reflect all known information at any one point in time and that markets are efficient allocators of resources.

Few conventional writers on economics come to the same conclusions as Marx without mentioning him or otherwise being aware of him, though Cooper seemingly manages it on two counts: his analysis of the causes of asset price bubbles, and his analysis of the cause of inflation and the role it plays within capitalism.

While he uses language more loosely sometimes than he might, talking freely about ‘credit creation’ when it is clear that what he means by this is the constant recycling of deposits into loans by the banking system rather than the creation of credit out of thin air, his explanation of asset price bubbles is sound. Essentially he takes the view that the process of the circulation of capital in the market economy is aided by the extension of credit and that this inherently gives rise to the possibility of financial dislocation and crisis (as did Marx, even if Marx argued that this possibility only became a reality when a crisis of overproduction for particular markets took place in the real economy).

Though it is something of a generalisation, Cooper contends that the tendency of markets for commodities to respond to rising prices through falling demand is not matched by the behaviour of markets for financial assets, which have a tendency to generate increased demand when prices rise (being typically intended for investment not consumption). This process can act in reverse, because when prices for commodities fall demand then generally increases, but when asset prices fall, demand for them falls too, as in the current financial crisis.

This is partly because much of the credit extended to purchase the assets has been granted by the banks against underlying collateral that is losing its nominal value. In this sense, there is no supposedly efficient pricing mechanism to reallocate resources – merely self-feeding panic as falling asset prices lead to enforced asset sales, and then further price declines caused by this lead to yet more asset sales as a consequence: ‘the process of collateralised lending generates one of the key destabilising forces in financial markets. Borrowers whose assets have already fallen in value may not have additional collateral to hand, and the bank’s decision to sell their collateral, into what is by definition a falling market, may simply exacerbate the borrowers’ and the bank’s losses.’ (p.100). This is essentially what has been happening during the credit crunch.

His analysis of what he calls the ‘inflation monster’ also largely hits the mark. While he does not overtly use a labour theory of value, he traces the origins of money through the establishment of gold as a recognised standard and store of value, and then considers the development of gold depository certificates and paper money as a consequence of this. He argues that with the expansion and contraction of money and credit during trade cycles, prices rise in booms and then fall in slumps but there can be no permanent tendency towards inflation while money is convertible into gold.

When convertibility into gold is suspended then the inflation monster can (and has been) unleashed by governments and central bankers: ‘The new currency regime, without a gold exchange rate, is known as fiat money. The movement from a currency backed by gold to one with no fixed gold price represented a momentous shift in our financial architecture . . . Governments had now awarded themselves the right to create their own money without any corresponding liability; since there was no longer a promise to convert the printed money into gold, there was no longer a liability associated with printing that money’ (p.69). In other words, governments could inject excess purchasing power into the system, in the form of an over-issue of inconvertible paper currency, that would only serve to push up prices.

Cooper identifies the collapse of the Bretton Woods international trading system in 1971 when the dollar was no longer pegged to gold as the definitive moment here, though in truth full convertibility had been suspended long before this in the US and all other advanced economies (in Britain it was as early as 1931 and by the time of the collapse of Bretton Woods in 1971 only around 1 per cent of the currency issue in the UK had even a nominal gold backing).

He argues that an excess issue of inconvertible paper currency can be directly used to finance government expenditure, as he thinks is about to happen now. He also makes the point – as have we – that there is a sense that governments prefer rising prices to falling prices partly on the grounds that it can increase their net tax-take, and perhaps because industrial unrest is more likely when workers have to resist falling wages than when they have what are generally rising nominal (if not real) wages under inflationary conditions. This partly presupposes that governments recognise a causal link between an excess note issue and rising prices, which is a moot point – though he also includes an interesting quote from Ben Bernanke, before he became chairman of the US Federal Reserve, which illustrates that there is certainly recognition of a linkage of sorts (even if they might view it as just one cause of inflation alongside others).

The tentative recommendations that Cooper makes later in the book for dealing with capitalism’s financial crises need not detain us too long, though it is interesting to note that the inability of mainstream economics to adequately account for the current crisis is again leading others towards the type of analysis that has all too rarely been seen, in recent decades, outside the pages of the Socialist Standard.

DAP

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