Will Hutton: Back to the Future, part 3/3 (2015)

From the Socialism or Your Money Back blog

Part 1 here and Part 2 here.

Hutton’s prescription for the global economy is a Keynesian one with a ‘credit creationist’ twist, attempting to iron out the boom and bust inherent in capitalist production.  J.M. Keynes (writing in the slump of the 1930s) saw the instability of capitalist production, its tendency to boom and bust, as due to the fact that investment tends to stall because not every seller in a market becomes a buyer as there is a tendency for businesses to hoard a portion of profits rather than to reinvest it all in new production, which creates a deficit in market demand.  For Keynes, the state needed to step in order to provide the demand that was missing through direct investment and through redistributive taxation. 

To overcome the crises such as that of 2008 and the current crisis in China and other ‘emerging market economies’, Hutton urges international banking reform and demand stimulation in western economies.  He argues that global banking needs to be regulated by a ‘reinvigorated IMF’, reconfigured so as not to be dominated by western political right (those marauding Anglo-Saxons) in order to ensure ‘proper surveillance of global finance’.  This would involve restrictions on capital flows between countries and ensure that central banks regulate banks reserves to prevent banks ‘creating money’ by lending multiples of what they hold as fractional reserves.  This assumes that global banking has not arisen hand in glove with global trade and that banks can lend what they don’t have (which they can’t). 

 In order to divert ‘excess credit’ from flooding ‘emerging market economies’ Hutton also calls for western governments to ‘launch massive economic stimuli, centred on infrastructure’ and ‘new smart monetary policies that allow negative interest rates.’  This is Keynesian economics designed to stimulate demand by direct government investment and kick-starting investment by making it expensive for banks not to lend.  The problem with the first suggestion is that Quantitative Easing inflated the value of asset prices (stock-market prices) without stimulating inflation (because the new money created – by the Bank of England which can create money - did not enter general circulation as notes and coins).  The ‘economic stimuli’ mentioned by Hutton (what has been called ‘People’s QE’ by Jeremy Corbyn), on the other hand, would involve the creation of new money that would enter circulation as notes and money and therefore run the risk of creating high inflation (a rapid rise in the general price level).  The problem with the second proposal of negative interest rates (which is happening in several European countries) is that in the absence of the opportunities for profitable investment (i.e., in a recession) banks may not lend more but simply hoard, accentuating the fall in investment.

Keynesian economists often point to the post World War 2 period as evidence of the success of their policies of state intervention in the economy to increase demand.  However, sustained post war growth was due to the recovery of the global economy following the slump of the 1930s and reconstruction following the World War 2.  When this growth stalled in the 1970s Keynesian attempts to stimulate demand created double digit inflation.  This and high rates of taxation tended to stall investment even further and state borrowing came with conditions to reduce the policies that necessitated the borrowing.  These problems were faced by all governments following Keynesian strategies once the post war boom was over.  It was not Thatcher but Dennis Healey who started the process of spending cuts in the late 1970s.  In France Mitterand was elected in 1981 on a platform of increasing consumption through state intervention.  The higher taxation, government borrowing and inflation led not to stimulation of the economy but to lower growth - by 1983 the Mitterand government had taken the ‘austerity turn’ in an attempt to restore favourable conditions for profitable investment.  Bang up to date the failure of the Syriza government in Greece to reverse austerity in Greece by renegotiating the terms of its borrowing failed ignominiously, the government backing down rather than face even more uncertain prospects outside of the EU.  Austerity is not being imposed by the political right as Hutton would have it.  It is being enforced by the need to create conditions favourable to profitable investment.  Trying to go back to a time before Thatcher and Reagan to get to a non-austerity future is going back in time to face the same problems, pursuing policies that will require the same policy reversals enacted by Healey and Mitterand.  Hutton’s Keynesian and currency proposals to calm global economic turbulence could not be enacted (say by a Corbyn Labour government) without worsening the prospects for productive investment, requiring a return to the very policies blamed by the left for causing current economic stagnation.   A real end to austerity requires the success of the socialist campaign to abolish capitalism itself not repeating the disillusion of past attempts to save capitalism from itself.

CSK

Growing Old, Growing Old (2015)

From the November 2015 issue of the Socialist Standard

We look at the way the older generation fare under capitalism, with poverty dominating the lives of so many.

A recent report by the Intergenerational Foundation pointed out how badly young people have fared over the last five years or so (Guardian Online, 11 July). The ‘living wage’ in Osborne’s budget, for instance, will not apply to those under 25, and people under 21 will no longer automatically be entitled to housing benefit. The cost of getting a university degree is sky-rocketing, and the relatively small number of houses being built is a crucial reason why so many young people have little chance of buying their own homes. At the same time, people are living longer and the number of those over 65 is increasing, so the younger generation are supposedly being forced to pay for the pensions and other benefits of the elderly.

Setting one group of workers against another is a standard capitalist tactic to divert attention away from the real clash of interest in society, that between the tiny class of people who own the means of production and distribution and the rest of us. If workers’ anger and resentment can be channelled towards immigrants or welfare scroungers or strikers, they are far less likely to hold the social system responsible for their problems. We are not saying that it is explicitly intended this way, but it fits into this whole paradigm to claim that the elderly are doing very nicely, while the young are in many cases mired in poverty with few prospects.

For the elderly suffer greatly under capitalism too. While there are retired workers who live reasonably on a workplace pension (having paid into it for thirty-odd years, mind), there are more who struggle to get by on the state pension and experience loneliness, isolation and poor health. The state currently pays a maximum of just £115.95 per week before tax, though there will be changes from April next year.

Back in 2002 a report from the Joseph Rowntree Foundation found that redundancy or early retirement could have a devastating influence on how people fared in old age. This applied particularly to men who worked for fewer than five years in their fifties and who worked in jobs such as clerical or sales staff. Many of these were among the lowest-paid and also their employment was the most precarious. Things will hardly have changed for the better since then.

According to Age UK, just over a million people have a care need – perhaps as basic as assistance getting out of bed – but receive no help from the state or other agencies. Government funding for local councils’ adult care budgets has been cut by a third since 2005–06, and further cuts are in the pipeline. These ‘savings’ may result in increased pressure on the NHS, as more elderly people go to hospital for emergency care. The government has now announced that it will not after all introduce rules to cap care costs, which means many elderly people will have to sell their homes in order to pay for care.

Towards the end of last year, Age UK reported that 1.6 million pensioners are living below the poverty line; many are entitled to extra state benefits but do not claim, whether through ignorance or pride. Bus passes and free medical prescriptions do not make up for this kind of suffering. In 2011 they produced a report Living on a low income in later life, which noted, for instance, that many people ‘went without holidays, stopped going out, did not replace household goods, and some took drastic action to reduce their heating and energy costs.’

One appalling indication of the extent of poverty among the elderly and their families is the rise in pauper’s funerals, or public health funerals, to give them their official and less unsettling name (Guardian Online, 20 October 2014). The state funeral grant is means-tested and is just £700; with the average funeral costing around £4,000, many people cannot afford that or have to go to pay-day lenders to pay for a loved one’s funeral. It’s all very well saying that people can take out insurance, but frankly people don’t, as this is hardly a priority for someone who is struggling to make ends meet anyway. Around one in seven have trouble meeting the costs of a funeral, and a pauper’s funeral is the last resort for those who have no family or whose relatives are too poor.

The background is that all this care for the elderly costs the capitalist class, via the state, money. There were fewer than seven million pensioners in 1951, over ten million in 1992 and over twelve million now, with around six per cent of GDP paid out as state pensions. People are simply living longer, thus drawing their pensions for longer. One person in six is over sixty-five, and there are more pensioners than children under sixteen. One response has been to increase the state pension age: the 1995 Pensions Act meant that the pension age for women would increase gradually from sixty to (if you were born in March 1953) sixty-three. More recent acts speeded up this increase, and the traditional pension age of sixty-five will also be scrapped, so that anyone born after 6 March 1961 will have to be sixty-seven before they qualify for a state pension. So the wage slavery of employment will last longer in future (provided you can get a job at all). And even receiving a pension may not mean the end of working: in 2011, 1.4 million people above the pension age were still working, primarily on grounds of poverty (up from 750,000 in 1993).

Moreover, increases to non-state pensions have since 2010 been based on the Consumer Price Index (CPI), not the Retail Price Index (RPI). These both measure the ups and downs of prices but, because of subtleties in the way the two indices are calculated, CPI is generally lower than RPI. As a result, pensioners are likely to lose out substantially over a period of several years. And final-salary pension schemes are becoming rarer, so the basis for calculating what a works pension will be worth is being reduced.

So it seems that, while the younger generation struggle with benefits, pay, education and housing, the elderly encounter comparable problems, of low incomes, poor health, choosing between eating and heating, isolation and loneliness. Traditional societies valued older people as a store of knowledge and experience, but under capitalism the elderly are seen as little more than unpaid child-minders for grandkids, and as a burden to be looked after as cheaply as possible. 

Paul Bennett

Will Hutton: Back to the Future, part 2/3 (2015)

From the Socialism or Your Money Back blog

Part 1 here

Hutton’s view is that lax regulation around the cash reserves that banks are required by law to hold (the fractional reserve) and the abandonment of other controls on capital flows between countries (previously part of the responsibilities of central banks) are responsible for an excess of credit being ‘created’ in the global economy.  Hutton argues that the ‘emergence of a global banking system’ means that ‘central banks are much less able to monitor and control what is going on’.  Because ‘few countries now limit capital flows’ the result, says Hutton, is that ‘cash generated out of nothing can be lent in countries where the economic prospects look superficially good.’  This leads to a ‘false boom’:

‘Property prices rise. Companies and households grow overconfident about their prospects and borrow freely… all seems well until something – a collapse in property or commodity prices – unravels the whole process.  The money floods out as quickly as it flooded in, leaving bust banks and governments desperately picking up the pieces.’ 

Hutton argues that the current problems in China follow on from the financially induced crisis in 2008 and that crises in other ‘emerging market economies’ are a knock on of the same process of ‘sky-high commodity prices… fuelled by wild lending’ that create ‘super-high but illusory growth rates.’

But the crash of 2008 was not a ‘false boom’ caused by finance but a particularly far-reaching crisis in the history of the business cycle that is inherent in capitalist production.   This cycle has played out numerous times in the past couple of centuries in capitalist economies, a process of capitalist production that Marx described as moving ‘through periodical cycles. It moves through a state of quiescence, growing animation, prosperity, overtrade, crisis and stagnation.’  In an expanding economy banks see a plethora of opportunities to lend at relatively low risk.  This lending greases the wheels of the productive economy which continues to expand at an even faster rate.  At some point in the process of expansion a sector of the economy overproduces relative to the demand.  Production slows in this sector, questions are asked and glances are exchanged.  Production slowing in one sector knocks on to another and then another, doubts begin to grow and confidence is dented.  Before long what seemed like a never-ending process of expansion turns into economic contraction as panic sets in and investment slows or stops.  This is what happened in 2008 as house building in the US outstripped demand leading to a collapse in prices.  This knocked on to the global financial system because the risks of default for US mortgages were bundled up in financial institutions around the world, a contagion that caused panic to ripple around financial markets and confidence to collapse.  Lending contracted, investment stalled.  It wasn’t caused by banks and credit but the global nature of banking did allow the results of overproduction to spread widely and rapidly (just as global banking facilitates investment and economic expansion widely and rapidly). 

The cause of the crisis then is not banks or even overproduction as such but production as it is carried on in capitalism.  Goods are produced not for direct use but for exchange, for sale on the market, rather than being consciously planned in the light of social need.  Inevitably, at some point, more goods will be produced than can be sold at a profitable price causing a dislocation in the expansion of production, the consequences of which (depending on its magnitude and inter-connections) may remain only local or may ripple out to affect regional, national or even the global economy. Frederick Engels referred to this process of production in capitalism as the ‘anarchy of social production’.   The situation is not caused by banks ‘creating credit’ but rather the opposite, an increase in investment in the productive economy causes a rise in lending, which facilitates and accelerates this growth by lending to apparently relatively risk-free borrowers.  Conversely the restriction of credit does not cause an economic downturn but is a reflection of it as borrowing for investment declines and lending is relatively more risky.  Credit accentuates the business cycle by inflating bubbles in times of growth and deepening downturns by restricting credit but it does not cause it. 

So too, the Chinese financial downturn is a tale many times told of rapid growth followed by a crisis and a recession (establishing the conditions for renewed growth).  In an attempt to reverse a slow-down in the productive economy the Chinese government cut interest rates in an effort to stimulate the economy.  Borrowing increased and the Chinese stock-market boomed for a while.  All that happened was that the gap between the reality of a slowing productive economy and stock-market prices grew larger.  At some point the two had to come together again and so they have. Banks did not cause the crisis by creating credit they only delayed and accentuated it.  More regulation of banks will not solve the problem of the cycle of boom and bust inherent in capitalist production.  Banking regulations of the sort that Hutton want aim to reinstate, it is argued, prevented crises in the past and will iron out the instability caused by the psychological flaws of bankers who ‘create money’.  It did not work before and it attributes to banking a power of the economy that it does not have.  Like many on the left Hutton wants to return to a time before Keynesian interventionism was ousted by free market ideologues.  Socialists argue that capitalism, not the form that it takes, that is the problem.  The future lies not in going back in time to a world of more regulated banking but forward to a world where the anarchy of production (indirect social production where goods and services are for sale and realised only when exchanged for money) is replaced by consciously planned production for meeting human needs (directly social production where goods and services are consumed without exchange) and where the conditions of production that give rise to banks will have been abolished.

CSK

Cooking the Books: Moore on Marx (2015)

The Cooking the Books Column from the November 2015 issue of the Socialist Standard

‘Marx did have an insight about the disproportionate power of the ownership of capital. The owner of capital decides where the money goes, whereas the people who sell only their labour lack that power. This makes it harder for society to be shaped by their interests.’ So wrote Charles Moore, Thatcher’s biographer and former editor of the Daily Telegraph in the World Street Journal on 25 September.

He had already assured his readers that ‘no one should worry that I have become a late convert to Marxism’ and went on: ‘In recent years, that disproportion has reached destructive levels, so if we don’t want to be a Marxist society, we need to put it right.’

As a fan of Thatcher his way of putting it right is to create a so-called ‘property-owning democracy’ where ‘people who sell only their labour’ come to own their home and some stocks and shares. Quite a few are already in this position, especially in the US with regard to stocks and shares.  But the assumption that this gives them any more power to decide where the money goes or to shape society in their interest is preposterous.

In fact being burdened with a loan to buy a house over decades weakens a person’s bargaining power vis-à-vis their employer as they can’t afford to lose money by striking or their job through being militant as they need to keep their mortgage payments up or risk losing their house. If ‘people who sell only their labour’ have a steady income from stocks and shares, as up to a third are said to in the US, this means that their employers don’t have to pay them so much to keep fit to work.  So what’s the gain there? It’s just swings and roundabouts.

Moore needn’t have worried about being taken for a convert to Marxism as elsewhere in his article he displayed an ignorance of what Marx thought. According to him, Marx ‘did not understand markets or respect political institutions, and he thought liberty was a sham.’

On the contrary, Marx well understood how the market works. In fact Moore himself recognised this earlier in his article when he commended three passages which he later revealed were from the Communist Manifesto:

‘Where might one find a useful analysis of what is happening today in the market democracies of the West? How about this: “The executive committee of the modern State is but a committee for managing the common affairs of the bourgeoisie.” Or this: “Modern bourgeois society … is like the sorcerer, who is no longer able to control the nether world which he has called up by his spells.” Or this: “The productive forces no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions … [and] they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property.”’

And why should Marx have respected the political institutions of capitalist society if they were there to manage the common affairs of the capitalist class? And isn’t ‘Liberty’ a sham if the ‘owners of capital’ exercise ‘disproportionate power’? Not that Marx was against the limited, political democracy that can exist under capitalism. He was all for it but regarded it not as amounting to freedom for ‘people who sell only their labour’ but only as an instrument to this, or as he put it, a ‘means of emancipation.’

Sting in the Tail: Fine in theory (1994)

The Sting in the Tail column from the February 1994 issue of the Socialist Standard

Fine in theory

What lay behind the desire of all those governments to bring about the recent GATT agreement? One of the main reasons was, we were told, "the need to stimulate competition".

In Australia a new football boot, "Blades", has been designed. It has diagonal rubber blades on the soles and heals instead of studs and the makers claim it will improve grip and reduce injuries. Eighty percent of Australian rugby league players now use it.

Glad cries all round then? No, in fact every obstacle is being put in the way of this competitor by the multinational football boot makers:

"A club sponsored by one took out a Supreme Court injunction to try to stop the Nine Network's "A Current Affair" programme showing its results of boot trials. It failed. In another incident subcontractors of a rival company stopped Blades' production by removing equipment from the factory. Power struggle and patent intrigues lie ahead." (Guardian, 11 December)

The fiercest opposition is what always faces those who try to put rhetoric about competition into practice.

Patching them up

An advert in the national press by the charity St. Christopher's Fellowship (31 December) announced that: "Christmas is over! In a few hours she'll be back on the streets." It told of a young woman who "is counting the hours until her temporary Christmas-time refuge is closed down".

She was not alone. Two thousand single homeless people in London hit the streets again after Christmas as temporary shelters closed. A week of being fed, given medical check-ups and even haircuts only highlighted for some the misery of the other 51 weeks and suicide attempts were reported.

And what did all this achieve? Crisis, one of the major charities, claimed:

"most of the homeless people who passed through its temporary hostels this Christmas emerged refreshed and better able to cope with life on the streets."

Could anything better demonstrate the utter futility of charity than this?

Segregated again

Remember the tremendous effort and sacrifice that went into the civil rights campaign to desegregate schools in the USA? Eventually schools were legally integrated.

But now a study by Harvard University reveals that 66 percent of black and 74 percent of Hispanic youngsters attend schools which have few white classmates. The prediction is that within 20 years half of US state schools will be predominantly black or Hispanic.

The Harvard report's director concluded:

"The civil rights impulse of the 1960s is dead in the water and the ship is floating back towards the shoals of racial segregation." (Guardian, 15 December)

What has happened is that poverty-stricken blacks and Hispanics have moved to the towns and cities and become concentrated in areas where those whites who can afford to have moved out.

So population drift has replaced overt racism as the cause of segregated schools: that may have changed, but the poverty factor remains constant and that is something the reformists can do nothing about.

The truth hurts

What politicians will do just to "get in" is exceeded only by what they will do to stay in. An example of this is the suppression of information which will be politically embarrassing.

The Black Report was commissioned in 1977 to inquire into inequalities in people's health. When it was ready in 1980 the Tory government did not publish it. Instead, 200 duplicated copies of the typescript were made available on August bank holiday in the hope that it would never be noticed.

The reason is clear:

"The report laid out a mass of evidence pointing out that social class and economic deprivation had a profound effect on health, with the inequalities of childhood persisting so that ill-health was worse, and death rates higher, at every stage of life the poorer the person was." (Guardian, 17 December)

London's yo-yo

London share prices have reached record levels - the FTSE share index rose by 22 percent in 1993 and another big rise is forecast for 1994.

What is causing this? Current low interest and inflation rates will encourage business to think they can plan ahead with more certainty. This, plus a feeling that the recession is now over, has pushed shares up, but there are other less rational reasons for the rise.

For instance, London prices usually follow prices on Wall Street and Far East markets and these have been rising (Tokyo is the exception). Then there is the fact that many investors buy on a rising market simply because they are afraid of being left out of what they think must be a good thing.

Of course, the last budget's tax rises may reduce consumer spending and the recession on the continent, which is British capitalism's biggest customer, may slow down the recovery and send the FTSE tumbling again.

The last emperor

Mao's centenary gave the media the chance to disclose some awful truths about the old tyrant. For example, on one TV programme his megalomania was on display. He saw himself as the greatest of China's Emperors and boasted how he had more power and killed more "enemies" than any previous Emperor.

And he was completely ignorant of even basic economics. His "Great Leap Forward" in the 1950s had an officially estimated 100 million peasants taken out of the fields to produce steel, of which they knew nothing, and resulted in tens of millions dying in the inevitable famine. Incidentally, Mao the "Marxist" had read very little of Marx's writings.

What, we wonder, were those British Maoists, past and present, thinking as they watched or read about the monstrous crimes committed by the man they so idolized?

That's them that is

"In this edition of 'History Today' Professor Lewis and I will be discussing the question 'Is there really a working class in contemporary capitalism?' Professor Lewis, what is your view?"

"See a boring old fart who thinks history is all about kings, queens, military commanders, politicians and other useless parasites?"

"I suppose there may be such a person."

"That's you, that is."

"Perhaps, Professor Lewis, but who are the working class today?"

"See those millions of people all over the world who must work for a wage or salary in order to live, who produce all of society's wealth and fight and die in wars which have nothing to do with them?"

"I have heard that there are such persons."

"Well that's THEM, THAT IS!"

(Acknowledgements to Newman and Baddiel)

Will Hutton: Back to the Future, part 1/3 (2015)

From the Socialism or Your Money Back blog

It was with a sense of irony that I read Will Hutton in the Comments and Debates section in a copy of Guardian Weekly (16.10.15).  It was the previous week’s edition and the irony was that I was reading it on Back to the Future day (21/10/15), which summed up the economic views that I was reading.  Hutton wants to go back not to 1985 but to any date before the rise of what Hutton calls the ‘Anglo-Saxon political right’  in the US and UK which put Keynesianism out in the cold (usually identified by the left with the bogeymen of Thatcher in Britain and Reagan in the US).  Now I thought that the political reach of Anglo-Saxons had ended a thousand years ago but I will leave that particular question mark to one side.  Hutton argues that the roots of the 2008 financial crisis and current crises in China and other ‘emerging market economies’ lie in a ‘world financial system that has gone rogue’.  At the heart of this argument is Hutton’s claim that the power of banking to ‘create money out of nothing has been taken to a whole new level.’ 

This is an up to date version of a theory that has been doing the rounds since the early 1930s, that of fractional reserve banking; the argument that banks by holding on to a fraction of its deposits (to ensure that withdrawals can be met) can create multiples of credit, that they can essentially ‘create money out of nothing’.  The crude version of this theory assumes that multiples of credit can be created from an initial deposit of £1000 with a fractional reserve of, for example, 10%, £900 could be lent (paid out as a cheque or transfer and deposited with the bank) expanding the initial deposit in one act of lending to £1900 of bank deposits.  If a loan of £900 was carried out 10 times the end result of the initial £1000 deposit would be £9000 in loans and £1000 in reserve, in 10 quick steps an initial deposit of £1000 has been turned into £10,000 – money has apparently been ‘created’ as credit from the scribble of a pen or the tapping of a keyboard.  However, this view of banking does not hold theoretically or empirically. Two quick examples (there are more) will show why the theory doesn’t hold.  Firstly, this model assumes that there will not be a cash withdrawal on the initial deposit during the whole series of transactions, a false assumption but necessary to prevent the theory’s instant collapse.  Secondly, the appearance of the creation of credit is created by standard double-entry book-keeping where when a bank lends, for example, £1000 this is recorded initially as a deposit of £1000 and a loan of £1000, apparently ‘creating’ £1000 (until the loan is withdrawn). Empirically we can also demonstrate that banks in fact do not operate in the way described.  If they did they would be able to create immense amounts of credit from relatively small deposits (pushing interest rates to very low levels).  This does not happen and banks back their lending not just from deposits but from money they themselves have borrowed – something that had increased to risky levels before the 2008 crisis (and interest rates do not fall to very low levels).

Hutton appears to hold to a less crude version of ‘credit creationism’ as he says that ‘the system depends on the truth that not all depositors will want their money back simultaneously… some of the cash banks lend in one month [will] be redeposited by borrowers the following month: a part of this cash can be re-lent, again, in a third month’ and so on.  This is just saying that some of the money that is taken out as loans will find its way back into the banking system as deposits, which can then be used to make further loans.  Unlike the crude version of ‘credit creationism’ Hutton acknowledges that money is constantly being deposited and withdrawn but this still does not mean that banks create money in the way that Hutton suggests.  According to the economist Paul Samuelson (who developed a more sophisticated version of credit creationism): ‘As every banker knows, he cannot invest money that he does not have; and money that he invests in buying a security or making a loan soon leaves his bank.’  That is, loans can only be made from deposited or borrowed money that is currently held - a fractional reserve in an individual bank cannot create multiples of credit.  Samuelson’s theory (and Hutton’s) is that, while multiples of credit cannot be created from a fractional reserve held by an individual bank, an initial deposit of £1000 (again with a fractional reserve of 10%) will eventually be multiplied to £10,000 across the whole banking system by constituting in circulation the basis of deposits in banks.  This theory describes in a simplified way the actual process of circulation of money and how a loan will, in circulation, be the basis of further loans but it does not demonstrate that money is ‘created’ as credit. 

Rather than by ‘creating money’ a bank takes money from real deposits and pays an amount of interest on it.  It then lends this money at a higher rate of interest.  Hence banks compete for customers deposits.  Why bother if it is so easy to turn a deposit into multiples of money out of thin air?  Rather, banks provide credit, they advance money at interest.  Marx held to this view that a bank ‘makes its profit in general by borrowing at lower rates than those at which it lends.’  Banking has an intermediary function, it does not create money but takes it from savers (from cash deposited and from money lent between banks) to lend to borrowers at interest.  By facilitating the transfer of money from where it is accumulated to where it is required in the process of production banks take a cut of the profits of the productive economy as interest. 

Hutton is attributing to banking a power it does not have, holding it responsible for turbulence in global finance that results in economic dislocation – the financial tail appears to be wagging the dog of the productive economy.  The reality is the reverse, turbulence in global finance reflects dislocation in the productive economy…

                                                To be continued…

For more detailed articles on fractional reserve credit creationism see:

http://www.worldsocialism.org/spgb/socialist-standard/2010s/2012/no-1298-october-2012/fractional-reserve-banking-refuted

http://www.worldsocialism.org/spgb/socialist-standard/2010s/2012/no-1298-october-2012/editorial-crunch-time-credit-creationists

CSK

Do the Gods Ever Change Their Mind? (2015)

The Halo Halo! column from the November 2015 issue of the Socialist Standard

Does a God who is all-knowing and all-wise ever need to change his mind?

Believers who pray for God to bring peace to the Middle East, for example, obviously assume he can be persuaded to take some course of action they fear he may not otherwise be planning. Or if they pray to him to cure Mrs Jones of her lumbago, how likely is he to say ‘OK, I’ve seen fit to let her to suffer for ten years, but as you asked nicely, I’ll cure her?’

Don’t they ever suspect that God isn’t there, or isn’t listening, or that maybe he just doesn’t give a sod about what’s going on down here?

Following the double disaster at the Islamic hajj this year, when 109 people were killed by a collapsing crane and then over 700 more in a stampede which, apparently, he could have prevented – if he’d wanted to – there was the usual hand-wringing and prayers for him to halt the carnage and have mercy on the victims. And let’s face it  – even without being all-knowing he should have seen this coming. Stampedes at the Hajj have caused many hundreds of deaths in recent years, often at the stoning of the devil ritual (and obviously, the devil is going to be a bit hacked off about that).

In Christianity, too, the logic is no better. Their all-knowing, all-merciful god is quite happy to allow the odd flood, earthquake or some other disaster to occur without lifting a finger to prevent it, but they then fall to their knees in prayer expecting him to suddenly feel remorse at what he, in his infinite wisdom and mercy has allowed to happen. And in spite of this indifference to human suffering there’s nothing like a mass shooting or some other disaster to get the believers on their knees.

‘My prayers are with everyone in Oregon. May the peace of God, which transcends all understanding, guard your hearts’ bleated one politician following the October mass shooting in America. And the Presidential candidates lined up, offering their thoughts and advice to God, and anyone else who was listening, as if they had some influence over the invisible man in the sky.

Part of Barack Obama’s statement was, though, perhaps unintentionally, more to the point: ‘Each time we see one of these mass shootings, our thoughts and our prayers are not enough. It does nothing to prevent this carnage being inflicted’.

Exactly. So what is the point? If we assume for a moment that a god who ‘transcends all understanding’ does exist and knows, more or less, what he is doing, isn’t it a bit optimistic to ask him to change his mind halfway through some divine act of carnage in his plans for the world which, of course, he is carrying out for our benefit anyway?

Religion must be the biggest fraud ever to have been carried out to keep the masses docile and in their place. As the French revolutionary Camille Desmoulins put it – ‘The Great only appear to us to be great because we are on our knees. Let us rise’.

NW

Editorial: Climate Change and Capitalism (2015)

Editorial from the November 2015 issue of the Socialist Standard

Since the industrial revolution there has been a significant rise in the average temperature of the Earth's atmosphere and its oceans, and scientists generally agree that the main contributor has been the burning of fossil fuels that generates CO₂ and other greenhouse gases. Not everyone is convinced that this is the case, and there are many who make it their business to deny it. Nevertheless, world governments and other global institutions have taken the issue of climate change sufficiently seriously to come together and attempt to find ways of tackling it.

The major milestones, so far, have been the establishment of the United Nations Framework Convention on Climate Change (UNFCCC) at the Rio Earth Summit in June 1992, a non-binding agreement to stabilise the levels of greenhouse gas emissions in the atmosphere, and the signing of the Kyoto protocol in June 1997 which committed the developed countries to binding targets in reducing greenhouse gas emissions by a 5.2 percent reduction from 1990 emission levels by the year 2010.

Yet there is little to show for these efforts. According to Naomi Klein in her book This Changes Everything: Capitalism versus the Climate, preliminary data shows that in 2013, global carbon dioxide emissions were 61 percent higher than in 1990. The United States government, looking after its oil and coal interests, refused to ratify the Kyoto Protocol. Canada, one of the original signatories, withdrew from the Kyoto Protocol in 2011, primarily to avoid possible financial penalties due to its failure to meet its agreed emission targets, mainly because of the extraction processes of its lucrative tar sands industry in Alberta. A clause within the Kyoto Protocol allows countries to meet their emission targets by purchasing quotas from other countries.

The main obstacle to reducing global warming is capitalism, where production is geared to profit, and production costs have to be kept to a minimum. Measures to curb emissions may increase the latter and place firms at a competitive disadvantage. Also, in many cases, it is more cost effective to import materials from abroad, which requires the burning of fossil fuel in transporting them. Nation states and trading blocs also seek to compete with each other on the best possible terms, and in some cases endeavour to protect their profitable extractive industries. Naomi Klein also noted that in the same period that these international summits were taking place, moves were made to expand world trade through the establishment of global bodies, such as the North American Free Trade Association (NAFTA) and the World Trade Organisation (WTO), which would encourage higher levels of fossil fuel consumption.

The 2015 Paris Climate Conference is due to take place this December and will attempt to set up a new binding agreement to control global warming. Judging from the record of previous summits, the prospects do not look too promising. Attempts to tackle climate change in the context of a world market economy will, at best, achieve only limited results. In socialism, where production can be rationally organised according to human need, we'll have the best chance of successfully curtailing global warming.

Pathfinders: Fission confusion (2011)

The Pathfinders Column from the July 2011 issue of the Socialist Standard

The political fall-out continues from the Fukushima plant as radiation levels continue to be revised upwards and the problems continue to cascade, with each solution itself presenting a new problem. Neighbouring states glare balefully as the Japanese now try to justify dumping 110,000 tonnes of  radioactive water into the local fishpond. Meanwhile governments across the world hold Nuclear Safety Reviews in a fever to satisfy worried populations that they are not being as careless over nukes as they usually are over everything else.

The UK’s Chief Nuclear Inspector, Dr Mike Weightman, has been hurriedly asked to do a review of all nuclear facilities, and has delivered his interim report (Link). The bemused Dr Weightman sees ‘no reason for curtailing the operation of nuclear power plants or other nuclear facilities in the UK’, no doubt because category 9 earthquakes and giant tsunamis tend not to happen in Britain very often.

However this hasn’t stopped the Nuclear Free Local Authorities pressure group, together with the Greens, from trying to whip up the anti-nuke fever with a briefing seminar at Westminster on the future of nuclear new build (http://www.nuclearpolicy.info).

Now the EU is even talking about a nuclear-free Europe, after Germany and Switzerland have announced the winding down of their entire nuclear programme and Italy has just overwhelmingly voted against nuclear energy in a landslide referendum (BBC Online, 14 June).

Almost alone in Europe, France continues to be independent and pro-nuke, possibly because of its history of being invaded by other Europeans, and Britain too remains resolute, possibly because of its history of being invaded by the French.

Folks with long memories were probably surprised at the renaissance in recent years of the nuclear option. There was a time when the anti-nuclear lobby seemed to have won the argument, or at least the contest for public opinion. The anti-nuke brigade had always got its biggest boosts from accidents at nuclear power stations, notably at Windscale in 1957, later at Three Mile Island in 1979, and of course famously at Chernobyl in1986.

Older Britons might remember having to pour all their milk down the sewers in Lancashire in 1957, but it was a shock to have to do it again in 1986 because of a leak the other side of the world. From this last disaster the pro-nuclear lobby seemed destined not to recover. Soon after this the German Greens saw a large increase in their support and the Green Party in the UK had its peak electoral success. But the opposition would not last indefinitely.

Indeed it was the very success of the environmentalist agenda itself which began steadily to erode the consensus against nuclear power. It was after all the only realistic alternative to fossil fuels, and there wasn’t much doubt among experts that fossil fuels were implicated in global warming.

While environmentalists protested loudly about viable alternatives it was clear to many that these didn’t amount to much in practice. As solar, wind, geothermal, hydrogen and other more exotic technologies continued to make little headway, the debate remained a two-horse race of fossil versus fission.

The problem is that nothing comes close to fossil fuels for reliability, adaptability or energy conversion efficiency, while alternatives are always piecemeal solutions which cost a fortune to implement and maintain, and for comparatively low returns.

Short-term governments dislike sinking money into projects with long-term gains (for which they won’t get the credit) when there are always more immediate demands for cash (for which they might). So all the most viable sustainable energy technologies continue to contribute negligible amounts to global energy requirements and where they contribute more, like hydro or biofuels, they end up causing massive environmental or social damage of their own. If there is any major technological advance it is not likely to come from the so-called viable methods but from some less likely source, as Scientific American argued in May this year.

So, as the new century dawned and no new technologies were found and significantly, no new Chernobyls occurred, people began listening to the pro-nuke assurances that ‘lessons had been learned’ and ‘technology had progressed’. As old installations neared their pension dates and the question of replacement became pressing, governments talked bullishly about expanding their nuclear build, confident that the people would accept the least-worst option, with resignation if not enthusiasm.

Then Fukushima. And what it has showed is a fundamental split between what governments want and what populations want. The real problem that faces the world’s governments, and by extension the various warring parties of its ruling class, is nothing to do with the environment. It’s the ability of some countries, notably Russia but also China, Venezuela, the Gulf states and potentially even Norway and  Canada, to hold the world to ransom through their ownership and control of oil and gas supplies.

The recent Gulf wars, together with Russia’s trigger-happy hand at the gas tap, have persuaded every economic bloc that it’s either Do It Yourself nuclear or Do As You’re Told fossil imports. And for a bonus, with nuclear power you can get nuclear bombs, as the mullahs in Iran are keenly aware. In any conflict with your neighbours it’s much more effective to throw lumps of plutonium than lumps of coal. Thus, with the global balance of power at stake, nobody’s much interested in the environmentalists and their windmill schemes.

And this is the nub of the matter for socialists. Global energy policy is not being driven by concerns about the environment, however much governments dress the thing up in a pretty green frock, it’s about ownership and control of key resources, who has them, and who’s got the weaponry to seize them.

In capitalism such conflicts are endemic and often end up as wars, but in socialism, where by definition resources are shared and controlled by the collective human race, the problem would be a simple technical one uncomplicated by geopolitical or military questions.

Can nuclear power ever be safe, and even if it can, what do we do with the waste? Can a mix of sustainable resources really meet local needs and what are the environmental or social costs? Can wholesale reduction in consumption, facilitated by non-market production methods, help solve the  problem? Will fusion ever work? Is there something we haven’t thought of yet? Well there is something the world hasn’t thought of yet.

The only way to take politics out of the energy question is to take capitalism out of the equation. Of course capitalist governments are not going to entertain that option. But we ought to.

Paddy Shannon

Trotskyist Zealots & Stalinist Neanderthals (1995)

Book Review from the January 1995 issue of the Socialist Standard

The Seeds of Evil. Lenin & the Origins of Bolshevik Elitism by Robin Blick, Ferrington Press. 31-35 Gt. Ormond Street, London WC1. £5.

The front cover of this book shows a Russian doll. The top one is Stalin, underneath is Lenin and underneath Lenin is Robespierre, the jacobin dictator who ruled France briefly in 1794. The theme of the book is that Lenin's elitist view that the workers needed to be led, and then ruled, by a vanguard party of professional revolutionaries had nothing in common with Marx's theory of the democratic self-emancipation of the working class, but derived ultimately from an organisational form developed to further the bourgeois minority revolution in France.

Blick sets out to argue:

"(a) that Leninim's claims to Marxist 'orthodoxy' are bogus;
(b) that Leninism 9in whatever of its versions or mutations) was and remains, by virtue of its assumptions and ethos, an elitist and totalitarian doctrine, capable of creating, whatever its subjective intentions, only elitist and totalitarian societies, in which the proletariat either becomes or remains a politically repressed and economically exploited class;
(c) that, consequently, Leninism constitutes a monumental and tragic hoax perpetrated on countless millions of oppressed and exploited human beings, not only in Russia, but throughout the world."

We would agree with every word here. After all, we've been saying the same thing ourselves for years. In fact there is very little in the whole book that we would disagree with, including the demonstration that the Bolshevik seizure of power in November 1917 was not a "working class soviet (workers' council) revolution" but a military coup engineered by Lenin, Trotsky and the Central Committee of the Bolshevik Party.

Although, as Blick points out, the pretensions of Leninism are now only defended in the West by "a dwindling fraternity of third-rate intellectuals, Trotskyist zealots and Stalinist neanderthals", this book is one any Socialist should have on their bookshelf in order to be able to refute the twin lies that Leninism is a form of Marxism and that Leninism did not lead to Stalinism.

Adam Buick 

Something to Remember You By (2012)

From the June 2012 issue of the Socialist Standard

It says a lot about the society we live in that there are so many war memorials. The latest addition to London's collection is to the men of RAF Bomber Command who were killed in operations over enemy territory during the 1939/45 war. Wait a minute; that war ended nearly seventy years ago. What took so long? Well to answer that we might do worse than think about Terry, who does not rate a place on a memorial because, although he flew in many of those operations he avoided being killed in them. Strip away his agonising dependence on alcohol and nicotine and you are left with Terry as a nice guy – gentle, caring, sociable. Restless, mind you, which may have been related to his comfortably-off family whose farming allowed them to plonk him into a posh nearby grammar school, but which infected him with an addiction to fast motor bikes and big, powerful goods lorries. And which then led to his partaking in a cruelly prolonged and deliberate act of mass destruction and killing.

Rear Gunner

At the time the gossip was that a desire to escape from his family drove Terry, when he was seventeen, to volunteer for Royal Air Force aircrew. Perhaps he dreamed of being a Spitfire pilot - Winston Churchill and The Few and all that. But he was forced to contain such energies when he was classified as a rear gunner - the coldest, most isolated, most dangerous position - in a squadron of Lancaster bombers. This aircraft was regarded as a marvel of speed, operating ceiling and bomb load, useful to the policy of what came to be known as area - saturation - bombing which emphatically laid waste to a number of great German cities and killed between 300,000 and 600,000 civilians. The casualties in Bomber Command exceeded 55,000 killed - one seventh of all British deaths in action during the course of the war. But the Lancaster offered its rear gunner one hopeful feature, for in an emergency he could use a mechanism to spin the turret so that the armoured doors he had entered through opened out at the tail end of the aircraft; he could then escape by tipping himself backwards and operating his parachute.

Coincidence And Cowardice

Terry contributed to the horror, as he recalled, by completing over sixty operations - well above the average or any expectation - which he survived through a combination of beneficial coincidences and cowardice. On one occasion, in terror while under attack, he used the aircraft Elsan and came back to his turret to find it had been blasted away. On another, soon after taking off and while still in English air space, he heard the pilot shouting that he could smell someone smoking; Terry heard only the word “smoke” so without asking any questions he spun his turret and threw himself out into the evening air. He could give a vivid account of dangling calmly from his parachute while watching the bomber continue on its way to the flak and night fighters. The most colourful incident was when the pilot found, after landing safely from an operation, that Terry had fallen asleep - which was strictly forbidden. He ordered the crew to leave Terry there while he took the aircraft out to the dispersal point at the remotest fringes of the airfield. When Terry eventually woke up his first, immediate sensation took in only the absence of vibration and engine noise so again he threw himself out – except that in this case he was only a few feet off the ground and had a long walk back to the airfield buildings, dragging an open parachute with him. In the years after the war he could laugh at these experiences but he could not laugh - could not even talk about - two incidents when his pilot could not get a badly damaged bomber back to base and crashed it into the sea, or another when his squadron came back to be told that they had seriously failed to hit their target and so must return at once to do it as ordered, flying in the daylight formation for which they had no training. Terry's dominating memory of that raid was of spotting another Lancaster alongside, in which he knew a close friend was the rear gunner. As he watched the bomber dissolved into a ball of fire.

Terrifying Force

By the time Terry was flying on operations, the effectiveness of RAF bombers, in terms of their range, power, technological equipment and bomb load, had been vastly improved. Which must also be said about the disciplined brutality of the raids. Now it was all controlled over the target by a designated Leader Marker who dropped a first flare. This was followed by the Pathfinders dropping aiming marker flares, which the main bomber force then used (once the Marker Leader was satisfied it had all been carried out accurately) to aim their bomb load onto the buildings and people below. And while this was happening the higher levels of command, where the policy was laid down, were involved in a long debate about the most effective – the most damaging and most murderous – method of wielding that terrifying force. Should it be against targets such as aircraft factories, oil plants, railways? Or should it be straightforwardly used against human beings, smashing their homes and all around them and killing as many as possible with the object of undermining their morale and affecting the German war effort. In the process of this argument a number of German cities - Berlin, Cologne, Essen and others - had to pay a savage price. A passionate devotee of the policy of area bombing was then at the head of the RAF Bomber Command - Air Marshall Arthur Harris (known, for obvious reasons, as “Bomber” Harris).  Air Marshall Harris persisted in the face of some influential opposition and attempts to sack him: “ . .  . in the last eighteen months Bomber Command has virtually destroyed forty-five out of the leading sixty German cities. There are not many industrial centres of population now left intact. Are we going to abandon this vast task, which the German themselves have long admitted to be their worst headache, just as it nears completion?” (1 November 1944). The rancour in this dispute over the most likely way to kill the largest number of the enemy was unusually enduring; Harris had to wait until 1953 for the government to award him a baronetcy, there was no campaign medal for the crews and only recently has there been that permanent memorial.

Hypocrisy

Against the odds Terry survived into civilian life, got married, had kids and was soon brought up against the fact that being one of yesterday's heroes - one of the glorious Bomber Boys - was not unfailingly attractive to employers. And then there was the ever-present need to control the more erratic features in his personality, which may have been acceptable up in the air above some burning German city but not so useful on the ground in peacetime. In bald terms, he and his family had a hard time of it. He split from his wife and was told that he suffered from an aggressive cancer in his lungs. In his last days in hospital he once blurted out that he “...could fight all those fucking Germans but I can't fight this.” At that time the ravaged cities were being re-built, the places of those who had died were being taken by others. And now, in a most blatant example of ruling-class hypocrisy, there is offered a monument to the men who died while they did their bit to make it happen. All of them were victims of the propaganda which insisted that there was an enemy who needed to be fought to exhaustion when in truth all of their interests were in unity. Terry was there because he accepted those lies – allowed them to wreck what should have been another useful life.

Ivan

Dissatisfied Customer (1973)

Book Review from the March 1973 issue of the Socialist Standard

Chronicles of Wasted Time, Part I, by Malcolm Muggeridge, Collins, £3.00.

Fourteen years ago Walter Allen's novel All in a Lifetime created a stir by depicting the formative years and ripeness of the Labour Party, and then conveying that a misjudgment of society had been made and it had turned out irrelevant. This first volume of Muggeridge's autobiography covers the same ground, but is different in that the recollections are real not fictional and the result is not perplexity but animated sourness.

Muggeridge's father was a Fabian who became an early Labour Councillor and, eventually, an MP, and the book gives an account of home life in that atmosphere—parlour discussions, meetings with MacDonald, Dalton, etc., and a Tolstoyan "colony" at Stroud. Muggeridge recalls it all subjectively and, to a large extent, derisively. "It was a kind of revivalism without tears; sinful men were to be washed, but not in the blood of the Lamb; in, as it were, municipal water, with carbolic soap purveyed by the co-op." Later, visits to Five-Year-Plan Russia are described as if it were a crude but fortunately transparent attempt at personal fraud on the writer.

These reactions are common. One can meet anywhere men of Muggeridge's generation who shared the faith that beneficent reform would conquer all society's ills. The hopes of an "intellectual, moral and aesthetic transformation" through universal State education, and slums "transformed into garden cities" by Planning Acts; what has been produced is not so much disappointment as a sense of having been swindled. Recalling pacifist talk in his youth, Muggeridge writes of their conviction that the arms manufacturers were the cause of all the trouble: "how surprised we should have been," he says, to know that trading in arms by Labour governments would far exceed the evils of private enterprise.

Yet the illusions were self-created by those who believed all this. The choice between reform and revolution was put before the social-democrats at the beginning of this century, and the majority elected for reform. No notice was taken of Socialists pointing out the all-too-obvious fallacy of—to use one of Muggeridge's own metaphors—"building a housing estate on the slopes of Etna". Despite everything a century's experience should teach, reformists go on being hopeful like bingo-players that the next try will be lucky, afterwards to sit chewing peevishly on "a civilisation dropping to pieces" and "credulous armies of the just".

What is notable also is Muggeridge's lack of contact with workaday life and people. He acknowledges this in speaking of some earthy-proletarian relatives in the North, tries to dismiss it by calling the working class a fantasy invented by Marx, Engels, Morris and D. H. Lawrence, but without showing comprehension of what it really means. Thus, he writes of the start of married life: "We had very little money . . . certainly not more than £100" . . . in the early 'twenties when £100 was a year's pay to many working men! The remark echoes one made in a TV programme a year or so ago when, denouncing birth control and answering a woman who supposed he had always been comfortably-off, Muggeridge said indignantly: "It's quite untrue. It was 1939 before I earned even £1,000 a year"—and appeared oblivious to the thrill of half-amused astonishment in the audience.

And one other curiousity, considering Muggeridge's prominence in crusades against what they call the permissive society. He relates weightily the sexual preoccupation of his marriage in its early days: "Rolling about, now one on top, now another; grunting, coaxing, sweating, murmuring, yelling  . . . We looked to our bodies for gratification, which we felt they owed us." But that was fifty years ago, before pornography and the pill and Oh, Calcutta! had come to make satyrs of us all. Doesn't that give away the whole present case for Muggeridge!

Robert Barltrop

Students and Workers (1973)

Book Review from the February 1973 issue of the Socialist Standard

The French Communist Party versus the Students by Richard Johnson, Yale UP.

The French Communist Party is one of the two mass Muscovite parties in Western Europe. It is in fact the main party supported by the organised industrial proletariat in France; and is led by ex-industrial workers who have always had a profound distrust of "bourgeois intellectuals" (i.e., radical-minded, university-educated children of business and professional people). These, for their part, have had an ambiguous attitude towards the French CP: respect for the fact that it is the main party supported by industrial workers, but also qualms about its bureaucratic structure and dogmatic ideology. Until the 1960's, argues Johnson, they had been prepared to forget these qualms for the sake of having access to the working class through the Party. "Outside the Party", they thought, "we are nothing", a fear the Party's bureaucrats exploited to the full to get them to toe the Party line.

Towards the end of the 1950's the CP's student section began to adopt a mildly critical line (that of the more flexible Italian CP in fact). The bureaucrats reacted by accusing them of betraying the working class because of their bourgeois origins.

May 1968, however, marked the final break between the radical students and the CP. Humanité, the daily CP paper, described those who took part in one riot as members of "certain groups (anarchists, Trotskyists, Maoists, etc. ) composed in general of sons of the big bourgeoisie and directed by the German anarchist, Cohn-Bendit". Cohn-Bendit replied in kind by speaking of "Stalinist shit".

Many of the students explained the CP's "betrayal" on the grounds that it had become bureaucratised and the victim of its parliamentary strategy (the CP's immediate aim was, and still is, an elected "popular democratic government" with Party Ministers). Johnson rejects the "bureaucratisation" view by pointing out how, on the contrary, the French CP has been extremely flexible, zigging this way and zagging that way on Moscow's orders. Instead, he sees the CP's attitude as a ritual response dictated by its whole ideology (the working class as the sole revolutionary class; the Party as the sole legitimate representative of the working class; and the Party leadership as the sole infallible judge of working class tactics). To back up this view he points out that the Maoists and certain Trotskyist groups also denounced, on ideological grounds, the student movement at "petty bourgeois" and denied that there was a "revolutionary situation" in 1968.

Undoubtedly there was no such situation at that time (even though these groups' conception of a revolutionary situation is radically different from ours). A revolutionary situation did not exist because the great mass of workers in France, industrial and white collar, were not socialist-minded. They were merely discontented, wanting higher wages and some reforms—which they got and returned to work leaving the students out on a limb. On June 12 De Gaulle banned a number of student anarchist, Trotskyist and Maoist groups and, beating the drum of "law and order", on June 30 won a resounding electoral victory. The student groups' attempt at "revolution" in an non-revolutionary period had strengthened the forces of reaction.

Adam Buick  

Party News (1960)

From the October 1960 issue of the Socialist Standard

Islington

Islington members have been reading The New Class, by Djilas (former supporter of Tito and ex-Vice-President of Yugoslavia), and J. Bonus will open a discussion on the book at the Branch Room, Co-op Hall, 129, Seven Sisters Road, N.7. on Thursday, October 13th, at 8.15pm. Further, Islington Branch is arranging a discussion with a member of the Yugoslav Democratic Union (an organisation of exiled Yugoslavs) sometime in November. Details will be announced soon.

Wembley

The new branch at Wembley seems to have made quite a good start. The inaugural meeting was held at the beginning of July, and a fair amount of activity has packed in since then.

Two visits have been paid to Southsea, one on August 14th and the other on September 11th, and both were successful, with interested audiences and good literature sales. In addition, on Friday evenings throughout September, some very encouraging outdoor meetings were held by this branch at Gloucester Road.

A film show took place on September 12th at the branch rooms and although it was the first to be held there, it attracted a number of non-members. The title of the film was "Eldorado" - a documentary on British Guinea, and it was followed by the usual comments, by a member of the Party.

This has encouraged us to think about further shows in the future, but this will, of course, depend on time available, for there is a very crowded autumn and winter programme of historical lectures. Three members of the branch will be responsible for these, and details appear elsewhere in this issue.

The branch has lost no time in canvassing the Socialist Standard, and both Harrow and Greenford areas have been given special attention. The results have been most gratifying, and local comrades are following up the contacts made. It is hoped to expand sales of the S.S. and other literature steadily over the next few months.

It can be seen from all this that the new branch is active and intends to stay that way. But more help is always welcome and members living in the vicinity are particularly asked to give us their support where possible. We have pleasantly situated branch rooms at Barham Old Court, Barham Park, Harrow Road, Wembley, and meet every Monday at 8pm. Members of the public are cordially invited and facilities are available for the friendly cup of tea and cake after each meeting.

Ealing

Ealing Branch meetings are continuing very satisfactorily. Outdoor activities have been handicapped by the weather, but some good meetings have been held at Gloucester Road with reasonable literature sales. A very good propaganda trip to Southsea took place on 4th September, with two meetings at which there were excellent audiences. Some useful contacts were made. Winter activities include lectures by Branch members and the resumption of the West London Writers' Class.

Paddington

On Sunday, September 11th, Paddington Branch paid a social and propaganda visit to Birmingham. Eight members (and a "fellow traveller" from Fulham) drove up in a minibus and were most hospitably received by Birmingham Branch members. After Sunday dinner and conviviality as guests of the local members, an outdoor meeting was held in the centre of the city at Chamberlain Place. This speaking spot is being built up in place of the traditional Bull Ring which is being completely rebuilt. It proved difficult to gather a large crowd partly due to the overwhelming noise from its fountain and droves of starlings on the surrounding buildings, but a small and attentive audience remained for three hours, and a fair amount of literature was sold. The speakers were L. Cox, E. Grant, S. Goodman, I. Jones and C. Wilson. Thanks Birmingham members for your hospitality and support!

Swansea

Welcome Swansea Branch! This new Branch was recently formed by our enthusiastic and active Swansea members, who have been keeping the torch of Socialism alight in South Wales for some time. We invite all readers in the Swansea area who are unable to personally attend Branch meetings to make a point of contacting the secretary (See Branch Directory, page 146. for details)

Glasgow

The two Glasgow branches, City and Kelvingrove are going to amalgamate their forces. watch this column and the Branch directory for more details.

P.H.   

Letter: Classless Society (1936)

Letter to the Editors from the December 1936 issue of the Socialist Standard

Canning Town,

London, E.16.

Dear Sir,

In a copy of The Socialist Standard left at my house I notice a phrase is frequently used, i.e., "The Classless Society." Will you kindly explain as fully as possible what you mean by this?

It appears to me that such a position, if ever achieved, could not remain in practice, for surely the members of the community holding the more responsible positions and directing "the centralised machinery of administration" (quoted from The Socialist Standard, December, p.54) would, and could, fairly ask for greater recompense in return for shouldering this responsibility. It follows, them, that there will be, as at present, many varying grades or classes of society—graded according to their abilities; the only class which will not then be extant being the person deriving an income from capital investment.

This, I think, is what the phrase must mean, but allowing that such is the meaning, it appears to be a most vague manner of describing the position I have mentioned previously. However, I should be very pleased to know your definition of the "Classless Society."

Wishing your policy, which I gather is the educating of the general public to an understanding of Socialism, every success.

                                                                                                                            I remain,

                                                                                                                                     Yours, etc,.

                                                             A. H. Kincey.

REPLY.

A careful study of the copy of The Socialist Standard, to which the above correspondent refers, should have convinced him that the S.P.G.B. only knows of two classes in present-day society, namely, the working class and the capitalist or master class. It is the exploitation of the former by the latter which gives rise to the manifold problems with which we are confronted, including the particular one which is puzzling him. The workers are graded and degraded because the structure and purpose of capitalism make that necessary.

Grades, however, are not classes. Hundreds of thousands of workers are promoted to more or less responsible and better-paid positions in the course of their lifetime. Very few can, however, change their class. Those promoted go on working for the master class in once capacity or another; quite unlike those rare ones who suddenly find themselves being left fortunes by hitherto unheard of uncles in the Colonies, or who succeed in winning the Irish sweep.

The reason for the illusion that the more highly-paid workers belong to a different class from those to whom they give orders arises from this very fact, that they are specially paid, not merely to administer affairs in the technical sense, but to supervise or maintain in one way or another the exploitation of their nominal subordinates. Although they receive greater recompense for this work, many of their subordinates are usually as competent, technically, as themselves.

In the very early days of capitalism, the capitalists themselves had to perform this task; but the growth of their capital enabled them to employ special wage-slaves for the purpose, on whom they conferred in varying degrees the appearance  and some small portion of the substance of social superiority. So great have the powers of production grown to-day, however, that there are, not only a multitude of unemployed labourers of varying degrees of skill, or lack of it, but also a growing number of unemployed technicians and administrators of all types.

The multiplicity of parties and the fierce competition in the political area is one expression of this. Under Socialism, however, the principle of co-operation will apply, not merely inside the individual factory or other industrial establishment, but throughout the whole process of social administration. The motive for effort will be neither private profit for the masters, nor individual wages for the slaves. The production and distribution of wealth as efficiently as possible will be in the common interest of all.

This will rule out any need for "grades" (or "classes" as our correspondent terms them) among the workers. As social equals they will be free to develop their abilities in any desired direction to the fullest possible extent. The material means for their training already exist or could be rapidly produced when the restrictions imposed by capitalist conditions have been removed. There will, therefore, be no lack of trained men and women capable of occupying responsible positions interchangeably, and their development into a class or caste is inconceivable. This was made possible and necessary in ancient times only because of the limited resources and small wealth-producing capacity of society in those days.

Economic development has given rise to priests and patriarchs, feudal lords and capitalists in turn. Each of these groups have evolved into classes and dominated society for a period only. New conditions and new needs have brought about the downfall of all, save the last-named, who now stand confronted by the heirs to the slavery of the ages. The emancipation of this class, however, the working class, involves that of all mankind, and the accomplishment of the goal of history, the classless society.

E. B.