Cooking the Books: Overproduction or underconsumption? (2010)

The Cooking the Books column from the September 2010 issue of the Socialist Standard

“Is Marx’s analysis of capitalism still valid today?” asked Jonny Ball in the anarchist paper Freedom (19 June). While trying to be generally sympathetic to Marx, he didn’t always get it right. According to him:

“Crises are not so much of a problem of overproduction, as this in itself is not a problem if people have the purchasing power to buy back what they produce, but the trigger in any recession is in fact, underconsumption.”

To back this up he quotes “the Marxist writer George Jackson” who wrote about production before 1929 increasing “without a corresponding increase in the ability of the great labouring masses to buy back what was being produced” and that therefore “it was underconsumption (not overproduction)” that led to stock market crash of 1929.

Overproduction occurs when too much of some good has been produced in relation to the market demand for it (not the same as the real need for it). It can affect any type of good – raw materials, steel, ships, consumer goods, anything.

Underconsumption has been defined in various ways but all have in common the view that consumer (paying) demand is too low.

Cruder versions of underconsumption argue that, because workers cannot buy back all they produce, a chronic shortage of purchasing power is built-in to capitalism requiring, for instance, exports to bridge the gap. It is true that workers cannot buy back all they produce but total paying demand is not made up just of what workers buy; it also includes what capitalist firms buy (raw materials, buildings and equipment, finished and semi-finished products).

More subtle versions argue that because the share of consumer demand in total demand is too low this prevents sustained, balanced growth. On this theory a crisis is precipitated when the production of consumer goods increases faster than consumer demand, which is mainly that of wage and salary workers.

A crisis can be triggered by such an overproduction of consumer goods, and a case can be made out for this being a factor in 1929, but this is not the only way a crisis can be triggered. Overproduction in any sufficiently important sector of the economy can do this. This is why it can be said that overproduction (not underconsumption) is the cause of crises, as the anarchic, competitive struggle for profits leads to the total production of capitalist firms in a particular sector coming to exceed the paying demand for its products and this having a knock-on effect throughout the economy.

It is not clear what Ball means when he says that overproduction “in itself is not a problem if people have the purchasing power to buy back what they produce”. If this is the case then there is no overproduction. Maybe he means overproduction in relation to needs rather than to paying demand, but this is not the sense that “overproduction” is usually used in economics.

But who is this “Marxist writer” George Jackson? Yes, it is George Jackson, the Black Panther and Soledad Brother, who was murdered in prison in 1971 at the age of 29. He spent his time in prison reading up on things and did become reasonably well-informed, but he would not have regarded himself as an authority on Marxian economics.

In any event, his “Marxism” was the so-called “Marxism-Leninism” of Mao Tse Tung. Not quite the same thing. Despite this, he did argue cogently for a moneyless society:

"Consider the people's store, after full automation, the implementation of the theory of economic advantage. You dig, no waste makers, no harnesses on production. There is no intermediary, no money. The store, it stocks everything that the body or home could possibly use. Why won't the people hoard, how is an operation like that possible, how could the storing place keep its stores if its stock (merchandise) is free? Men hoard against want, need, don't they? Aren’t they taught that tomorrow holds terror, pile up a surplus against this terror, be greedy and possessive if you want to succeed in this insecure world? Nuts hidden away for tomorrow's winter. Change the environment, educate the man, he'll change. The people's store will work as long as people know that it will be there, and have in abundance the things they need and want (really want); when they are positive that the common effort has and will always produce an abundance, they won’t bother to take home more than they need. Water is free, do people drink more than they need?" (Soledad Brother, Letter of 17 June 1970).

Greasy Pole: Home Sweet (?) Home (2010)

From the September 2010 issue of the Socialist Standard

David Cameron and his Coalition Gang are working tirelessly to introduce the novelty of a more balanced economy, fortified against any repeat of the so-called Credit Crunch, the collapse of the banks, the calamitous recession. Their proposed method is anything but novel – cutting spending so as to reduce what are known as services, lowering our living standards, enforcing a larger element of austerity into our daily lives. That is also true of the terminology – punitively flavoured – which they call into use to excuse their policies. How often in the past have we heard of the need to “tighten our belts”? Of unavoidably therapeutic “tough decisions” which have to be taken? The assurance that “we are all in this together”? The concept of mendacious, self-promoting ministers proposing to take their belt in a few notches is risible enough to lighten an hour or so at the Job Centre. From experience we know that “tough decisions” are not something we participate in; they are imposed on us to teach us to mend our ways. And are we supposed to be ”all in it together” with a government crowded with millionaire wealthy products of the public schools? Like Eton?

Evictions
A provocative, newsworthy addition to the groups whose profligacy has landed the country into its present desperate state – like the inveterate unemployed, the chronically disabled, the pensioners – has recently been unearthed by David Cameron – the long term council tenant. “There ls, “ he recently told a Birmingham audience “A question mark about whether, in future, we should be asking when you are given a council home, is it for a fixed period? Because maybe in five or ten years you will be doing a different job and be better paid and you won't need that home, you will be able to go into the private sector”. This was more than just random speculation: a consultation paper suggests that councils should keep an eye on their tenants so that, if they are observed to be rattling around in some three bedded mansion when strictly speaking they could manage on just two, or living it up with expensive holidays abroad on an income to compare with some of Cameron's friends in banking they can be made to “downsize” – in other words kicked out. Presumably it will be overlooked that to restrict council housing according to a tenant's income would dissuade unemployed, or low-paid, people from trying for a better situation – which could mean council estates sinking into concentrations of workless poverty with all that means in terms of alienation, crime, sickness. This would serve to justify the prejudices about council estates, about the behaviour of those who live there and the conditions they create for themselves – which Cameron was appealing to.

Estates
Among the expected minor tsunami of response there was one supporting both Cameron and his implied threat to the stereotypically pampered but ungrateful council tenant: “I grew up on a council estate just after the war and it was not a bed of roses”. Indeed. One such estate in west London can be as bustling at the middle of a week day as a town centre – because there are so many workless residents there, out on the drab streets rather than going quietly mad inside their tower block. It was in fact from the balcony of one such block that a TV set was once vengefully aimed at an unpopular fellow resident taking the air below. During bad weather it was not sensible to visit one tower at another estate a few miles away. The lifts were likely to be out of order and the stair well made perilous by the rain or snow driven through the holes hammered by the residents in the surrounding concrete walls. But these were tragic chapters in what might once have been presented as a happy fiction – a romance – of the human benefits of well built, comfortable, secure social housing.

Fit For Heroes
The whole massive and expensive question – clearing slums as well as the provision of stable and affordable homes- was among the preoccupations of politicians for much of the 20th century. At times it was a crucial factor in determining the standing of the minister concerned – as in the case of Harold MacMillan and his promise to arrange the building of 200,000 council houses a year. In the late 19th century, in recognition of the profitability benefits of a safely accommodated work force, the principle responsibility for housing was placed with local authorities so that social housing became in effect homes which were built, owned, managed and allocated by the council. Several measures, such as the Addison Act of 1919 which purported to provide the promised Homes Fit For Heroes after the First World War, were designed to ensure the smooth running of the system. But there were some unforeseen problems, among them the reluctance of tenants to be dragged from communities which, however rancid, had the merit of neighbourly cohesion and support, to be dumped in some blandly frigid new development a long way off. And in any case the slums persisted; by the outbreak of the 1939/45 war there were some 470,000 of them, bad enough to be knocked down.

It can be assumed that the council's living-space police implied by Cameron's scheme will be selective about those they spy on. Cameron himself, for example, will be exempt from their attentions in spite of his possessing two large homes, one in a trendily costly part of London and the other in Oxfordshire with wisteria which has to be trimmed - naturally paid for by his expenses. Between them he and his wife have a fortune of some £30 million. Chancellor George Osborne (whose first name is actually Gideon - he changed it because "life was easier" as a result) is heir to a fortune arising from the family wallpaper firm and a huge property portfolio. He spent his early life in a £3 million mansion in Berkshire with a swimming pool, tennis court and gamekeeper. These two, and their associates, have no concept of what it means to live under poverty - of struggling in unsavoury, cramped homes, of the fear of being homeless through ill health, unemployment or eviction. The most effective way of informing them of these realities would be to evict the very system which shelters them.

Ivan

Communist Camp (2010)

From the August 2010 issue of the Socialist Standard

What happens when you swap your wage-slavery for a rucksack? You get communism. That, at least, was the argument of Aditya Chakrabortty in a column for the Guardian (13 July), drawing on the arguments of the late Marxist philosopher GA Cohen. Camping and caravan trips last year were up 27 percent on the previous year and sales of tents and other equipment continue to climb, as workers cut back on holiday spending due to the recession, according to a report in the same newspaper. But camping, says Chakrabortty, is not just a bit of fun (or a horrific trial comparable to fleeing a war zone with your belongings strapped to your back, depending on taste): it’s also a “socio-political experiment” demonstrating the feasibility of communism.

How so? Well, on a camping trip, “adult hierarchy is flattened, utensils and resources are pooled. Tasks are performed as a unit: you may lay on the food, but your friend is a better cook, and her boyfriend will clean the dishes. There is no question of people being paid differently for different tasks. Nor [can you claim a] ‘banjo bonus’ for providing a highly-valued service enjoyed by less-talented souls.” And the objections to this communist picture? What if someone on your camping trip demands more room in the tent than everyone else? Or a greater share of the food? Or dominates the decision-making about what to do? In real, everyday life, we would just say, “For heaven’s sake, don’t be such a schmuck”. But in political discourse, especially in the wilderness of the camp of public opinion, where passions run as high as the bog roll is scarce, and the odd real insight blows by unremarked like tumbleweed, such objections are taken to be the stuff of profound criticism. Chakrabortty will have discovered this for himself if he ever went to read the comments section on his article when it was posted on the Guardian website (See here). To be fair, although the noise of the screeching in the chimp enclosure was at levels you’d expect from internet discussion forums, all the important issues were also raised, and the comments reflected genuine concerns about the socialist project – concerns that very rarely get a hearing in Camp Public Opinion.

The chief objection was that, as far as Guardian readers could see, there was very little resemblance between a camping trip and a labour camp in Siberia (or alternatively a very great resemblance, again depending on taste). In other words, ‘socialism’ and ‘communism’ are still associated in the public mind with the state-capitalist tyrannies of the former Soviet Union and China and so on. These arguments are very frustrating to socialists, but actually they make a fair point. To the vast majority of people, the words ‘communism’ and ‘socialism’ refer to realities that they are quite right to reject – indeed, to regimes and practices that genuine socialists have always rejected on principle. That’s why we in the Socialist Party are always careful to explain exactly what we mean by socialism (or communism, by which is meant the same thing): a moneyless, stateless, classless society, where the means of producing and distributing wealth are held in common and controlled democratically by the whole community. This is a different proposition to state ownership. State ownership and control of capitalist industry is just that – an inevitable and necessary aspect of the normal functioning of capitalist society, resorted to as freely by ‘free market’ ideologues as ‘communist’ demagogues. Socialism, on the other hand, is a total change in human relationships; the realisation of the liberal dream of democracy. It means democracy everywhere, from the home to the workplace to the global administration of production, not just the right to choose different management teams every five years.

A related objection is that communism only ever comes about if forced on a country against the will of its people. Again, this is an idea that it is quite right to reject, and the exact opposite of the truth: genuine communism is impossible unless a majority of the population consciously chooses it and expresses its choice democratically, at the ballot box; and not just in one country, but globally.

Another predictable objection, given the example Chakrabortty chose, was that people like living in the modern world and do not want to give up their homes or their hard-won comforts to live in a field or wash in a bucket. Again, the hecklers have a point. Living in a mud hut may appeal to a small handful of romantics, but socialism is all about building on what capitalism has bequeathed us, not razing it all to the ground and heading back to the trees. It will often be conceded that communism is possible among small groups – it can hardly be denied now thanks to the popularisation of anthropology on some very good television programmes, such as Bruce Parry’s Tribe on the BBC – but the idea that it can also take place on a larger scale is dismissed as obvious rubbish. This is false on both levels – hunter-gatherer egalitarianism could be and was organised with millions of people and over vast continents; and if there’s a reason why a postal system, or an airline, or a world-wide industrial system, couldn’t be organised on similar principles, then it has yet to be demonstrated exactly why not.

Of course, Chakrabortty’s specific arguments about camping shouldn’t be taken too seriously. As he says later in the same article, “it's not as if camping is the only situation where the normal rules of pay-as-you-go market exchange are suspended”. He cites the example of libraries and blood donation, but the examples could be massively extended. As Marx pointed out, even within a capitalist factory or workplace the basic organizational principle is still largely communist internally: if someone wants to use your stapler, you hand it over, you don’t charge by the hour. Within the family, too, the principle “from each according to ability, to each according to need” applies: parents do not generally need to put padlocks on the fridge door. Indeed, as Marx shows in Capital, capitalism is actually parasitic on this form of communism – it takes the natural gains of human cooperation and nature as a free gift, then pours them into the pockets of private individuals.

When we go camping, the usual, normal organizational principle of human life – i.e., communism – naturally takes over. The question is, as Chakrabortty says, “if people choose to live like this for a few weeks each year, what's to stop them doing so all the time”? What indeed? Our answer is nothing at all apart from the political will and the kind of dedicated organization needed to see it ushered in. “The argument then becomes not whether to have socialism but how to have it,” says Chakrabortty. When the argument progresses to this level, assuming it ever does, then indeed socialists will be able to say that they have scaled the north face of the Eiger. And camping will be optional.

Stuart Watkins

More tea, vicar? (2010)

Book Review from the September 2010 issue of the Socialist Standard

For All the Tea in China. By Sarah Rose (Arrow Books)

In the eighteenth and nineteenth centuries the British Empire, via the East India Company, made vast fortunes from selling opium to China and buying tea from China with part of the proceeds (the tea was then re-sold in Britain at much higher prices). All attempts to grow good-quality tea outside China had failed, though it was realised that doing so would lead to even greater profits. The ruling Qing dynasty made sure that the secrets of tea were not exported outside China.

Discovering new plants and crops was an important aspect of the British Empire. Botanists sailed with Captain Cook to Australia. Nathaniel Ward had invented a kind of portable glass house, nowadays known as a terrarium, to keep plants alive without water on long voyages.

In 1848 the East India Company employed Robert Fortune – yes, that really was his name – to travel to China and obtain (i.e. steal) tea plants and seeds, together with knowledge of how to cultivate them, and bring them back to Calcutta and the Himalayas. After many vicissitudes – attempts to transport plants were unsuccessful – Fortune was eventually able to transplant seeds in Ward’s cases. Then in 1851 he persuaded a number of Chinese experts to work in India and give advice on how to plant and irrigate tea and how the Indian workers should cultivate it. As Rose says, all this was pure industrial espionage, ‘the greatest theft of protected trade secrets that the world has ever known’.

The Chinese monopoly on tea was broken, and it would now be spread to Ceylon, Kenya and so on, to the immense profit of those who ran the British Empire. In addition, it increased the demand for sugar, hence the colonisation of the Caribbean, and led to improvements in sailing boats and the development of the tea clipper. And of course it had an enormous impact on daily life in Britain.
Rose’s book is mostly a rather over-dramatised popular history, but also makes some useful points about the consequences of Fortune’s plundering of the secrets of tea and its relation to the spread of empire and the development of capitalism.

Paul Bennett

Editorial: Make austerity history (2010)

Editorial from the September 2010 issue of the Socialist Standard

Fifty years ago politicians and pundits were promising that automation and increasing productivity would mean a shorter working week, an earlier retirement age and a doubling of the standard of living every twenty-five years. As late as 1979 Chris Evans, “a psychologist and computer scientist” was predicting that by 2001 “we will all have a 20-hour working week and retire at fifty” (See here). No, not Chris Evans, the celebrity radio presenter, though it might as well have been.

Listen to the politicians now. All the talk is about austerity, cuts and pain. Public sector workers, those on housing benefit and the jobless are the main targets but everybody (except for businesses and shareholders) will be hit one way or another. And the retirement age is to go up not down.

Why? Why this failure to realise the promises of yesteryear? Because we are living under capitalism, and capitalism is not geared to meeting people’s needs and improving our lives. It’s an uncontrollable system geared to making and accumulating profits.

In 2008 the accumulation of profits – which Gordon Brown foolishly thought would just go on and on – faltered as it regularly does from time to time. This presented the government with its own financial problem – tax revenues fell, so they had to borrow more – but also with the job of facilitating conditions for the revival of profit-making.

That’s why they’re axing government spending, freezing government wages, cutting benefits, keeping interest rates low and, last but not least, lowering corporation tax on profits.

There’s no guarantee that this will work, but there is a guarantee that people will suffer.

With millions of able bodied people sitting in enforced idleness, with factories closed or working short time, with an abundance of natural resources, skills and technical know-how, it’s surprising that we are being told that we will have to undergo a period of austerity. But it’s a lie.

If the profit system did not exist, and if we all owned in common the places where useful things are produced, we could reap the benefits of scientific advances and modern technology to provide plenty for all, so making poverty and austerity history.

The resources to provide enough healthy food, decent housing, good health care and other amenities for all exist now and have done for many years, but the profit system stands in the way. All the advances in technology over the last fifty or so years mean that austerity is even more unnecessary today that it was then. In fact, every scientific advance, each new invention makes socialism all the more possible.

The fact that the politicians are now talking about a “New Age of Austerity” in a world of potential plenty is a damning indictment of capitalism.