"Liberty and Peace" in Canada. (1919)

From the May 1919 issue of the Socialist Standard

Recently the writer received several copies of "The Red Flag," a journal published, as it announces, "when circumstances and finances permit, by the Socialist Party of Canada." Their previous organ, the "Western Clarion," was suppressed by the authorities some months ago.

The first number of "The Red Flag" (Jan, 11th, 1919) contains in its editorial evidence of the freedom-loving nature of the Canadian government. It says: "The official organ of this party has been suppressed, and representations to Ottawa (chief press censor) are so far without results. Leaflets mailed have been confiscated and complaints ignored. Almost every letter which arrives at this office bears unmistakable signs of having been opened, though no censorship mark to that effect is on them. All such letters are unduly delayed, being some four, five and six weeks in the mails before delivery. Most of such letters contain remittances for dues or for literature, etc."

"Moreover, letters and parcels which we have despatched have failed to reach their destination. The mail of individual members of the party also suffers from the same despicable secret censorship. Our protests and complaints to heads of departments result only in officially equivocal and evasive replies. The greeting the writer received from the postmaster in Vancouver on making a personal representation to him was, 'You are a Bolshevik,' and that was all he would vouchsafe of definite character in his replies to questions."

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By an "Order in Council" the Canadian Government has made it an offence punishable with 5,000dols. fine, or five years' imprisonment, to be in possession of any of the Socialist (or, other) literature published by C. H. Kerr and Co. of Chicago.

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I take the following from a letter of a Winnipeg comrade, dated Jan. 31st: "Two Sundays ago our Local pulled off a meeting, took in 80dols. collection and sold 35dols. of literature . . . We decided to hold another meeting last Sunday, but owing to threats by returned soldiers could not rent a theatre and had to try the market square. We were to start at 2.30, but at 2 o'clock a parade of veterans started out to see that no meeting was held. We refused to allow our speakers to try to talk as we smelt trouble, so they cleared out our headquarters, threw our furniture out of the windows, etc., and stole all our literature - which, I hope, they read."

Then, under the pretext and cry of "Down with Bolshevism," the mob of deluded fools raided and looted all the German and Austrian clubs and "murdered about half-a-dozen foreigners by the simple expedient of beating them to death."

The following incidents are related in the report of the "Winnipeg Telegram" (Jan. 28th, 1919): "One German was captured in Main Street, broke away, and ran into a store. Both the storekeeper and the fugitive were dragged out and given a warm five minutes. The German refused to kiss the flag, and broke away again. He was outdistancing a soldier - who yelled to an officer who was out for a stroll, 'Stop him'; the officer immediately swatted the fugitive with his cane, felling him to the sidewalk. 'I guess that'll hold him Scottie,' coolly remarked the officer, who then proceeded on his stroll quite as though he had accomplished the most matter-of-fact thing in life. Ten minutes later the fugitive picked himself up from the devilstrip of Main Street, and like the Arab, silently stole away, leaving behind a large pool of blood." Several similar incidents are recorded.

R.W Housley

The Green Party's Basic Income Scheme: could it work? (1988)

From the September 1988 issue of the Socialist Standard

In their manifesto for last year's general election the Green Party proposed to "guarantee economic security to each person as a right" by instituting a Basic Income Scheme involving "an automatic weekly payment to everybody, throughout life, regardless of sex or marital status, non-means tested and tax free, at different rates for different age-groups". No figures were mentioned but the manifesto stated that "the payments would guarantee an income adequate to live on, higher than current welfare benefits".

This is a scheme, then, to give every adult in Britain, whether in work or not, an income high enough to allow them to live appreciably above the official poverty line. The idea behind the scheme - guaranteeing everybody security from material need - is entirely laudable. But could the scheme work within the present economic system?

The prices-wages-profits system
The basic feature of capitalism is that wealth is proposed for sale and that people's incomes - whether wages and salaries, profits or benefits - derive ultimately from the receipts obtained from selling what has been produced. In fact the incentive to produce under this system is monetary profit, the difference between sales receipts and the amount of money originally laid out in purchasing the elements necessary to production (materials, buildings, machinery, power, labour, and so on). Maximising monetary profit is the primary objective of production and what makes the economic system function.

Out of sales receipts - or rather, to strictly accurate, out of that part of sales receipts representing the new value added in production - are paid both the work incomes (wages and salaries) on which most people now depend and the property incomes (dividends, interest, ground rent) that accrue to those having ownership rights in the means of production.

Wages and salaries correspond more or less to the cost of bringing into being and maintaining the working skills which employees sell to employers (cost of training plus the cost of housing, food, transport, and so on which employees must incur to maintain themselves and their families), while profits are the part of the newly added value left after wages and salaries have been paid. The government obtains the money to pay out social benefits from taxes which ultimately fall on profits or incomes derived from profits. Taxes on wages and salaries, by increasing the cost of maintaining employees and their skills, are eventually passed on, through the operation of economic forces, to employers in the form of increased money wages.

Where will the money come from?
What, then, would be the effect of introducing the Green Party's Basic Income Scheme into this prices-wages-profits system? If everybody, whether in work or not, is to be paid "an income adequate to live on, higher than current welfare benefits", we are talking about a massive increase in government expenditure. Which makes the question"Where is the money to come from?" wholly relevant.

We have just seen that the ultimate source of government revenue is profit made in productive industry. But if the money paid out as "basic income" is to be taken from profits -  the fuel on which the present economic system runs - there is a serious risk of reduction in economic activity and a knock-on effect leading to a slump and growing unemployment; in short, of provoking an economic crisis. In other words, the increased taxes on profits needed to finance the Basic Income Scheme would risk killing the goose that lays the golden egg.

Drastic fall in wages
In reality, however, all the money to pay the "basic income" would not be generated from existing profits, since a large part would come from the drastic reduction in wages and salaries that the introduction of the scheme would bring about. Employers would be provided with an extra income to compensate in part for the extra tax burden they would have to bear.

For it should not be imagined that wages and salaries would remain at their present levels if everybody, including those in employment, were paid a basic income of, say, £100 a week by the government. Such a payment would result in a fall in wages and salaries of an equivalent amount because, as we have seen, they are fixed by the operation of economic forces at around a level sufficient to maintain the employees in question and their skills.

If wage or salary earners are paid £100 a week by the government, they can use this income to maintain themselves; which means that the employer will be relieved of having to include an amount to cover this expenditure in the wage packet or salary cheque. Economic forces will therefore tend to ensure that wages and salaries fall to a level which, when added to Basic Income, will allow the employee to maintain him or herself. In other words, wages or salaries would become sufficient only to top up Basic Income to the economically determined level. Or, put the other way round, Basic Income (like Family Allowances today) would be a subsidy to employers, and a massive one at that.

Growth of voluntary unemployment
Employers, however, would not welcome the scheme because it would completely upset the wages system, under which people are forced by economic necessity to sell their skills to an employer. If people received an adequate income from the government, what would be the incentive to find employment?

This problem would be particularly acute for paid work at and immediately above the Basic Income level. The manifesto used a peculiar argument in this respect, stating that

The "unemployment trap" is created by the withdrawal of benefit when a person finds work. Perhaps more than any other measure the Basic Income Scheme would stimulate employment, since it would always be financially worthwhile to work.

It is not clear exactly what this means, but it appears to be accepting the common slur that many of the unemployed don't work because it's not financially worth their while; in other words, that much unemployment is voluntary. But this is clearly far from being the case. Most employment today arises because, for the time being, it is unprofitable for employers to invest in full production. The jobs are simply not there, and merely providing a financial incentive to work won't make them reappear.

As a matter of fact, and contrary to what the manifesto suggest, the Basic Income Scheme would probably lead to a massive increase in voluntary unemployment (not that there's necessarily anything wrong with that, but that's another question). Imagine a situation where people went to work for an employer only when they needed extra money to pay for some special item or, say, a visit to friends or relatives abroad. Imagine too what would happen to discipline at work if people were not there through economic necessity: they would (quite rightly) refuse to be bossed around or do unpleasant jobs. Profit motivated industry just couldn't function under such circumstances.

So, once again, the result of introducing the Basic Income Scheme would be an economic crisis. (Of course the whole scheme might be a subtle way of destabilising the present economic system, but I think rather that its architects really imagine it to be feasible.)

What's the alternative?
Our purpose in criticising the Basic Income Scheme and showing it to be impracticable has not been to defend the existing prices-wages-profits system but rather to suggest that some other way will have to be found of guaranteeing people basic material security.

The socialist answer would be to allow people free access to the common store of wealth set aside for personal consumption, according to what they themselves judged to be their reasonable needs. Other needs would be satisfied on the same basis. Houses and flats would be rent-free, with heating, lighting and water supplied free of charge. Transport, communications, health care and education would be organised as free public services. There need be no admission charges to museums, parks, libraries and other places of entertainment and recreation.

Such free access would be a much more direct way of ensuring that people were freed from material insecurity than the impractical Basic Income Scheme proposed by the Green Party. It would also involve, as a corollary, the transformation of work. Instead of working for wages to produce profits for an employer, people will be able to co-operate to produce what they really needed.

In fact such direct production for use, replacing production for sale and the profit motive, is the only possible framework within which we can satisfy our needs in an ecologically acceptable way. For, with the end of production for sale will go also the pressure for blind economic growth generated by the competitive struggle for profits. If production were geared directly to supplying needs it would eventually tend to platform off at a level sufficient to provide for current needs and repairing and maintaing the existing stock of means of production.

Adam Buick

Nowt to look forward to (2012)

Book Review from the August 2012 issue of the Socialist Standard

The Road to Wigan Pier Revisited, by Stephen Armstrong. Constable.  £11.99.

In 1936 George Orwell travelled to Wigan and wrote a classic account of the extent and effects of poverty. Now Stephen Armstrong has gone not just to Wigan but also to other towns in the north of England to report his findings.

There are many similarities between the thirties and now: a recession, high unemployment and cuts in government spending, for instance. Above all, there is destitution, as many people are barely able to survive on what little they earn or the pittance they receive from the state. It is the personal accounts Armstrong provides that bring this home far more than any statistics could do.

One nineteen-year-old woman in Manchester was pregnant but she overslept and missed her first scan.  As she had no proof she was pregnant, the Job Centre sanctioned her for being late for an interview: she was taken off Jobseeker’s Allowance and had to make do with hardship payments of £28 a week. Job Centre staff are given a target of referring three people a week for sanctioning (their jobs supposedly consist of helping people into employment).

Another woman was made redundant, and now she cannot afford to heat her house in winter. She cuts Brillo pads in half before using them, has stopped buying butter since it went up 5p and uses her old clothes as cleaning cloths. One twelve-year-old sometimes eats only a bowl of cereal a day. He has never been outside Wigan. Another woman gets about £8 a day in benefits and is reduced to sleeping on her daughter’s sofa. She says, “It’s horrible, there’s nowt to look forward to, there’s nowt to fetch kids into this world. I’ve worked all my life and I’ve got nothing to show.”

Most of the poor are not on benefits, however, but are employed. A particularly nasty development is zero-hour contracts, which do not actually guarantee paid work during slack periods. One man interviewed had a four-hour contract at Argos in Warrington, which made him ineligible for unemployment benefit. Things were OK when he worked 36 hours a week, but during a period of heavy snow there were few shoppers and most staff were sent home with four hours pay at minimum wage: £28. These and many others are part of the ‘precariat’ (a blend of precarious and proletariat).

As Armstrong says, ‘the poor make a lot of people very, very rich’. If you pay for gas or electricity using a prepayment meter or cards, you pay a much higher rate than those who get a regular bill. Payday loan companies and doorstep lenders such as Provident Financial exploit this ‘non-standard credit market’ and do very nicely out of it (Provident made pre-tax profits of £62 million in the first six months of 2011). Rent-to-buy companies like BrightHouse sell TVs and other goods via weekly payments which can add up to well over twice the straightforward purchase price. They have vicious late-payment charges and are not above shouting to the whole street that you owe them money. A New York hedge fund has a majority stake in the company.

Unfortunately, Armstrong spends too much time criticising MPs for fiddling their expenses, and does not look into the real reasons for the poverty he depicts, class ownership and the profit motive.

Paul Bennett