Saturday, February 15, 2014

It could be you (1995)

Editorial from the October 1995 issue of the Socialist Standard

As this year's conference season grinds on the attribution of blame continues in earnest. Aspiring politicians hoping to hit the jackpot know that their party's conference is the big one. For them this is the major event of the year, a televised showpiece designed to maximise the possibilities afforded by what is no more than institutionalised peddling of hopes. So forget the National Lottery, for in this game of chance we are all participants and therefore all as equally likely to have the finger pointed at us.

In the same random fashion that coloured balls are spewed out of the National Lottery number selector so scapegoats for society's ills are picked out. As a member of the working class there is every likelihood that some facet of your existence will be selected and held up as the cause of a one of the current ills that befall us.

It is foolish of us to expect anything else from these smooth-tongued professional mouthpieces. No politician became rich or successful by concerning themselves with honesty, truth or principle. And as they inch their way up the greasy pole of career politics we can only watch as their promises of a better world are continuously held over into life's eternal rollover week.

In this world of rigged opportunities where life's ticket is handed to you at birth the dreams invested in lottery jackpots and the power bestowed upon political dream merchants exist only with your agreement. It is you the finger points at. For if you accept that chance is dependent upon matters outside of your control then you are ignoring the opportunity that is available to us. To take control of our lives and rid ourselves of the organised fraud that is capitalism.

Why do we need socialism? (1987)

From the April 1987 issue of the Socialist Standard

The reaction of many workers to this question will be to dismiss it as being no concern of theirs. They are concerned, they say, with the company that employs them, with their chance of keeping their jobs and with getting more pay. They are mistaken. What happens to a particular company depends on its ability to sell its products at a profit, which in turn depends on what happens in the economy as a whole - that is in capitalism. Workers give partial recognition to this by organising with other workers in trade unions. Socialists urge them, in their own class interest, to take the further step of replacing capitalism with socialism.

Capitalism, the social system under which we live now, is briefly described in our Declaration of Principles:
Society, as at present constituted is based upon the ownership of the means of living, (i.e. land, factories, railways etc) by the capitalist or Master class, and the consecutive enslavement of the working class, by whose labour alone wealth is produced.
And our Object deals with socialism:
The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community. 
Unfortunately, and through no fault of our ours, the terms capitalism and socialism have both come to be widely used to mean something quite different from what they mean to socialists.

The Labour Party and the Tory Party have, for many years, restricted the term capitalism to cover only part of the whole capitalist system, excluding from the definition the nationalised, or state capitalist industries. In keeping with this unjustified limitation both parties have chosen to call the state capitalist industries "socialism".

This was not always so, for some of the leaders of the Labour Party once took a different view. Sidney Webb, later to become a minister in Labour governments, signed  the Manifesto of English Socialists which contained this declaration:
On this point all socialists agree. Our aim, one and all, is to obtain for the whole community complete ownership and control of the means of transport, the means of manufacture, the mines and the land. Thus we look to put an end for ever to the wage-system, to sweep away all distinctions of class, and eventually to establish National and International Communism on a sound basis.
In 1907 Keir Hardie the "father of the Labour Party" - and its first champion, justified nationalisation, not as an end in itself, but on the ground that "it will prepare the way for free communism . . . in which the rule of life will be  . . . 'from each according to his ability. To each according to his needs'". In saying this he was, as he said, claiming the Labour Party to be Marxist.

The Tory Party has been equally inconsistent. Now they say that nationalisation is socialism. They did not say that in 1844, when they passed the first act giving the government power to nationalise the railways, or when Tory governments nationalised the postal, telegraph and telephone services of when they set up the Central Electricity Board and the BBC. Their version then was that these were measures undertaken in the interests of capitalism.

They have a special problem with their idolised leader, Winston Churchill, for during the greater part of his political life he was a supporter of nationalisation and, in their misuse of language, must therefore have been a "socialist". Churchill was minister in several governments which nationalised various services and in 1943, when he was Prime Minister, he declared: "There is a broadening field for state ownership and enterprise, especially in relation to monopolies">

Karl Marx spent a large part of his life studying the historical developments which produced capitalism. He identified what distinguishes it from earlier social systems, describing how capitalism came into being with the forcible removal of the peasants from the land, turning them into a propertyless class - wage earners producing profits for the owners of land and capital. In his analysis Marx set out the conditions necessary for the rise of the capitalist system of society -  a peasantry forced off the land and compelled therefore to seek employment; an owning class possessing land and money; the prevailing arrangement being the production of "commodities" (the products of industry should be, not for the direct use of the owning class but for sale in the market) and the dispossessed class being wage workers as opposed to slaves.

He showed that the essential, distinctive characteristic of capitalism is not the exploitation of one class by another, or riches and poverty (both existed when there was slavery and where there was serfdom) but commodity production as the prevailing system, wealth being produced by a class of wage-earners. So the opening paragraph of Marx's Capital (Vol. 1) begins with the words:
The wealth of those societies in which the capitalist mode of production prevails presents itself as "an immense accumulation of commodities". 
 In line with this, Marx's aim of replacing capitalism with socialism involved, not only the dispossession of the owning class, but the ending of production for sale. It was put by Marx and Engels in The Communist Manifesto as "the abolition of buying and selling". Engels said: "With the seizure of the means of production by society, production of commodities is done away with". Marx also showed that historically, in all forms of society, the way in which the products of industry are divided among the different class is determined by the existing mode of production itself.

In socialist society therefore, with production directly and solely for use and the consequent disappearance of the money system, the wages system and incomes from the ownership of property, all will have free access to what has been produced. This brings us to another misuse of the word socialism, based on the fallacy that state capitalism (nationalisation) is socialism. We are told the world is divided into "capitalist countries" and "socialist countries", the latter comprising Russia with her allies and associates, China, and such modern countries as happen to have governments which call themselves "socialist" (France and Spain at present and Britain when the Labour Party is in power).

This theory is totally without foundation. In all the 160 countries in the world there is a wage-earning class divorced from the means of production, getting a living by being the employees of the companies and governments which own and control society's means of production and distribution. In all there are inequalities of wealth and income; the more money you have the more you can enjoy of the products of industry. In all, the prevalent form is commodity production' production for sale at a profit. (In Russia for example a large part of the revenue of the central government is described as "a share in the profits of state industry'). The very existence of the 160 separate countries with their conflicting interests and armed forces is an indication of world-wide capitalism for, as Marx said, the formation of the separate nation states was a necessary part of the establishment of capitalist class supremacy.

In seeking to abolish capitalism and replace it with socialism the appeal of socialists is to the working class of the world, in whose common interest it is to bring about that revolutionary change.
Edgar Hardcastle 

Keynes’s World (A Capitalist Utopia) (2006)

From the October 2006 issue of the Socialist Standard
Maynard Keynes imagined a society that would be centred on the pursuit of enjoyment rather than accumulation, but like other reformists he couldn’t fathom a future without money and commodities.
Markets, profit, money, and private property seem as natural as the air we breathe to most people. Like Adam Smith, they believe that the “propensity to truck, barter, and exchange one thing for another” is an aspect of our human nature. So it is naturally assumed that commodity exchange will continue to exist in the future, and that the only realistic way to overcome the problems we face is through a reform of capitalism. This is the “common sense” of today. And from this perspective, socialists appear to be unrealistic dreamers.

Certainly, socialists do dream of a new form of society, but our conclusion that fundamental social change is necessary is based on an understanding of today’s reality. We know from experience and study that the serious problems which humanity faces, such as poverty and war, arise naturally from the capitalist system itself. History also teaches us that other forms of society have preceded capitalism, so this system is neither eternal nor rooted in “human nature.” And we also have an idea of how to achieve socialism by means of a revolutionary political movement.

The aim of this article, however, is not so much to refute the claim that socialists are unrealistic, as to throw this same criticism back at those who believe capitalism will somehow work out its problems in the future. This reformist view, quite frankly, is a daydream. To concoct their capitalist utopia, reformists have to overlook the nature of capitalism as a class-divided system of production for profit, not to mention the fact that profit stems from surplus value obtained from workers.

The unreality of the reformists’ standpoint becomes clear if we look at any of their depictions of a better future under capitalism. The view of the economist J.M. Keynes seems as good as any to consider, particularly since his stature has been high (at times) among both capitalists and self-styled leftists.

Keynes’s prediction
In a 1930 article entitled “Economic Possibilities For Our Grandchildren,” Keynes predicts a far better world in a hundred years. He does not attach any label to his future society circa 2030, but it is said to be a world where the “economic problem” has been solved. This is defined as the problem of scarcity, which he describes as the central economic problem that has confronted humanity throughout history. Overcoming scarcity will mean that people’s “absolute needs” (as opposed to subjective needs) are fully met.

The solution to the problem of scarcity, Keynes says, is a continuation of the capital accumulation and technical innovation that have been raising the standard of living since the dawn of the “modern age” (capitalism) following centuries of stagnation. He views capital accumulation in material terms, noting that if capital increases at two percent a year, “the capital equipment of the world will have increased by a half in twenty years, and seven and a half times in a hundred years.” He encourages the reader to “think of this in terms of material things — houses, transport, and the like.”

This steady capitalist growth is the basis for Keynes’s bold prediction that the standard of life in “progressive countries” in a hundred years’ time “will be between four and eight times as high as it is to-day,” even adding that it “would not be foolish to contemplate the possibility of a far greater progress still.” Expressed in qualitative terms, he says that once economic scarcity has been overcome, we will be able to “devote our further energies to non-economic purposes.”

What scarcity?
Before further examining Keynes’s solution to “economic scarcity,” it is worth considering whether scarcity, at least as he understands it, is indeed our main problem.

Keynes is hardly alone in raising the problem of scarcity. In a popular university textbook by Harvard professor Gregory Mankiw, who chaired the Council of Economic Advisors under George W. Bush, students are informed on the very first page that, “Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have+a society cannot give every individual the highest standard of living to which he or she might aspire” (Principles of Economics).

Here this problem of scarcity is both an explanation and a justification for why some people have a less than ideal life. But if society’s resources are so limited, how can the rich (like Mankiw himself), and the ultra-rich, justify their own disproportionate consumption? The fact that a single individual, Warren Buffett, has 35 billion dollars on hand to donate to a charity run by another multi-billionaire, suggests that the “scarcity” some of us face does not stem from the limited resources of society.

The fact that the economic scarcity of certain individuals is an artificial condition, related to class divisions, should have been perfectly clear to Keynes. Already a century earlier, the Swiss economist Sismondi had been shocked to see first-hand how miserable workers in England were despite the tremendous advances in the output of production. The artificial nature of “scarcity” under capitalism becomes even clearer during a crisis, when factories remain idle because production is not profitable and commodities rot on shelves for a lack of customers.

Keynes wrote his article at the outset of the Great Depression, so he could not completely ignore the mass unemployment of the time. Yet, in his article, unemployment is dismissed as “growing-pains from over-rapid changes” or a “temporary phase of maladjustment.” He was confident that in the long run things would work out, which is a bit rich coming from a man who reminded us that “in the long run we are all dead.” Today, more than 75 years later, these growing pains continue. The “scarcity” resulting from unemployment seems unlikely to end any time soon.

Keynes’s way of framing the problem in terms of scarcity, and finding the solution in increased production, only makes sense if it is assumed that we are already dealing with a socialist society. That is, in socialism, where there is social ownership of the means of production and the aim of production is to directly meet human needs, any expansion of material production or increase in labour productivity would potentially raise the standard of living for every member of society.

Things are a bit different under capitalism. We know from experience, for example, that the introduction of new technologies or increased productivity will not necessarily result in a shorter working day or improved standard of living. This seemingly illogical state of affairs is not surprising when we consider that technical improvements are only made to gain a competitive advantage that will result in higher profits.

Keynes chooses to ignore the obvious fact that the pursuit of profit underlies technical innovation, making it seem instead as if every increase in production under capitalism will directly raise the standard of living for the population as a whole, bringing us that much closer to the end of scarcity.

Neighbourly thinking
How will we know when economic scarcity has become a thing of the past? Keynes writes: “The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed. The critical difference will be realised when this state of affairs becomes so general that the nature of one’s duty to one’s neighbour is changed.”

He argues that the number of affluent members of society will increase to the point that people’s way of thinking changes. Instead of being “economically purposive” (selfish), people will be generous towards each other. It is not at all clear, however, how “general” this state of affairs will have to be for a magical transformation in consciousness to take place.

The absurdity of Keynes’s dream speaks for itself. Why would a person suddenly begin acting in a neighbourly fashion one day, if the competitive system that had fostered his avarice were still very much in place? Moreover, it takes considerable wealth today for a person to be able devote his or her “energies to non-economic purposes.” And even those able to retire from the business world, to engage in philanthropy and the like, appoint other “economically purposive” characters to manage their affairs. At any rate, few people are satisfied even after their “absolute needs” have been met, and most seek to accumulate a bit more just to be on the safe side. It should be obvious that the general way people think and behave will only fundamentally change once we are free of the insecurity that the competitive capitalist system breeds.

To his credit, Keynes does seem a bit disgusted by the selfish way people act under capitalism in its present form. But in a strange twist of logic, he argues that selfish behaviour will some day set us free from selfishness. In fact, he warns us not to start acting too generous, too soon: “But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair, for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer. For only they can lead us out of the tunnel of economic necessity into daylight.” Apparently, the road to paradise is paved with bad intentions.

“Economic bliss”
Keynes’s depiction of what he jokingly refers to as “economic bliss” is very brief, but he does manage to effectively contrast the stunted nature of present-day life with a far more civilised existence in the future. He notes, for example, that people will begin living for the sake of enjoying the present, rather than endlessly accumulating for tomorrow. Instead of the fawning over the rich, people would value those “who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking the direct enjoyment in things.”

Keynes also points out that even after we are free of economic scarcity, many people will have a strong desire to work. He suggests, for instance, “three-hour shifts or a fifteen-hour week” would probably be “quite enough to satisfy the old Adam in most of us!” It is not clear whether this work is actually necessary, or just a way for people to occupy their time, but Keynes is right to suggest that work can be a source of human satisfaction (if taken in the proper dosage), which refutes the idea that no one would bother to work in socialism.

Compared to the joie de vivre that characterizes life in his future world, Keynes says that today’s love of money “as a possession” would seem a “somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.” And he looks forward to the day when “all kinds of social customs and economic practices” that are “distasteful and unjust” can at last be discarded. Although, true to form, he feels obliged to remind us that such habits are “tremendously useful in promoting the accumulation of capital,” which is his motive force of history.

Many of Keynes’s observations, ironically enough, are applicable to life in socialism, but his clear assumption is that the system of production from the days of economic scarcity remains more or less intact. Even though money will no longer be loved as a possession, it will still be cherished “as a means to the enjoyments and realities of life.” In other words, people will still have to pay for whatever they consume. This naturally means that products are produced as “commodities” for exchange, and therefore the means of production are in the hands of private individuals or groups of individuals. Keynes even admits that there will be people in the future with “intense, unsatisfied purposiveness who will blindly pursue wealth,” although he assures us that we “will no longer be under any obligation to applaud and encourage them.”

In short, Keynes looks to a future where people are generous and enjoy life to the fullest even though production is carried out with profit in mind and money still makes the world go round. To which socialists can only respond: Dream on!
Michael Schauerte

Cooking the Books: Cash Mountains - Why? (2012)

The Cooking the Books column from the April 2012 issue of the Socialist Standard

In his City column in the London Evening Standard (21 February) Anthony Hilton commented on the fact that at the moment “firms are awash with cash”:
“It is certainly highly unusual for companies to be in such surplus. Over the past half-century in both Britain and America, companies have shown themselves far more likely to be borrowers than savers. It is different now because they are behaving differently. Companies are sitting on mountains of cash because they have decided no longer to invest it. The ratio of investment in GDP in the developed world is about the lowest it has been for 60 years. What we now see – in Britain and the Unites States in particular – are corporates running themselves for cash rather than growth.”
This is indeed how many capitalist corporations are behaving at the moment, but the way Hilton puts it makes it seem that this is a deliberate change of policy objective on the part of those in charge of them: in the past they aimed at growth by re-investing the profits they made; now they have decided to use them to build up their cash reserves instead.

But why? This doesn’t make sense in terms of capitalism as a system where capital is accumulated out of profit and then reinvested in production, (i.e. growth), and where those who Marx said “personified capital” (today the top executives of capitalist corporations more than the individual capitalists of his day) are “merely a cog” in a social mechanism which obliges them to “keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation” (Capital, Vol 1, ch. 24, section 3).

Hilton’s explanation is that a target for building up profits that are not necessarily re-invested is attained more easily and quickly than a target for growing the size of the business; so top executives prefer to set such targets as easier for them to achieve and so claim their bonuses. “The bonus culture,” he says, “is destroying the system. The focus on the short term has led to a calamitous fall in investment which has unbalanced the entire national economy.” In short, it has even caused the present crisis.

The present crisis has been caused by a lack of investment; in fact, that’s what it is, a fall in investment which has had knock-on effects, on consumer demand and government debt as well as on output and employment. So Hilton is not entirely wrong when he writes:

“Conventional wisdom holds that the mess we’re in is the result of governments spending too much. But it could also be thought of as the consequences of firms spending too little.”

This, in fact, is how it should be thought of. The present slump has been caused, and is continuing, because of the reluctance of companies to re-invest any profits they are still making to expand production. But not for the reason Hilton suggests. It’s not because companies have decided to deliberately build up their cash reserves. It’s because they have calculated that they won’t make any or enough profit if they do invest. So they don’t, and as a result their cash reserves build up. Hilton has got it the wrong way round.