Obituary: Comrade MacHaffie (1931)

From the May 1931 issue of the Socialist Standard

It is with great regret that we record the death of Comrade W. E. MacHaffie (Mac), of the East London Branch, at the age of 47 years, on Thursday, March 12th.

Comrade MacHaffie joined the Party shortly before the outbreak of war in 1914. As a result of his activities during the War he came into conflict with the authorities and was sent to prison. Later, during transfer from one prison to another, he escaped. From that time began a struggle against odds which finally defeated him and undoubtedly shortened his life. The necessity of keeping "on the run" to avoid arrest, the difficulty of obtaining food because of the Government's rationing schemes, and lack of money finally reduced him to a shadow of his former self. Early in 1918, starvation, accompanied by a tubercular disease which he had developed, compelled him, after nearly four years of struggle, to give himself up to the police. From that time his life was constantly interrupted by periods of hospital and sanatorium treatment. Never willing to believe that he was really ill, he invariably discharged himself from these institutions as soon as he was physically capable of walking out, causing much consternation to the hospital authorities thereby. A few days before his death he assured the writer, who expressed concern at his deathly appearance, that he would improve his health with the arrival of the finer weather.

He could never be persuaded to take any part in the Head Office side of the Party's work. He was a "branch man" and was perhaps almost unknown by many with long service in the Party. Essentially a propagandist and educationist, he was impatient with cant and timidity of thought. Yet with patient skill he would spend hours explaining complex points to younger members of the branch he did so much to form, and encouraging them to do the work his health prevented him from doing.

He was a powerful and feared opponent; a kindly and generous friend; a fountain of knowledge and an almost inexhaustible source of information to hundreds who had come in contact with him inside and outside of the Party.

He will be gratefully remembered for a long time to come by those who knew him.

H. W.

Our First Prospective Candidate for Parliament (1928)

From the November 1928 issue of the Socialist Standard

At a meeting of the Battersea Branch, Comrade Barker of the Tooting Branch, was adopted as prospective candidate of the Socialist Party of Great Britain for Battersea.

It now remains for those who desire to see our candidate go to the polls to give practical effect to their wishes by swelling the parliamentary fund to the required dimensions.

As we pointed out originally, our candidate will go to the polls if we are provided with sufficient funds to carry the business through.

Between the Lines: Jewish Anarchists and the Wobblies (1986)

The Between the Lines column from the August 1986 issue of the Socialist Standard

We lost; they won

It has been a miserable few weeks for "us". First "we" got torn apart by the Indians in the Test Match. Of course, "they" were using unfair tactics -  and "we" taught "them" how to play the game. Then "the Argies" get their own back in the World Cup. Maradona, using the Belgrano tactic (when "they" do it's called cheating to win) knocked the Falklands spirit out of Jimmy Hill. Then some unknown American (worse still, a negro) demolished "our" boy, McGuigan. And to finish it off "we" didn't stand a chance at Wimbledon. TV sports commentators — a unique tribe of know-nothing nationalists — are buried in the vocabulary of "us" and "them". World sport becomes a spectator version of world war, and viewers are treated to such phrases of nationalist nonsense as "Well Jimmy, it looks like the Brazilians are up to their old Latin tricks" and "Look at those Moroccans — they must be proud to be playing against a team like England". (Morocco beat England.) And as the World Cup final was played between England's two old enemies, "the Jerries" and "the Argies", wasn't it a pleasure to watch Jimmy Hill sitting there trying to find a way to hate each more than the other?

How to succeed in nastiness

It is not often that this column has reason to mention Terry Wogan. Perhaps that is because we endeavour to deal with the TV output which our readers are likely to bother with. But much as one tries to avoid him, it is difficult to watch BBC TV for very long without being caught. Wogan (BBC1, 2 July, 7.00pm) had as his guest a fifteen year old boy who had started his own business, employed other people and was raking in a five-figure income. He boasted about being driven to school in a chauffeur-driven car and eating in the best of restaurants. How did he achieve this? By employing others to work hard to make him profit. We were not told where he got his initial capital from and no doubt viewers were supposed to conclude that here was a model of how they too could get rich. In fact, the kid was a rather nasty bit of work, boasting about how he ensured that his employees did not "misbehave" and explaining how examination knowledge was of no interest to him. Quite true: you don't need to have many ideas to get rich, just plenty of wage slaves willing to carry you on their backs. Capitalism loves the successful entrepreneur (remember Freddie Laker?) and the mass media offers every impoverished wage slave the promise of reaching such frank prosperity. We look forward to seeing Wogan interviewing a few of the countless victims of the dole queue to see if they have as much to laugh about.

The Jewish anarchists

It makes a refreshing change to find a TV programme dealing with radical ideas in a serious and sympathetic manner. The Free Voice of Labour: The Jewish Anarchists (Channel 4, June 26), was the fourth programme in an excellent series on American labour. The film, using interviews, snippets of rare films, newsreels, stills and song, told the story of the Yiddish anarchist paper, Freie Arbeiter Stimme, established on 4 July 1896. Although the aim of the paper was to spread ideas about a society without government, coercion and wars, it also provided a medium for Yiddish culture, theatre, poetry and literature.

The historian Paul Avrich, author of several books on anarchism, explained how Jewish immigrants escaping from Eastern Europe were disappointed with life in capitalist America. The so-called land of liberty, promise and opportunity, was brutal and oppressive. The conditions of labour in the sweatshops and factories of Boston and New York were miserable, the wages low. Some of these experiences are reflected in the folksong, Mayn Rue Plats, (My Place of Rest).

Don't look for me where the myrtles grow
You won't find me there, my love.
Where lives wither at machines, that is my resting place
Don't look for me where birds sing.
You won't find me there, my love.
I am a slave, and where my chains ring,
That is my resting place.

The Jewish immigrants worked mainly in the needle trades and it was here that anarchists and radicals became involved in the struggle, often violent, to establish trade unions and the eight hour day. This story is captured in the Yiddish feature film, Uncle Moses (1932) and in the folksong, Makhnes Geyen (Masses Marching):

How long, oh how long
Will you remain enslaved
Bearing the shameful shackles?
How long can you create magnificent riches
For him who robs you of your bread?
How long will you stand stopped back,
Down trodden, homeless, in pain?
It's dawn, already! Wake up!
Open your eyes!
Recognise your strength of steel!

The Jewish anarchist movement was at its height between 1880 and 1920, and during this short period of time it helped to influence the development of the American labour movement. In the 1920s and 1930s anarchist ideas were kept alive by Italian and Spanish immigrants. Several reasons were given for the decline of the Jewish anarchists. Firstly, the overthrow of Tsarism in Russia by the Bolsheviks, who used slogans such as "All Power to the Soviets", attracted many young and active anarchists, who formed the backbone of the American Communist Party. Secondly, America's entry into the First World War led to an increase in patriotic fervour and a crackdown on all "subversive organisations". Anarchists and Wobblies were attacked for making anti-war speeches. The Palmer raids led to persecution and imprisonment for radicals. Under the Espionage Act, anarchists such as Emma Goldman and Alexander Berkman were deported. Finally, Jewish anarchism can be seen as partly a response to the experience of being an immigrant in a strange and hostile country. Future generations were rapidly assimilated into mainstream American life. With the decline of Yiddish language and culture went the decline of the Freie Arbeiter Stimme. It ceased publication on the 25 November 1977, with a circulation of 1,700.

Many of the ideas discussed in this fascinating programme have been consistently advocated by the Socialist Party - the abolition of the state, opposition to all capitalist wars, and rejection of the state-capitalist system found in Russia and other so-called socialist societies.

Having watched this programme and sung along with Hey, Hey, Daloy Polltsey (Down with the Police), I somehow couldn't face the next programme, Their Lordship House.


The Wobblies

On July 3, C4 continued their series about American labour history with a programme on the Wobblies, the Industrial Workers of the World. It described their attempts before and during the First World War to organise unskilled and immigrant workers into the one big union. These workers were in a weak position, working long hours for low pay and often their periods of exploitation were irregular. The Wobblies had some success in recruiting them, much to the consternation of the bosses and their newspapers, who described the union men as thugs, vagabonds, workshy and other such names popular among defenders of the parasite class.

The programme had some old Wobblies recalling several successful strikes, where the solidarity of the workers paid off despite the violence and intimidation of the bosses, their police and courts. The determination and intelligence of these people was a conclusive answer to those who doubt workers' ability to organise for themselves.

The Industrial Workers of the World were beaten when America joined the war and the bosses made sure there would be no interruption to the military defence of their markets and strategic interests. This came about at a time when the Wobblies were split over the Russian revolution, which many wrongly saw as the workers taking over the factories for themselves. One weakness of having leaders and followers was shown when the leaders of the Wobblies were jailed on trumped-up charges or fled the country to Russia. If there are no ringleaders then it is difficult to pick them out.

The actions of the state in breaking up the Wobblies show the inadequacy of organising in one big union. You ignore the state at your peril. A separate political organisation aiming at democratically seizing state power is needed; union organisation is necessary, but is never enough.

Many of the Wobblies as migrant workers were deported for their "anti-American" activities, and a poignant scene showed them being shipped out past the Statue of Liberty. Coincidentally, the next day most news programmes had an item on the restoration of the statue, and its lighting up on Independence Day. This is a time when Americans are supposed to celebrate the anniversary of a change in their exploiters, from foreign to homegrown ones.

Ronald Reagan was at the ceremony, of course, where he made his usual speech about freedom, liberty and the US being a shining city on a hill, showing the way for all freedom-loving people. Reagan uses the words freedom and liberty a lot. The previous night's programme showed that in America, as elsewhere, it is the freedom for the bosses to exploit the workers, and the liberty of the workers to be wage-slaves, to starve or to get beaten up for resisting.


The Wirecutters

World in Action (ITV, 7 July, 8.30) showed a documentary entitled The Wirecutters. It was about the 2,000 odd reformists whose contribution to preventing a Third World War is to cut the wire fencing around US military bases — a pathetically futile waste of time, although one could not doubt their sincerity. No doubt either about the sincerity of Lady Olga Maitland when she says that we need bombs to preserve peace, but sincerity is insufficient. The reaction of most workers to reformists like the Wirecutters is to say that they will get nowhere. Then when they encounter socialists talking about how the means are at hand to really end all war they dismiss us with the same cynicism. The message of this documentary is that reformists not only fail to eradicate the problems they claim to be solving — they make it harder for those of us who are advocating the real solution.


Peacock

First came the leak and then the publication and then the interpretation of the Peacock Report on whether the BBC should be nationalised, privatised, commercialised or simply left to carry on telling lies in the same old way. The Socialist Party's verdict on the report? Yawn! Snore! Throw Terry Wogan to the lions!

Steve Coleman

The Right to be Lazy (1971)

From the November 1971 issue of the Socialist Standard

In the course of the French revolution of 1848 the workers of Paris  went into the streets to demand "The Right to Work".  Ever since, whenever unemployment has grown, trade unionists have demanded the same "right". In fact the Clydeside shipworkers are supposed to be asserting it at this very moment

But what is this high-sounding Right to Work? To the average trade unionist it is probably the "right" to have a job and the pay packet that goes with it. It would, in other words, be more accurately called "The Right to Employment" or "The Right to Work for Wages"

It should not be necessary to argue that under capitalism no such right exists, nor could it. Capitalism is based on the ownership of means of production by a minority.  The rest have no alternative but to sell their ability to work — when they can — to one or other of these  employers.  But the employers are not philanthropists. They do not employ people in order to give these employees a living. They  only employ people when they have calculated that they themselves can make a profit from selling the goods the workers produce.

Production, and therefore employment, is determined under capitalism by the profit motive. The rule "no profit, no production" is the guiding economic principle. If those who own the means of production calculate — as many have done recently — that they cannot make a profit by selling the goods their factories could turn out, then they will run those factories below full capacity or even close them down altogether. The result is the mounting redundancies and growing unemployment we are now experiencing.

This is the normal way capitalism works and is one reason why the Right to Work is a completely unrealistic demand. It amounts to demanding that employers abandon the profit motive and operate their system on some other principle. But they could not do this even if they wanted to, since what they can do is limited by the working of capitalism's market forces. Nor could they be forced to do it even by the most militant trade union or political action. If pressed too far, they would merely shut up shop. The stark fact is that capitalism creates, and needs to create, rising unemployment from time to time.

So, our average trade unionist may now be thinking, are you saying that in order to get the Right to Work we must get rid of capitalism and establish Socialism? No, we are not! We are not in favour of the Right to Work in the first place. Remember the Right to Work is merely a fancy way of referring to the Right of Employment, the Right to Work for Wages. In our view, this is demanding the Right To Be Exploited. It involves accepting capitalism and its wages system. The employer/employee relationship is based on exploitation since, if the employer is to make a profit, the wages he pays his employees must be less than the value of what they produce. The system of employment for wages shows that human brain and muscle power has become a mere commodity, to be bought and sold like some object. It signifies that those who actually produce the wealth of society are excluded from ownership and control of the means of production and so have no choice but to operate them for the employers on the employers' terms — and at the employers' convenience. The wage packet is in fact a badge of slavery.

No, Socialists don't want the Right to Work. It would be more accurate to say that we want its opposite, the Right To Be Lazy. This isn't as way-out as might seem. Just think of developments in technology over the past hundred or so years, developments which  are still going on, and you will see that the bulk of the hard grind of production is now done, and could be done even more, by machines. Automation could now relieve human beings of the burden of boring toil. Nobody need do a job he doesn't like doing. The set working day could be reduced to two or three hours, freeing men to engage in the activities of their choice, including even producing useful things.

Of course, this will never happen as long as the means of production are the property of a minority. It could only happen in a society where the factories, farms and other places where wealth is produced are commonly owned by all the people. There would then be no employers, nor wage-earners. Instead everybody would be an equal member of a free community organised to produce an abundance of good-quality consumer goods for people to take freely according to their needs.

Actually, so long as it is enjoyable, work is a natural human activity, not to say need. In this sense to talk of the Right To Be Lazy can be misleading. But although men will always work, there is no reason for it take the form of boring toil. It could and should be interesting and so become like some of today's leisure-time activities — done for the fun of it.

To convert work from boring toil to creative activity is now possible. The ethic of hard work — necessary perhaps in the past to build up the means of production to the point where they can now turn out abundance — is outdated, and worse: it helps to keep capitalism going. No five words better sum up the Socialist's emphatic rejection of the dogma that boring toil must be the lot of mankind than the slogan "The Right To Be Lazy". Speed the day when trade unionists begin to demonstrate for this rather than some spurious Right to Work.

Between the Lines: Utopias and First Tuesday (1989)

The Between the Lines Column from the June 1989 issue of the Socialist Standard

The Myopic Visionaries

Somewhere in the basement of Channel Four there is an office in which is to be found a team of timewasters whose lifelong project is to make lengthy documentaries about "socialism" or "Marxism". Over the years the C4 audience has been subjected to numerous programmes of this kind. We wait excitedly, expecting a serious analysis of the subjects so seductively advertised in the titles — and with regularity we are left feeling frustrated, cheated and wondering when the case for socialism would at least be mentioned in passing.

Utopias (C4, 10.45 pm, 1 May) was a classical production of the basement timewasters. The programme lasted for over an hour. It was clearly produced with enormous technical care, using props and recordings of speakers which looked like they were going to serve as a backdrop for something more than superficial. The title was intriguing. Socialists are often called utopians, and here was a programme offering eight "socialists" the chance to discuss their visions of what socialism means. Within the first few minutes that sinking feeling began: the declaration was made that this would not be a programme about definitions. Which meant, more precisely, that it would be a programme in which anyone who felt like it could call themselves socialists without being under the least pressure to explain themselves.

Then the visions commenced. Eight miserable bloody visions of capitalism run better than it is now, with the occasional reference to such limited dreams as being elements of socialism. Jack Jones, the first lofty dreamer, who as head of the TGWU advocated the so-called Social Contract whereby trade unions would agree to take lower wages in order to assist a Labour government to manage the capitalist economy, offered the vision of "fair pensions" and an incomes policy as his taste of utopia. Then came a "socialist" economist who talked a bit about the need for morality and the impossibility of doing away with market forces altogether; followed by some ex-strikers from Silentnight who had set up a furniture-making co-operative business and saw this little dot on the market map as their own piece of socialism in practice; Sheila Rowbotham's utopia had been and gone. It was the GLC, and if that was utopia, then Birmingham's a tropical holiday resort.

Rarely has so much valuable TV time been wasted upon such vague and limited visions of what could be. Here was a chance for a socialist to really show what life could be like in a world set free from the bondage of the profit system. A world of abundant resources in which people could give according to their abilities and have free access to the goods and services that they desire. This would have been something to make them sit up, make them now that there is something more that we could have if only capitalism was not here.

Instead of that we are offered neither socialism nor utopia, but the stale reformist outlooks of capitalism's tame leftwing. As is often the case, the worst contribution of the evening was provided by the SWP. David Widgery, who is an SWP Leninist, a GP and a very pleasant fellow, trotted out the usual line that workers must organise to get reforms out of capitalism. As he put it, "In these times, to be a revolutionary means to try to hang on to reforms". So, the total destruction of the capitalist system is to be postponed a while; there are prescription charges to be fought over. We can only hope that the men in the basement (or wherever they are) take a long time before producing their next intellectual tease.

The Practitioners of Genocide

First Tuesday (ITV, 10.40 pm, 2 May) contrasted strikingly with Utopias. It did not claim to deal with any grand intellectual theme; its subject was the My Lai massacre carried out by the US army twenty years ago. It was the most forceful and moving documentary to be shown on British TV for a long time. It should be seen by anybody who has illusions about the glory of war.

The documentary concentrated upon the way that military training brutalised a group of American workers, whose average age was twenty, into Nazi-like sadistic thugs. One of the few surviors in My Lai was interviewed. Like most villagers, her entire family had been killed in the massacre: "The more I think about it, the more I want to cry" she said, two decades after the atrocity had been committed. She had been thrown into a ditch with scores of dead villagers piled in on top of her. She explained how the soldiers had indiscriminately shot old men and women and infants and babies, how they had raped the women and done worse to young girls, how they had tortured the villagers and then lined them up in rows to be shot. Nearly every one of them was murdered in what the US press called the 'Pinkville' massacre.

The interviews with the screwed up soldiers who are still around to tell the tale demonstrated just how much both killer and killed are the brutalised victims of war. To be sure, the uniformed murderers survive, but with what memories? Psychologically, these men were wrecked; Vietnam had taken their minds and left them badly injured. One black ex-GI sat shaking and twitching. He is on major tranquilisers. He cries a lot. He looks over and over again at press cuttings of the massacre. He recalls, self-torturingly, how he personally shot dead about twenty-five villagers. including several little children. He sits next to a photo of his own son who was murdered in a street attack — and he explains that this must have happened as a punishment for his action in Vietnam.

But, as the documentary clearly showed, these men did not decide to go to Vietnam and slaughter innocent people. They did not act upon a whim. They were driven into a frenzy of violent hatred against the unknown enemy as part of their preparation for the job of being good soldiers.

The documentary ended with pictures of the modern US army being trained, explaining that what is happening to the soldiers is not different from the brutalising process which had turned those of twenty years ago into the practitioners of genocide. No doubt there will be some who will have seen this powerful documentary and concluded that this only demonstrates the awfulness of human nature. That would be a false conclusion; these soldiers were not born thugs, it was the system which required them to be that way. It is capitalism which makes killers out of decent men and women. These men should not feel self-guilt about what they have done, but angry about what they were made to become.

Steve Coleman

A Free Market Guru Gone Wrong (2007)

From the January 2007 issue of the Socialist Standard

The death of the economist Milton Friedman at the age of 94 last November has robbed the free-market of perhaps its greatest advocate of modern times, but his views were wrong in theory and a failure in practice

Friedman did much to prepare the ground for the resurgence in free-market economics that occurred once capitalism had entered a new phase of economic crisis in the 1970s, and was the main driving force behind what became known as ‘monetarist’ economic theory.

Friedman was a New Yorker by birth but made his name at the University of Chicago, where he was Professor of Economics from 1948. His particular brand of free-market economics gave rise to the ‘Chicago School’ of economists who provided much of the intellectual impetus behind Mrs Thatcher’s early years as UK Prime Minister and influenced countless other governments across the world. After his retirement from Chicago, Friedman joined the Hoover Institute and spent considerable time on the lucrative US lecture circuit preaching his free-market creed.

Friedman was a prolific writer on economic matters for much of his life, but his two most well-known works were also the most transparently political: Capitalism and Freedom (1962) and Free To Choose (1980), the latter written jointly with his wife, Rose. Most of his other writings were concerned with monetary economics where he became the guru of those opposed to the dominant economic orthodoxies of the post-war period, particularly Keynesian economics.

The position of Friedman and the Chicago School can be divided into two (related) parts. Firstly, the view that markets are the most efficient way of allocating resources and that government intervention in the economy should be as limited as possible, leaving firms and individuals free to maximise their wealth in competitive markets. Secondly, the view that the massive and persistent rise in price levels across much of the world since the Second World War has been essentially a monetary phenomenon, causing dislocations in the normally efficient workings of the market mechanism, eventually leading to rising unemployment and other economic problems.

Free market voodoo

Friedman and the Chicago School viewed capitalism – if left to its own devices – as a largely unproblematic way of organising society, with its own in-built regulatory mechanisms for successful wealth generation and allocation. The key problem with society was not capitalism, but governments. Throughout the twentieth century governments had become more involved in every aspect of economic life and, in the view of Friedman, were creating problems under the guise of preventing them. State ownership, direction and fiscal policy meant that firms were unable to operate in ways that would otherwise be encouraged by free and unregulated markets, causing economic inefficiencies and blockages. The solution was to ‘free the market’ and reduce as far as practicable the interference of the state.

To this end, within a year of Mrs Thatcher’s election as Prime Minister in the UK, Friedman latched upon her government’s stated intention to ‘roll-back the state’ as the first example of his free-market solution in action in the developed world. Friedman advocated ‘the elimination of all government interference in free enterprise, from minimum wage to social welfare programmes’ and told the Washington Post in 1980 that Mrs Thatcher’s economic experiment ‘could mark the turning away from the welfare state back to the free-market economies of the nineteenth century’.

But this view was problematic for two reasons. One, that no economy, even in the nineteenth century, was a genuinely free-market one. Indeed, the free-market economy is a construct or model – a postulate of economists – and has never existed in reality. Because of the way the capitalist economy works in practice, it almost certainly never will as capitalism, a competitive and necessarily class-divided society, is dependent on state intervention and regulation as an arbiter (and enforcer) of competing interests. Indeed, ironically enough, it was brought into being in large part because of the actions of the state itself in removing feudal peasants from the land through the Enclosure Acts and other devices, so as to create a pool of available wage-workers (without which capitalism would have no producer class).

Second, while the economies of the nineteenth century (and other economies too admired by Friedman in more recent times such as South Korea and Malaysia) were closer to this model than most, there is little about their economic structure which is suggestive of a desirable environment for human beings. In fact, countries with the most rampant free-market economies tend to exhibit characteristics of mass poverty, social polarisation and raging crime above all others.

In many respects then, Friedman’s conception of the free-market was a utopian one, a notion that existed in the heads of the Chicago School economists but not in reality. It could never exist in actuality and the nearer one got to it, the less desirable it appeared anyway.

But Friedman’s resurrection of the totem of the free-market betrayed its unoriginality too. From the outset, Friedman had been a follower of some of those in the earlier ‘classical’ school of economics (such as Alfred Marshall) who thought that governments and trade unions were the economic villains preventing the effective operation of the market economy as the most efficient mechanism for allocating scarce resources. Whatever the inadequacies of the Keynesian School that had replaced their thinking as the dominant one, the very reason classical economics from Adam Smith to Marshall was overturned as the orthodoxy by Keynes was precisely because it had failed to explain – let alone provide a cure for – the most persistent and endemic problems of the capitalist system, such as poverty amidst plenty, mass unemployment and economic crises.

So Friedman’s solution to the emerging economic crises of the 1970s and 80s was an old, discredited one, resurrected for a new audience but where – as the mass unemployment record of the Thatcher government testified – the second performance was no better than the first. That right-wing US politicians such as the former President George Bush were driven to describe the Chicago School’s tax-cutting, free-market approach as ‘voodoo economics’ is in itself quite some testimony to its failure.

Monetarism

The second distinctive aspect of Friedman’s economic thinking was often – and loosely – labelled ‘monetarism’. This was the idea that inflation is a monetary phenomenon with a monetary cause, but – just like free-market economics – this was really an old idea given new life by Friedman and the Chicago School. As an attempt to explain the persistent rises in the price level that had taken place since the Second World War, together with the Keynesian failure to deal with the problem, monetarism represented an attempt to get back to economic basics.

If persistently rising prices had become a noticeable issue after the war, by the 1970s it was a serious problem across much of the world, reaching double-digit figures in most countries, including the most advanced. The explanations for it advanced by economists and politicians of every hue were many and varied. The most prominent were that it was caused by factors such as:

1 the profiteering of the big corporations

2 excess levels of overall demand in the economy

3 wage increases above rises in productivity/ coupled with trade union power

4 excessive government expenditure

5 excessive government borrowing

6 the expansion of bank deposits and credit

7 psychological ‘expectations’, i.e. that price rises are a self-fulfillingprophecy

8 low interest rates

As the problem got worse and the analysis of it more desperate, some of these explanations interlinked. The monetarists at various times indicated some agreement with all of these explanations except the first two, though it was the monetary aspect of their argument that won them most attention and separated their approach most clearly from what had become the prevailing Keynesian orthodoxy.

In essence, monetarism was based on the Quantity Theory of Money and a formula for it developed by Irving Fisher which is the notion that changes in the money supply, all other things being equal, have a direct impact on the general level of prices. Friedman even went so far as to explain that in this respect Karl Marx was one of the first monetarists, holding to an explanation of inflation that focused on the supply of money as the key variable.

Friedman’s argument was that persistent inflation caused a serious imbalance to the successful operation of the market economy, leading to market distortions and failures (which, in turn, explained high unemployment and other contemporary phenomena). Its cause was once again mistaken government interference, this time governments failing to conduct monetary policy based on the equilibrium formula identified by the Quantity Theory of Money as being essential for a stable price level.

Friedman summarised his view in the Financial Times (7 September 1970) by claiming that ‘inflation is always and everywhere a monetary phenomenon – in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output’. This indeed sounded like the analysis of Karl Marx based on his labour theory of value. Marx’s view was that the over-issue of an inconvertible (such as into gold) paper currency above and beyond that needed to carry out production and trade in an economy at any one time, would cause a commensurate rise in prices. This was because such an excess issue of paper money caused an artificial bloating of monetary demand, injecting purchasing power into the economy that was not based on the production of real value embodied in commodities. As demand increases, caused by this excess of circulating money, prices rise in response to it.

For Marx as well as many of the earlier classical economists, inflation was properly called ‘currency inflation’ as it was based on an artificial bloating of the currency leading to a diminution of its purchasing power. Individual prices of commodities could rise and fall too, of course, and the trade cycle would cause the price level as a whole to rise in booms and fall in slumps, but currency inflation was a different phenomenon, caused by governments over-issuing an inconvertible currency.

If this is what Friedman had really meant too, it would have no doubt had some effect on the conduct of monetary policy in a way that could have tackled the problem – but in the eventuality it was not quite what the monetarists meant at all. In fact, the monetarists got themselves into the ridiculous position of agreeing that inflation was caused by an excess supply of money, without being able to agree on what actually constituted ‘money’ in the first place.

Applying his labour theory of value, Marx had taken the view that ‘money’ in capitalism was really the money-commodity, typically gold, through which other commodities acquire a price, and which denotes how much of the money-commodity they will exchange for. In the situation of a currency that is not convertible into gold, this underlying relationship is merely expressed by paper token money (as today) and its purchasing power is determined solely by its quantity in relation to the amount of gold the token paper money is supposed to represent.

Lacking a labour theory of value to underpin their analysis and – just like the other conventional economists who content themselves with examining surface appearances in the capitalist economy rather than underlying relationships – the monetarists decided that things that had often been termed ‘near-money’ were so close to money as to become indistinguishable from it and should therefore be included in any definition of the money supply. This primarily included bank deposits.

This seemingly theoretical distinction had a real, practical impact. When Jim Callaghan’s Labour government from 1976-9 signalled a move towards rejecting Keynesianism in favour of monetarism – and was then followed by the more full-blooded version of monetarism from 1979 onwards when Mrs Thatcher’s Conservatives came to power – their stated aim was to ‘watch and control’ the expansion of the money supply. But the favoured money supply indicators (labelled ‘M1’ and ‘M3’ at the time) consisted primarily of bank deposits and it was no surprise that their movements bore little relationship to what was happening to the price level. Indeed, Thatcher herself was later to comment that these indicators were ‘often distorted, confusing and volatile’ (The Downing Street Years, p.688), with their control soon being abandoned as a policy instrument.

In effect, what Friedman had done was to encourage governments in the UK, US and elsewhere to resurrect what had been known decades earlier as the ‘bank deposit theory of prices’. This was a long-discredited theory that had been comprehensively demolished by (among others) one of the last of the classical economists, Professor Edwin Cannan of the London School of Economics, who, in his Modern Currency and the Regulation Of Its Value (1931) claimed with a remarkable sense of prophecy that ‘this is one of the most obstructive of all modern monetary delusions’. Like Marx, and like his fellow classical economists, Cannan adhered to a theory of value which allowed him to underpin what happened on the ‘surface’ of the economy with what was happening in the sphere of real wealth production and distribution. His argument was summarised in his Money: Its Connexion With Rising and Falling Prices (1923):

‘A[n] . . . error, which has, unfortunately, been countenanced by many high monetary authorities in recent years, is to suppose that the aggregate of deposits is a kind of money (sometimes it is called ‘bank-money’) which should be added to the actual stock of coins and notes existing at any moment. The individual, no doubt, finds ‘money in the bank’ much the same as ‘cash in the house’, but the aggregate of all the individuals’ balances at their banks is only an amount which the bankers are liable to pay, but which they could not possibly pay in cash at one moment. A liability to pay cash is certainly not cash: both debtors and creditors are painfully aware of the fact. When additional currency is put on the market by some one who has the power of issuing it, prices are raised, because the issuer’s offer of money in exchange for goods and services is additional, the power of nobody else to spend money having been reduced. When, on the other hand, a person increases his balance at his bank he increases the bank’s power to lend only at most by the amount which he forgoes, so that the aggregate money-spending is not increased’ (p.81).

An inability to recognise this fact (compounded by a general adherence to the mistaken view that banks can create vast multiples of credit from a single deposit base) meant that Friedman’s ‘monetarism’ amounted to little more than the advocacy of a discredited economic theory with predictably disastrous results.

Legacy

The modern legacy of Milton Friedman is not a strong one. Where free-market solutions to problems are not in open retreat, they are being questioned with renewed vigour and ‘monetarism’ has deservedly died something of a death, even among many of its previous adherents. And while Friedman hugely exaggerated the role governments have played in market failures such as economic slumps (his book A Monetary History of the United States 1867-1960 being something of a case in point) where he was right – with inflation being a government-promoted monetary phenomenon – it was not always for the right reasons.

In most developed countries the creeping inflation of the currency that started at the time of the Second World War is still with us, partly because Friedman’s ‘monetarism’ ended up obscuring the issue. The amount of currency in circulation in the UK in 1938 was under £600 million, now it is around £45,000 million having steadily increased year-on-year, being far in excess of what is actually required for production and trade. The result is that the price level has risen every single year since and – despite the current downward pressure on many prices caused by world competition – continues to do so. And capitalism’s other attendant social and economic problems are still with us as they always are, whether there is inflation or not.

Seen in this light, Professor Friedman’s most important interventions verged between the disastrous and the useless. In promoting a free-market dogma which refuses, against all the evidence, to countenance the fact that there is something intrinsically wrong with the capitalist system of production for profit he was seriously misguided; furthermore, in effectively resurrecting the formerly discredited ‘bank deposit theory of prices’ he did little but add further confusion on the principal issue that made his name.

In 1976 he won the Nobel Prize for Economics. Little did they probably suspect at the time that it was for breathing life into two economic corpses that would have been better left dead and buried.

DAP

This "Honours" Business (1935)

From the July 1935 issue of the Socialist Standard

The awards of honours to prominent trade union officials, Messrs. Pugh, Citrine and Edwards, is of sufficient importance to call for comment. It mirrors the attitude of mind of the trade union movement on the one side and of the ruling class on the other. It is a by-product of the crisis and of the uneasiness of our masters in face of international difficulties.

When war broke out in 1914 the British capitalists knew that they were facing a situation full of danger for themselves. If the German capitalists' appeal to arms were to succeed the flow of wealth derived from the exploitation of the black, yellow and white workers of the Empire would be re-directed to the advantage of the German capitalist victors.

To overcome the danger the British Government had dire need of the unstinted support of the working class. To secure it they called in the trade union and Labour leaders, gave them office, pay, honours and flattery, and got in return a sufficiently docile working class, content to die for capitalism and be enthusiastic about it. There was, of course, a minority who were never misled, but the majority was large enough to serve the capitalist purpose. Shortly after the war, in 1921-22, there came another crisis for capitalism—an economic crisis. Again the trade union officials and Labour leaders played their part in smoothing things over and restraining their followers. Then, in 1924, a Labour Government was allowed to function on a short lead, as an instrument for securing an adjustment of foreign relationships, particularly with Germany. When that was finished, out it went. In 1926 the workers, against the advice of their leaders, came out on strike as a spontaneous gesture of sympathy with the miners. This time capitalism preferred fighting to negotiation, so the labour leaders were not wanted, and were hardly even allowed to save their faces.

A few years later, in 1931, capitalism had another economic crisis. Again it was necessary to have the workers won over, or, failing that, to have them confused and divided.

MacDonald, Snowden, Thomas, etc., responded to the capitalist call for aid and enabled capitalism to solve its problem cheaply and expeditiously. Now we come down to 1935 and the distribution of knighthoods to the trade union inner circle. What os capitalism's problem now? and why does it not continue to make use of tried and trusty turn-coats like MacDonald? The answer to the second question is a simple one. To be of use to the other side a leader must be a man of commanding influence and popularity, otherwise his defection will not serve the desired purpose of destroying his party. But once the desertion has taken place, the influence and popularity steadily diminish. MacDonald and Thomas in the past four years have become less and less influential with the working class. So the exit of MacDonald from the premiership coincides with the advancement of his former associates—who are now his opponents—to the honour of titles.

And what is the crisis for which capitalism requires working class aid this time? The answer is no doubt to be found in the re-arming of Germany and her demand for the restoration of colonies. If the British Government should want to take a strong line in the councils of the international capitalist banditry it may again require the support and sacrifice of the British working class, so again it uses the time-honoured device of seeking to nobble the leaders.

Doubtless the men concerned do not see it that way. They either do not see anything—although one would have supposed that Mr. Citrine for example could realise the helpless position in which he is placing himself—or else they honestly believe it is their duty to support English capitalism against Nazi capitalism. It matters little which attitude is really theirs. The result is the same in either case, and it spells disaster for the working class. Working class interests require that the workers shall line up as one solid body against capitalism and capitalist Governments everywhere, and for Socialism at all time times and in all places. Even on the short view, looking only at the question of the danger of war, the international standpoint is the soundest common sense. The Governments in every country, when seeking the support of their own working class for some policy of national defence and war, invariably stress the alleged unity of workers and capitalists abroad as an excuse for strong armaments at home. The only answer to that is for Socialists to seize every opportunity of making known their own untarnished independence and loyalty to Socialism. Nothing will so dishearten internationally-inclined workers in Germany, France and elsewhere as the impression that Socialism in Great Britain has sold out to the capitalist class. And nothing will so hearten Socialists in Germany as absolute confidence that in no circumstances whatever will Socialists in Britain ever desert Socialism, no matter what specious argument is advanced by Socialism's enemies and false friends.

The Socialist Party of Great Britain is able to assure the workers of all countries that there will be no compromise with capitalism as far as we are concerned. We are and will remain Socialists, independent of and hostile to capitalist parties of all kinds.

So far from helping capitalism to tide over its difficulties the working class should adopt and alter the slogan of the old Irish nationalists and avow that capitalism's extremity is Socialism's opportunity.

Edgar Hardcastle