Capitalist crises (2015)

Book Review from the August 2015 issue of the Socialist Standard

'Capitalism’s Crises: A Debate'. Contributions by Andrew Kliman, David Harvey, and Doug Lain. Marxist-Humanist Initiative. 54 pages.

Andrew Kliman wins this debate hands down.  David Harvey has tried to argue that Marx didn’t really hold or didn’t stick to the theory of ‘the law of the tendency of the rate of profit to fall’.  He did suggest that, as labour is the only source of profit and as capital accumulation tended to be labour-saving, there was a tendency for the amount of profit to grow more slowly than the amount of capital invested. So Harvey’s view is easy enough to rebut. The real debate, which Harvey does not enter into, is how this tendency might be related to financial crises and economic downturns.

Some argue that there is a direct link between the falling rate of profit theory and crises, in that, as a result of the introduction of more and more labour-saving machinery over a period, the rate of profit eventually falls so low that there is no longer an incentive to invest so much and so there’s a slump in production.

Kliman’s argument is that the link is only indirect:

‘Marx did not regard the tendency of the rate of profit to fall as an immediate cause of commercial or financial crises. He argued that a decline in the rate of profit leads to a crisis indirectly and after some delay. It promotes overproduction (by, e.g., depressing productive investment demand). It also promotes financial speculation and swindling (…) it is only when debt finally cannot be repaid that a crisis – that is, a financial crisis – erupts, and the crisis then leads to stagnation’  [Kliman’s emphasis].

He also writes of ‘the existence of many intermediate links between the fall in the rate of profit and the outbreak of crisis.’  But with all these intermediate links is this really a falling rate of profit theory of crises? Doesn’t it amount in the end to saying in effect that capitalism causes crises?

No such questions arise over the complementary view that during a slump the rate of profit rises through the devaluation of capital (capital is not a thing but a sum of values), so creating the condition for a resumption of capital accumulation. Kliman explains this well, underlining a very useful distinction between a financial crash (the actual ‘crisis’ point) and the drop in production that follows, useful because those in the Marxist tradition (including ourselves on occasion) sometimes use the word ‘crisis’ to cover both.

Adam Buick

Work - as in holic (1994)

From the February 1994 issue of the Socialist Standard

I am unemployed at the moment, on a small retainer from a government which begrudges it heartily and doesn't miss an opportunity to remind me of the fact. Officially I am an IT trainer and (for the benefit of those at the benefit office employed to stop my benefit) I am actively seeking work. Information Technology, if you don't already know, is for those who think there is something seriously groovy about electronic filing systems and adding machines. I certainly do. In this heady world of techno fashion toys people like me describe new clever filing systems as "sexy", which shows you how disturbed we are.

It is interesting to note in passing that the CBI recently complained that Britain was going down the toilet because its workers are not trained in Information Technology. Anyone who knows anything about computers knows this is all bollocks, and that Britain will go down the toilet whether or not its workers know how to save a text file memo in dBase. I suspect the government takes the same view. I got made redundant, after all.

Being unemployed is of course a pain in the arse, but it has its moments. I'm pretty rich in freedom for one thing, although oddly I fritter that away in just the same way an employed person does money, wondering where it all went at the end of the month and thinking that it never seems to buy anything these days.

But I've had a dose of life in the Office, as a computer programmer, and by god that was like being on a different planet. Forty hours a week for forty years under forty-watt light-bulbs — that was a nightmare I had to get out of bed to experience. The cheery accounts department banter only made it worse. But what threatened to push me over the edge was that I was surrounded by workaholics. I developed a large rash of "attitude problems" and "under-motivation complexes" by being planted among individuals who all wanted to chalk up fourteen hours graft a day and no passes.

Chas was the accountant. Very nice chap, charming, friendly, lots of brains and charisma. One of the new breed of managers, who don't give orders but merely ask "personal favours", giving you the impression that they're your friends and not your employers. Chas works from seven a.m. till ditto p.m. virtually every night (and takes work as well). Then there's "owd Fred", who'd been there since they took all the railings away from the park for Spitfires, and he was putting in a solid ten hours a day. There's Arthur who would look at his watch and say "Christ, I'll get shot . . . " but still wouldn't go home.

Who you know
The Managing Director, a relation in the old family, would come in for an occasional gloat round the office but was usually out fishing in the afternoon, from what I could see.

So did I have the wrong attitude, I wondered? Is office work so exciting that people the world over just can't tear themselves away from it even to go to lunch? In extremis, I turned to friends for a little psychiatric help.

"Look here," I chattered through clenched teeth, manfully containing my hysteria, "is it me or is it them? Who's the nutter?"

"Oh, that's nothing," came the careless reply. "I worked at a place once . . ."

One morning I staggered into work after a particularly heavy night on the piss to discover that the mainframe computer had crashed because, get this, one of the staff had come back to finish some invoices at midnight. Unpaid, mind you.

And when you suggest that socialism could roll along quite happily because at bottom human beings quite like work and would do it paid or not, people look at you as if you're completely deranged.

"Oh no," they state flatly, "you can't have a society where everything is free and nobody is paid to work. No one would do anything. People are too selfish."

Working to rule
People think I'm cynical. Well now, let's not get the wrong idea. I'm not flatly knocking dedication to the job. I wouldn't want to be shovelled bleeding into Casualty one night after being bagged by some drunken bastard in a Volvo only to find that the staff were on their shift break and couldn't possibly be disturbed until halfpast two. I realize that working strictly to rule isn't always practical or desirable. But there are one or two basic economic considerations here that are worth pointing out. Unions exist, as everyone knows, to try to improve the pay and conditions of work. Many however have exactly the same attitude to them that we do to a commercial plumber. In other words, we treat unions like a paid-for service, to resort to only when our pay-packet springs a sudden leak, and not as organizations that require our constant attention. Union reps with hundreds on their books usually can't get double figures into the meetings. The fact that this is partly the movement's own fault for being undemocratic in the past isn't really the point. What is the point is that workers themselves, by opting out of a union which "charges eight quid a month and does sod all" and by agreeing to work extra hours for nothing, are not doing themselves any big favours.

Being an unemployed IT trainer myself, I could take the view that every IT trainer out there who is doing work for free is a traitor to the cause of my personal unemployment. The state won't come up with the funds to pay me, and thanks to them it doesn't have to. According to one researcher, "the cost of replacing the work of the voluntary sector would be well in excess of £20 billion — or some 12p or 13p on the basic rate of income tax." Since we're being so generous with our time, why don't we volunteer to run the NHS as a charitable endeavour and then we can put the nurses out of work too? (Half the hospitals in the country seem to be paid for out of collection as it is).

Meanwhile the Managing Director is presumably still pissing himself laughing down by the river. Whoops, another bite on the line  . . .

Joining the dog race
If you bred whippets for sale, you wouldn't feed them on smoke salmon and then sell them for half their value, would you? No, you'd buy the cheapest dog food you could get away with and charge the highest price you could get. Thus are fortunes made. It's not a matter of greed as some people seem to  think but simply of common sense. Gather ye profits while ye may, because of course the bottom might drop out of whippets at any moment. Not a pleasant thought.

In capitalism people's skills, like whippets, are a commodity. In fact, unless you're rich, it is the only commodity you've got to sell, so why sell yourself short? The selling process is nothing but the frantic pursuit of means to pay for the privilege of living. It's like being born with an overdraft that you can never clear off.

The labour market that we sell ourselves in works like any other market, in other words, on the basis of supply and demand. If you have trained for thirteen years as a doctor, you're a bit of of a rarity and in some demand, so normally you'll fetch a decent price. (Naturally they'll always try and pay you less, if they can get away with it — you have to learn to haggle, which is why unions were created in the first place). If you have trained for thirteen years as a Conquistador you will certainly be a rarity but no one is going to pay you large sums of money to invade Mexico. The labour market is quite ruthless. Some workers fetch good prices and other don't. What's more, like any other market, nothing is stable and demand is unpredictable. The buyers of labour wring their hands and sniff that the recession is ruining them, but they make a staggering profit out of this arrangement.

Just look for a minute at where the profit comes from. If employers were to pay you exactly what you're worth to them, they wouldn't make a penny out of it for themselves. So they pay you less than your labour is earning them and keep the difference, to save up and buy themselves nice clothes, politicians and continents. Ah but, you might ask, how do they know exactly what your labour is worth to them? After all, most workers are not employed to produce anything at seventy pounds a week that you can paint green and charge a hundred quid for. In the real world it's much more complicated than that. So they employ accountants like Chas to figure it out for them (and they don't pay him the millions he saves them either).

Why should a worker give ten hours to an employer when the contract says eight and they're only paying for seven anyway? Add to this the anti-union feeling which also exists, and one begins to see that really, until people start taking their own interest seriously, the owning class has got it made.

Paddy Shannon

Cooking the Books: Hypocrisy and the Unemployed (2015)

The Cooking the Books column from the August 2015 issue of the Socialist Standard

The government blames the unemployed for being ‘a burden on the taxpayer’, denouncing those of working age without a job as scroungers and devising all sorts of schemes to try to drive them  off state benefits and on to the labour market. They do this well knowing that there will always be a pool of unemployed and so that not everyone can get a job, however hard they try and however harsh the sanctions. Their calculation is that bashing the unemployed is a vote-catcher.

Not only do they know that there will always be a pool of unemployed but they also want there to be. They don’t want ‘full employment’ as this would exert an upward pressure on wages, cutting into profits. But the truth sometimes slips out, as in an article in the Times (10 June) by its Economics Editor, Philip Aldrick. He referred to an ‘equilibrium unemployment rate’, defined as ‘the level at which wage inflation pressures build up.’

This used to be called ‘the natural rate of unemployment’ but conceding that unemployment was natural to capitalism was considered too much of a concession to its critics and it is now called in economics textbooks the ‘non-accelerating inflation rate of unemployment’ (NAIRU). It’s a bit of a dubious concept (it’s trying to calculate when a boom begins to get out of hand, but even if this could be done it wouldn’t make any difference as nobody could do anything about it). But that’s not the point. The point is that government policy-makers believe it.

Economists differ as to what this rate is. Some put it at 6 percent. The Bank of England puts it, for the UK, says Aldrick, at ‘5.1 percent – the average between 2001 and 2007’. He quotes a City economist (these days the media interview them rather than academics despite their obvious lack of independence) called Michael Saunders of the Citi investment bank, as suggesting that the rate here could now be as low as 4 percent, and comments:

‘In other words, at the economy’s optimum cruising speed, 400,000 fewer people need be unemployed than before the crisis.’

‘Need be unemployed’! That’s a telling phrase, saying that some people need to be unemployed. In the three months to April this year the unemployment rate was 5.5 percent, or 1,810,000. If it had been 4 percent this would still have left 1,316,000 as ‘needing’ to be unemployed.

The government may well, from one point of view, want to cut the benefits bill by reducing the number on the dole, but, from another point of view (that of big business whose interests they serve), to reduce the number too far would set off an upward pressure on wages to the detriment of profits. It’s a balancing act. Capitalist firms will have to pay one way or another. Either their profits are taxed to pay unemployment ‘benefit’ to at least 1,316,000 (or on the Bank of England’s figure 1,678,000). Or their profits will be eaten into by rising wages.

So, however many application forms they fill in, however many courses they go on, however many times they report to the DWP,  between one and two million people will not get a job because, if a substantial number of them did, it would upset ‘the economy’s optimum cruising speed’ and the government doesn’t want that. In saying that they are practising ‘tough love’ by harassing people as a means of helping them to get a job, Cameron, Osborne and the rest (the leaders of the Labour Party too as they are also into bashing the unemployed) are shameless hypocrites.

Sour milk (1986)

Book Review from the May 1986 issue of the Socialist Standard

Loyalists and Loners, Michael Foot (Collins, £15.00)

Those who were on the left wing of the Labour Party during the Attlee governments of 1945/51 will remember Michael Foot as an heroic but tragically neglected saviour from the rigours of Crippsian austerity. Bevin's Cold War belligerence, Morrison's careerism. If only Foot could be Prime Minister, Foreign Secretary and Chancellor of the Exchequer—preferably all at once—it would herald the dawn of socialism in Britain. The British ruling class would be in open alliance with Stalin, pensioners would be elevated into a new privileged class, Harley Street would be jammed with the proletarian sick. But it could never, wailed the left, happen. Foot was too honest, too radical, too fiery to be allowed into government.

By this time those delusions, usually misnamed idealism, had crusted over Foot had made it into a Labour cabinet, with instruction to buy off the 1973/4 coal strike and end the Three Day Week. In time, with what seemed a spasm of desperation, Labour elected him as their leader, which meant that the doorway of Number Ten was in his sights. What happened during those days of power and influence was that Foot proved to be as tamely conventional as the rest—with the difference that he could rely on his reputation for fiery honesty and radicalism to put over such policies as supporting Thatcher's Falklands war. Faced with an embarrassing, probably a vote-losing conference decision for unilateral nuclear disarmament, he fudged the issue. The orderly administration of British capitalism and the profitable exploitation of its working class were as much a priority for him as for any right-winger, any Tory. In the 1983 general election it was clear that Foot's reputation as an intellectually fastidious, but otherwise dishevelled eccentric was a liability. He cynically submitted himself to the party's image-builders, trying desperately to appear like a man you would gladly buy a second-hand election promise from.

In spite of all this, left wing prejudice ensures that Foot's reputation remains unsullied. He has progressed from radical firebrand to elder, ambitionless statesman; clearly in the tradition of political has-beens, it was time for him to get out a book. Perhaps this was not wise: Loyalists and Loners exposes Foot as an intensely patriotic man, a person who is so confused — and confusing — about capitalism's class society that he writes in these crudely ignorant terms: " . . . for the bulk of the British adult population, the moment which must stand out most proudly in their collective memory was 1940" (written in 1965): " . . . the British people were not going to give in to Hitler and Hitlerism . . . (1983).

This collection of essays, book reviews and other miscellania — which Foot audaciously offers as serious analysis — includes many pieces which deny the author's reputation for tireless affability. Tony Benn's abrupt changes in style and attitudes are described as a deliberate ploy to hijack the Labour leadership (if so it as particularly stupid and short-sighted); for David Owen, "The sweets of office seemed to soften even the harsh Owenite accents"; of poor old George Brown, "Some of his judgements were so topsy-turvy, so much in defiance of the common sense view, that the astonishing fact is how long his other qualities enabled him to survive at all". Another "astonishing fact" might be how Foot excuses his own involvement in a party peopled by such monstrosities. Or why he should attack these tricksters ("I called him [Tony Benn] a liar and he got up and left") while he admires others, such as Bevan and Enoch Powell, who are equally guilty. In fact, Powell is treated with all the nauseating chumminess on which capitalist politicians are so copiously nurtured. Powell had a "passion for truth . . . " he was " . . . stating the case against the nuclear deterrent with a crystal logic no one else could equal . . . " the fact that Powell never became Prime Minister " . . . was a tragedy for Enoch, and a tragedy for the rest of us too".

Politics is not a subject for dilettantes. It is all about the power of the working class to revolutionise a decadent, repressive, murdering social system into history. This vital issue finds no mention in Foot's pretentious exercises in irrelevance. Is this the best this reputedly cultured man can do? For sure, Foot knows about the Socialist Party and he lays claim to understand socialism, as witnessed in his contemptible sneer in Debts of Honour:

I naturally went to Hyde Park to hear the orators, the best of the many free entertainments on offer in the capital. I heard the purest milk of the word flowing, then as now, from the Socialist Party of Great Britain.

Little wonder, with such lack of insight, that Foot is capable of producing so flimsy, unilluminating and boring a book as this.

Ivan