Monday, September 4, 2017

Confusion about Money and Inflation (1975)

From the January 1975 issue of the Socialist Standard

Under the influence of Professor Milton Friedman and other “monetarists” it has become fashionable for politicians and economists to discuss the rise of prices in relation to what they call “the money supply”.

Thus the City Editor of the Daily Mail, 18th November 1974:
Some experts say the money supply tells us how bad inflation is going to be in the months ahead. The increase of just 1¾ per cent in the past three months looks hopeful.
And in July last Mr. Healey said:
We have the rate of increase of the money supply under control. I propose to keep it so. It is running at roughly half the rate at which it was running under the previous government.
But the rate of the rise of prices did not halve or even slacken. In spite of whatever effect subsidies and price controls may have had, the rise of prices in the eight months after Healey became Chancellor was not smaller but greater than in the previous eight months under Tory government.

It is important to recognize that the theories of the monetarists are not at all the same as the theory of Marx. Marx showed that an excess issue of inconvertible paper currency depreciates the currency and causes prices to rise, though it is not the only factor affecting prices. Essentially, what the monetarists attempt to show is that the price level is mainly determined by the size of deposits in the banks.

What the monetarists use as their guide are the official figures for “money supply”, made up of currency (notes and coin) plus bank deposits; but the currency element in the figures is so small a proportion of the whole that the changes in the amount of “money supply” from month to month are dominated not by the increase of the note issue but by the changes in bank deposits.

Actually there are two official indexes of money supply, known as M1 and M3. The first includes current account bank deposits, while the second includes also money on deposit account. (Currency constitutes only about one-third of M1 and about 14 per cent, of M3.)

One of the absurdities of monetarist theory is that M1 and M3 rarely give the same guidance, yet both are used. They hardly ever move at the same rate, and often M1 is going down while M3 is stationary or going up. One factor in this is that if depositors transfer large amounts from current to deposit accounts it reduces M1 but does not affect M3 because M3 already includes all deposits whether on current or deposit account.

Professor James Morrell of Bradford University attacked the “money supply” concept in an article in the Sunday Telegraph on 10th November 1974:
Since one measure of Britain’s stock of money showed a 1.5 per cent rise during the past 12 months (third quarter 1973 to third quarter 1974) and another showed a rise of 13.5 per cent we may well wonder if the experts know what they are talking about.
But what of the theory that bank deposits determine prices? It is a very old theory, but one that will not stand examination. Figures are available which show that deposits in the Joint Stock banks rose from £159 million in 1877 to £890 million in 1910, but the price level was rather lower in 1910 than in 1877. And between 1921 and 1931, when prices fell by 35 per cent., London Clearing Bank deposits fell by about 9 per cent, in the first five years then, rose again to the original level.

As Professor Cannan pointed out:
Prices continued to wax and wane with currencies, and to exhibit towards the variations of bank deposits . . . complete indifference.
(Modern Currency and the Regulation of its Value, 1931, p. 95)
It is a reflection on the modern economists, including Professor Morrell, that with few exceptions they are not even prepared to look at the possibility that Marx’s theory would provide the explanation for inflation that they are unable to find elsewhere.
Edgar Hardcastle

A German Tragedy (1975)

Book Review from the February 1975 issue of the Socialist Standard

Leviné by Rosa Leviné-Mayer. (Saxon House, £2.50)

This is yet another biography by the wife of a well-known revolutionary. Mrs. Kusinen has written Before and After Stalin; Heinz Neumann’s wife has recounted by her harrowing experiences in Soviet labour camps; and now Mrs. Leviné has delved into the details of her comrade’s revolutionary career.

Eugen Leviné, a prominent member of the Spartacus Group of Liebknecht and Luxembourg, was sent to Munich to organize the Bavarian Soviet Republic. An extraordinary situation prevailed in Germany at the end of the first World War. On 9th November 1918 the Kaiser abdicated. Power was assumed by the leader of the Social Democratic Party, Friedrich Ebert.

The army transferred its loyalty to the new régime and General Gruber, speaking for the army, telephoned Ebert to say the armed forces were at his disposal “if he would fight Bolshevism and maintain army discipline”.

Workers’ and Soldiers’ Councils had sprung up all over Germany and elected a Central Council dominated by the Social Democratic Party. Included as an Appendix to the book is Leviné’s own report on the first All-German Soviet Congress. His lengthy speech can be summarized in one extract. Recounting the failure of the “left” to get any motion passed, he said of the first point:
to declare Germany a United Socialist Republic is one to which the SPD is particularly opposed. They do not want a Socialist Republic.
(p. 194)
The Spartacus Revolt in Berlin and Hamburg was crushed but a group of intellectuals, poets, artists and anarchists managed to proclaim a Soviet Republic in Munich, which hung on for two months, headed by Ernst Toller the dramatist. Sensing collapse and defeat Toller’s group packed it in and Leviné, instructed by the Spartacus Group and assisted by the Russians, took over.

His régime was soon crushed by the army under Social Democratic orders. In its proclamation the SPD asserted:
The troops of Hoffman’s [the SPD Prime Minister] come not as enemies of the working class, not as White Guards, but as protectors of public safety and order. Comrade Hoffman is no reactionary but a radical champion of the socialist movement.
The Bavarian Soviet was ruthlessly suppressed by working men, Social Democrats. Leviné was sentenced to death and faced the firing squad on the first day of May. His last speech to his murderers in the court showed him to be a man of considerable perception and boundless party loyalty: he was aware that the policy of the Spartacists was wrong, but was unable to betray it.

Tsar Brezhnev and the Jews (1975)

From the March 1975 issue of the Socialist Standard

About a year ago when the furore about emigration of Jews from the USSR to Israel was at its height there appeared in the letter columns of The Guardian (that gallant defender of the weak and the oppressed), a long, well-argued, and excellently written letter from a reader who wrote “as a Manchester Jew”. This gave him two positions of strength to start with. Manchester was of course the birthplace of the paper and its home when it had some right to call itself a liberal organ (perhaps I am being a little naive, but I prefer to cherish the notion that it was rather more genuine than it is today. Well, it must have been). And a Jew, seemingly, had the right to argue that Russia was not being beastly to its Jews as all these jackals and hyenas of the west were alleging.

The writer failed to add (no doubt through modesty) more about himself which would have helped readers to evaluate his contribution. He could have added that, as well as being a Manchester Jew, he was a lifelong Communist (whether card-carrying or fellow-travelling I know not). It would have enabled readers to appreciate that what they were really reading was a professional Communist propaganda effort fronted by a babe-in-the-wood from the Manchester ghetto. And they would have been on their guard accordingly. (How do I know this top-secret information? Well, it happens that I too am a “Manchester Jew” and used to attend the same Hebrew classes as this chap. I wasn’t born in the SPGB: very few of us are.)

What was he saying in this erudite epistle? The message came through loud and clear. Any talk of anti-semitism in the Soviet Union, that glorious fatherland of the Socialist Revolution, that fearless champion of anti-fascism, that gallant defender of minorities, not to speak of the widows and the orphans, was and by definition must be sheer scurrilous slander. Russia is not against the Jews. Perish the thought. It is only the Zionists, the dupes of the State of Israel, who are being put in their place in the USSR. And he went on to say, as they always do, that had it not been for the gallant Stalinist Red Army, Hitler would have solved the Jewish Problem once for all. (He forgot to mention, again they always do, that at the beginning of the war, Stalin had a pact with Hitler and was assisting his war effort until Adolf turned on poor old Uncle Joe. “Have we deserved to be treated like this?” as the Russian diplomat in Berlin whined as Hitler was kicking him out.)

I would have like exposing this stuff for the hypocritical Communist guff it undoubtedly was. But the great organ of freedom won’t print letters from the likes of me. But within a couple of days there appeared a far better demolition job than I could have done. The writer was a London Jew. Mr. E. Litvinoff (I don’t think he is any relation of the Stalinist foreign minister of that ilk, though he might be) wrote a devastating reply along the lines: So the Russians are not anti-semites eh? Only anti- Zionists? Well, get a load of this.

There then followed the story of a pamphlet recently issued in Paris under the imprimatur of the Embassy of the USSR. This official Communist document was not only a slander of Jews qua Jews. It was not, and could not be, against Israeli Imperialists. And why not? Because, as Litvinoff made clear, it was taken word for word from a pamphlet issued in the days of Tsar Nicholas, the last of the Romanovs, by an organization known as the Black Hundreds, whose sole raison d'ê·tre was anti-semitism of the most virulent kind. They were not merely propagandists. They organized pogroms of the most brutal kind. Before Israel was even heard of — nearly fifty years before, in fact. The men, women and children who were slaughtered in the pogroms had not been Israeli imperialist stooges — they were massacred and reviled because they were Jews.

Lots of good folk condemned these murderous monsters, including Lenin. So now we have the minions of the heir of Lenin indulging in the same filth as the Tsarists themselves. So much for the Stalin Constitution which guaranteed (so we were told) freedom for minorities — which never prevented Stalin from murdering “rootless cosmopolitans” right up to his death and the monstrous “Jewish Doctors’ Plot”. But Brezhnev is the heir not of Stalin, we are told, but of Lenin. He is clearly also the heir of the Tsars — of whom at least one thing can be said. The Jews were allowed to emigrate pretty freely; and enormous numbers of them did (including, I doubt not, the father or grandfather of our “Manchester Jew”).

Well, what did the latter reply to Litvinoff? You must be joking. He disappeared without trace into the Manchester fog from which he had emerged. That is the way with these people. They write a diatribe or speak a speech — and hope to get away with it. They often do. But when they are answered they show their lack of sincerity by keeping their heads down and their mouths shut. Hoping that everyone will forget.

Now, Litvinoff has made a book out of the episode and it was reviewed in the same Guardian as ever was by their Soviet “expert” Jonathan Steele (9th November 1974). The Guardian these days is a highly successful paper and its ever-growing circulation figures are enabling it to laugh all the way to the bank. It has a square creep in a square hole whichever way you look — Steele for Moscow, Gott for South America, Gittings for China et al. These people are not reporters, so much as artful dodgers and slippery eels on behalf of the red regimes. It must be some ten years since the paper had the temerity to print a letter praying to Gott to say something about the 20,000 political prisoners in Castro’s Cuba which he had described in glowing terms (having spent his time in the Havana Hilton instead of in a prison). For nine years I looked eagerly every day for His reply. I now realise that Gott (like our Manchester Jew) never replies.

Steele writes that he found Litvinoff’s book “very disappointing”. Well, having just come back from a three months’ trip to Russia where he seems to have visited everywhere apart from your actual salt-mines, he clearly felt hurt that anyone could be so cruel to his red-fascist friends. And what was wrong with the book? Mainly that Litvinoff pointed out (as he had done in the letter) that the Russians had indulged in the same scurrility as their Tsarist predecessors. He had failed to “define the line which should be drawn between anti-semitism and anti-zionism”. Why the devil should he waste his time in such rubbish? The import of the book (which was based on a trial in Paris when the editor of the pamphlet, a French Communist frontman who said in court that he had never even seen the thing till it was printed, was found guilty of stirring up racial hatred. Such communists) was to the effect that the Russians were not interested in any such line whether it could be drawn or not. 

They reprinted pogromist literature so slavishly that they reprinted the mistakes of the illiterate Tsarists. So that Parisians in 1970, like Muscovites in 1900, can read that it is better to cast meat to the dogs than to a goy; or that a Jew can be happy when he hears an "akum” is dying. (I am quite sure there is no such word in Hebrew or Yiddish or any other language as “akum”. But Brezhnev’s men are determined to copy their mentors, boobs and all.)

Oh yes, and while Litvinoff is right to criticise the Russians for equating Zionism with Nazism, he actually compares Nazism with Soviet anti-semitism. Litvinoff really has a cheek. On the other hand, I suggest that next time Steele is a guest in Russia he visit a prison or asylum where some Jew is incarcerated and tries to show the poor devil how much difference there is between Nazism and Red Fascism.

Just in case anybody gets wrong ideas, we Socialists are not only concerned with Jews. We are concerned with all the victims of the capitalist jungle. East and West.
L. E. Weidberg

Taking The Rostrum (1975)

From the April 1975 issue of the Socialist Standard
These steps I’ve taken this afternoon
Like any other afternoon 
Are for SOCIALISM, nothing less
For no other cause will I digress 
My comrades and I will never falter
Though mocked and jeered we’ll never alter 
We know our case in and out
So take us to task, have a bout 
Prove us wrong and I’ll get down
Maybe join a circus, become a clown
If that is all you want to see 
Or do you possess the dignity
To stand up against inequality, 
Destruction, degradation, poverty, starvation even!
What do you do Mary, Bob, Alice, Stephen? 
You acquiesce to a system
Where profit be the only reason
To struggle, to suffer through every season 
Summer, Winter, Autumn, Spring
Don’t time fly by with a zing? 
You know! 
This madhouse does not have to be
A better system we can see 
So open your minds
Give SOCIALISM some thought
If you agree, throw in your support 
We’ll not have to look to optimism
When the world is rid of capitalism
David Wright

Houses and Profits (1975)

From the May 1975 issue of the Socialist Standard

The assumption that that the solution to the housing problem is simply to build more houses is an erroneous one. Access to housing, like everything else, depends on money. Houses are built to be sold at a profit. For example, even though there were in March 1974 28,866 homeless persons in Britain (Hansard 17th December 1974 col. 436) at least 35,000 newly completed houses remained unsold (Management Today, October 1974).

In the same month Management Today carried a survey of the building industry. The facts revealed (brick production down 16 per cent and deliveries down 23 per cent over the previous year, a decline in private house building of 50 per cent over the same period) led them to observe that
. . . the industry’s future over the next 18 months looks gloomy indeed. Since it depends to such a large extent on the health of the economy at large, it is not surprising that the industry is in a state of depression.
Came December and the Labour Government were confirming (again!) that the housing programme had “top priority” (Evening Standard 4th December 1974). By the end of January unused brick stocks had risen to 933 million and Tony Cadman, Director General of the Brick Development Association, could only gloomily say after two Labour budgets “I still resent the fact that the Government has not given major priority to housing”. (Building Trades Journal, 7 March, 1975.)

The anarchy of conflicting interests prevents rational planning to meet people’s needs. Problems for some are looked upon by others as an opportunity for profit making. Pushing their own sectional interest the British Woodwork Manufacturing Association urged Environment Minister Anthony Crosland to use timber-framed buildings in order to speed up the house-building programme. They claimed that such housing would also be less costly than conventional buildings. But perhaps they were being too optimistic — nothing in capitalism is ever that simple. In the very same week the Home Timber Merchant’s Association forecast grave difficulties ahead for the timber trade. The tax situation on forestry is chaotic and they claimed that
. . . this winter, largely owing to the Government’s tax confusion, some 28,000 acres will remain unplanted. Millions of young trees will have to be destroyed. (Building Trades Journal 7th March 1975).
Whatever the outcome of the representations made by these industries one thing is certain — capitalism cannot solve the housing problem. Its priorities are profit: “the health of the economy”.
Gwynn Thomas

The Myth of the Middle Class (1975)

From the May 1975 issue of the Socialist Standard
A letter sent to Woking News and Mail as a contribution to a running battle between anti-union and pro-union debate.
Miners and Headmasters, “middle class” and “working class”? Surely it is high time both recognized that miners and headmasters are in the same class economically, namely the working class.

Of course, coal-miners can claim to work in tough conditions and to produce an end-product of obvious utility, while teachers on the other hand can claim long training and heavy responsibility. Every job has its peculiarities but these — responsibility, danger, dirt, boredom or whatever — do not divide workers into separate economic classes. (If they did, there would have to be as many economic classes as there are occupations: which would be nonsense.)

Many white-collar workers who sell their labour-power for “a salary”, not a wage, describe themselves as “middle class”. This term is impossible to define. But the essential fact is that these people have to sell their labour-power in order to live and are therefore part of the working class. Yet their education, tastes and sometimes their position at work (as managers, for instance) result in their identifying with the interests of the class which owns and controls the means of producing wealth. Thus they identify with their exploiters: like those ducklings who mistakenly regard Konrad Lorenz as Mummy.

Nowadays more and more of these “middle-class” workers have been forced to take industrial action and to recognize that they have the same problems as dustmen, miners or dockers. They even organize themselves into "greedy and irresponsible” trade unions in their attempts to maintain their living standards. Even Civil Servants go on strike!

Since there is so little difference in their economic position, all workers must eventually recognize their common class interest. The employers recognized their common interest as a class, years ago, hence the media’s and the Government’s bitter hostility against almost any group of workers who are “greedy and irresponsible" enough to demand wage or salary irresponsible enough to demand wage or salary increases. There’s never been a right time for pay rises.

To sum up: since an economic class is defined by its relationship to the means of producing and distributing wealth, and since our society is divided into a minority class who own and control the means of production and distribution, and a majority class who cannot live except by hiring out their physical and mental abilities, there is no place for this illusory “middle class”. This illusion only serves to divide the working class on snobbish grounds (staff against shop-floor, white-collar against blue-collar, manual against clerical, and so on). But it is only an illusion: in politics it is important to distinguish between myths and reality.

There’s no such thing as fairness in fixing the price of labour-power, any more than in the fixing of the market price of any other commodity. Another very good argument for abolishing the pay-packet- and-poverty racket in favour of Socialism, where class conflict will be a thing of the uncivilized past and where each will contribute according to his ability and obtain — according to his needs. Which simply doesn’t happen under capitalism, nohow.
Charmian Skelton

Pollution State-Capitalist Style (1975)

From the June 1975 issue of the Socialist Standard
“Despite the large amount of work being done throughout the country to protect the atmosphere against pollutants, the pollution level in a number of cities and industrial centres still exceeds permissible norms, due to the constant growth of industry and motor transport, and to the inadequacy or low effectiveness of the measures taken”. 
Sounds a very familiar line doesn’t it? It could have been taken from almost any of the flood of books, reports and articles that have, over the past ten years or so, turned pollution from a concern of cranks into a major world problem.

In fact the quotation comes from an official Russian publication Nature Protection in the Soviet Union (Novosti Press Agency, Moscow, 1974). The fact that Russia and the so-called socialist economies suffer from pollution and environmental degradation just as much as the capitalist west may cause some puzzlement to those who believe implicitly that state capitalist economies are somehow different from the avowedly capitalist nations. This is certainly one line of Russian propaganda. For example B. Gorizontov writing in Soviet Weekly says
  In the socialist countries, where economic advance is based on public ownership of the means of production and natural resources and on planned management, it is much easier to protect the environment and natural resources — but they, too, have their problems.
(Soviet Weekly 14 December 1974.)
And what problems! In Poland only 20 per cent of the rivers have water fit for communal use. The Oder is unusable throughout its entire length. In 1967 8,400 of the countries 14,000 industrial plants discharged refuse directly into rivers and more than a third of the largest plants (accounting for 80 per cent, of all effluent) had no effluent treatment equipment. (New Scientist 6 July 1972). Air pollution is also a problem for the Poles. Anthony Sylvester, a frequent visitor to Poland, reported last year on a visit to Katowice the centre of Poland’s coal and steel industry.
  Contamination here is about twice the level normally tolerated in Poland or for that matter in the West. Again, 100 miles East of Warsaw I saw trees destroyed or badly damaged for twenty miles by nitrogenous fumes from a huge fertilizer plant.
(Daily Telegraph 11 July 1974).
To combat this the Polish Government has bought £2.5 million worth of Western-made equipment for monitoring and measuring so as “to establish the most economical ways of reducing the evil”.

Other East European countries have fared no better. The Bulgarian Black Sea resort of Varna was closed down in 1971 because of contaminated water. The Hungarian Ministry of Health have been battling with an increasing air pollution problem since 1952. In the German Democratic Republic the chemical industry centred on Bitterfeld releases 180 tons of ash into the air each day. Bitterfeld has been described as having a dust fallout twenty times higher than the permitted 15 grammes per square meter per month. “Bronchitis and breathing difficulties are 5 times as frequent in Bitterfeld as in towns with relatively pure air.” The reason given was that the district produced two per cent, of the national income of the GDR and the question which had to be faced was: What comes first? In Bitterfeld the answer had to be, for a very long period: production. (Democratic German Report 31 July 1974).

Doctor Jan Cerousky, a Czech biologist has also exposed the profit motive as the cause of “socialist” pollution. After describing “Environments so badly destroyed by coal mining, industry and many-sided pollution that they are almost impossible for people to inhabit”, he (possibly unwittingly) pointed out that a state capitalist economy works under exactly the same constraints as do the free enterprise ones.
  Even the most socialist country will certainly find it impossible and dangerous to go far beyond its economic capabilities. To solve existing environmental problems and prevent new, even worse ones, from emerging is clearly a long-term matter, while economics, instant needs, building capacities and technological equipment create pressure for short-term solutions.
 The state as law maker imposes on itself limits to the capacity of industrial undertakings. As decision-maker the state can also permit exceptions from its own anti-pollution laws to state owned enterprises because it needs their products without the cost being increased by expensive anti-pollution measures.
(New Scientist 16 April 1970).
As in the West improvements that are carried out are done so for hard-headed economic reasons. The question “does it pay” enters into any capitalist equation. Two East German dailies investigated the problem of noise at work and found that production costs for noise-reduced machines were between five and ten per cent, higher than “non-silenced” machines.
   . . . but the larger investment is soon made up: there is no need to pay a “noisy-work” supplement, or even a disablement pension. Equipping a noisy work-place with anti-noise devices costs an average 800 marks, but every case of sickness or disability caused by excessive noise costs at least twice as much every year.
(Democratic German Report 10 April 1974).
This is an argument which would sway any capitalist boardroom!

The existence of these problems has been excused as a hangover from the days of capitalism. In the Soviet Union itself which (it is falsely claimed) has had socialism for over sixty years these problems should have been well and truly licked. The facts show this to be untrue. Even though Lenin set up the first nature reserve in 1919 the rape of earth continues. In the USSR some 400 million acres of arable land plus 350 million acres of pasture land are affected by soil erosion. The average yearly loss of fertile soil is a staggering 500 million tons. Forests are felled with little or no regard to the future and in many places replanting is only sporadic or even non-existent.

The Times correspondent David Bonavia reported that the Caspian sea level had fallen by more than six feet in the past two decades and that the White Sea was being used as a dumping ground for oil and industrial waste products.
  Some Russian scientists are already preoccupied with environmental problems which, they complain, the industrialists and city planners do not take seriously enough.
(The Times 4 February 1970).
One such scientist is the “dissident” nuclear physicist Andrei Sakharov. Among the world problems threatening the existence of humanity (e.g. nuclear war and weapons testing, by Russia and others, has caused fallout damage which is as yet incompletely assessed) he includes environmental pollution. He is convinced, as are many others, that “The salvation of our environment requires that we overcome our divisions and the pressure of temporary, local interests. Otherwise, the Soviet Union will poison the United States with its wastes and vice versa”. After a brief, if all too familiar catalogue of environmental ills he refers to the tragedy of Lake Baikal. This mile-deep 400 mile long lake (the largest single body of fresh water in the world) of remarkable purity has become yet another dumping ground for waste from wood-milling and paper making plants which pour their poisonous sulphurous wastes into this biologically unique stretch of water. Sakharov puts the blame for this “senseless despoilation” on "local, temporary, bureaucratic, and egotistical interest and sometimes simply by questions of bureaucratic prestige.” (Progress, Coexistence and Intellectual Freedom (1969) p.44)

But the problem has now been recognized as a serious one by the state capitalist bosses themselves. Vice-Chairman of the Council of Ministers of the USSR Deputy V. A. Kirillin addressed the USSR Supreme Soviet in September 1972.
   The shortage of clean fresh water, air pollution and the erosion of the soil have unfortunately become a reality today . . .  for the socialist countries, too, these problems are today of extremely great importance.
(Nature Protection in the Soviet Union p.4)
So after years of supposedly rational planning for the benefit of all, people in Russia suffer exactly the same environmental problems as the rest of us. By 1980 the level of air pollution will be double that of 1970. Yet it is recognised that
    Desulphurization of . . . fuel burned is a radical means of reducing the discharge of sulphur dioxide. However, economically acceptable methods of such fuel purification have not yet been sufficiently developed.
(ibid p.25)
State ownership of the means of production does not remove the basic drive of capitalism — the need to make a profit in order to accumulate capital. Only with the removal of this by the conversion of the means of life from class ownership into common ownership will the problem of pollution be resolved.
Gwynn Thomas

Benn's Road for Capitalism (1975)

From the July 1975 issue of the Socialist Standard

In the run-up to last month’s referendum the man who excited most attention was Anthony Benn. The comments on his prophecies of doom and gloom ranged from stabs in the back from his own colleagues such as Roy Jenkins who said he couldn’t take Benn seriously as an economic minister (Guardian 28th May) to near-hysteria. For example the Daily Mirror (29th May) gave him the Draculean headline of “Minister of Fear”. An “X” certificate will no doubt follow.

The Guardian took the trouble to interview Dracula himself (21st May). The article was headed “Benn’s road to Socialism”. Benn did not define what he meant by Socialism (no Labour politician will do that), he only mentioned the word once. That was almost by accident when he referred to his package of reforms as “British Socialism”.

What concerns Benn is the running of Capitalism. And for those who care to look, it is perfectly obvious that he is determined to run it as efficiently as possible. This means that he is trying to ensure that the workers are exploited as hard as possible — because that is what efficient Capitalism means.

The source of the wealth of the owning class is the amount of unpaid labour that the working class concede to the capitalist class. This may be called robbery. Benn says “I am for more profits . . .” That is more wealth to the capitalist class.

He thinks that industry runs without workers doing the work. John Palmer the interviewer asks him about “shop floor power” and should workers have a right to veto management decisions. Benn’s reply is a beauty: —
   That kind of workers’ power already exists. But it is only being used negatively at present. Workers are accused of throwing spanners in the works BUT THAT IS THE ONLY TIME THEY ARE ALLOWED NEAR THE WORKS, (our emphasis)
Clearly Mr. Benn believes in perpetual motion and thinks industry runs itself. Workers may wish they were not allowed near the works, but capitalism is run only by the workers inside and out. It is Mr. Benn who won’t get to grips with the meaning of capitalism.

The inevitable question about loss of jobs was put to Benn, and he said — prophetically — “I can’t guarantee anyone’s job, including my own”. He then continued with this howler:
   You cannot give people power without responsibility too. They understand this.
I wonder if he thinks the steel workers being laid off in their thousands take things so phlegmatically? They certainly didn’t when his fellow phoney, Michael Foot, went to Ebbw Vale earlier this year. When Mr. Foot asked them “to understand” that it was in their interests that they should be laid off, they gave him a roasting. Foot scurried back to the warmth and comfort of Westminster pretty sharp.

The rationale behind Benn’s approach is that he can control capitalism by putting into effect his policies. But he plainly admits that it is capitalism that controls the government, and not the other way round. Asked about the best way to use the taxpayers’ money he says:
   The government does not dictate the pace of industrial change. It is forced by events to inter-act with reality.
Wilson once said the last labour government was “blown off course”. Benn is saying that there is no course to be blown off in the first place. Capitalism acts, and the government reacts.

For those members of the capitalist class who sit in fear and trepidation awaiting Benn’s next move, let him reassure them. Palmer talks about the “radical changes” that are taking place in industry. Benn modestly says “My  rôle in all of this has been very minimal”.

To the workers who vote for the likes of Benn, let him deliver his own epitaph. Palmer asks him about his views in 1966 when Benn was last in power. Benn disarmingly says:
   The policies I followed between 1964 and 1970 had much to recommend them and were taken up by the succeeding government. BUT THEY DID NOT WORK, (our emphasis)
If the policies had much to recommend them, why didn’t they work? And how nice it is for Capitalist politicians to be able to dismiss their records of failure with such glib phrases. We can tell the working class now that Mr. Benn’s policies won’t “work” this time either. But we are not stating this so that later (when Benn too will no doubt again say he was wrong) we can say “we told you so”. We are asking the working class to ditch their allegiance to Capitalism and apologists like Benn and urging them to get on with the tasks of finding out about Socialism.
Ronnie Warrington

What are you going doing about it? (1975)

From the August 1975 issue of the Socialist Standard

Socialists will happily and eagerly answers question on every aspect of the Socialist case and patiently explain our attitude to an infinite variety of issues However there is one kind of query which makes hackles rise. It is asked by would-be friends in a hurt manner, “Why are you not better known? Why don’t you do this, or even that?”

Our reply is that of course we want the Party to be better known. We want Socialist ideas to spread as rapidly as possible so that this capitalist nightmare may be brought to a speedy end. Unfortunately we are a small political party with a membership of around 700. Members have the usual family and job commitments.

Our efforts include producing and distributing 4,500-5,000 copies of this journal every month; the Standard is sold in shopping centres, at railway stations, at meetings organized by the Party and at opponents’ meetings. The Party, and individual members, write letters to newspapers, national and local, as well as to TV & Radio. Over the years we have made repeated attempts to get a broadcast hearing (see July Socialist Standard). We are denied access to the mass media but make every use of the opportunities which are open to us. This includes the outdoor platform in Hyde Park, at. Tower Hill, The Mound (Edinburgh) etc. During the recent referendum campaign 25,000 leaflets explaining the unique Socialist attitude were distributed. Then there is the day to-day running of the Party . . .

This piece is not intended an an eulogy but is simply to show that our members do not complacently sit about and hope.

On the contrary we are impatient to see the Socialist movement grow and if we could somehow increase the number of hours in a day we would double our own efforts. Those who think we should do more should come and help. It is absurd to stand back and expect the tiny Socialist Party to achieve Socialism for you!
Pat Deutz

The Turmoil in Portugal (1975)

From the September 1975 issue of the Socialist Standard

Events in Portugal this year have moved with almost stunning speed. From a long-established reactionary regime, Portugal lurched overnight into a regime committed apparently to radical changes.

And so elections were held. And to the dismay of the “communists” and their Army and Copcon cohorts, the moderates and “socialists’’ emerged with an overwhelming majority of votes.

But if “communists” understand anything well, it is the paramount importance of holding onto power. By any means. So the word went out to forget about “bourgeois” democracy. Guns are more important than votes and if people start protesting, lock them up. (It has been reported that more political prisoners are held now than were found held in jails by the detested predecessors, the PIDE.)

But this was all predictable, to some extent. There is a very obvious precedent. Portugal before the coup had a long-established reactionary dictatorship, weakened by an unsuccessful war, the people impoverished, the capitalists frustrated by lack of political power. Frustrated political movements relied on emotion. This was clearly seen in the mammoth demonstrations characteristic of the Lisbon of today.

Similarly in 1917 Russia also had a long-established reactionary dictatorship, weakened by an unsuccessful war, the people impoverished, the capitalists frustrated by lack of political power. Censorship had resulted in popular ignorance so that frustrated political movements relied on resentment rather than anything else. This was clearly seen in the mammoth demonstrations characteristic of the Petersburg of 1917. 

There is yet another important parallel. In 1917 elections were held for the Constituent Assembly and the Bolsheviks got less than a quarter of the total votes cast. Similarly in Portugal where the Communists only achieved a very small proportion of the votes, the majority going to the “socialists” and social democrats. The result was that in both cases the “communists” used military force to wipe out any attempts at a democratic constitution. This is important and should not be forgotten.

The real lesson of 1975 is the same as that of 1917. Lenin, Trotsky and their co-conspirators used armed force to achieve and maintain power for the very good reason that they and their supporters were only a small minority of the population. The Portuguese “communists” are evidently good Leninists and Trotskyists. They are a minority and therefore have to use armed force to suppress the rest of the community. In other words, they are waging war on the workers. They are in fact red fascists and deserve no more working-class support than the regime of whom they are such worthy heirs. For the Portuguese people, it is a case of “out of the frying-pan into the fire.”

And one final point: although the news reports from Portugal speak constantly of “communists” and “socialists”, there is not one party in Portugal, including the Maoists, which stands for the end of the wages system. They are all supporters of capitalism who find it necessary or convenient to fly the Jolly Roger. Let no-one be deceived by such a strategy.
Charmian Skelton

An Innocent Abroad (1975)

From the October 1975 issue of the Socialist Standard

It is no news that Communists are fatheads, but Arthur Scargill is obviously a fathead par excellence. This “Marxist” miners’ leader went on two weeks’ holiday to the “workers’ state” of Bulgaria, and on his return told newspapers how surprised he was at what he found:
Corruption in State-owned shops and restaurants ‘that would have done credit to the Mafia’; Massive overbooking by State agencies that kept tourists stranded for hours;
A State-Run voucher system of paying for meals that left holiday-makers hungry and out of pocket.
   ‘It was a disaster', said Mr. Scargill. ‘I have no intention of ever returning'.
    ‘If this is Communism they can keep it.’
The report in the Daily Mail on 9th September was supplemented by an article giving further details of holidays and life in Bulgaria. No doubt the Mail’s readers would admit their need for such illumination; but not Scargill, surely? He, after all, has been an advocate of the "workers’ state” and presumably went to Bulgaria because he thought well of the régime.

The tragedy is that workers in Britain have been accepting militant leadership from this simpleton who confesses he didn’t know what he was talking about. He is described as a "Marxist”, and would probably rush about telling everyone of his astonishment if he opened a book by Marx, too.

Let us explain that in the so-called “Communist” countries the workers do not own the means of living, and production is carried on for sale and profit as it is in other countries. Which means you are as likely to be done, if you are a holidaymaker, in Bulgaria’s Sunny Sands as in Torremolinos or Blackpool; and as certain to be exploited, if you are a worker, in Sofia as in Bradford.

Arthur Scargill was open-mouthed because he did not know what either Socialism or capitalism is. Perhaps he will refrain from further utterances until he has found out.
Robert Barltrop

Crisis 1975: A Parable (1975)

A Short Story from the November 1975 issue of the Socialist Standard

Once upon a time some people were persuaded to join a pleasure cruise to an Island Paradise in the South Pacific, on the liner SS Capitalism: Captain Harold Wilson, First Mate Denis Healey.

After being at sea for some time they ran into dirty weather and asked the captain if there was anything to worry about. He confidently dismissed their fears. “Remember”, he said, “my own sterling character, my past successful cruises, and above all that I learned seamanship from the world’s most famous navigator”. Leading them into the captain’s cabin he pointed to a well-thumbed Manual. It was "How to Navigate a Ship — Smooth Voyages Guaranteed” — Author, John Maynard Keynes.

But a few nights later there was a terrific crash and the ship lurched to a standstill. Some passengers rushed up on deck and hurried back to tell the captain that as they could see icebergs they were beginning to doubt whether the ship was nearing the sunny beaches that had been promised.

The captain was as confident as ever. He gave them his personal assurance that there was nothing wrong, there were no icebergs and the ship was still on course. He said the whole story was a malicious invention by the Press.

But when daylight came the icebergs were still there and the captain admitted that the ship was not in the Pacific at all. Though he could not be sure, he thought they had run on to a rocky coast in the Arctic Circle; he had set up an urgent committee of enquiry to discover who had been responsible.

When some passengers wanted to hold the captain responsible he said he was deeply hurt — it was obvious that everyone else was to blame but not him. They could surely not be serious in suggesting that the captain of an ocean liner ought to know something about such an absolutely unprecedented event as a storm at sea.

He blamed the passengers for their selfishness and want of foresight and the crew for being a mutinous lot, overpaid and overmanned. But it was, he said, time to make a new start. Let them all forget their differences and be one happy band of brothers thinking only how to help each other. It was in this spirit of unity that he had drawn up his new plan, “Attack on Inflation”.

Two chief items in the plan were to reduce the pay of the crew, and to take five per cent of them and throw them overboard; this would lighten the ship and help to refloat it. It was all to be done democratically and in full consultation with the TUC.

Captain Wilson laid some part of the blame on former Captain, Ted Heath. Though he had studied navigation in the same Keynesian Manual he was only a yachtsman, knew nothing of handling sailors and had left the ship in a most unseaworthy condition.

He also blamed some pirates who had cut off the ship’s oil supplies. When this was reported in the world’s Press the captain received a radiogram: —
The captain called a meeting of passengers and crew so that he could explain to them how they had nearly wrecked the ship and to hear what they proposed about putting things right.

A ship’s officer, Wedgwood Benn, offered a simple change which would refloat the ship and prevent it ever running on the rocks again. It was to re-name the liner SS State Capitalism. This was received with rapturous applause by “left-wingers” among the crew.

The First Mate said he had been unhappy about throwing redundant sailors into the sea. He thought they should now be fished up again and put on the payroll, along with any other unemployed sailors they could find.

Two sailors, Hugh and Clive, while professing undying loyalty to their captain, rejected his Plan. They said it was self-evident that to refloat a ship you had to put everyone’s pay up, not down, and that this was what Harold used to say before he became captain.

The passengers also had their say. One group thought that the crash (and the similar one under the previous captain) would never have happened if they had had as captain, a woman, Mrs. Thatcher.

There was loud laughter at this point when Jeremy, a cabin boy, said that the only safe and democratic way was to have three captains.

Mrs. Thatcher, wearing her new see-through chiffon cape top over a strapless dress, gave an interview to the ship’s newspaper. She said that with her well-known housewifely shopping skills she would never have let the ship’s oil tanks run low. She thought there was too much equality about, so that while supporting the reduction of the pay of the crew she thought that shareholders’ profits should go up.

Another passenger, Geoffrey Howe, suggested lowering the luxury class fares to induce millionaire pop stars to join the cruise.

Mrs. Thatcher was seen to wince when Sir Keith Joseph thought they ought to go back to the tried and trusty sailing ships of the nineteenth century.

The captain entertained the ship’s company with his lectures on navigation, but in the bar there was entertainment of another sort. A ship’s steward was telling of strange goings-on in the captain’s cabin. Hearing noises he had peeped through the keyhole and saw the captain, looking very worried agitatedly turning over the pages of the Manual as if he was looking for something. He was muttering to himself: “Keynes never told us about storms”.

On another occasion the steward saw the captain trying to make a speech while standing on his head, and at the same time stuffing bits of paper into his mouth, looking like torn-up election pledges.

After his lectures on the arts of navigation the captain handed out a pamphlet to passengers and crew. It turned out to be a prospectus for a new cruise. Not a pleasure cruise this time but a rough, tough voyage lasting for years, though the first year would be the worst. This time it was to be a Treasure Hunt, diving for Fools’ Gold in the North Sea.
Edgar Hardcastle

Is Crime Hereditary? (1975)

From the December 1975 issue of the Socialist Standard

The nearest thing in contemporary newspapers to Beachcomber’s “Dr. Strabismus (Whom God Preserve) of Utrecht” is Professor Eysenck. Dr. Strabismus produced useless masterpieces such as artificial wigs and dummy glass eyes; Professor Eysenck produces statistics which are supposed to have Profound Implications. The difference is that Dr. Strabismus was a parody created by a well-known humorist. Eysenck, unfortunately, is real and is therefore taken seriously.

During October Eysenck made two announcements of statistical discoveries. The first, and farther-reaching, one was the existence of hereditary criminal tendencies. The evidence presented was from a number of adopted children. Those whose natural parents had criminal records showed a higher propensity for getting in trouble themselves, even though they had been brought up in different surroundings by law-abiding foster-parents: heredity triumphing over environment. The second announcement, made in a television discussion, was that Eysenck had found statistics to support the claims of astrology. What was not explained was whether the stars cancel out heredity, and if the impulse from Aquarius make up for an embezzling father.

The danger in this kind of thing is that Eysenck is a “popular” investigator, in both senses of the word. He is responsible for superficially instructive books such as Know Your Own IQ and Know Your Own Personality, designed for mass readership; and his conclusions tend to affirm common prejudices and therefore to be readily received and referred to as authoritative. The man in The Ragged Trousered Philanthropists who said “Go in any chemists’ shop and ask the bloke” is now likely to say “Professor Eysenck says it’s true”. There are large numbers of people, who through ignorance, believe that some are born good and some are born bad; they are approximately the same people who believe, for the same reason, that black men are inferior to white ones; and Eysenck enables them to say “Told you so”.

Circumstances and Cases
In dealing with crime the fundamental question is not the make-up of the individual but the make-up of society. What is crime? When a law is passed, those who offend against it are criminals; when it is annulled, a criminal section becomes a law-abiding one. During the last war a number of laws were enacted and very strictly enforced. A person found with food he had not given rationing coupons for, or who left his job without permission, was liable to a heavy fine or imprisonment. The fact that the war is now thirty years distant makes that seem rather astonishing, but many people were convicted for those breaches of the law. At other times and places the holding of wrong political or religious opinions has been a crime.

An up-to-date example, shown in various newspapers on 2nd November, is that of a couple convicted for incest. The case was followed by correspondence and discussion, much of it remarking that the existing law is archaic; one newspaper, the Sunday People, suggested that the couple appeal against the order for them to separate and thereby make a test case In the recent past the offence was regarded as intolerable, and they would without doubt have been given heavy sentences. If, as seems feasible, a change in the law is made in the not-distant future, it will mean that a class of criminals will automatically become respectable citizens. What then becomes of the hereditary propensity to that crime?

The question can be taken further. The most widespread of all crimes is stealing, in one form or another: robbery, embezzlement, fraud. All of them are obviously connected with the desire for money or what money is seen as providing in possessions, comfort and display. It is not suggested by Eysenck or anyone else that the desire for these things is a reprehensible inborn tendency. On the contrary, it is usually praised as “ambition”; and so far from being hereditary, it is taught as an essential to personal and social well-being — children are urged to be “first” and “top”, and shown examples of people who have succeeded. The criminal’s motive is learned from society; his error is choosing the wrong way.

No doubt it would be said that this is the point, that there is a section who persistently make that choice in the face of prohibitions. One important answer is that a high percentage of crime is due to nothing of the kind, as the court reports in local newspapers show: people steal when they are in need or in debt. But underlying this is the property foundation of the society we live in. The law is a social apparatus for its preservation. Its basic concern is protection of the class ownership of the means of production and distribution, and of necessity the products too; so that in practice it centres on property at all levels. If, as Socialists advocate, private ownership were abolished and there were free access to all the wealth of society, the effect would be the same as the limited one now produced by the dropping of an irrelevant law. That class of crime — the largest one — would immediately disappear. Will Professor Eysenck communicate this to the genes of adopted children?

Class and Heredity
Prejudices are ideas, of a sort. The saloon-bar oracles who find Eysenck’s proposition to their taste are voicing the kind of idea the ruling class likes. It means that the capitalist system is not to be blamed for a social problem: how can it be, when the cause of crime is individually organic?

The same gift to capitalist thought was made at the beginning of this century by Cesare Lombroso. He held that crime arose from physical and mental anomalies, due to degeneration or heredity or even reversion to a primitive evolutionary stage; criminals could be identified by definite physical characteristics. Lombroso’s concern in fact was reform, to obtain more humane treatment for criminals by destroying the supposition that they were responsible for their acts or could be cured by punishment. His theory was accepted, however, for its usefulness in substituting hereditary and psychological causes for social ones.

If the records of forebears govern people’s conduct, few of us would escape the taints Eysenck claims to discern. The genealogical fact is that over only three or four centuries we are descended from a relatively small number of ancestors. Because of the high rate of early death in the past, a single survivor in the seventeenth century can and does stand as the progenitor of several hundreds in this century. It is fairly well known that most people can, if they like, trace some “blue blood’’ in their ancestry; for the same reason, and probably with less difficulty, there are less honorific elements to be found by all. It can also be added that most nations have in their fairly recent history some huge act of barbarism in which large numbers of the population took part. Do genes then pass a moral judgement to avoid the repetition of such behaviour? Such a conclusion being obviously silly, the advocates of the “hereditary evil” idea have no choice but to say it was the need or the standards of the time, i.e. a social phenomenon. Quite right; but they should then explain why this explanation is abandoned over crime.

One other aspect which should be mentioned is that material presented in a statistical form is often taken to be undeniable fact. It should be appreciated that Eysenck’s findings are of “statistical relationships”: that is, sets of figures which are pointed out to be similar and therefore possibly linked as cause and effect. These are — as he admitted in the discussion of astrology — anything but conclusive and often thoroughly misleading. A light-hearted example given some years ago concerned the observation that the audiences at strip clubs had a high proportion of bald-headed men; a “statistical relationship” would suggest that watching such performances caused baldness, despite other and likelier explanations.

There is no question of anything having been proved; the area for proof is non-existent. The fault, dear Eysenck, is not in our stars or our heredity but in our social system. The point is to change it.
Robert Barltrop

Divided Ireland (1971)

Book Review from the January 1971 issue of the Socialist Standard

Divided Ulster, by Liam de Paor (Penguin Special. 5s.)

"In Northern Ireland Catholics are Blacks who happen to have white skins". Liam de Paor’s analogy has some validity when Catholics in their areas of Derry and Belfast are compared with Negroes in their ghettoes in some American states. Northern Ireland, the more capitalistically advanced geographical area of Ireland, has even in this advanced phase of capitalism a working class who are led to believe that religion divides them, and this division causes sufficient hate for sectarian conflict. The historic division into Catholic Ireland and Protestant Ireland has been much more intense in the remaining six-county British "colony" because Protestants form a two-thirds majority whereas in the other counties their numbers are negligible.

Threats to English rule in the 16th and 17th centuries were mostly instigated by the Celtic dynasties of the Northern part of Ireland — of which the O’Neills were most prominent. Confiscation of land by the natives from Cromwellian Protestant settlers intensified suspicions between the two groups. In this way "the complex struggle for power and property in Ireland, as the civil war was in England. manifested itself as a religious war". Ulster was used as a base for the Williamite conquest which was settled finally by the defeat of the Catholic James II at the river Boyne in July 1690 and enthroned the never-to-be-broken Protestant succession to the British monarchy. The aftermath of "the Battle of the Boyne" saw the consolidation of Protestant rule by anti-Catholic laws "designed essentially . . . not to convert them to any form of Protestantism, but to prevent them from obtaining as a group, property, position, influence or power”.

The tribal system of Gaelic Ireland was not broken until after English rule was established there. Feudal Ireland matured under English rule. The Catholic natives mostly worked the land and the Protestant landlords found this quite profitable because the Catholics paid high rents. In Ulster competition for tenancies was so keen that Protestants were forced to combine in groups whose purpose was to attack and maim Catholics. Catholics also found it necessary to combine for similar reasons.

Industrial advance in Belfast and Derry produced a working class among Protestants and Catholics alike. Poorer peasants sought work in industry and drifted towards Belfast and Derry from other parts of Ireland. Competition for jobs became keener and Catholics were often prepared to work for less than their Protestant counterparts. The Protestant majority overcame this by combining under a religious cloak against the Catholics.

Catholic influence, ownership and power was generally on the increase in the island as a whole. Catholics Emancipation campaigns ended the penal code, and thus enterprise among Catholics was increased with a consequent increase in their power.

In the North Eastern part of the island, the capitalists and landlords capitalised on the resentment which Protestant workers felt towards Catholic workers. Through discriminating against Catholics in an area with large numbers of Catholics and Protestant workers, religion became a cloak for real economic reasons. The more Home Rule came near to becoming a reality, the more Catholics and Protestants were divided by their exploiters. The capitalists in Northern Ireland quite rightly knew their interests lay in British rule and believed that Home Rule would mean being reduced to the agricultural and economic backwater which the rest of Ireland was. But this “divide” policy could only work where there was a Protestant majority.

Resistance against Home Rule on a large political scale and a raging guerrilla war for Independence resulted in a compromise— a parliament representing 26 counties in Dublin and one representing six counties in Belfast. The Belfast parliament was soon discovered to be an effective means of maintaining the British economic connection against republicans, but with the advantage that more effective legislation relating to Northern Ireland’s capitalists’ political problem could be invoked against any threat to sever this connection.

The economic advance of the South in the 1960s and the decline of the major traditional industries in Northern Ireland; the decline in emigration from the South and the decrease in between the standards of living between the two states would suggest that the economic reason for the existence of separate states was marginal.

However, the Craigs, Chichester-Clarks and all the other historical hangovers found that the Parliament forced upon them in 1921 became their life-saver in 1969 when their political existence was threatened by the civil rights movement which had successfully united Catholics and some Protestants. Along with the Civil Rights Association, the People's Democracy marched, Protestant with Catholic, demanding rights to housing, employment and local election voting. Police and Protestant Orange assaults on the marchers finally erupted in near civil war. British troops were sent in. It appeared that the Orange Order was foundering together with its implement of power, the Belfast parliament. However, through the good services of the Free Presbyterian Church on the one hand and of the more moderate members of the Order on the other, Protestant [and] Catholic workers became increasingly divided and the influence of the CRA and PD declined almost completely.

The battle was now waged by Catholic workers against Protestant workers and intensified on both sides by opportunist extremists. De Paor aptly quotes Pearse:
  When the Orangemen 'line the last ditch’ they may make a very sorry show; but we shall make an even sorrier show, for we shall have to get Gordon Highlanders to line the ditch for us.
How oppressed the Bogsiders were was shown when they welcomed the British troops — oppressors in the disguise of protectors. But soon the troops were forced to oscillate between “protecting" one side from the other and using methods which, if used in South Africa, the British Press would have denounced as “fascist”.

Socialists recognise one evil, capitalism, whether or not the method used for its maintenance is political democracy. The struggle in Northern Ireland continues, but it is a struggle to maintain the present out-dated managers of capitalism against a newer capitalist class. The workers have nothing to gain from this fight; but once again they are allowing themselves to die for capitalist ideals.

All inspired but misguided republicans should heed what James Connolly said:
   If you remove the English army tomorrow . . . England would still rule you . . . through the whole army of commercial and individualist institutions, she has planted in this country.
The sad part of these struggles is that so much effort on a world scale would end today’s problems — capitalism.

While Liam de Paor does not give a Marxist analysis of Northern Ireland he does nevertheless provide workers with a valuable introduction, to a case study of, the Northern Ireland problem.
Patrick Garvey

Enoch Powell on Inflation (1971)

From the February 1971 issue of the Socialist Standard

Before he jumped on the racialist bandwagon, Enoch Powell was a man who spoke of the futility of attempts to make capitalism work other than in accordance with the economic laws of profitmaking.

Powell returned to this theme in a speech he made in Scotland on 20 November, in which he revealed that he is one of the few politicians to have some understanding of the cause of inflation.

Inflation is a currency matter. If, with the level of production and trade remaining the same, the amount of currency in circulation is increased this will inevitably lead to a rise in the general level of prices because increasing the supply of money in these circumstances is in effect to depreciate the currency.

If the government were to decree that from tomorrow all notes and coins would only be worth half their face-value, this would automatically cause all prices to be doubled. What was today priced at £1 would be priced at £2 tomorrow. When the French government decreed that from 1 January 1960 a franc would be worth a hundred times what it was before, this, in accordance with the same principle, automatically cut all prices in France a hundred times.

Doubling the amount of currency in circulation would tend to have the same effect as halving their face-values. The face-value of the notes and coins the government issues is arbitrary. They can fix them at any rate; divide them anyway (and alter this division, as they are doing with decimalisation), and call them any fancy names they choose. There is however a real relationship, which no government can alter (which we cannot go into here except to say that it can only be explained adequately on the basis of the Marxian Labour Theory of Value), between the amount of goods on sale and the money-commodity of which the notes and coins are but tokens.

A specialised means of exchange, currency (or money in its original sense) is needed so that the goods on sale can be bought and sold efficiently without having to resort to barter. If coins and notes could only be used once, the amount of currency needed would have to equal the sum of the prices of all the goods on sale. In fact the notes and coins can be used more than once and do circulate, but at any given time their “velocity of circulation” can be assumed to be constant.

This means that once the face-value of the currency has been fixed by the government there is, for a given level of production and trade, a given amount of currency needed. If the government issues more than this they will depreciate the currency already in circulation. If they were to double the amount, for instance, then the purchasing power of the currency would tend to be halved. Each note and coin would then have to cover only half the value of the transactions it did before. Everything else being equal, £1 would gradually depreciate until it would buy only what 10s. did previously. All prices, in other words, would be doubled — just as if the government had decreed a halving of the face-value of the currency.

Powell expressed this view clearly in his speech, “Inflation”, he stated, “is a matter of money”, and went on:
  If, during tonight while we sleep, a nought were to be added to every sum of money, we should still wake up to be doing the same things and producing the same tomorrow as to-day—neither ten times more nor, for that matter, ten times less. We should be neither better off nor (apart from some slight inconveniences) worse off. But we should have undergone an almighty inflation, which was only painless because, in my imaginary, simplified picture, I supposed it to happen all at once and uniformly.
   My example brings out another vitally important point, too. It not only shows how inflation is, as I said, to do with money and only money. It also illustrates how helpless everyone is to prevent inflation if money increases while everything else stays the same. Nobody, in short, can prevent the consequences of an increase in money.
  Let us imagine that, instead of happening magically and painlessly overnight, and uniformly everywhere, the same increase of money had been injected like water flowing into a lake or cistern from a sluice or a valve at one end. Sooner or later the same result would have been arrived at in terms of prices, wages, pensions, etc. etc., but think of the wage claims and strikes and pensions increases Acts and all the rest that would have been involved in the process. That picture is close to real life; and looking at it, we realise that, whether they had liked it or not, all concerned could not have helped their incomes or their prices rising tenfold. It would have been impossible for anything else to happen, and no law, compulsion or tyranny could have prevented it.
This economic law — that the general price level will tend to rise in proportion to the extra amount of currency issued, sometimes called the Quantity Theory of Money — was known to the Classical economists of the 18th and 19th centuries and was accepted by Marx. It came to be rejected by later economists in the course of the so-called Keynesian revolution. Governments acting on the advice of these Keynesians, issued more and more currency without considering the effect. The result has been inevitable: continually rising prices as the currency depreciated.

Prices can of course be affected by other things. Individual prices are affected by supply and demand, by monopoly conditions or by changes in productivity. The general price level goes up and down in the course of the business cycle and would be affected by a change in the value of gold. But the main reason why prices have risen since the war has been the over-issue of paper currency by the government.

Politicians are not usually original thinkers and the ideas of most of them, in both parties, reflect those of their mistaken Keynesian mentors. In their ignorance they have blamed, depending on their political prejudices, either the trade unions for asking for too large wage increases or the big monopolies for using their special position to raise prices. Powell, who has often spoken out against the lies of his fellow politicians, has not hesitated to do so here:
   Wage claims, wage awards, strikes, do not cause rising prices, inflation, for one simple but sufficient reason — they cannot. There was never a strike yet which caused inflation, and there never will be. The most powerful unions, or group of unions, which was ever invented is powerless to cause prices generally to rise . . .  In the matter of inflation, the unions and their members are sinned against, not sinning. In the matter of inflation, the unions and their members are as innocent as lambs, pure white as the driven snow.
Powell would no doubt be surprised to learn that, in more poetic language, he is echoing here the views expressed by Marx in Value, Price and Profit, still an invaluable guide to trade union activity. Powell went on:
   There are millions who . . . look with bitterness and hostility on the shops, on the manufacturers, on the importers, on the shareholders, who (they imagine) are making themselves rich by putting up prices against the consumers and the poor, and thus driving the workers into fresh rounds of wage demands and wage increases. It is not so — for a very simple reason: it cannot be so. The biggest, the greediest monopoly ever created or imagined is powerless to put up prices generally . . .  In the matter of inflation, monopoly is perfectly irrelevant.
All this is very true.

There is, however, an ambiguity in Powell’s position as expressed in other parts of his speech. At times he seems to be suggesting that “government expenditure finances inflation”. In fact, as long as government expenditure is financed out of taxes it is as irrelevant as trade union action or monopoly as a cause of inflation. It would only be inflationary if it was financed by issuing more currency, and then the cause would be the extra currency not the way it was spent. Nor of course has Powell any understanding of the underlying value relationship between the money-commodity and all other commodities we referred to earlier.

In commending (at least in part) Powell’s analysis of inflation we are not in any way endorsing his policy for dealing with it. The government could cure inflation if it was prepared to face the political and industrial consequences by strictly controlling the amount of currency issued, but an end to inflation would not leave workers any better off. Their trade union struggle would have to and should continue, whatever the currency policy of the government.

We are concerned with understanding how capitalism works not with a view to suggesting what policy the government should pursue, but with a view to showing how it can never work in the interests of wage and salary earners. Like Powell, we know that capitalism can only work according to the laws of profit-making. Unlike Powell, we realise there is an alternative — Socialism. To achieve that is our policy.
Adam Buick