Saturday, December 2, 2017

Cooking the Books: Free is Cheaper (2017)

The Cooking the Books column from the December 2017 issue of the Socialist Standard
In 1964 a group of American liberal intellectuals calling themselves the Ad Hoc Committee on the Triple Revolution submitted to President Johnson, on their own initiative, a set of proposals to deal with the impact of what was then called 'cybernation'. They argued that the coming of machines that didn't require a large labour force to operate them would lead to increasing unemployment and so less paying demand for goods and services. To remedy this, they proposed to break the link between income and having a job by instituting a guaranteed income for everyone, employed or not.
The socialists of the time saw the 'problem' the Committee perceived of industry being able to provide plenty for all with less living labour as reinforcing the case for socialism, making possible the application of 'from each according to their ability, to each according to their needs' on the basis of the common ownership and democratic control of the means of production. They regarded what the Committee proposed as pitifully inadequate and impossible under capitalism.
Now, over fifty years later, another group – University College London's Institute for Global Prosperity – has come up with a similar proposal to deal with the same drop in employment and income they expect to result from growing automation. Their proposal is in fact more radical: that 'free housing, food, transport and access to the internet should be given to British citizens in a massive extension of the welfare state':
 'The recommendations include doubling Britain’s existing social housing stock with funding to build 1.5m new homes, which would be offered for free to those in most need. A food service would provide one third of meals for 2.2m households deemed to experience food insecurity each year, while free bus passes would be made available to everyone, rather than just the over-60s. The proposals also include access to basic phone services, the internet, and the cost of the BBC licence fee being paid for by the state ' (Guardian, 11 October).
 This 'universal basic service' is offered as an alternative to the 'universal basic income' that others have proposed to deal with the same perceived problem of the impact of advancing technology of employment and incomes. From a socialist point of view, it is more attractive as it would reduce rather than pander to money-commodity relations. There were some members of the Socialist Party members in the 1950s who saw extending free services as the way to socialism (they left).
 The trouble is that, as a reform of the 'welfare state', it is envisaged as being implemented under capitalism to deal with the problem of how to deal with people without an income from employment. Its proponents claim that it is 'fully costed' as all reforms have to be these days. They say that 'the value for an individual using all services would represent £126 of net weekly earnings' which could be funded by reducing the personal tax allowance; in other words, by reducing net weekly earnings. Which sounds like the 'redistribution of poverty' that the 'welfare state' has been all about.
 A weekly saving of this amount would have the same effect as a weekly basic income of the same amount. It would be a wage subsidy to employers and so would exert a downward pressure on wages. Much better to go the whole hog and abolish the wages (work for money) system through making the means of production the common property of all, so that everyone can have free access to all of what they need.

Those Reform Patches. (1909)

A Short Story from the August 1909 issue of the Socialist Standard

Scene: the spacious offices attached to the large works of that well known firm, The International Industrial and Financial Co., Ltd. Several clerks are busy with the usual office routine. under the suprvision of the chief clerk. Mr. I. L. Peert, who looks spick and span and has a habit of casting covert glances at the large mirror over the mantle-piece, just to reassure himself that his appearance is respectable. Enter through door leading from workshop, the fitter and engineer of the works, S. P. G. Britten, who carries a piece of oily waste and a smell of grease about with him. as well as a grimy face.

Definitions: Old Boiler - Capitalist System ; Directors — Capitalist Class; Patches — Reforms; New Boiler — Socialism.

Britten : Good Morning, Mr. Peert.

Peert : Er —morning Britten. Do you wish to see me ?

Britten : Well, yes. I must see you or somebody about that Old Boiler.

Peert : Boiler ! What, again ?

Britten : Yes, Mr. Peert, again. It is rapidly falling to pieces; it is awfully hard work trying to keep any fire in at all, and as for steam, why, it does not supply the “hands” with a third of their requirements, work they ever so hard. 

Peert : Ah ! it is a waste of good material even from the employers' standpoint, not to meet the people’s wants. I must look up some statistics on the subject and elaborate them.

Britten : But you understand the urgency —

Peert : Oh, yes. I was going to say that meantime our Directors will be round this way I hope, and I will ask them to kindly consider the advisability of conferring with their friends, Messrs. Muddlem & Co., with a view to having another Patch or two put on the Old Boiler. Messrs. Muddlem will doubtless report in due course, and if we can only induce you to keep your demands within moderate limits, possibly we shall manage to keep things going

Britten : Mr. Peert! What is the good of talking about more patches? I am continually telling you that nothing less than a New Boiler is of any use whatever. The old one is quite worn out; it has served its turn and done very well—for the Directors—but is now only fit for the scrap heap. It has been patched to such an extent that there is little room left for another, indeed, you have to keep Patching previous Patches, and as fast as you try to make good one defect it breaks through in one or two other places. I repeat that the thing is quite rotten, and it is useless and futile to mess about with it any longer. You know quite well that our men are in a bad way owing to its present condition.

Peert : Ah, yes. I quite agree, the Old Boiler is worn out and the men are suffering accordingly. But we must do nothing rash, Britten, or we shall spoil our ease and not get even another Patch, and so long as the thing will hold together we must accept the Patches, if offered, as the directors will not order a new machine. I really dare not approach them with such a request. As regards the men, you know that 1 do my best for them as secretary of the soup kitchen and bread fund. 

Britten : But what in the world is the good of that? It is only tinkering with the effects and does not touch the cause of all the trouble. Here is a machine that is quite worn out and unsafe, and the only remedy is a new one. You have been Patching the Old Boiler for generations, and all the time it has been getting worse. The people have been so blinded with Patches that they are unable to see the defective and dangerous condition of the machine, but you, Mr. Peert, profess to see the defects and agree, in the main, as to the only real remedy, and yet you talk “Patches” like the rest of them. Its, folly. Sir, absolute folly. 

Peert : No, Britten, you are wrong in not being more expedient in your methods. You will never get anything if you ask for it all at once ; you must learn to lx* more judicious. 1 have to be judicious or I would very soon lose my job and only ask for a part, and then you will possibly get some. Now every Patch is a step in the direction of a New Boiler.

Britten : What ! How on earth can the Patching of the Old Boiler, with a view to making it last longer, be a step towards a new one? 

Peert : My friend, you are really too impetuous. If you only knew our Directors well as I do you would talk more reasonably.

Britten : I believe 1 know enough about the Directors, but possibly I know more about the workers and Boilers. Besides, Mr. Peert, do you not think that if you were more insistent in asking for a New Boiler you would then get your beloved but useless Patches far easier and in more often? Now just come along with me and have another look at the old crock, and you will see for yourself that— 

Peert : Oh, I know it is in a bad way and I admit that you understand these things better than I do. But when one has to deal with influential men like our Directors, who cling to their constitution, which, by the way, you must admit is a better one than any foreign firm can boast of, why, one has to be careful. 

Britten : Damn the constitution! The Old Boiler is rotten; the people are starving and degraded in spite of your bread and soup funds, and at the risk of losing my job, I tell you plainly, Mr. Peert, you are acting the goat in order to keep your already insecure place, and you are already currying favour with the powers that be, with one eye on the chance of your becoming one of those powers yourself. You are well aware that the Patches are a delusion and a fraud, and I for one, will have nothing more to do with them.

Peert : Well, there are plenty more who will attend to them, Britten.

Britten : Unfortunately that is so at present, but there will be fewer who will attend to them before 1 lay down my tools for good.

Exit Britten into the workshop to have another dig at the Old Boiler, while Mr. I. L. Peert turns to meet the disconcerting glances of his fellow clerks, muttering something about “a troublesome chap.”

That's Different. (1909)

A Short Story from the September 1909 issue of the Socialist Standard

A man with an ax flew by Socrates, chasing another man:

"Stop him ! Stop him !” cried he of the weapon. "He’s a murderer! ”

But the old sage wasn’t taking any chances, and jogged on imperturbably.

"You fool! ” quoth he of the ax. "Why didn’t you stop him ? He’s a murderer, I tell you! ”

"A murderer! What’s a murderer ? ”

"Fool! One that kills, of course.”

"Ah ! a butcher.”

"No, idiot! That’s different. One that kills a man.”

"Oh ! Ah, a soldier.”

"No! No! That’s different altogether. One that kills a man in times of peace ! ”

“A hangman! ”

"No! No ! No! That’s different. One that kills a man in bis house ! ”

"A doctor, then! ”

"No! No! No! No! No! That’s different.” 

Running along after him (2,000 years after) comes another man with flaming eyes: ‘‘Stop him! Stop him!” he cries, pointing to something he sees, or thinks he sees, ahead of him. "Stop him! He’s a Socialist! "

"A Socialist! What’s a Socialist? ”

"Why a believer in state industries, of course.”

"Oh, I see ? The railways, post offices, customs, drains, and all that.”

"No, that's different! I mean competing against private enterprise.”

"Oh ! schools, universities, and the like.”

"No! No! That’s different. 1 mean state trading . The fellows that expect everything done for them by the state ! A loafer that wants to share the earnings of the industrious workers! ”

“Ah ! Ah ! A nobleman who has inherited land.”

"No ! No! That’s different. I mean—.” 
From the Sydney Bulletin.

An S.D.P. Curio. (1909)

From the October 1909 issue of the Socialist Standard

A surprising discovery has been recently made in an old, old Roman camp at Elslack, near Skipton. It was a volume shaped like an exercise book, made of that inferior kind of paper which stamped it at once as reminiscent of the twentieth century. In some strange way it had become mingled with the potteries and coins of the old camp, perhaps left there by some twentieth century explorer. A thorough examination proved it to be an old minute book belonging to the Burnleigh Branch of the Social Democratic Party, and as luckily a specialist in things historical is now investigating the wobbling and bewildering policy of this one time well-known party it will perchance be of valuable historical interest. I write a few extracts culled at random from this mysterious volume.

The Secretary, Mr. I. Dirving, read the minutes of previous meeting. Twenty-five members present. Queetons were invited on the minutes. Tertullian inquired about the antics of Mominsen, who had recently joined the Tariff Reformers (these being one of the side-tracking sects of that time). Was it true that this Mominsen had been cheekily saying that ha had as much right to advocate Tariff Reform as a palliative as other Socialists had Free Imports? Another member remarked that Mominsen was gulling the workers by a deliberate distortion of the word “palliative,” for was not Socialism itself a palliative?

Arising out of the minutes Euselrius enquired as to the truth in the report of a member mentioned having tried to form a suicide club, consisting of those members of the branch who were Conscious Pessimists,and uttered in unison an amount of commonplace pseudo-philosophic pessimism anent the impossibility of cultivating the working class—not including in the phrase “working class,” of coarse, the members named. He was informed that the allegation was an S.P.G.B. calumny, and that one S.P.G.B. firebrand in particular was persistently commenting on the alleged indifference of certain S.D.Peers because they had, after a few years’ experience of reform agitation been “fed up” with it. Many other members of the branch had also been charged by the same clique with holding a foolish fatalism and with being like those Eastern philosophers mentioned by Gibbon who “sat motionless year after year absorbed in the contemplation of their own navels.”

Celsus questioned about members of the branch sitting on the directive board of the Co operative Society, whether the Society was a revolutionary body, and could members improve working-class conditions by being on the picnic or library committees of the society. He was told that fine work had been done by our members, that margarine was being bought shillings a cwt cheaper owing to the exertions of one of our members, and that Mr. H. G. Wells' great work, “New Worlds for Old," had been placed on the library shelves.

Origen asked the secretary if they could not obtain more uniformity in their speakers, that one week the speaker would condemn palliatives and the four following weeks perhaps the lecturers would speak of reforms with laudation. It was pointed out that the action of a certain organisation made it imperative that occasionally we have speakers who would put the straight position, but it would be seen to at election times that the more extreme men were silenced in some way.

Arising from the correspondence a member said it was sad to think the Sunday morning discussion class was to be abandoned, and what was the reason? Answered that the previous year had seen a successful choir and cycling club, but that for some incomprehensible reason the discussion class had been a complete fiasco. Besides, a discussion class attracted a certain sententious type of individual not possessed of the sweet reasonableness of the choir members. They saw the dilemma. The wreckers or blackleg Socialists would attend and argue indefinitely, while their own members were apathetic toward politics. It had, however, been definitely decided to form a class for the study of botany; a dart club was also to be originated. He believed, said the secretary, their comrades at Sarle Hyke boasted the finest dart team in the Kingdom.

Augustine questioned on the matter of Socialist councillor Harry Lee Henry being on the committee of the Guild of Help, an organisation formed for the economic distribution of alms. The secretary said that the Guild of Help was a non-party organisation, witness the fact that both Liberal and Tory were connected with it. The larger a material platform, remarked the chairman, the more it would accommodate, but the larger a mental platform the smaller the number it would hold. As an organisation they must be tolerant so as to attract all and sundry to the fold.

Epictetus said: arising from this point, had their candidates come to any agreement on the reform question? It was answered that one was opposed to secular education, another to compulsory evening schools, another to proportional representation, but they had united on the common ground of a complete abolition of the smoke nuisance, and incidentally on the question of Socialism.

Lucian asked could they not amalgamate with the I.L P. in the town and thus prevent confusion in the minds of the workers. They had a common aim, Socialism, and agreed on the desirability of working with the trade union forces. Why not present a united front to the enemy? Answer: the S.D.P. as an organisation refused to join the National Labour Party, but locally individual branches had a free hand. Just as a general on the field of battle must adapt his tactics in different parts of the field to varying requirements, must sometimes practice contradictory tactics at one and the same time, may both be traitor and patriot, cautious tactician and daring fighter; just as in logic a thing can both be and not be—

Here the manuscript ends.
John A. Dawson

Nutters and Putters (2017)

The Proper Gander column from the December 2017 issue of the Socialist Standard

Television programmes (and magazine articles) about Donald Trump are rarely in short supply, thanks to his knack for being a symptom of just about everything wrong with society. The upcoming anniversary of his presidency starting has given another opportunity to try and explain how on earth he got where he is. For starters, Channel 4 have broadcast an epic four-part account of his life called 'Trump: An American Dream', although 'nightmare' would be a better description. Other shows have focused on particular aspects of his rise, such as who his supporters are and his relationship with Scotland.

In 'Angry, White and American' (Channel 4), reporter Gary Younge goes on a road trip through Maine, Pennsylvania and Mississippi to speak with people who aren't ashamed to admit on camera they voted for Trump. Younge wants to learn what experiences and mindsets led people to wave the flag and cast their vote for the dangerous demagogue. He's interested in the extent to which economic deprivation has undermined the sense of identity which many white working class (by which he means blue-collar) Americans have had. In places like Johnstown, Pennsylvania, heavy industries used to provide local employment until the markets turned and they stopped being profitable. As factories closed down and jobs were lost, the little financial security felt by many communities fell apart. Trump found support from those struggling financially who believe that he'll revitalise industry back to some mythical golden age. But, as Younge points out, most of Trump's supporters are white, so if economic deprivation was a main driver for his support, then why didn't poor black and Latino people tend to vote for him? Younge speaks with Erin McClelland, a Democrat congressional candidate who suggests that non-white Americans have always felt dissatisfied by the system, but dissatisfaction among white people is a new thing: black people haven't had wealth and prosperity taken away from them, as white people have. While McClelland is obviously wrong about white people not being alienated by capitalism up to now, it may be that expectations have changed and this has led some voters towards Trump and his allies on the far right.

Trump and the far right have a reciprocal relationship. His most rabid supporters can be found here saluting and chanting 'Heil Trump', and in turn his rise to power has emboldened the movement. According to Younge, the far right and Trump's advisers 'swim in the same pool'. Prominent white supremacist Richard Spencer (who coined the term 'alt right', an odious attempt to rebrand fascism) is visited by Younge at a rally. Spencer's sharp suit and fixed smile can't disguise his abhorrent views, such as promoting a 'white only' ethno-state. Other opinions rattling around inside his tiny brain are just as vile and ridiculous, like 'Africans have benefited from their experience with white supremacy' and 'if Africans had never existed, world history would be almost exactly the same as it is today'.

Those who voted for Trump to 'make America great again' seem to fall into two types: those who explicitly connect him with the narrow-minded racism of the far right and those who choose to ignore the bigotry which comes with nationalism. The latter, when interviewed by Younge, downplay America's slave-owning history and the connotations of the confederate flag.

Over in Britain, we're sadly not immune to Trump's influence. In 'Donald Trump: Scotland's President' (BBC1), reporter Glenn Campbell looks at the links (including golfing ones) Trump has with Scotland. His mother was born on the island of Lewis before leaving its rugged tranquillity for the bustle of 1930s Manhattan. According to those interviewed by Campbell, she taught Trump the value of getting attention, as well as traits like respectability and a sense of community which may have transferred less well to his adult life. When Trump visited Lewis in 2008 he reportedly spent 97 seconds in his mother's birthplace before jetting off to Aberdeen for an inquiry into his plans for a golf resort north of the city. This inquiry was held after local councillors had turned down his proposal, fearing that two golf courses, a hotel and conference centre, 950 holiday homes and 550 houses would ruin the area's natural habitats. The then-First Minister Alex Salmond stepped in and following the inquiry the Scottish government granted the planning application. A few locals have stoically refused to sell their homes to make way for the development, including one who flies a Mexican flag in solidarity with others threatened by what Trump wants to build. Those who agreed the development thought that the promised billion pound investment would justify an area of special scientific interest being built on. However, five years after the project opened, the second course and houses haven't been built and an area which used to be a wilderness now looks manicured. Many regret the decision.

The development of Trump's golf course ('the greatest golf course ever built', according to him) shows that if you wave enough money at something, you tend to get your own way in the end. His rise to power highlights other features of our capitalist society, such as how economic struggles and finding scapegoats in other groups fuel support for the far right, as it did in 1930s Germany. Far from being the trailblazer which his supporters want him to be, Donald Trump represents capitalism at its worst.
Mike Foster

Waste Paper and Old Tin. (1909)

From the November 1909 issue of the Socialist Standard
"Capitalism, with all its attendant evils of poverty and distress, is doomed. The dawn of the Cooperative Commonwealth is even now at hand: be it yours to vote and work to hasten the noontide of the happier day it promises for us all. .  .  . I have, as you know; always stood as a Socialist, in favour of a definite programme and policy on Socialist lines, because I am convinced that by the realisation of Socialism alone can the many injustices and inequalities of social and industrial life be redressed."
The above is culled from the election address of Mr. Dan Irving, issued this November to the electors of Burnley. It is the theoretical, the word-stuff specifically coined to catch flats. Now for the real—and the anti-climax.

The "Burnley Express” of October 9th contained a report of a Council meeting, the star turns “Socialist” councillors Irving and Lees being present. A question of vital importance to the worker was under discussion, not one of your puny palliatives, but a knotty administrative, collective ownership, municipal enterprise problem. “To institute a system of collecting waste paper and cardboard, apart from other refuse, from tradesmen; and also to recommend the purchase of a tin-crushing machine” (to smash with lightning celerity dilapidated salmon tins). Harry Lees mentioned paper collecting systems at Bury and said that this method kept the streets tidy and the tips sightly; and the tin-crushing machine took up very little room and would cost but £100. and the saleable value of the tins would be increased four or fivefold. Liberal councillor Race suggested that the tins might after all be crushed by the steam roller, but ridiculous! responded Lees, who pointed out that Nelson (which boasts a Labour council and mayor) made a profit of £25 a year by tin crushing. Dan Irving submitted that if they collected waste paper from shops less would get into the streets. But by a vote of 18 to 8 it was decided that a tin-crushing machine was not required, and another example of municipal "Socialism” was ruthlessly crushed in the bud. £25 profit in a year! Could it not have been used to lower the rates, or to cover the expenses of a deputation to Guernsey to investigate the market building scheme?

And this is what the Social Democratic movement in Burnley has culminated in. Men and women who have been in the thick of the fight, who have been victimised by ruthless employers and compelled to seek fresh fields and pastures new, or have given gratuitously time and energy to street corner agitation and converse with their mates in the workshop, those who have canvassed and paid and worked and borne obloquy—all receive their reward in such laughable and petty administration. Those who have worked and remain S.D.Pers, those who have worked and ratted, those who have worked and tired.—we ask one and all, is this what you have worked for? If not, come outside and join the only Socialist organisation in Great Britain.
John A. Dawson

Obituary: Robert Stroud (1909)

Obituary from the December 1909 issue of the Socialist Standard

We regret to learn that the Cause has lost an earnest and efficient worker by the death of Comrade Robert Stroud, of Toronto, Canada. Taking "the worker's risk" at his employment recently, he met with a severe accident and, after a hard struggle for life, died. Comrade Stroud had taken great interest in circulating the "Socialist Standard" in Canada, and in other ways had been very active for the Cause. We send heartfelt condolence to his bereaved family and friends, associating with ourselves, as we are sure we may, every member of our Party.

Capitalism's crisis cycle (1982)

Cartoon by George Meddemmen.
From the October 1982 issue of the Socialist Standard

Capitalism is a system of society in which the means of production take the form of “capital” or wealth used to produce other wealth with a view to profit. It is a system where wealth is produced to be sold profitably on a market. For capitalism to have come into existence (and to continue to exist) certain conditions have to be met, in particular the separation of the producers from the means of production. The producers must have been reduced to the status of a propertyless proletariat compelled to sell their mental and physical energies for a wage or salary to the minority who monopolise (own and control) the means of production. The essential features of capitalism are then: production for profit, buying and selling, wage labour, class monopoly of the means of production and distribution.

Capitalism differs from other systems of society by the fact that under it production is not carried on for use. Even under another class system like feudalism most production was for use; the peasants produced their own subsistence needs, the rest going in kind to maintain the barons, the church and other exploiters. It was the same in ancient slave society. Capitalism is different in that goods are no longer produced to be directly used but to be sold on a market with a view to profit.

Decisions about production — what to produce, how it is produced, where it is produced, and soon — are no longer simple decisions to produce what is needed, either by the producers or by their exploiters. Decisions about production become decisions to produce those goods which, at any moment, appear most likely to procure a profit when they are sold. In other words, production is governed by the search for profits, by the impersonal forces of the market which express themselves in the minds of the individual capitalists (or of their hired managers) as the "profit motive”.

As a matter of fact the situation is even more impersonal than this simplified description might suggest. For the individual capitalist does not seek profits just to satisfy their own personal needs. To stay a capitalist they are obliged to reinvest. rather than consume in riotous living, the greater part of the profits they make — in other words, to accumulate capital. It is this in fact — the accumulation of capital — rather than simply making profits that is the object of production under capitalism. The individual capitalist, just as much as the wage and salary earner, is a mere cog in this economic mechanism which is beyond human control and which operates independently of human will.

The accumulation of capital is not the mere amassing of greater and greater sums of money; it reflects itself as the expansion of the means of production, the growth of the stock of machines, factories, means of transport and communication and other means for producing wealth.

This growth, however, does not proceed smoothly and in a straight upward line. The general trend is upward — capitalism has immensely increased the stock of means of production since it made its historical debut in the 16th century and particularly since it entered its industrial phase in the 18th century — but this growth is in fits and starts. Illustrated graphically capitalism’s growth pattern would be an alternating series of peaks and troughs, with each peak normally being higher than the previous one. Or, more accurately, as a series of upward moving waves. Traditionally of course the metaphor that has been used is of a cyclical movement, the ups and downs of growth under capitalism being described as "the business cycle”, the "trade cycle” or the “economic cycle”.

Marx’s explanation, in a nutshell, is that growth under capitalism is cyclical due to the unplanned nature of production — what he calls the “anarchy of production” or the fact that production decisions are taken by a host of independent, profit-seeking, competing firms. This anarchy of production coupled to the search for profits, said Marx, leads to one sector of the economy over-expanding in relation to the others, so provoking by a chain reaction a more general slow-down or halt to growth.

Marx, towards the end of Volume II of Capital (published after his death by Engels from his notes and thus not a form Marx would necessarily have regarded as ready for publication) divides production into two main sectors, or departments:
Dept I: producing means of production or what academic economists today would call "producer goods" or "capital goods”.
Dept II: producing means of consumption or "consumer goods”.
If there is to be steady growth then these two sectors must grow in proportion. The necessary proportion is quite easy to work out. Thus Ernest Mandel in his Introduction (not at all bad apart from the occasional nonsense about Russia being "non-capitalist" or "post-capitalist") to the new Penguin translation of Volume II:
. . . the equilibrium formula of expanded reproduction . . . implies an identity of the rate of growth of demand for consumer goods generated by department I. and a rate of growth of constant capital in department II (p.67).
In a sense this division of production into only two sectors is a gross simplification but its logic lies in the fact that it brings out that capitalism is not a system of production for use and that the output of Department II is restricted in the end by the need to limit the consumption of the producers at the expense of profits and capital accumulation. All the same, there are in fact as many sectors as there are industries and, if growth is to be smooth, all these sectors, or sub-sectors, must expand proportionately. It is thus easy to see how, given the anarchy of production, crises are possible, in fact inevitable, under capitalism. As Mandel puts it:
the very structure of the capitalist mode of production, as well as its laws of motion, imply that the "conditions of equilibrium" are inevitably destroyed; that “equilibrium" and "harmonious growth" are marginal exceptions to (or long-term averages of) normal conditions of disequilibrium (“overshooting” between the two departments) and uneven growth, (p.31)
Crises are due not to simple disproportionality but come about because this happens in the context of a society where production is for profit and where consumption is restricted by the majority being exploited by a minority class. A crisis, as a more or less sudden stop to growth, is in fact only one phase of the capitalist economic cycle. In Volume I of Capital (which he did himself see to the press) Marx speaks of the “life of industry" being a "series of periods of moderate activity, prosperity, overproduction, crisis and stagnation" which are “recurring cycles whose successive phases cover a number of years and which always end in a general crisis, which is the end of one cycle and starting point of another".

The key factor governing the move from one of these phases to the next — from moderate activity to prosperity to overproduction and crisis to stagnation — is profits, short and medium term variations in the rate of profit.

In the period of moderate activity, which is the period of recovery just after the stagnation (the period Tory ministers have been saying for the past year or so is just round the corner!), industrial activity is beginning to pick up. This means that more workers are in employment and have more money to spend. More money to spend means a larger market for consumer goods, which means that capitalist firms in this sector will expand production ordering new factories, machines and raw materials from the producer goods sector. This interaction between the two sectors eventually leads to the period of prosperity and boom, with relatively full employment, rising wages, full order books. So it is the confirmation of the confidence that capitalist firms had in being able to sell profitably what they produced that leads from the period of "moderate activity" to that of "prosperity”.

But this period of prosperity does not last for ever. It inevitably ends in "overproduction", as capitalist firms become over-confident. This is because the competing firms in an industry all assume that they will sell their goods profitably on the expanding market. As a result the total amount produced comes to be more than enough to satisfy the market. In this sense, there is “overproduction” in one industry. This leads to lay-offs and cutbacks of production which affect other industries, and so to a generalised "overproduction” and an end to the boom.

In Marx's day, when most industry and trade was financed by trade bills, this led to a loss of confidence in credit and to a financial crash — or crisis in the sense Marx used it in this context. Then followed the period of stagnation: a fall in industrial output, mass unemployment — which is what we today more usually mean by crisis.

The evolution from "stagnation” to "moderate activity" is once again governed by a change in the rate of profit. As a slump continues the conditions are eventually created for a restoration of profit levels and a gradual recovery of economic activity. Profit levels are restored by a number of factors: (1) depreciation of capital, through bankruptcies, write-offs, takeovers, fall in the value of stocks and so on: (2) a fall in real wages; (3) a fall in real interest rates as the supply of capital for lending comes to exceed the demand. These three factors all work to increase the rate of industrial profit and eventually bring about a recovery, and so the cycle recommences.

This is our analysis of the current slump. It is one phase of the economic cycle which is repeated under capitalism and will in time give way to the next phases: moderate activity, prosperity and then another crisis and stagnation. In other words, capitalism will eventually recover from the present crisis.

So, to sum up, growth under capitalism is not smooth and steady but cyclical. Crises occur because of the uneven development of the various sectors of the economy which is inevitable given the anarchy of production which reigns under capitalism. The present slump is not the final crisis of capitalism, nor the beginning of a permanent depression, but simply one phase of the economic cycle which will sooner or later come to an end — even if this turns out to be later (say, the 1990s) rather than sooner.
Adam Buick