Letter: What is Capital? (1928)

Letter to the Editors from the September 1928 issue of the Socialist Standard

To the Editor, Socialist Standard.

In your reply to Mr. Keeble’s letter concerning the aims of the I.L.P. you repeat for about the umpteenth time that the statement that land and capital should be communally owned is utterly meaningless.

I have followed very closely the controversies between various political parties, but never have I heard of one party accusing the other of putting forward as its chief doctrine a meaningless statement. Surely you do not really believe that such is the case with the I.L.P. ? According to your definition of capital, i.e., as money invested with the object of profit-making, it would be quite obvious to anybody that all talk about common ownership of capital would be meaningless, since under Socialism capital in that sense of the word would be non-existent.

Reverting however to what some people choose to call “bourgeoise” economics (which is the economics that the I.L.P. seem to follow) we find that capital is defined as “wealth set aside for the production of further wealth." This translated into everyday speech simply amounts to the means of producing wealth (i.e., machinery, factories, etc.). The I.L.P. are therefore in agreement with you that the means of production of wealth should be communally owned. I sincerely trust, therefore, that (even if you do not print this letter) you will in future refrain from levelling such a ridiculous accusation at the I.L.P.

Incidentally, I might point out to you that, your action only serves to confuse the minds of your readers. —Yours sincerely,

“Independent.”

Our Reply.

"Independent" believes that when the I.L.P. use as a description of their aim the phrase "communal ownership of capital" (admitted by their Chairman, Mr. Maxton, to be an absurd contradiction in terms) what they really mean is common ownership of the means of wealth production and distribution. That this is not so has been shown in these columns by numerous quotations from I.L.P. publications in which they admit their intention to be Nationalisation, with the present owners still drawing property incomes, but from the ownership of Government bonds instead of company shares.

Their aim is not common ownership, but merely State Capitalism.

For example, The Socialist Programme (I.L.P., 1924, p. 24) says:—

  The present shareholders in mines and railways could receive State mines or railway stock based on a valuation and bearing a fixed rate of interest.

It is amusing to be told that we are guilty of confusing the minds of our readers by using the only tenable definition of "capital.” An economic theory is either correct or incorrect. To talk of "bourgeois” economics as distinct from some other kind, as if two incompatible doctrines can both be correct, is nonsense.

(Incidentally, at least two anti-Socialist economists of note have explicitly rejected this unsound definition of Capital, viz., Professor Edwin Cannan, and the late Sir William Ashley.)

If "wealth set aside for the production of further wealth" is "capital" (as is taught by the I.L.P.) then Capitalism would be any society in which tools or machinery are used. Thus "feudalism" would be "Capitalism,” and, in fact, every system of human society, and some animal societies, would all be correctly described as "Capitalism.” Socialism itself would on this showing also be "Capitalism.” The theory is unsound, but exceedingly convenient to opponents of Socialism who wish to prove that Capitalism has always been and always will be. By spreading this confusion, the I.L.P. is doing the work of the anti-Socialist.

Edgar Hardcastle