50 Years Ago: The Passing of Individualism (1968)

The 50 Years Ago column from the April 1968 issue of the Socialist Standard

Imperialism, especially under the impulse of its exacting offspring, the war, has revolutionised the capitalist mind. The old "individualism” is dead as a working philosophy. Whilst in the "Liberal" period, the capitalist class largely achieved its prosperity through each capitalist seeking independently his own welfare without much regard for, or heed of, the support of his class, now that competition between its national sections has become intense, class solidarity within the nation has become imperative. The great expense of militarism and the need for efficiency demand concessions and sacrifices from the individual members of the bourgeoisie.

Organisation for war having become an economic necessity, military service is now considered an imperative obligation. The military spirit is glorified, military traditions are revived. The State it no longer regarded, as in the individualist period, a necessary nuisance, useful to keep the workers down (maintaining "order" as it is called) but otherwise the less in evidence the better. Now, on the contrary it has become the "saviour of society” (i.e. of the bourgeoisie). Only by its powerful aid can the needs of the capitalist class be satisfied. The State, in addition to securing military efficiency, now organises and provides over the industries of the Nation, striving to co-ordinate National production, eliminate waste, and otherwise promote the efficiency required for the intense competition in the world market.

From an article by R. W. Housley, Socialist Standard April 1918.

Prejudice and Pride (1968)

From the April 1968 issue of the Socialist Standard

Her Majestie understanding that there are of late divers blackmoores brought into this realme, of which kinde of people there are allready too mannie, consideringe howe God hath blessed this land with great increase of people of our owne nation . . .  those kinde of people should be sent forth of the lande . . .

(Acts of the Privy Council 1596)

Apart from the government’s feeble, obligatory excuses, both supporters and opponents of the Commonwealth Immigrants Act are agreed that it is a measure designed to discriminate against people on grounds of colour.

The Act was rushed through in deference to a widespread feeling that it was needed, which is what Callaghan meant' when he spoke in the debate on the Bill:

Pledges had been given to people which, if carried out. could cause great political turbulence and place Britain's services under a far greater strain. (Daily Telegraph, 28/2/68.)

Labour politicians have learned their lesson; the name of Smethwick is graven on their hearts and it will be a long time before they again risk going against the popular conviction that immigration should be restricted, if not stopped altogether, and that coloured immigrants are especially undesirable.

This last prejudice, which was behind the Commonwealth Immigrants Act, is a complex matter which has been the subject of much investigation. We do not need to be a probing sociologist to know what it amounts to — the opinion that coloured people are sexually dangerous, emotionally unstable, mentally retarded, lazy. Some think that a coloured skin must be dirty, like the chauffeur who was surprised to find Negresses working in the kitchens at London Airport. “. . . because they are usually so careful about hygiene here." Others do not bother to think out their prejudices even to that extent; to them, a coloured skin is strange and that is enough to condemn it.

We must be careful not to exaggerate the size of this feeling. In his book White And Coloured Michael Banton sums up one aspect of his investigations:

  It would appear that the proportion of the British population who consciously subscribe to doctrines of racial superiority is certainly less than 4 per cent, while the proportion who are prepared to translate such opinions into active hostility is very much smaller still.

Banton’s carefully qualified statement is probably correct; but behind that 4 per cent lies a much larger proportion of people who have prejudices which are perhaps less conscious but which, when they are tested by an influx of coloured workers, can be provoked into activity. This is what has happened in recent years. Banton found 62 per cent assenting to the proposition that “It would be a good thing if people of different races mixed with one another more’’. But that was in 1956; if 62 per cent of the electorate were now in favour of racial integration there would probably have been no such thing as a Commonwealth Immigrants Act.

A lot of the objections to immigrants are based on the fears that they will swamp the hospitals and social services. In its most extreme, but by no means rare, version, this pictures the Negroes and the Asians coming here with an enormous family and heading straight for the nearest office of the National Assistance Board, then settling down in slumland, performing the miracle of running a big flashy car and several women on unemployment pay.

To some extent this was answered in the Sunday Times of March 3, in an article which pointed out that, with the exception of Education and Child Care, the average cost per head of the immigrants to the social services is below that for the total population. This is because the immigrants tend to be younger than average, which also means that their national insurance payments are higher than the average.

We should realise that facts like these only put some prejudices into perspective. What, it may be asked, happens when the immigrants get older? Does the case against them become stronger because they are more of a burden on the social services? In fact, the whole issue is irrelevant. People who object because there are some — even many — coloured faces in an already overcrowded, understaffed hospital are overlooking the fact that it is only one social class which always has to rely on such hospitals and that the best medical services are reserved, not for coloured workers but for the economic masters of workers of all colours.

By the same token immigrants are forced to move into areas which are in a state of slow decay and accelerate the process. A large, depressed migrant population, fleeing from destitution or oppression, is usually forced into this (have a look at Cecil Woodham Smith’s story of the Irish emigration westwards in The Great Hunger). But the solution is not to keep the immigrants out, so that at best the decay advances only slowly. The root of the problem is in the fact that we live in a social system which frankly admits that it cannot stop producing slums.

To illustrate the point, here are a couple of extracts from A Question Of Colour?, a book by Peter Griffiths, the man who won the notorious election at Smethwick. These are supposed to be justifications for the objections to immigrants but in fact they show up the negative attitudes behind the objections:

People who have perhaps been evicted from one overcrowded dwelling after another are bound to feel bitter when they hear of houses being occupied by several families or used on the shift system.

And

Housewives, waging a never-ending battle against industrial dust and grime in an attempt to turn mean little houses into real homes, are highly critical of any lowering of standards.

Working class fear about lack of housing, hospital accommodation and so on, is only the sauce on the pudding. Without it, there is still an indigestible lump of what can only be called prejudice, or sometimes simple insularity. In Southall, for example, the elderly Sikhs regularly gather in the park — whenever they can in the open — and converse in a large circle. Sometimes younger men join them. It is all perfectly harmless, all very sociable — the kind of thing that does not normally happen in an industrialised city and is all the more poignant for it. But many local white people think it is a cheek, to take up so much of the park and others that it is a strange and sinister thing to do.

In the same way, there is a reluctance to accept, or even to evaluate, any different sexual standards which immigrants may have. The West Indians regard marriage with rather less reverence than do the British — which has the effect of making their families almost matriarchal and their old men sometimes almost discards. This attitude has nothing to do with any inherent Negro characteristics, as many white workers think. It is no more than a product of the immigrants' history. In West Indian Children In London (Occasional Papers on Social Administration) Katrin Fitzherbert outlines the results which slavery had on the family in the West Indies:

Family life was barely possible under slavery; the marriage customs of a particular tribe could not survive when slaves from different parts of Africa were put into the same compound; English-type marriage was forbidden for most of the period of slavery — on some plantations to the very end. For two centuries the institution we consider most fundamental to human society was forgotten.

A British worker has to make some sort of an effort, if he is to realise that the family organisation he has been conditioned to accept as eternal and invulnerable does not hold good for all time and all over the world, and that different social circumstances will often result in different sexual conventions. At the moment he prefers not to make the effort; it is easier to reject facts and surrender to prejudice, sexual fears, the jungle standards of competition on the labour market. It is easier to try to keep out anything foreign, with different customs and culture.

A lot of the reason for these insular prejudices can be found in the fact that many workers, after perhaps decades of hard work, have painstakingly sunk their roots into mortgaged houses and have embellished them with hire-purchased durables (which is not our word for them) like cars, television sets, refrigerators. They have revealed remarkable talents in decorating their rooms and laying out their gardens. They are proud of what they have done.

In these little homes, within the confines of their families, many workers feel they have built themselves a fortress. They will defend it against all comers — and at the moment the enemy they see coming is the coloured immigrant. They are fighting him now with their votes. Who cares to say how they will fight in the future? 

The tragedy is that those little homes are not fortresses so much as prisons. Capitalism is a massive confidence trick which convinces workers that their chains are ornaments, that their poverty is prosperity, that cheap, cramped houses are objects of pride — because they have had to be worked for. Coloured workers are equally deceived—the limits of their ambitions is to get a clean passport into the working class with all its poverty, fears and suspicions, probably to set up their own prejudices and insularity.

Capitalism is strikingly adept at erecting barriers among its people. It divides them into nations, income groups, races — all of them inspired by false notions of economic and social interests. It is a desperately inadequate society, in which for millions of people the highest achievements is to close themselves up into the confines of a little home and a little job and a little family. These confines are self-productive; they encourage the neuroses and prejudices which fear a different skin colour, and which insist that I shall keep in my small corner while you must keep in yours.

Ivan

Finance and Industry: Nationalisation and the Commercial Jungle (1968)

The Finance and Industry column from the March 1968 issue of the Socialist Standard

Nationalisation and the Commercial Jungle

The shortcomings of capitalism are widely felt but little understood. The Labour Party see some of these as being due to the unbridled competition resulting from private enterprise and supposed Tory policies. To them capitalism is competition, private enterprise and the Tories. Their answer is to restrain competition through government intervention in industry and through nationalisation. Add planning to this and you get their idea of Socialism. But if this is Socialism, then the Tories too could call themselves socialists.

The government’s proposed aluminium smelter scheme is an example of how little can nationalised industries be isolated from commercial wrangles. In the past it was cheaper to import aluminium, but now it is expected to be a paying proposition to do the refining and smelting in Britain. The proposed scheme set off a competitive scramble between the nationalised atomic energy, electricity and coal industries. Aluminium smelting ' requires large, uninterrupted supplies of electricity. New nuclear power stations were expected to provide the cheapest source of power. But Alcan proposes to use electricity generated in their own coal-fired power station. It was this that caused the storm amongst the nationalised industries. The Central Electricity Generating Board (CEGB) complained that Alcan would be getting coal cheaper than they themselves were. The recently nationalised steel industry made the same complaint and added the objection that manufacturers of a rival metal were being given an unfair advantage. Again the NCB has been complaining that the government’s fuel policy unfairly discriminated against coal and in favour of atomic power. On top of trying to sort out the rival claims of the aluminium companies and to settle the squabbles of the nationalised industries, the government has come under fire from abroad. Overseas producers, especially Britain’s EFTA partner Norway, do not like the idea of losing part of their market. The Norwegian government suspects that the EFTA treaty may be violated, claiming that aluminium cannot be produced profitably in Britain without subsidy.

This is the predicament of those, like Labour, who would tame capitalism whilst leaving its basis intact. Socialists do not care who gets the contract or what kind of fuel is used or whether EFTA agreements are violated. We know that capitalism is based on the monopoly of the means of wealth production by a minority. Buying and selling and the commercial jungle result from this. Our answer is to replace minority ownership by the common ownership of the means of production by society as a whole. Then there would be no basis for commerce or competition as there would really be a common social interest.


Rich and Poor

The second United Nations Conference on Trade and Development (UNCTAD) meeting in Delhi was faced with problems that would have defeated the mythical wisdom of Solomon. They will also defeat this international gathering of talented experts. Unctad’s aim is to find ways of bridging the gap that exists between the so-called developed and underdeveloped nations. Statistics are used showing the differences between America and India in per capita income, steel production, electricity output and so on. Giving the impression that India equals poverty and America affluence and so the conclusion that poverty in India will be eradicated when average income and production figures reach those of America. So, Unctad claims, what is needed is more trade and technical development. But it is on the question of trade that their plans founder.

The underdeveloped countries are urging easier access for themselves to the markets of the developed countries. The developed countries are trying to balance their own trade and payments. This involves cutting imports and stimulating exports. So they are faced with the same problem as those they say they are trying to help: more exports. The main exports from the poorer countries are raw materials. But their plight in recent years has net been due to any lack of enterprise or too slow increase in productivity, as is generally thought, but to too much of these. The problem has been that the prices of their export commodities have been falling because the market cannot absorb the extra production. This is what the Unctad experts have to sort out. The best capitalism has come up with so far is giant bonfires of coffee, cocoa and other products, or, what amounts to the same thing, schemes for curtailing production. Proposals that more manufactured goods should be imported by the developed countries from the less developed are worth as much as the suggestion that Brazil should import large quantities of coffee.

Just as all nations are faced with trade problems so they all also have poverty problems. America is not entirely populated by Rockerfellers and Henry Fords. Nor is everybody in India destitute. Living in affluence there are not only the remnants of the pre-capitalist rulers but also home-grown captains of industry who are just as wealthy as their American counterparts. The problem is not one of rich and poor nations, but of rich and poor social classes. The solution to the world-wide poverty problem is the establishment of a world community in which production is geared solely to meeting human needs. The problem is not one of trade, aid or technology but of how society is organised.

Joe Carter

Party News: Teddy Lake Retires (1968)

Party News from the March 1968 issue of the Socialist Standard

Last month Teddy Lake retired from Head Office activity. He has been our Treasurer since 1944, when he took over "temporarily" after his predecessor, Jack Butler, was killed in an air raid. We shall miss his genial and warm presence at Head Office.

Phyllis Howard

Draft Resistance and Conscience (1968)

From the March 1968 issue of the Socialist Standard

Over Vietnam, the majority of Americans go willingly to war—or at any rate keep their fears and doubts to themselves. President Johnson, under pressure about the war, replies that this is no time to argue; American boys are in battle over there. Most Americans accept this cynically emotional appeal and close their ranks—and perhaps their minds as well.

Only a minority, now graced (or cursed) with the name Draft Dodgers, stand aside and refuse to join in the killing. These young men, opposed to the Vietnam war, refuse service in the army under the United States selective service system. They sometimes destroy their draft cards, sometimes return them to the authorities—even give them to the enemy, the Vietnamese National Liberation Front.

Some of the objectors—for example the Quakers—are acting in line with a persistent opposition to war wherever it is fought. Others resist only the war in Vietnam:

  I am not a pacifist or a conscientious objector in the narrow sense, but I am a conscientious objector with regard to the Vietnam war. I do not object to conscription as such. (Michael Haag.)
  I totally want to dissociate myself from my country's course in what I consider a disgraceful, cynical war. It is not a war against communism. (Joel Gladstone.)

(Both quoted in The American, 15/12/67.)

We can see how small a minority the draft dodgers are, from the figures issued by the U.S. Justice Department of prosecutions for draft evasion. About 160,000 men are registered for the draft each month, only a part of them being called up. In the year July 1965/June 1966 the call up was 336,530; only 658 men were prosecuted. For the year July 1966/June 1967 the figures were: call up 288,000; prosecutions 1,409.

Young Americans can apply for registration as conscientious objectors but, according to the Sunday Times (21/1/68) the only people likely to be granted this are Quakers or members of the American Friends’ Church. (In this country, during 1914/18, the C. O. Tribunals rarely accepted what they called a "political" objection to war.) Very often, then, the only way out is to evade the draft laws —refuse to register, destroy or return the draft card. The legal penalty for this can be a fine of up to $10,000 and a prison sentence up to five years. There can also be illegal penalties—victimisation in employment or, as some of the card burners have experienced, a beating up from patriotic hooligans.

The draft dodgers are the latest in a long line of war resisters—a line with a mixed pedigree. There were the Christians who refused to serve in the Roman militiae; the Quakers who went by sledge to Moscow to protest against the Crimean War; the unenduring resolutions of the Second International. In this there is a discernible change; the development of capitalism had its effect on the anti-war movement. For capitalism made war total, with everyone under fire and with a modem state machine recruiting all its resources—including people—if necessary by compulsion. But at the same time capitalism needed to school its people in its productive techniques, which gave rise to a working class with political fights, often seeing capitalism’s problems as political issues. Thus when conscription came in, the opposition to it was often in political terms. Pacifism, in the words of Christopher Driver tended to become secularised.

In his book Pacifism and Conscientious Objection Professor G. C. Field, who sat on a C.O. Tribunal from 1940 to 1944, recalls among the people who came before him:

  . . . adherents of fifty one different religious bodies . . . those, comparatively few in number, whose objections were based on ethical or humanitarian grounds independently of any religious beliefs . . . a few whom we classified as political objectors and a few, also, who could only be described as objectors on aesthetic grounds.

This was the result of a development which started in 1914. Before the First World War, Britain was the only major European power to rely on a volunteer army. As the war drew closer, a conscription pressure group grew in strength and in 1902 gave birth to the National Service League (President the Duke of Wellington; supporters Rudyard Kipling, the Duke of Westminster, the Bishop of Chester.)

The outbreak of war, and the growing threat of conscription, threw up an opposition—the No Conscription Fellowship (Chairman Clifford Allen; supporters Fenner Brockway, Bertrand Russell, Bernard Boothryd.) On December 3 1914 the NCF declared itself:

  . . .  it would, we think, be as well if men of enlistment age who are not prepared to take a combatant’s part, whatever the penalty for refusing, formed an organisation for mutual counsel and action.

Stage by stage, as the war settled down into a pattern of interminable murder, the government progressed towards conscription—its appetite, as Philip Snowden pointed out, growing by what it fed upon. In March 1916 the final blow came; the Military Service Act gave the unmarried man of military age a choice between enlisting immediately or being called up in his group. If he did neither he would be "deemed to have enlisted”—in other words he was a soldier whether he liked it or not.

This was a vital provision. It meant that an objector who was turned down by his tribunal was instructed to report to his unit. If he did not go he was a deserter; if he was taken and then refused to put on a uniform he was disobeying a military command. As he was legally a soldier he was subject to army discipline; he could be sent to a military prison, court martialled, sentenced to undergo such experiences as Field Punishment Number One or even—as happened to thirty four men—could be sentenced to be shot.

Under army detention the C.O.s were subjected to a variety of brutality and torture. In the civil prisons they fared only a little better. J. Allen Skinner was one who spent time in both Wandsworth and Wormwood Scrubs during 1916/17. In 1960 he was in prison again—in Brixton after a Ban the Bomb demonstration. He told the Governor of Brixton of his earlier sentences. "That”, said the governor feelingly "must have been a terrible experience." (See The Disarmers by Christopher Driver.)

And so it was—for Skinner and for all the other objectors to that war. There were about sixteen thousand of them (12,000 with “political” objections) and seventy three died as a result of the treatment they received.

The pacifist movement, dying down after 1918, came back to life in 1935, once more at the approach of a major European war. That was the year when the Peace Pledge Union was formed; over 100,000 signed its renunciation of war. The PPU was swept along on a wave of enthusiasm; in 1937 its Leader, the Rev. Dick Sheppard, was elected Rector of Glasgow University.

The 1939 war, as many thought it would, exposed the Pledge. (Professor Field claimed: ". . . a clear-sighted pacifist friend said to me, the Peace Pledge was really a piece of bluff”) Only about 65,000 men registered as C.O.s during the entire war and of course not all of these had signed the Pledge. British capitalism had learned a lesson. Conscription was in force before war was declared, the tribunals operated with a lighter hand (about seventy per cent of objectors were found to he “genuine”) nobody was “deemed to have enlisted”, sentences (there were about four thousand of them) were served in civil prisons. There was no torture, no death sentences, hardly any discernible victimisation, no outrages worthy of the name.

The Second World War saw a decline in the numbers of “political” objectors; from about 12,000 in 1914/18 to about 3,250 in 1939/45. This can be explained by the fact that most of these in the first war were members of the ILP which was then part of the Labour Party. By 1939 the ILP had all but disappeared arid the Labour Party no longer had any doubts about its support for capitalism’s wars.

What of the pacifists? The word covers a multitude of opinions on war, but implies the basic agreement of regarding war in the idealistic sense, as an evil in itself which can be abolished by a policy of righteousness. Thus Dr. Alfred Salter in his pamphlet Religion of a C.O. (1914):

There is a great place waiting in history for the first nation . . . that will dare to base its national existence on righteous dealing, and not on force . . .

This is typical of the pacifist attempt to deal with war in isolation from the very surrounding conditions which cause it. It avoids the all-important question of why governments base their existence on force—even a government like the Attlee administration, which included men who were objectors with Dr. Salter in 1914/18. What did their pacifism do for their policies, when they had the chance to try a little righteous dealing?

This same question was still being evaded when the Second World War came. On September 8 1939 the PPU Council agreed that “. . .  in all ways possible the PPU should strive to make the Government publish terms of peace by consent.” In August 1944 they were demonstrating for a negotiated peace and “just peace terms”. (See I Renounce War by Sybil Morrison.)

It is a massive contradiction to accept all the pre-conditions for war and social violence—to accept the capitalist system and its governments, its diplomacy, its “peace” talks and treaties—and at the same time to object to war. This basic fallacy runs like a thread through pacifist thought. The people who marched from San Francisco to Moscow in 1961 distributed a leaflet along their route which said:

  We believe that the Soviet Union and the United States with other countries should pool their resources to remove such suffering—by using the money now wasted on weapons of destruction.

And Richard Gregg, in The Power of Nonviolence, says:

Nonviolent resistance is more efficient than war because it costs far less in money as well as in lives and suffering.

Pacifists like Gregg believe that war and violence are an effect of inferior ideas (“. . . a large part of the activities of the state are founded upon a mistake, namely, the idea that fear is the strongest and best sanction for group action and association.”) But it is impossible to conceive of capitalism without war. The private ownership of the means of production divides the world into antagonistic classes, competing firms, rival nations and international power blocs. It is this competitive nature of capitalism which causes its wars, which are as much a part of the system as the governments, the money and the treaties which the pacifists are prepared to accept.

Modern war is fought to settle the squabbles of capitalism’s master class; it does not involve the interests of the ordinary people except that it brings them nothing but suffering. If the working class refuse to fight—as we say they should—it should be on these grounds—and this should apply to all war, not just to Vietnam, or Korea, or Algeria. If the pacifist, idealist objection to war is futile how much more so is that which stands out against only one particular war?

The draft dodgers may claim to have made a start. If so, they must go on to realise that there is nothing special about Vietnam— nothing special about its causes, its history, its horrors. The war resisters have won the honourable distinction of showing that capitalism need not have it all its own way—that even in face of overwhelming propaganda the working class can recognise a problem and protest. They have shown their power, and that courage does not have to wear a uniform. These qualities will stand us in good stead, when we have a society where war is only a black memory.

Ivan

Bitcoin: What Would Marx Think? (2018)

From the February 2018 issue of the Socialist Standard

We have heard all kind of things about Bitcoin. There is even someone who has dared to say that Bitcoin was an alternative to the current economic-political structure and that for this reason Marx would have liked it (‘Bitcoin and Marx’s Theory of History’, Kenny Spotz, Bitcoin Magazine 26, July 2014). Oh dear!

Let us see whether Marx would have liked Bitcoin or not. Bitcoin is a ‘cryptocurrency’, ie a digital encrypted means of payment, safe, until hacked of course. According to Marx, the only alternative to capitalism is a society based upon common ownership of the means of production and products, a society with no profit and no money, not even crypto or funny ones.

Marx analysed extensively the nature and function of money in the capitalist system. This can be found in the first section of the first volume of Capital. Let us brush up on a few concepts from it.

Anything that is able to satisfy a need has a use-value, which is a utility, a particular quality. But when we look at the exchange of two things and their qualities, for example two chairs and 0.3 ounces of gold, their various use-values are not the driver for the exchange; what matters is some measurable common quantity. In the exchange, these two things become commodities and their values become exchange-value. As for the example, the 2 and 0.3 are the exchange-values. Yet, if we were to look at it from the utility point of view, the two chairs should be more useful than the 0.3 ounces of gold (let’s say a golden ring).         

But who or what decides that two chairs are worth only 0.3 ounces of gold, rather than 20 ounces, or 0.1 ounce? It is because the average amount of human labour in a society needed to produce two chairs and to extract 0.3 ounces of gold is the same. Thus, two chairs as well as 0.3 ounces of gold can be exchanged with each other, as with 8,000 apples, or 4 pairs of shoes. Every commodity therefore has equivalents, reflecting the average labour time spent on producing them from start to finish. By convention, historically, the universal equivalent form was attributed to a precious metal, gold or silver, as money-commodity, as the currency, which in itself embodied a standard of labour time in the same way and allowed all other commodities to be measured against it. 

Marx sums this up in a clear example:

  ‘Could commodities themselves speak, they would say: Our use value may be a thing that interests men. It is no part of us as objects. What, however, does belong to us as objects is our [exchange] value.’
   ‘Gold [meaning here as money] … serves as a universal measure of [exchange] value.’

In origin, money was a commodity, the precious metals gold or silver, for their property of lasting through time and their divisibility; their exchange-value was determined by their weight. At some point in order to allow smaller scale exchanges, other metals such as copper were used as tokens, substitutes for gold or silver coins. Even gold and silver coins were subject to wear and tear, thus their value became more and more conventional and less and less connected to their weight. This paved the way for a purely conventional currency as paper notes. Paper by itself is of little exchange-value, but conventionally notes are worth £20, £50, £100, etc. In Marx’s time Bank of England notes were redeemable in gold. The Bank, to which the state had given a concession to print paper notes, had to have in its safe the same amount of value in gold.

As Marx said, ‘Coining, like the establishment of a standard of prices, is the business of the State.’ Furthermore,

‘Only in so far as paper money represents gold, which like all other commodities has value, is it a symbol of value.’        

One by one, governments around the world decided to stop their currency’s convertibility to gold, making them fiat currencies. Fiat stands for let it be. That is to say, money with no gold convertibility obligations.

So today, a central bank, that can print banknotes under the state’s concession, can create money out of thin air, increasing the chances of inflation. 

Let us go back to the cryptocurrency, though, and how Marx would see it.

It is quite possible to create a ‘cryptocurrency’ out of thin air; it is all a question of convention. To become a real currency, the state would have to recognize it. In most of the world’s countries, but not all, bitcoins are legally recognized but only as a private currency. Importantly, the inventors of Bitcoin set a limit on the number of bitcoins (21 million) and this scarcity, combined with other advantages, gave it some attraction. The major other advantage is that Bitcoin guarantees anonymity, ideal for those interested in tax evasion, gambling and money laundering. Moreover, purchases are not taxed. Bitcoin does not require so many intermediaries and therefore should have lower transaction fees. Businesses can even raise money, by means of Bitcoin, with no formal stock exchange listing. Yet, these advantages do not explain the steep increase in its price.

Chicago Mercantile Exchange, the world’s largest derivatives exchange operator, is planning to start offering Bitcoins trading. This has helped make the speculative Bitcoin bubble bigger than the dot-com one of the late 90s. At the time of writing, in December, bitcoins were worth about $15,500, already on a descending phase, from a peak of about $18,000. What was it going to be worth the next day, $10,000, $500, $1? Investors were buying bitcoins because they expected somebody else to buy them, and so on. They hope for a ‘greater fool’ to buy from them, as the Economist (1 November) put it. Clearly, despite what the Bitcoin community say, this is not a currency adequate for buying everyday goods, but it has proved ideal for a huge speculative bubble, surely not a step towards the future of human evolution.

Marx would not think that Bitcoin was a good currency, because it is not a stable form of universal equivalent. Marx would equally think that neither the dollar nor any other fiat money was a good form of universal equivalent, since fiat money is fictitiously sustained by the state and when issued in excess leads to inflation. Marx would not think that a currency, invisible because digital and encrypted, was intrinsically a step forward or could change the social order. Capitalism can be surpassed only by a system where the means of production and products have become the common property of the whole society, and access to them completely free. A society where gold would not be the universal form of equivalent, nor any other type of money.

Cesco.