Ethics (1999)

A Short Story from the January 1999 issue of the Socialist Standard

As a socialist I have always found myself slipping quite naturally into what I think of as “ethical” behaviour when dealing with other human beings and life generally. I don’t make my ethics up as I go along; they are more to do with an insecurity in me which says I desperately need people to be decent to me and that requires me to be decent to them. It has nothing to do with any religious creed on my part, nor is it an attempt to exhibit a smug do-goodism. It is more a need to survive a system which teaches us to “Do others down the way you would expect them to do you down” and another one of those commandments I shall disobey with relish whenever I get the opportunity.

An article, “The Car” by G.T. in last March’s issue of the Socialist Standard illustrates this to some measure. G.T. sells his car knowing fully well that it is dodgy, but is oddly relieved when the people he sells it to do him out of a hundred quid when they hand over the envelope with the money in it. He says “I was initially relieved as if the lack of honesty on their side somehow reduced the guilt on ours.” He admits that he later felt depressed every time he thought about it. And I’m not surprised. Who wouldn’t?

Ethics are not easy to practice daily. I mean you can’t get out of bed and do an hour of them like you can yoga or Chinese exercises and immediately feel the benefit of them. The social mess we live in reminds us to look constantly to our own survival and we have to work hard at that. In my book though, this does not give us carte-blanche to cheat others or to turn a deaf ear when sympathy and understanding are called for. It means trying to be a psychologist and applying this to the way we live—which is what most of us do all the time anyway.

For example I live in one of a row of terraced houses, all stuck together, cheek-by-jowl, the walls so thin that even the turning on of a light switch by someone next door can sound like the faint crack of a whip. I can hear my next door neighbour sneezing, sighing and belching, and a quarrel between he and his spouse can send me scuttling to a part of the house where I hope I won’t be able to hear them. Yet these very same neighbours would not dream of disturbing my peace with very loud music or of turning up the volume of the television to an uncomfortable (for me) pitch. This is because they are on the whole decent people but more to the point they know that if I wished to I could retaliate and so we share an interest in keeping the peace. There is in this arrangement an unspoken acceptance, an acknowledgement of mutual existence. The basis for socialism.

But there is another example. For some reason (probably to do with the ethos of capitalism) there are those people who view another’s ethics as some kind of dreadful weakness and exploit it. They are those obsessed with their own existence. The system has taught them that the individual (to the cost of all other individuals) is the most important and so to them behaving in an ethical way is what someone else does. The other person is often the listener, the helper, the provider, the sympathiser. Then they look into another’s eyes they see nothing but their own reflection. They seldom see that another human life has its heartaches and problems. They are the same people who never seem to buy a round of drinks in a pub when it is their turn. Their pocket or purse always contains a twenty pound note and they don’t wish to break into it. Such mean-spiritedness! Money, plus self-obsession has become their God and it is a God we could all do without.

Once when offering a homeless person a small amount of money I was told by a well-heeled acquaintance of mine “I had to make my own way in life. Why can’t they?” It is precisely this kind of attitude that helps to promote capitalism. It is a deeply-engrained notion that we can all get along without each other. We can’t and we don’t and our lives would be a good deal happier if we all realised that. The influence of the capitalist system has ensured that many do not yet understand the necessity for the working class to free itself from slavery. It is a slavery not only of the body but of the mind too and that must be the worst enslavement of all.

Heather Ball

Bugged by mill-ennui – From Dark Ages to Grey Ages (1999)

From the December 1999 issue of the Socialist Standard

By the time you are reading this, you will know whether there has been a Wall Street Crash. If the world is lucky, the bubble won’t burst, it’ll just deflate. But nobody’s been feeling lucky for quite some time. Capitalism has made pessimists of us all.

For me, the summer of 1998 was the most depressing I can ever remember. While it was nothing but a polite winter in Britain, elsewhere, from Texas to China, countries seemed to be having catastrophic droughts, heatwaves or floods, suggesting that a huge environmental payback was imminent. An air of doom pervaded the rest of the year as people expected a global slump to follow the Asian crisis, while and India and Pakistan squaring off a nuclear war seemed more likely than ever. The news, and my friends, seemed full of foreboding about what fate had in store, and 1999 advanced upon us like footsteps ringing down a corridor on Death Row.

Many sensible people were inclined to believe the Nostradamus prediction that the world would end in 1999, but even the prospect of Armageddon could not shake us out of apathetic resignation. The end of the century. The end of a millennium. The end. Here, Britain has suffered a kind of bleak fin de siècle despair, a leaden “mill-ennui” that has produced the worst electoral voting figures on record and the most crushing sense of apathetic defeat in modern times.

In line with this mill-ennui, some people have been talking about the end of capitalism. What they mean is the end of civilisation, a dread abyss, the destruction of everything and the rule of chaos. On the 70th anniversary of the Wall Street Crash, analysts observed uncanny parallels between then and now, and a huge stock-market crash was expected by many. If history repeats itself, the consequences of global depression, unemployment and protectionism could lead to the rise of fascism, invasion and global war. The destruction incurred would then give capitalism a new lease of life for the 21st century. Faced with this doomsday scenario, prospects for socialism and even survival could look extremely bleak. In that sense one can only hope the optimists of a “managed downturn” know what they’re talking about. But when they assure us that “the fundamentals are sound”, J K Galbraith for one experiences “a slight feeling of unease” (Money Programme, BBC2, 24 October).

The real Third Way
It’s bad enough already for the people in eastern Europe. Under the old system it was secret police, propaganda and bread queues. Now it’s mafia, unemployment and bread queues. The Albanians thought pyramid schemes were what capitalism was all about, and lost everything to the first swindlers that chanced through their area. Many east Europeans, judging by the phoenix-like rise of the old “communist” parties, are contemplating a return to square one, the devil they know, but that prospect appals. The rest of them blanch at rebuilding Lenin’s statues, and must really be looking for a Third Way, never mind Tony Blur’s idiotic soundbites.

That there really is a “Third Way” of doing things is what this journal, and this organisation, are in existence to argue. The picture we represent of a peaceful, co-operative human culture based on a society of abundant resources is pleasant and reasonable but, unfortunately, so far removed from the selective reality of the news bulletins that people, by and large, just don’t believe it’s possible. For many people it’s not a matter of reasoning, it’s a matter of faith, and people don’t have any faith in themselves, let alone each other. According to the sociologists, all the old idols, the so-called “grand paradigms” of Fascism, Sovietism and Capitalism, have been historically discredited, but they continue to prowl in the dark, like the Undead.

Nobody feels liberated, just lost. Many will embark on a faddish search for “alternatives”, racing frantically but uncritically round a large dreary circle of other people’s abandoned cults until they arrive back where they started. For those with money, comfort-buying consumerism is all that’s left. The media advertising cry has become a ceaseless scream in our ears. Everybody’s claim seems equally just. We don’t know who to believe or what to believe in, baffled by the multiplicity of values and viewpoints in this inert postmodernist swamp we call a culture.

The only common hard ground in this swamp appears to be the prejudice that human nature is basically bad, or at best unreliable. It follows from this that any society made up of humans must be bad, or at best unreliable. Anything else is a Utopia. The future will be just more of the same, or worse. If Nostradamus had predicted that in 1999 we’d all have millennial misery then he’d have got one right at least. Thanks partly to an odd love affair that we humans have with wailing Cassandras who predict dire things, but thanks mainly to ourselves for doing those dire things anyway, we arrive at this most significant date believing that the sky is about to fall on our heads and there’s nothing we can do about it except smile wanly and pass the anti-depressants.

Meanwhile politicians have been acting out a kind of danse macabre with a flaming Earth as their stage. None of them appear to be doing anything apart from striking postures and smiling with photogenic insouciance. In Britain, our capable trendy leader Tony is revealed as Thatcher’s spawn, grinding an already prostrate working class under his designer boot, appearing on platforms with former Tory grandees like Kenneth Clarke and Michael Heseltine, and while airily informing Scottish factory workers that he can’t save their jobs or stop the recession, energetically pretends to be fascinated by the urgent needs of constitutional reform.

This doom and gloom is more than the usual force-of-habit. Owing to an accident of calendars, the West is arguably in an especially reflective mood, contemplating a moment which occurs only once in a thousand years, the dog days of a millennium which started off in the Dark Ages and has ended up, many think, back there. If there is ever a time when society is going to review its history, its future and the meaning of it all it is likely to be at a time like this. But if people have become millennial about political realities for a while, it hasn’t inspired them with revolution, just revulsion. Religion may profit from this, since it feeds on despair like flies feed on cowshit. Fascism, the supposedly dead paradigm, is crawling from its grave once more to prey on the terrified but tethered scapegoats.

Reasons to be cheerful 
But to predict that the 21st century will be an exact replay of the 20th is to take no account of how things have changed in the interim. Without being pollyannas, we can easily find reasons to be more cheerful about the 21st Century than this. You only have to look at how far humanity has come this century in the matter of science and technology. Victorian writers thought of their steam-driven world as a paradise of technology and wrote paeans of praise to this new empire of reason, or else they pointedly lyricised about flowers just to be awkward, but they would have been awed into silence by the discoveries of the following hundred years.

From balloons to space stations, from the Penny Black to the Internet, the speed of change is as startling as it is unprecedented. Our general history looks like a bomb exploding. When this millennium began we were still in the Iron Age. In the thousand years before that, practically the only invention of significance in Europe was the stirrup, a device which turned the cavalry horse into the first tank. But then began a long slow accumulation of critical mass, followed by an accelerated expansion of development so powerful that its effects can now be detected in days and weeks and no longer in decades and centuries. It would be ludicrous to suppose that in the future this acceleration will not continue, just as the fragments of an exploding grenade do not stop suddenly in mid-air and fall to the ground.

Whether we know anything more as people than we used to is debatable. Ignorance is still rife, despite our literacy and sophistication. Our culture has certainly not kept pace with our discoveries. But it is having to change, whether people like it or not. We aren’t cowed by the priests like we used to be. Science made fools of them. We aren’t impressed by politicians any more. They made fools of themselves, and the press did the rest. Few believe in the Queen, or the Pope, as being anything but empty forms left over from bygone times. The rich are not revered, although their wealth is. Even the police are represented in popular TV shows as routinely criminal and corrupt.

Little by little, the ideology that underpins capitalism is being stripped of its pretensions, exposed and embarrassed by the ever increasing intensity of the public glare. The 21st century begins with the advantages of hindsight and experience the 20th never had. The resistance to fascism is huge. Capitalism’s own fear of global war is bigger still. The Internet is changing the face of popular culture and ideology. We are already in the midst of a social revolution that makes a lasting return to parochialism ever less probable. Now, in the face of that revolution, people are starting to describe the 20th century as the Grey Ages.

Post-modernism is the trendy name for nihilism, a belief in nothing, and nihilism is a state of ideological bereavement. Workers have been orphaned by the paternalistic state which now, clearly, cares nothing for them. Yet bereavement is merely a phase, and humans will recover. Post-modernism will pass. History cannot stand still. Lust for life and hunger for truth will return, and the war of ideologies will become more savage and deadly. But whereas ideologies in the past have relied on the severe restriction of information, ideas in the future will have to fight on more even ground and more on their merits.

Unable to prevent good ideas penetrating society, the owning class will face a massacre of its mythology and a wholesale change in the consciousness of the worker. Unless the rich can find a way to prevent it, the “wired” society of the future will open the way towards revolution.

Paddy Shannon

Next month: beginning of a three-part series on the Impact of the Internet.

A Capitalist Criticises Capitalism (1999)

Book Review from the April 1999 issue of the Socialist Standard

“The global capitalist system . . . is coming apart at the seams”. So declared arch-speculator George Soros before a US congressional enquiry on 19 September last year. He has since expanded on this in a book entitled The Crisis of Global Capitalism. What has he in mind?

By “global capitalist system” Soros doesn’t mean what we would understand by the term, i.e. capitalism as a world-wide system of production for profit, but the more restricted sense of present world financial arrangements which allow the more or less free movement of capital throughout the world:

“The global economy is characterized not only by free trade in goods and services but even more by the free movement of capital. Interest rates, exchange rates, and stock prices in various countries are intimately interrelated, and global financial markets exert tremendous influence on economic conditions. Given the decisive role that international financial capital plays in the fortunes of individual countries, it is not inappropriate to speak of a global capitalist system” (Introduction).

It is these arrangements—this single world financial market—that he is saying is in danger of disintegrating; which of course would not at all be the same thing as the collapse of capitalism that has sometimes been mistakenly predicted by some writers in the Marxist tradition.

Unstable system 

Soros, following, consciously or not, a distinction made by one school of anti-imperialist thinkers in the 1970s and 80s, divides the “global capitalist system” into a centre (US, Western Europe, Japan) and a periphery (Asia, Latin America, Russia, East Europe, Africa). Under this system capital flows from the centre to the periphery and back, supposedly to the mutual benefit of both. He sees the danger of disintegration coming from countries on the periphery taking steps to stop the free flow of capital in a bid to avoid the negative effects of the system’s instability on their economies and populations:

“To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its own interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism” (p. 176).

So what Soros means by the “breakdown” or “disintegration” of global capitalism is not the collapse of the world-wide system of production for profit based on the exploitation of wage labour, but only states coming to adopt measures that impede the free movement of finance capital.

Soros does not believe this to be an inevitable process. As the quote above makes clear, he thinks it can be stopped if appropriate measures are taken at international level; global institutions must be created to lay down some basic ground rules for the operation of global capitalism.

For Soros is no free marketeer. In fact part of his book is a devastating attack on those he calls the “market fundamentalists”, the followers of Von Mises, Von Hayek and others, who advocate that market forces be given complete free rein and who came into intellectual prominence in the time of Reagan and Thatcher. Soros levels two charges at them. First, that they think that markets have an in-built tendency towards creating a stable situation through supply and demand being in balance, while this is not the case. Second, that they preach that the market is the best way to regulate all human activities.

Writing from his own experience, admittedly not of the real economy but only of financial markets, Soros challenges the equilibrium theory:

“Market fundamentalists have a fundamentally flawed conception of how financial markets operate. They believe that financial markets tend towards equilibrium . . . Financial markets are characterized by booms and busts and it is quite amazing that economic theory continues to rely on the concept of equilibrium, which denies the possibility of these phenomena, in face of the evidence. The potential for disequilibrium is inherent in the financial system; it is not just the result of external shocks” (Introduction).

The external shocks which the market fundamentalists invoke are usually, of course, government interventions of one sort or another. According to them, if governments just stood aside and let the magic of the market operate, there would be no slumps just continuous, smooth growth. But there is no evidence for this. Throughout the 19th century British governments pursued a policy of laissez-faire yet slumps still occurred on a regular basis.

The fact is that the market system does have a built-in tendency towards creating booms and busts rather than stability and smooth growth. As Marx pointed out, this applies to the real world of market-oriented production and not just to financial markets. Soros is even prepared to give Marx some credit here:

" . . . the capitalist system by itself shows no tendency toward equilibrium. The owners of capital seek to maximise their profits. Left to their own devices, they would continue to accumulate capital until the situation became unbalanced. Marx and Engels gave a very good analysis of the capitalist system 150 years ago, better in some ways, I must say, than the equilibrium theory of classical economics” (Introduction).

He claims, however, that thanks to “countervailing political interventions in democratic countries” Marx’s “dire predictions did not come true”. This is based on a misunderstanding of Marx’s view. The “dire predictions” that Soros mentions were not, as he seems to assume, that the unregulated profit-seeking of capitalists would lead to the collapse of the capitalist system but simply that their competitive struggle for profits meant that steady, smooth growth was impossible and that growth proceeded by means of booms and slumps.

Capitalism has not collapsed because it was never going to, not because of government intervention Marx didn’t foresee. And government intervention has not been able to eliminate the boom/slump cycle which Marx saw was an unavoidable feature of capitalism.

Creeping marketisation

Soros sees himself as continuing the political philosophy of Karl Popper. As expounded in books such as The Open Society and Its Enemies Popper argued against the idea of trying to establish a “perfect” society in favour of accepting an “open” society as one subject to permanent improvement by piecemeal social engineering, by which he understood capitalism with a political structure involving elected institutions, the rule of law and pluralism, i.e. more or less what the West has had for years.

For Popper the main enemies of his “open society” were the totalitarian ideologies of fascism and “Marxism” (which, for him, was not just Marx’s own views but those mixed up with Lenin’s and Stalin’s). Soros adds a third which he says has come into prominence since the collapse of “communism”: uncontrolled capitalism. Hence the subtitle of his book “Open Society Endangered”, though he had already expressed this view in a famous article “The Capitalist Threat” that first appeared in The Atlantic Monthly in February 1997 and which was widely reproduced.

Soros sees the danger coming from the penetration of market values into all aspects of life, leading to social disintegration. “Monetary values”, he writes, “have usurped the role of intrinsic values and markets have come to dominate areas of society where they do not properly belong” (p. 206). He is in fact quite forceful in his criticism of this aspect of global capitalism:

  “The functions that cannot and should not be governed purely by market forces include many of the most important things in human life, ranging from moral values to family relationships to aesthetic and intellectual achievements. Yet market fundamentalism is constantly attempting to extend its sway into these regions, in a form of ideological imperialism. According to market fundamentalism, all social activities and human interactions should be looked at as transactional, contract-based relationships and valued in terms of a single common denominator, money. Activities should be regulated, as far as possible, by nothing more intrusive than the invisible hand of profit-maximising competition. The incursions of market ideology into fields far outside business and economics are having destructive and demoralizing social effects” (Introduction).
   “A transactional society undermines social values and loosens moral constraints. Social values express a concern for others. They imply that the individual belongs to a community, be it a family, a tribe, a nation, or humankind, whose interests must take precedence over the individual’s self-interests. But a transactional market economy is anything but a community. Everybody must look out for his or her own interests and moral scruples can become an encumbrance in a dog-eat-dog world. In a purely transactional society, people who are not weighed down by any considerations for others can move around more easily and are likely to come out ahead” (p.75).

Soros does not realise just how fundamental a criticism of capitalism this is. Although he rightly says that “a purely transactional society”, in which the only links between people would be monetary, “could never exist”, the market fundamentalists are equally right to insist that the logic of capitalism is to work towards this—they are just crazy in thinking that this nightmare situation is the ideal form of society.

Soros’s mistake is to think that you can have capitalism and somehow keep its money-commodity relations from spreading everywhere. The history of capitalism is the history of the continuous spread of such transactional relationships—i.e., the market—into more and more fields of human activity. It is a process that cannot be stopped within capitalism as growing marketisation is just as much a feature of capitalism as capital accumulation; indeed the two go together.

Soros, however, is a supporter of capitalism:

  “I want to make it clear that I do not want to abolish capitalism. In spite of its shortcomings, it is better than the alternatives. Instead, I want to prevent the global capitalist system from destroying itself” (Introduction).

We doubt whether he has given serious consideration to the alternative of a global society based on the common ownership of the world’s resources and production directly to satisfy human needs. Not that we would really expect him to. Some of his fellow-capitalists already think he has gone too far in his criticism of their system.

Adam Buick

Africa: Who gains from female circumcision? (1999)

From the October 1999 issue of the Socialist Standard

Female circumcision, like male circumcision, is a practice that dates back to the remotest of times in history. Today, however, the former has come under fire by feminists and other concerned groups and individuals. Why male circumcision is not touched is not clear. Perhaps the whole issue is still part of the male chauvinistic nature of contemporary society since it may not be plausible to claim that male circumcision is harmful as there are no statistics regarding the casualties the practice has caused or how it has affected fertility.

I am not holding brief for this custom but some of those against it fail to situate the practice in its right perspective and thus fail to find the right solution. This myopic attitude is reminiscent of similar haughty attempts to characterise traditional African religion as “barbaric” and “uncivilised” (when in fact all religions are the same).

Like other customary practices, female circumcision is a tool in the control and manipulation of society by the elders and leaders who in traditional society were the owners of wealth. In the case of female circumcision, a group of individuals (including vocal and influential women) soon emerged who specialised in the art of operation. In many areas, these “doctors and paramedical staff” introduced mysticism into the act in order to gain a monopoly over their “profession”. As religion and spiritualism are part and parcel of their life, it is always easy to weave the supernatural element into anything that is done. This mystification is usually intensified if there are some material gains attached.

It is common knowledge that not all those who are involved in collecting girls for the ritual nor those who carry out the operation do so for a fee. Yet they get more than if they were charging fees. It is the same with traditional healers. They charge no fees but you give what you feel like giving—and the gift/payment is usually more than a mouthful.

Those who organise female circumcision get a lot of material gains from the parents, relatives and well-wishers of the girls. For instance, the food requirements, drinks, kolanuts, tobacco, etc., of both girls and organisers are provided for by the girls’ parents. And here we are talking about a period which could last as long as six months though these days the period may be just about two months in some areas. But the organisers actually make their money during the “passing out” of the circumcised girls. In most cases, each chief organiser (who is always an influential woman) becomes a social, political and spiritual “mother” to all girls circumcised under her authority—they all join her camp. Such women constitute the ideologues of the practice of female circumcision and they concoct all myths to perpetuate the custom. Those girls who do not go through it are stigmatised and derided and may even find it difficult getting a husband.

Perhaps started by men to control family property relations, female circumcision is strongly encouraged today by some females for the sake of material gains.

One other prominent feature in the whole affair is the intervention of non-governmental organisations. Needless to say, much credit goes to these NGOs for “sensitising the international community” to this “evil custom”. But it is equally important to point out that, far from helping solve problems, NGOs are themselves an offshoot of the profit system. In fact, the ideology of NGOs enhances the money system and perpetuates its evil practices through the half-baked and inadequate measures they put forward for solving the world’s problems.

I know very well that there are genuine individuals who are doing their best to ameliorate the deplorable state of mankind. However, I do not think they can make any meaningful headway by targeting isolated issues like discrimination against women or, to be specific, here female circumcision.

What I therefore put forth as a lasting solution to these undesired customary practices and to the gender problem is a holistic and all-round approach. This entails a complete rejection of the status quo. Production of goods and services should be organised for the sake of satisfying needs and not for profits. Therefore money in all its forms (cheques, treasury bills, tickets, etc) should go. But as this cannot be wished away, people will have to come together and through concerted effort push towards the realisation of the objective in a world socialist movement.

Suhuyibi Nbang-Ba (Gambia)

What is history? (1999)

Book Review from the October 1999 issue of the Socialist Standard

Marxism and History. By S. H. Rigby, Manchester University Press, 1998.

This is a revised second edition of a book, first published in 1987, which is widely used at undergraduate level teaching. The focus of Rigby’s analysis is G. A. Cohen’s influential book, Karl Marx’s Theory of History: A Defence, published in 1978. Cohen argued that Marx’s account of history is a form of “productive forces determinism” in which society’s productive forces (applied technology) bring into being specific class relations. As these productive forces develop throughout history, they periodically bring about new class relations of production. Thus the growth of the productive forces is said to be the dynamic which creates specific class relations and through them new forms of state and ideology.

Rigby admits that this is a legitimate reading of Marx, most notably found in Marx’s 1859 Preface to A Contribution to a Critique of Political Economy. Marx and Engels often asserted that the productive forces have an inherent tendency to develop throughout history but in practice, says Rigby, Marx was not consistent in applying such a thesis in his historical and contemporary analyses.

He argues that Cohen’s specific argument that society’s relations of production are functional for the productive forces is not an explanation of why the productive forces develop, nor is it consistently supported by historical evidence. Of course human history has seen a growth of productive power, but such developments have been specific to time and place. There have been periods of human history in which the productive forces stagnated or even regressed, other periods in which class relations have changed without any obvious development of the productive forces, and yet other periods where the growth of the productive forces bring no change in class relations. For Rigby, the growth of the productive forces does not explain the change from the Ancient world to feudalism and it was only after feudalism had ended and capitalist relations of property had been established that new productive forces were introduced.

Rigby asks how can the productive forces within capitalism bring about socialist relations of production without invoking some kind of determinist assertion? His contention is that productive forces do not determine class relations. Rather, that class relations determine the direction and rate of advance of the productive forces. Instead of determinism we have a conditional statement: “if the productive forces are to advance then certain relations of production must obtain”. According to him, “whether these relations of production do develop is historically contingent and can only be established through empirical research”; Marx’s theory of history is a guide in that research by supplying the framework for identifying societies and how they change.

A society is not identified merely by its class relations, it is rather a specific mode of appropriation of surplus labour. Feudalism was based on the appropriation of surplus labour as feudal tribute (whether in the form of money, produce or labour services) from the peasantry. Capitalism is a society where surplus labour takes the form of surplus value (ground rent, interest and profit) extracted from wage labour. However, class relations and the mode of appropriation of surplus labour do not always coincide. This can be seen in the Ancient world where the predominant relations of production were the master and slave of chattel slavery. Yet independent producers who were the forerunner of the medieval serf produced the surplus labour, appropriated as taxation. As the Roman Empire declined chattel slavery increased, but the increasing demands placed on the independent producers by an expanding and costly empire brought about (together with external invasion) internal collapse. There then followed four centuries of stagnation of the productive forces. A simple analysis of relations or forces of production would not reveal what was really going on.

Rigby argues that the development of the forces of production in feudalism had a tendency to stall and sometimes to recede, as in fourteenth-century England and seventeenth-century Poland; the process described by Marx as “the primitive accumulation of capital” was largely one of the establishment of capitalist relations of production prior to the “take off” with the productive forces in the industrial revolution. Hence his conclusion: “capitalism was not the result of the growth of the productive forces. On the contrary, capitalism was the cause of that growth.” From which it would follow that the case for socialism does not rest on the assertion that the productive forces have run up against the limits imposed by capitalist relations of production. Instead the argument would be how socialist relations of production will allow the forces of production to be used to meet human needs. If Rigby’s argument is correct, then this is not just a criticism of Cohen but also the theory of history in what is known as “classical Marxism”. You will need to read the book to decide.

Rigby also includes a useful account of state capitalism. At the same time he wrongly identifies Marx’s proposed first stage of communism as “socialism or the dictatorship of the proletariat”. Marx did not say that socialism was a first stage, nor did he equate it with working class political control of the state—which is what he meant by “dictatorship of the proletariat”.

Rigby follows academic convention (as does Cohen) by wanting to keep Marx’s theory of history free from what he regards as Marx’s irredeemably false theory of value. But he cannot have it both ways. Rigby’s main contribution in this book is to emphasise how a society must be identified by its historically specific mode of appropriation of surplus labour. Capitalism is therefore identified as the extraction of surplus value through wage labour, and this clearly requires a theory of value as part of the identification process. Marx’s theory of history and his theory of value are dependent on each other.

Lew Higgins

The Triumph of Hope Over Experience (1999)

From the August 1999 issue of the Socialist Standard

The annual UN Human Development Report is now ten years old. The latest edition published this July, like its predecessors, reads as a crushing indictment of capitalism, yet still its authors foresee no way forward but to reform the institutions and the system that blights the lives of billions of us each day.

As ever, its observations, facts and statistics reveal a world increasingly divided between rich and poor and in which there is little prospect for improvement.

While the world’s richest 200 people have doubled their wealth to over $1 trillion in the past four years, the number of people existing on less than a dollar a day remains the same at 1.3 billion (incidentally, the number of humans estimated to go without a meal on any given day).

The wealthiest three people in the world continue to increase their fortunes. Between them, Bill Gates, Warren Buffet and Paul Allen have assets (according to Forbes magazine) of $156 billion. This figure is greater than the combined GNP of the world’s 43 poorest countries—of which some 600 million inhabitants can be found in sub-Saharan Africa. Moreover, some 80 countries now have a lower per-capita income than when the report first appeared in 1989, and in spite of all the wise UN recommendations put forward since then.

The New World Disorder.
There is much in the report that criticises the power of the multinationals. It points out that of all world patents, 97 percent are held by companies based in the industrialised countries. The report highlights the way the rules permit multinationals to hog intellectual property rights and traditional remedies and cites an example. Two years ago, a University of Mississippi research team was granted a US patent for using turmeric to heal wounds, in spite of this having been an Indian remedy for thousands of years. When ancient Sanskrit evidence was presented, the patent was withdrawn.

In a section on technology, the UN reveals the myth of the trickle-down effect of the hi-tech revolution which was supposed to ease globalisation and be to the benefit of all. While access to the Internet is said to speed growth, we find that 88 percent of users live in the West, and whereas a Bangladeshi would have to save his wages for eight years to buy a computer, the average American need only sweat for a month. As the report points out: “The literally well connected have an overpowering advantage over the unconnected poor, whose voice and concerns are being left out of the global conversation.”

Ted Turner, owner of CNN and the man who donated $1 billion to the UN last year, is afforded space for a special message in the report, which re-emphasises the UN’s demand for poverty reduction:

  "Even as communication, transport technology are driving global economic expansion headway on, poverty is not keeping pace . . . it is as if globalisation is in fast forward, and the world’s ability to understand and react to it is in slow motion.
 Those supposedly in the know, whose words carry weight, certainly do not seem to understand the nature of capitalism, for they react in the same reformist manner as always. The UN itself in the report makes a number of proposals to counter the dire effects of “globalisation”.

The UN recommends a World Trade Organisation capable of enforcing a code of conduct for multinationals, of having the power to curb their monopolistic tendencies; it suggests the establishment of a global central bank—as if the IMF is not enough—and a world investment trust that could redistribute incomes globally and a world forum of businesses, trade unions, environmental and development groups to counter the power of the G7 in global decision-making. Hope again triumphs over experience.

We approach the 21st century with the problems facing humanity many times greater than those that faced us at the start of the 20th century. There are more starving, more homeless, more impoverished people on the face of the earth than at any time in human history. Moreover, the threat of all-out war and environmental catastrophe that threatens the very existence of our planet and every living creature upon it is as real now than ever before.

The facts and statistics that bear out the glaring contradictions of capitalist society are churned out seemingly without end and by the very organisations set up to help rectify them. Still, the reformist logic prevails. Still, a little tampering with the system is all that is envisaged.

After ten years of UN reports, we would think the authors would have got the message. They system can’t be reformed in the interest of the majority. It works as it was always meant to work—to the benefit of a minority. Change is indeed needed, but it is so big a change it is beyond the ken of the likes of Ted Turner of CNN. It involves the total abolition of the money system and a freeing of the productive processes from the artificial constraints of profit. It involves the abolition of all borders and frontiers and the taking-away of power from all who use it to serve their own selfish ends. Simply, it involves the establishment of a global system of society in which we each have free access to the benefits of civilisation.

As we approach the beginning of a new millennium, with a century of raw capitalism behind us, these are the recommendations a Human Development Report would be making.

John Bissett

The way to deal with Fascism (1974)

From the August 1974 issue of the Socialist Standard

Get it right. Fascism is not an economic and social system different from capitalism. It is a political faction possessed, as they all are, with the idea of a method which will make capitalism run to order. Its policies are both absurd and detestable, but are far from unique and are variously shared with the other pro-capitalist parties.

Don’t be misled either by the persistence of “fascist” as a political swear word. Any opponent or inconvenience to the Left is a “fascist”: fascist thug, fascist reactionary, fascist warmonger etc. — the alleged thuggery, reaction and militarism thereby being made a special and more fearsome kind. This is part of the verbal hallucination in which left-wing organizations live. It is interesting that the other great condemnatory term, “Trotskyist”, has now dropped from the Communists’ vocabulary. Why? Because the Communists now collaborate with the Trotskyists in industrial agitation (and, of course, in anti-fascism).

Attacking (and therefore publicizing) fascism has been good business for the Communist Party. Unable to get anywhere by industrial militancy, its membership hung round 4,000 until campaigns against fascism — by fighting Mosley’s party in the streets, by making a crusade of the Spanish Civil War, and finally by supporting the Allies in the 1939-45 war — raised it to several times that number. Its successors, likewise unable to make much impression by other kinds of agitation, have obviously taken note.

Pre-War and Now

The term was the name of Mussolini’s movement started in Italy in 1919 — the Fasci di Combatti- mento, which took power as the National Fascist Party in 1922. By 1936 imitative governments existed in Austria, Hungary, Poland, Rumania, Bulgaria, Greece and Japan. In 1939 Franco’s Falangists took power in Spain; and there was, of course, Germany. It survived World War II only in Spain and Argentina, where a group which included Juan Peron became the heads of government in 1943.

The pre-war fascist movement in Britain was Sir Oswald Mosley’s British Union of Fascists, formed in 1932 as an amalgam of several small groups. Its membership was never large, and had a high proportion of adolescents; it published a paper called Action, and its main activity was the staging of marches and rallies. In 1940, soon after the outbreak of war, Mosley and the other leaders were imprisoned and the BUF’s existence ended. The rank-and-file members, so far from defending or acting for Germany and Italy, joined the forces and fought in the war professedly against fascism.

Mosley attempted a revival, the Union Movement, in 1948, and other neo-Nazi or racist groups had patchy existences before the formation of the National Front in the late nineteen-sixties. In the General Election this year the National Front put up 53 candidates who averaged 1,436 votes (as against the Communist Party’s average of 780, WRP’s 466, IMG’s 238, and the Marxist-Leninist Communists’ 237). This support, small as it is, is almost entirely for the National Front’s racist propaganda. Fascist organizations’ policies have always been to exploit working-class and petty-capitalist misconceptions of their grievances. In the ’thirties the scapegoats were Jews, Freemasons, Catholics, the trade unions (linked with “communism”), bureaucracy, and the big corporations. The list is not very different today except that the black immigrant population has taken the chief position.

Vicious attitudes joined to a promise of repressive government naturally rouse indignation and the determination to oppose them. The demonstration of 15th June produced numerous letters to newspapers insisting that fascism be suppressed for fear the horrors of the last generation be repeated: or alternatively, that left-wing activity be suppressed because that is what drives people to support fascist movements. In both cases the argument is of “the lesser evil”, and it ignores the cause and the answer to fascism.

Causes & Compulsions

The single cause of the rise of fascism in the nineteen-twenties and thirties was the inability of reformist governments to cope with capitalism’s problems. In the preceding years, parliamentary representation and the franchise had spread to practically all the developed countries, and Liberal or Labour parties had been in power with extensive reform programmes. They had, inevitably, failed; there had been crises, mass unemployment and extreme poverty instead of the promised benefits.

What was conveyed therefore to large numbers of people all over Europe was that democracy was a washout, and they were ready to listen to demagogues who affirmed this and would attack the alleged scapegoats. The dictatorship regimes are usually said to have “seized power”, a phrase which obscures the fact that they were supported and elected by the majority of workers in their countries. Of course they were supported by sections of the capitalist class too, who have no fastidiousness in backing the best agents for their interests. But the poison was laid by the Labour and other parties who misled the working class with their policies of trying to reform capitalism instead of abolishing it; and they, of course, are still at it.

Undoubtedly some will say that, whatever the cause of fascism, it threatens those it singles out. Jews and black people in particular are likely to think they must oppose it as a matter of self-preservation. However, it is not so simple. Many Jews supported the Communist Party for its anti-fascism in the ’thirties — only to find that Jews were (and are) persecuted in Russia as well as by fascism. The modern history of the United States shows that you do not have to live under a dictatorship to be victimized or killed for a belief or a skin-colour.

Capitalist governments and parties will oppose fascist ones — but only when it suits them. For all the propagandist talk, the last war was not fought over ideas by either side: the compulsion was commercial rivalry in world markets. The horrific discovery of the German concentration camps provided an apparent justification in retrospect, but in fact the camps’ existence and what was happening to Jews in Germany were known in Britain in the nineteen-thirties and largely discounted. Hitler and Mussolini were praised by ruling-class politicians, including Churchill. And the trigger for the outbreak of war was the German attack on Poland — a country which itself had a dictatorship.

Changing Policies

Fascist parties are no more able than social-democratic or liberal ones to deal with the problems and resist the pressures: they are themselves reformists. Of the Mussolini government, H. Kohn tells us in the Encyclopaedia Britannica:

The standard of living and the real wages of the Italian workers and farmers remained extremely low in comparison with other European countries throughout the 20 years of the Fascist regime. Nevertheless, the Fascist leadership did not cease painting a picture of coming Italian grandeur for the benefit of the Italian masses.

The Nazi régime was more fortunate in that it could claim a substantial reduction in unemployment, because its establishment came immediately before a period of capitalist expansion following the 1929 depression. But Peron’s downfall in 1955 came at a time of severe economic difficulties in Argentina and a sharp rise in the cost of living.

The classic question put to Socialists, what would we do if fascism arrived here, has to be seen in this light. Under the pressures of capitalism, fascist policies are no more certain than any others. Before achieving power Mussolini completely abandoned the anti-monarchist and anti-Catholic programme on which his movement had been built up. The Italian and Japanese régimes had no racist policies, and anti-Semitism was described as “an absurdity” by Italian fascist leaders until 1938 when the German racial theory was adopted, for obvious reasons. On the other hand, the Nazis after their pact with Russia in 1939 cancelled attacks on Communism, which until then was declared their arch-enemy; diatribes against “Jewish communism” gave way overnight to ones against “Jewish capitalism”.

In that connection, Mosley never declared his or his organizations’ position to be specifically anti- Jewish, clearly seeking to keep the options open. The programmes of the British Union of Fascists and the Union Movement were a rag-bag of reforms gathered from Mosley’s earlier days in the Labour Party, the ILP and the New Party, and the National Front’s programme apart from “Keep Britain White” is a repetition of the same rubbish. It is worth noting too that Mosley pinned his hopes, as most left-wing organizations do, on the “collapse of capitalism”. His postwar book The Alternative named 1948 or 1949 as the year, and further predictions of the “inevitable” catastrophic crisis continued until the early ’sixties.

The element which has remained constant in all fascist governments and programmes is the one-party state. It is not a prospect which Socialists would welcome, to say the least, but some observations about it are important. First, the monopoly in it is held not by fascism but by what is called communism in Russia, China, Cuba and the east-European countries. Second, dictatorships like other governments are dependent on the assent of the ruled. Third, physical suppression has never prevented the formation and circulation of ideas. After the Austrian social-democratic paper Arbeiter Zeitung was banned and severe penalties for possessing it were imposed in 1934, it was produced in Czecho-Slovakia and then in Paris, and two years later had a bigger circulation in Austria — over 60,000 — than any legal newspaper. We ourselves have experience in two world wars of carrying on under prohibitive conditions, with members in prison and Socialist literature under restraint.

Effective Action

In 1937, when calls were made for a “Popular Front” of anti-fascist organizations, we said:

  Fascism can only be fought successfully by Socialists. Labourites cannot fight it because the Fascist social reform programmes are largely made up of points from the Labour programme. Communists cannot fight it because they are tarred with the same brush of dictatorship. Open defenders of capitalism cannot fight it because the workers are sick of naked capitalism.
  Only Socialists — themselves consistent critics of capitalism, reformism and dictatorship — can combat Fascism.

(Socialist Standard, December 1937)

The safeguard against fascism is Socialist understanding. The working man or woman who has it cannot be taken in by nationalism, racism or reformism — or by anti-fascism, which is the same thing with another name. The present-day fascists are hoping that, like their predecessors, they will thrive by others taking their bait: partly in publicity, partly through attacks on them heightening concern about disorder and causing a reaction in their favour.

It is a mess, and an ugly one. But there is a solution — Socialism.

Robert Barltrop

It's always warm in a bank (1974)

From the August 1974 issue of the Socialist Standard

A building of strong architecture with a fine oak door and shiny brass. In winter the snow is cleared from its doors. Inside we find leather-upholstered seating and the smell of polished wood and floors. But most of all we find it is always warm. No overnight ice on the windows like the bedrooms of millions of houses, the reason being the heating is on all night. Surely this should be a haven for weary travellers, a refuge for the old and cold? But it isn’t, it’s a bank.

It’s always warm in a bank, unlike the overcrowded draughty conditions of a doctor’s surgery or any waiting rooms that affect the working class.

You would say that the workers there must surely be lucky, but seeing all the job advertisements in the papers and on the television, the mundane work must undoubtedly cancel out the warm conditions. Then when they leave work for home they also become weary cold travellers struggling with the elements, the fuel bills and inflation.

How long will you live in a world where only the quest for profit can bring comfort? In a world where thousands of old people are dying of the cold, it’s always warm in a bank.

D. Wright

Inflation: the Theories and the Facts (1974)

From the September 1974 issue of the Socialist Standard

Along with explaining what inflation is and why it happens, another question presents itself today. Why is it that a problem fairly widely understood half a century ago now completely baffles the majority of politicians and economists? Some of them admit that as far as they are concerned it is inexplicable and incurable; others offer explanations which a look at past inflations would show to be quite untenable. And now we have psychologists telling us it is not just an economic problem but is to be explained as indicative of a deep-rooted dissatisfaction with life.

A few facts show the irrelevance of most of the theories of inflation now current. Past inflations have always been halted when governments decided to halt them, and British capitalism operated continuously for a century before 1914 without any inflation at all. Are we to seriously believe that it was a century of “satisfaction with life” on the part of the workers? And what of the ten years 1921-31 when prices were not rising but falling, and the workers showed their “satisfaction” by the General Strike?

Push, Pull and Prattle

Understanding inflation may not be particularly easy, but most of the difficulty is the confusion introduced into it by economists. An economics handbook published in 1909 defined inflation in terms of its cause, depreciation of the currency: “high prices caused by an over-issue of inconvertible paper money”. That is how Marx and many other economists correctly explained inflation, but nowadays most economists attempt to explain it in terms of its symptoms not its cause.

They talk about two kinds of inflation, “cost-push or wage-push” and “demand-pull”, the one pushing prices up and the other pulling them up. That is about as useful a concept as Dr. Doolittle’s famous circus animal the Pushmi-Pullyu which had a head at both ends. (It would appear that the economists’ monster has both heads at the same end but, like Dr. Doolittle’s, they mostly take control alternately and not both at the same time.)

If a general price rise had not been caused by currency depreciation its “cost” and “demand” symptoms would also not be there; which is not to say that individual and general price rises cannot happen for causes other than inflation. In the period 1820-1914 in this country, when there was no currency depreciation and therefore no inflation, there were alternate comparatively small falls and rises of the price level in depressions and booms. But it never once rose above the level of 1820 whereas, with inflation, the present price level is about six times what it was in 1938.

General price rises due to currency depreciation were known in previous centuries, but it was a mark of 19th-century British capitalism that, by deliberate government policy, prices were kept comparatively stable by the avoidance of inflation. It did not stop the growth of production and wages.

Marx and Keynes

Marx dealt with one aspect of price changes in his lecture published in the pamphlet Value, Price and Profit, where he examined the erroneous proposition that wage increases cause a general price rise; but he did not there deal with currency depreciation or inflation. On the contrary, as he pointed out, he was dealing with the situation as it existed in Britain when there was no inflation. He was therefore assuming for his purpose no change whatever “in the value of the money wherein the values of products are estimated”.

His examination of inflation is in Capital, Volume I, in the chapter “Money, or the Circulation of Commodities” where he put forward the proposition, based on his labour theory of value, that the excess issue of an inconvertible paper currency puts up prices.

J. M. Keynes in his Tract on Monetary Reform (1923, pages 42-3) gives a similar explanation. Marx pointed out that beyond a certain point an excess issue of notes will result in money “falling into general disrepute”. Keynes, in the work referred to, dealt with the way this condition of general disrepute developed in Germany in the great inflation of the nineteen-twenties. Professor Edwin Cannan, without using the labour theory of value, reached much the same conclusion from observation of what actually happens (Modern Currency and the Regulation of its Value, 1931).      

It should be noted that Cannan, like Marx, dealt with “currency” (notes and coin). Some modern “monetarists” have introduced more confusion by trying to base their theories on “money” defined to include bank deposits as well as notes and coin..

What must be emphasised is that inflation is caused by those who control the note issue, which in this country is the Government through the Bank of England. It is often used in wartime because it is a speedy way of increasing government revenue to meet additional war expenditure. In Germany in the nineteen-twenties, in peace-time, it was a deliberate device (backed by big business) to pay off debts in depreciated currency: inflation, at least in the short term, serves the interest of debtors against lenders.

Marx and inflation

Marx’s treatment started with the economic law that the use of a particular commodity to serve as the money commodity, e.g. gold or silver, rests on the fact that that commodity like all other commodities is an embodiment of value, the amount of “socially necessary labour” required to produce it. If for example one ounce of gold and one bicycle each require ten hours’ labour they are equal values, and gold can serve as the “universal equivalent” for the exchange of all other commodities.

The conversion of value into price takes place through the minting of coins of uniform weight and purity. In Britain each £ or sovereign was, by law, fixed at a uniform weight of gold (about a quarter of an ounce). So the bicycle’s price would be about £4 because its value was equal to that of one ounce of gold. If the British government had fixed the £ at one-eighth of an ounce of gold instead of one-quarter, the bicycle’s price would have been £8 not £4 and all prices would similarly have been doubled. If they had fixed it at half an ounce, all prices would have been halved. On both suppositions, while the price of the bicycle (or other commodity) would have been doubled or halved, its relation to an ounce of gold would have remained unaltered.

The next stage in Marxian monetary theory was based on the proposition, confirmed by long experience, that with a given total volume of production and buying-and-selling transactions, and with gold minted into the £ or sovereign at about a quarter-ounce, a certain total amount of currency would be needed. (The fact that the required total varies from time to time with the velocity of circulation need not be gone into.) What Marx put forward was that the total value of needed currency represented a total mass of value, and therefore a total weight, of gold, and that if the total of gold is replaced by inconvertible paper money and the paper money is then issued in excess, prices will go up.

“If the paper money is in excess, if there is more of it than represents the amount of gold coins of like denomination which could actually be current, it will (apart from the danger of falling into general disrepute) represent only that quantity of gold, which, in accordance with the laws of circulation of commodities, is really required and is alone capable of being represented by paper. If the quantity of paper money issued is, for instance, double what it ought to be, then in actual fact one pound has become the money name of about one-eighth of an ounce of gold instead of about one-quarter of an ounce. The effect is the same as if an alteration had taken place in the function of gold as a standard of prices. The values previously expressed by the price £1 will now be expressed by the price £2.” (Capital Vol. I, page 108 in Allen & Unwin edn.)

Now Showing

Long experience has shown that Marx was right. Whenever inconvertible paper money has been issued in excess for a considerable period it has raised prices above what they would otherwise be.

In Britain the amount of notes in circulation in 1938 was £554 millions. It is now about £5,330 millions. Since 1938  the needed amount has been affected by certain changes, including greater total production (now more than double the 1938 level), and increased population, which would operate to raise the needed amount of currency. Working in the opposite direction has been the wider use of cheques, etc. and corresponding reduced need for notes and coin.

In the 19th century the issue of notes in excess amount was effectively prevented by law. Beyond a small fixed amount the Bank of England could only expand the note issue by placing an equivalent amount of gold in its reserve, and the paper was tied to gold by the requirement of “convertibility” –that is to say, the Bank of England was compelled by law to give gold in return for notes at the legally fixed rate of about one-quarter ounce for each £1. Except for marginal variations the value represented by Bank of England notes could not be different from the value of gold. Bank of England notes “were as good as gold” and were everywhere accepted as such. Now there is no convertibility, and in effect no restriction on the note issue.

A Two-way Fallacy

The man largely responsible for the adoption of inflation as government policy (they now call it “reflation”) was the economist J.M. Keynes. Yet he did not knowingly and intentionally advocate inflation as a long-term policy. (There were some people who did just that.) What Keynes did was to say that if certain other things were looked after it was no longer necessary formally to restrict the note issue.

“Thus the tendency of today  . . . rightly I think is to watch and to control the creation of credit and to let the creation of currency follow suit, rather than, as formerly, to watch and control the creation of currency and to let the creation of credit follow suit.”

Professor Cannan promptly warned that the doctrine was basically unsound and would open the door to inflation. See Economic Journal, March 1924, and Cannan’s An Economist’s Protest, 1927, pages 370-384. Keynes’s views won the day and came to be accepted by the Tory Party and Labour Party and by the trade unions, not only as monetary theory but because Keynes put them forward as part of his popular “full employment” doctrine.

This doctrine was formally set out by the Tory, Labour and Liberal wartime government in 1944 in the White paper Employment Policy. It was cautiously phrased but was immediately followed by a more crude interpretation drawn up by the Labour Party in Full Employment and Finance Policy. Here it was laid down that if unemployment threatened “we should at once increase expenditure, both on consumption and on development – i.e. both on consumer goods and capital goods. We should give people more money and not less to spend. If need be we should borrow to cover government expenditure. We need not aim at balancing the budget year by year.”

It is the Labour Party version that has been followed by Tory and Labour governments, particularly in the past decade. It has included hoping for a much lower level of unemployment than even Keynes thought possible, and part of the belief has been the idea that increased spending increases production –something which events show to be true, if at all, only for a short period.

The fallacy of the theory is well illustrated from the period 1965-72. In that period annual consumer spending jumped from £22,943m. in 1965 to £39,263m. in 1972, an increase of 70 per cent. In the same period registered unemployment jumped from 360,000 to 943,000 and production went up by only 17 ½  per cent. The principal result was that prices rose by 47 per cent.

The policy is still being operated. One of the few forecasts about the present Labour government that has proved correct was that made by the late Richard Crossman, former minister in a Labour government, that the rate of inflation would be increased (Times, 12th Sept., 1973).

There are two ways in which currency depreciation can be operated, the direct way used by the German government in the ‘twenties and the more indirect way used in Britain. Professor F.W. Paish summarised them:

“In some countries it [the Government] might simply print more notes and use them to pay for its expenditure. Nowadays, in such a country as Great Britain, the government would borrow from the banks, printing more notes to enable the banks to maintain their cash reserves.” (Benham’s Economics. 1967, p. 465)

The additional notes and coin get into circulation through the joint-stock banks (Lloyds, NatWest, etc.) which bank with the Bank of England.

These banks withdraw notes and coin from the Bank of England and in turn the additional notes and coin reach the individuals, shopkeepers and employers who make withdrawals in that form from their deposits with the banks. The note issues are set out in the Bank of England’s Weekly Return. In the week ended 24th July 1974 there was an increase in the notes in circulation by £52,193,306 to a total of £5,098.767,831.

Signs of Alarm

Many economists and politicians would be happy to see inflation going on indefinitely in the belief that it keeps unemployment down. But whatever happens with moderate inflation, even they cannot ignore that when inflation gets to the point that money falls into “general disrepute”, unemployment multiplies. In Germany in 1923, unemployment was 4.2 per cent with another 12.6 per cent partially unemployed. Within the year it had jumped to 28.2 per cent and 42 per cent respectively, representing together over 5 million workers in receipt of unemployment pay and an unknown larger number not receiving relief. At this point the German government called a halt by replacing the notes by a new gold-backed currency.

Realisation of this danger here has induced some politicians and economists to call for the limitation of the note issue. In 1968 the Editor of The Times (15th October) described the idea that price rises could be checked “by printing fewer notes” as a “crude error”. Now the Editor, Mr. Rees-Mogg, has been converted and is urging a return to the gold standard (Times, 1st May 1974).

But at the same time they are fearful that the drastic action of entirely stopping the increase of the note issue would, as in 1920, bring prices down but be accompanied by a big increase in unemployment. So the line taken by one group of economists is to call for a gradual reduction in the rate at which inflation is increasing. Professor A.A. Walters of the London School of Economics is urging that such a slackening should be spread over three years (Money and Inflation, Aims of Industry 1974. and Times, 23rd July 1974).

It only remains to point to the difference between Marx and other economists. Marx was simply describing how capitalism operates, with inflation and without it. He was not saying, as did Cannan, that it is better to run capitalism without inflation, or saying like Keynes that a “full employment” policy will improve and save capitalism.

In Marx’s view capitalism inevitably produces unemployment and crises. For him the task of the workers is to abolish capitalism and replace it with Socialism, in which problems of prices, inflation, crises and unemployment will not exist.

Edgar Hardcastle