The Slump Deepens (1971)

From the December 1971 issue of the Socialist Standard

Nobody knows how deep the present depression will go, how far it will spread and how long it will last, but there are plenty of ominous signs. At first, some two years ago, the British Press had its eyes on growing trade and unemployment difficulties in America, then it became apparent that conditions were rapidly worsening in Britain. Now we read reports of troubles in Japan and the countries in the Common Market. The Observer (7 November) under the heading “Fear and Depression hits Europe” reported:

Western Europe has been seized by recession jitters. The economics of the main industrial returns are still far from a crisis situation, but bankers and industrialists in France, West Germany and Italy are intensely alarmed by the outlook for 1972.

The government here tries to stimulate optimism by declaring that we are on the verge of big expansion, but, as the Times recalls in its issue of 5 November, the Chancellor of the Exchequer was making the same kind of hopeful forecast exactly a year earlier. This is the common pattern of all the recessions capitalism has ever had. Nixon’s government was also a case in point. First the promise that there would be no recession, then the denial that it had begun, then the late admission that it was a little one and would soon be over and finally the complete reversal of policy by his government in August last—a clear confession that the policy that was to have solved the problem had in fact not worked.

The First National City Bank of New York, in their monthly Economic Letter, were caught napping by this. They were so impressed by an article written by Paul W. McCracken, Chairman of the Council of Economic Advisers, in which he explained “clearly and persuasively” why the Nixon government would not adopt the Galbraith policy of imposing controls on prices and wages that they re-published the article in their August issue; only to find that by the time it was in print the Nixon government had imposed a 90 day freeze on prices and wages, to be followed by a policy of “guide lines”.

This policy of controls was reported to have been well received, apart from a certain amount of trade union mistrust, just as the Heath promise to curb price rises helped him to win the Election in June 1970.

Most people believe that things would be better and life would be easier if only prices were stabilised or reduced. This is a complete illusion, a failure to understand how capitalism works. To start with nobody actually wants all prices to be reduced: what they all want is that the prices of the things they buy should be reduced and the prices of the things they sell kept as they are or increased. This includes the workers, none of whom want to see a reduction of their wages —which also are prices, the prices at which they sell their mental and physical energies (their labour power) to the employers. The workers also want “full employment”.

Here they come up against the cruel truth about capitalism. The employers have paid off hundreds of thousands of workers because at present selling prices and costs of production (including wages) they cannot make a profit. If they saw the prospect of a profit they would re-engage them to-morrow. From the employers’ point of view the solution lies in raising their selling prices, or reducing costs, including wages, or cutting their total costs by getting the same amount of work out of fewer workers. All of this is subject to the overriding condition that the goods produced can be sold, and at the present time world markets are shrinking and competitors abroad are also trying to cut their costs.

Though it had not attracted much general attention some prices have been falling, notably the metals copper, aluminium, antimony, silver. The price of copper has fallen from about £700 a ton early in 1970 to about £400—due to overproduction. It is being met by agreement to curtail production, with a consequent increase in unemployment. If the depression deepens and extends generally to other countries all prices could be stabilised or actually fall. Capitalism is behaving normally, going through its phases of expansion, boom, crisis and stagnation just as Marx depicted it a century ago. What has obscured the effect of these phases is that governments have superimposed on the normal workings of capitalism a steady depreciation of money itself.

This has led monetary economists such as Milton Friedman to offer as a remedy a curtailment of the increase of the money supply and a consequent restriction on the general rise of prices. It would not solve the problem of capitalism’s alternating expansion and contraction. Capitalism works like this at any price level, high or low. In the years 1920-1924 prices fell by a third and wages by rather more, with unemployment reaching peaks of over 2½ million in 1921 and 1933 and never falling below a million.

Would any of the various forms of controls of prices and wages avoid depressions? The answer is that every possible variety has been tried and failed. What is happening now is that the governments are shopping around, as is Nixon’s trying the cast-off methods which have been used elsewhere. All the short lived “miracle” countries are in the same situation. No longer do we hear about the Japanese miracle, the French miracle, the German miracle and so on.

The latest to start moving into depression is Sweden, just when John Davies, Secretary for Trade and Industry gave an interview in the Director (November) saying that he rather liked the Swedish version of incomes policy even though it wouldn’t be practicable in this country at present.

In this country some form of incomes policy has been tried half a dozen times by Labour and Tory governments since the war and all have failed and been abandoned.

The last was the Labour government’s imposition of a “standstill” for six months in 1966, followed by six months “severe restraint”. (This policy was imposed only four months after the General Election of March 1966 without any mention in the Labour Election Manifesto that it was intended). It completely failed to prevent prices and unemployment rising, and the Heath government have been even less successful.

It may be hard to accept but is nevertheless true that there are no ways, with or without an ‘incomes’ policy, to prevent capitalism from behaving in accordance with its own economic laws.

Edgar Hardcastle

Marx and Engels on Ireland (1972)

From the December 1972 issue of the Socialist Standard

Marx supported and advocated independence for Ireland, a fact which is sometimes used to try to justify Socialists today supporting the demand for the establishment of a united Irish Republic.

Two points can be made here. First, what Socialists should do in the 1970’s does not depend on what Marx may or may not have done in the 1860’s. And second, the circumstances which led Marx to support Irish independence no longer exist.

Marx did support Irish independence but he did so primarily because he thought it would hasten the completion of the democratisation of the British State.

After the failure of the insurrectionary war in Europe in 1848 Marx dropped out of active politics and devoted his time to the economic and historical studies which led to the publication of his Critique of Political Economy in 1859 and of the first volume of Capital in 1867.

In 1865, however, he again became actively involved in political struggle through the International Working Men’s Association, or First International. His general strategy was the long-term one of gradually preparing the working class to win political power for Socialism. This involved Marx not only in supporting trade unionism but also in advocating various democratic and social reforms.

Conquering Feudalism

At this time the bourgeois democratic victory over feudalism was far from complete even in Britain, then the most industrially developed country in the world, and on the continent of Europe what progress had been made was continually threatened by three great feudal powers, Russia, Austria and Prussia. In these circumstances Marx considered it necessary to support not only direct moves to extend political democracy but also moves which he felt would weaken the feudal powers of Europe. For instance, he supported Polish independence as a means of weakening Tsarist Russia. His support for Irish independence was for the same sort of reason: it would, he thought, weaken the position of the English landed aristocracy.

As he put it in a letter dated 9 April,1870:

Ireland is the bulwark of the English landed aristocracy. The exploitation of that country is not only one of the main sources of the aristocracy’s material welfare; it is its greatest moral strength. It, in fact, represents the domination of England over Ireland. Ireland is therefore the great means by which the English aristocracy maintains its domination in England itself. If, on the other hand, the English army and police were to withdraw from Ireland tomorrow, you would at once have an agrarian revolution there. But the overthrow of the English aristocracy in Ireland involves as a necessary consequence its overthrow in England. And this would fulfil the preliminary condition for the proletarian revolution in England (Marx and Engels on Ireland, 1971, pp. 292-3).

At the time Marx wrote the English landed aristocracy still enjoyed considerable political power. The franchise had only been extended to the better-off urban workers a few years previously, and the majority of the working class were still voteless; there were not yet secret ballots; Oxford and Cambridge universities had only just been opened to non-members of the Church of England; the House of Lords could still reject any Bill it objected to as long as it was not financial.

Democracy and Socialism

Marx may well have been right about the effect of Irish independence in 1870. Since the English landlords only retained their power to exploit the Irish peasants by force of British arms, a British withdrawal from Ireland could well have led to their expropriation. But this was never put to the test and the Irish land question was solved in quite a different way even before Ireland got independence. The series of Land Purchase Acts introduced between 1885 and 1903 enabled the government to buy out the Anglo-Irish landowners and then lend the peasants the money to buy their farms. By 1921 Ireland was largely a country of peasant proprietors. In the meantime the political power of the English landed aristocracy had finally been broken by a series of measures culminating in the 1911 reform of the House of Lords.

What this meant was that by the time Ireland was about to get independence after the first world war, the changes Marx had expected it to bring—land reform in Ireland and a weakening of aristocratic power in England—had already been brought about by other means. His particular case for supporting Irish independence was thus no longer relevant. Besides, the first world war destroyed the three great European feudal powers—Russia, Austria and Prussia—so making it unnecessary for socialists to support moves to weaken them. In fact, once industrial capitalist powers had come to dominate the world, and once a workable political democracy had been established in those States, then the task of Socialists was to advocate Socialism alone, rather than democratic and social reforms that might make the establishment of Socialism easier. This is the position the Socialist Party of Great Britain adopted when it was founded in 1904 and endorsed by the World Socialist Party of Ireland in 1949, and it is the basic reason why we do not support Irish Nationalism and Republicanism.

Industry, Tariffs

It is important to note that Marx’s strategy on Ireland was concerned with furthering the establishment of political democracy in England. It was not an anticipation of the Leninist theory of imperialism according to which independence for colonies will help precipitate a socialist revolution in the imperialist countries, though it is sometimes misunderstood to be this. Marx clearly writes here of independence for Ireland helping to overthrow the remnants of feudalism not capitalism itself in England. Marx clearly wrote of independence for Ireland helping to overthrow the remnants of feudalism not capitalism itself in England. Both he and Engels knew full well that, in the political conditions then existing, Socialism was not an immediate issue either in Ireland or in England.

Marx had a good sense of history and, though he himself never developed the theme, realised that the struggle of the Irish Nationalists for Home Rule was bound to help the evolution in Britain of political democracy because both struggles were directed against: the same class enemy: the English landed aristocracy. A good development of this theme, drawing on Marx, is E. Strauss’ work published in 1951 Irish Nationalism and English Democracy. Strauss, incidentally, also brings out a point neglected by Marx: the extent to which the area around Belfast was industrialized and had become an integral part of the industrial North of Britain. Marx tended to regard Ireland as a purely agricultural country and so failed to see that while Home Rule and tariff protection for infant industries might aid the development of capitalism in the agricultural South of Ireland, it would have been economically disastrous for industrial Belfast which depended on Britain for capital, raw materials and markets. But, to be fair, Marx died before Gladstone’s first Home Rule Bill in 1886 revealed the determined opposition of the Belfast capitalists to the threat of being cut off from the rest of industrial Britain behind the tariff walls it feared a Home Rule parliament in Dublin would sooner or later erect. Engels should have known better, but he does have the excuse that although he twice visited Ireland he never went to Belfast. (Since he was there on holiday he can’t be blamed for this!) But if he had he would surely have recognised Belfast as a sister city to the Manchester of his youth.

Empty Conspiracy

Engels, however, did state clearly that Socialism was not an issue in the Irish question. In 1888 he gave an interview to an American German-language paper and answered one question as follows:

A purely socialist movement cannot be expected in Ireland for a considerable time.  People there want first  of all to become peasants owning a plot of land, and after they have achieved that mortgages will appear on the scene and they will be  ruined  once more. But this  should not prevent us from seeking to help them to get rid of their landlords, that is, to pass from semi-feudal conditions  to capitalist  conditions  (Interview,  20  September 1888,  New Yorker Volkszeitung, Marx  and  Engels on Ireland, p.343).

Marx and Engels were much more critical in private of the Irish Nationalists—including the Fenians whose unsuccessful 1867 uprising had re-opened the Irish question for English radicals—than they were in their public pronouncements on behalf of the First International. The Fenians were a secret society set up in 1858 dedicated to using physical force to overthrow British rule and establish an Irish Republic, the direct political ancestors of today's Provisional IRA. Marx and Engels were particularly critical of the conspiratorial and terrorist methods the Fenians employed to try to release their members from British prisons, one attempt at which — the blowing up of Clerkenwell jail in 1867 — killed 12 people and injured many more, most of them innocent members of the working class. But when two years later one Fenian prisoner, O’Donovan Rossa, a former editor of their paper The Irish People, stood for election to parliament at Tipperary and was elected (only to be disqualified), Engels wrote to Marx:

The election in Tipperary is an event. It forces the Fenians out of empty conspiracy and the fabrication of plots into a path of action, which, even if legal in appearance, is still far more revolutionary than what they have been doing since the failure of their insurrection (29 November, 1869, Marx-Engels, Selected Correspondence, Moscow, 1941, p.274).

So, although Marx and Engels can be claimed as supporters of Irish independence, they certainly cannot be claimed as supporters of IRA-type terror to achieve it. But whatever Marx and Engels supported, we in the Socialist Party of Great Britain and the World Socialist Party of Ireland do not agree that Socialists should support, or should have supported, Irish Nationalism any more than they should support nationalism anywhere else.

Adam Buick

Anti-Affluence: the Debt-Ridden Society (1972)

From the December 1972 issue of the Socialist Standard

Writing to the newspapers in protest against the receipt of unsolicited credit cards is an honourable as well as a popular occupation. Implicit in the nuisance is a degree of social flattery: those selected to be pestered in this way are the cream of shopping customers, whose bills are paid promptly and whose credit is worthy. There has been no stream of complaints and Questions in the House from the scores of thousands who, ask as they may, will get no credit cards or hire-purchase terms. These are the sometime defaulters whose failures, and a great deal more about them, are recorded in the finance companies’ registers of debtors.

Once in those files, you never come out. Capitalism drives and presses us all to buy to the limits of our means, and offers devices by which those limits may be apparently stretched. But the pressure must never be yielded-to by an inch beyond the limits. The point of marketing, after all, is not that goods shall be distributed but that they be paid for. He who, lured and compelled by deferred terms or slashed deposits or simple needs, fails to meet his money commitment is as far as possible prevented for the future from buying on those terms again. Morally condemned as well, for violating the golden capitalist rule that everything has its price.

Recording and Collecting
There are about 3 million registered defaulters in Britain. The most common ways of getting listed are by irregularity or failure in payments to one of the companies which finance trading credit, and through a County Court judgement. It does not follow, however, that the absence of such a record means credit granted automatically. An application for hire-purchase or the opening of an account always means an enquiry being made. One widespread practice is to send forms to local officials likely to know something about the applicant, asking for an estimate of what he is worth and any useful information regarding him. The car-finance companies keep detailed records in which procrastination over payments is noted for future reference, even if there is no actual failure to pay.

When a debt occurs, the usual first step is a warning letter—from the legal department if the firm is big enough, from a solicitor if it is not. Some traders employ debt-recovery agencies, which work on a percentage of money collected and aim, generally, to scare or embarrass the defaulter into paying up. One technique is to send a notice on blue paper, looking remarkably like a summons, with words like “Bailiff”, “Distrain on Your Goods”, “Appear in Court”, etc., printed in capitals and underlined. In other cases, collectors call on the debtor repeatedly and make themselves objectionable. No doubt there are laws against much of what goes on, but a debtor is likely to feel he is hardly in a position to shout. Car-finance firms, for instance, are known to employ men who stand on defaulters’ doorsteps jingling keys and announcing their intention to take the car away—despite the fact that this cannot be done without a court order.

Penalties
If all the threatening is ineffective, a summons follows. There are two kinds, the common one being the default summons. No-one goes to court over it: the defendant has ten days to settle his debt, dispute it, or offer to pay by instalments. If he fails to do any of those, a judgement summons (the other sort) is served; he must attend the court to answer questions about his means, and the normal outcome is an instalment order. And if the instalments are not paid, a “warrant of execution” is issued for each as its due date passes. This is simply a distraint order—the County Court bailiffs call and arrange to take enough belongings to cover the amount owed plus the Court costs. The costs are standard fees charged at each step in the proceedings, so that the repayment of a debt in these last-resort circumstances is itself an extra expense.

Until a year ago debtors could be imprisoned instead of distrained upon, by order of the court. The purpose of “committal orders” was to deal with people who supposedly could pay but were reluctant to do so. However, County Court judges were in the habit of making the orders almost automatically, and an impoverished defaulter was liable to be hauled to prison by the bailiff. What good was thought to be done by it, no-one knows; though its abolition aimed at reducing the pressures on prison resources, not at sense or humanity. Imprisonment orders are still made for one common class of debts, non-payment of rates to local councils. Since rates are levied under statute law, defaulters over them are summoned not to the civil courts but to magistrates’ courts which continue to make committal orders.

Hard Cash
One other course of action against a debtor is the High Court writ. This is more attractive to creditors than County Court proceedings because the outcome is swifter and more relentless. The debtor has ten days following the service of the writ to file an “appearance“. Unless he has (and is prepared to pay for) a defence, the plaintiff may then “take judgement”. The High Court does not deal in instalment plans, and very shortly after the judgement the debtor will be called-on by a Sheriff’s officer — i.e. a licenced bailiff—with a view to distraint on his possessions. However, High Court proceedings are for larger sums. The County Courts are intended to deal with actions for debts up to £700; though claims for smaller amounts can and do go to the High Court, they are not encouraged there.

It is true, of course, that proceedings for debt can be expensive to the plaintiff. The cost of solicitors’ letters, and representation in court for the hearing of a judgement summons, is not recoverable. Proceedings to get back, say, £50 can well cost that amount and so have their success nullified. Many traders acknowledge this, and either write off small debts when the threats have failed or try the percentage collecting companies. Larger firms can afford the proceedings, but the fact remains that much debt-recovery is sterile: the real object is to make default an unpleasant experience, to brand the defaulter and let it be known that this sort of thing will not be tolerated.

A Dirty War
“Unpleasant” is a mild word. For those who have got into debt through adversity, over-optimism or simple inadequacy in dealing with everyday matters, the consequences are harrowing and humiliating. Threats; the bailiff (or, for rates, a policeman) on the doorstep; the possibility of an auctioneer’s van come to take one’s belongings away, and even of being taken to prison. One wonders what future generations will think of a society in which such miseries were commonplace. There is the thought, too, what kind of people are prepared to treat other human beings like that. For judges, the question need hardly be asked. Bailiffs generally are either men who got into it through the accident of starting in associated employment when they were young, or retired policemen and the like. Loathsome as their functions are, it ought to be remembered that they are wage-workers—only daubed with more of capitalism’s dirt than most of us. Certainly they suffer a penalty in social isolation: it is not uncommon for bailiffs’ wives to have been in the same line of business, leaving one with the thought that most women draw the line at living with that.

Since debt is a struggle, it produces its own strategies. A debt is personal; the desperate defaulter becomes a dodger. A wife may stave off the pressures by saying her husband has gone away and left her, though bailiffs are likely to keep an eye on the house and make neighbourhood enquiries. A High Court writ has to be put actually in the defendant’s hand and proceedings can start only when this has happened, making elusiveness desirable (process-servers usually are young smart-alecs ready to find fun in the chase). Likewise, when distraint is proposed a husband may claim that all the household belongings are his wife’s or someone else’s and therefore not seizable for his debt. This can be challenged by a creditor—the action is called “interpleader”—but the difficulty of proof make the cases rare and seldom successful.

States of Mind
Whatever the reasons for which people get in debt, it is likely to become a spiral from which extrication is hard: continually half-robbing Peter to half-pay Paul, with the result that both remain hot-breathing creditors. One of the attractions of the “second mortgage” is that it offers the exchange of a lot of small debts for a single large one, an apparent fresh start which also can take a haunted person from the realm of County Courts to that of the High Court. But if an even keel is reached, the record of money troubles remains as a permanent disability. It is permissible for a small fee to have past judgements erased from the court registers, but they are never deleted from the credit companies’ records. Extenuating circumstances are not allowed: a defaulter is marked for the rest of his life. It is possible for defaulters to be victimized through their records. Two or three years ago someone circularized several thousand householders offering highly favourable mail-order terms. They were all in fact selected from registers of defaulters, their readiness to jump at the prospect of being allowed to buy on a credit system obscuring more rational doubts such as how the advertizer was financing his generous activities. Orders with deposits rolled in, for the money to be pocketed by an adventurer whose chief asset was a little comprehension of the states of mind that debt produces.

Must it Continue?
Looking at all this: what a way to live! Yet it is part of how a very large number of people do live. Statistics about it tend to appear unbelievable because people will admit to other problems but not this one—disgrace in money matters is the deepest kind of disgrace in a money-dominated society. Nor is it anything new. The 18th-century London Spy describes women in the debtors’ prisons through default to tallymen. Spike Mays account of pre-1920 village life, Reuben’s Corner, refers to the village postman “walking many miles round the scattered community pushing bills and debt-summonses into letterboxes” (a different picture from the romantic one of rosy-cheeked rural bliss).

Most people under capitalism exist in “quiet desperation”, hair-breadths away from this sort of calamity. To talk of the proliferation of debt as a consequence of irresponsibility, of failing to cut coats according to the cloth, is beside the point. For the great majority, there chronically isn’t enough cloth to keep out the cold. The respectable with credit cards and no histories of default are in debt just the same, paying monthly for what they cannot otherwise afford. Debt is a demonstration of the inescapable poverty problem of the working class. The slogan of the latest credit card is that it “takes the waiting out of wanting”; but the only way wanting and waiting will be ended is by the abolition of capitalism.

Robert Barltrop