Voice From The Back: The Class Struggle Today (1) (2013)

The Voice From The Back Column from the November 2013 issue of the Socialist Standard

The Class Struggle Today (1)

That we live in a modern freedom loving society wherein the owning class and the working class co-operate without nasty out-dated class conflicts has recently been shown as a complete nonsense. Britain’s biggest construction companies finally admitted that they used a secret industry blacklist to vet workers as they announced the creation of a compensation scheme. ‘Unions believe construction companies face paying hundreds of millions of pounds to the 3,213 workers whose details were kept on a database kept by a shadowy organisation called The Consulting Association. The information was used by 44 companies to vet new recruits and keep out trade union activists or those who had raised concerns about health and safety’ (Times, 10 October).

The Class Struggle Today (2)

It is a popular notion, reinforced by politicians, that the police force is completely independent of class interests. Recent disclosures by the Independent Police Commission however show that this is not the case. ‘Police officers across the country supplied information on workers to a blacklist operation run by Britain’s biggest construction companies, the police watchdog has told lawyers representing victims. Independent Police Complaints Commission has informed those affected that a Scotland Yard inquiry into police collusion has identified that it is ‘‘likely that all special branches were involved in providing information’ that kept certain individuals out of work’ (Observer, 13 October). Workers blacklisted for raising issues about health and safety on information from the police should come as no surprise to anyone aware of the present day class struggle.

Hunger In The UK

We all know of charities launching campaigns to feed the hungry in Asia and Africa but here is one aimed at the UK hungry. ‘The Red Cross said it was about to launch a campaign in supermarket foyers asking shoppers to donate food to be distributed to the most needy through the charity FareShare. Rises in basic food prices and soaring utility bills have helped push more than 5m people in the UK into deep poverty. Nearly 500,000 people needed support from food banks last year, according to figures from the Trussel Trust’ (Guardian, 11 October). Half a million relying on food banks in one of the most developed countries in the world – isn’t capitalism wonderful?

How Capitalism Operates

Mr Szymkiowiak is astounded by how capitalism operates. ‘A first-time investor has told BBC News how he is ‘pretty delighted’ after Royal Mail share rose by more than 38 percent after the start of conditional trading. ‘I could potentially make £300 for doing nothing,’ Jamie Szymkiowiak said’’ (BBC News, 11 October). Mr Szymkiowiak may be astounded but that is how capitalism works. His modest little investment is as nothing compared to the billions of pounds that members of the capitalist class make from the exploitation of the working class. The owning class do nothing either except live on the surplus value produced by the working class. Astounded?

This Is Progress?

Supporters of capitalism extol its progressive nature but we wonder what they make of this development. Energy giant SSE announced a price rise of 8.2 percent. It will send gas and electricity bills rocketing by more than £100 and there is expected to be a domino effect in the next few days with other major suppliers also slapping hefty rises on the average dual fuel bill. ‘Pensioner groups said the elderly will be hardest hit, with many forced to decide whether to ‘eat or heat’ as the weather turns colder’ (Daily Express, 11 October). A winter of discontent for many members of the working class seems certain.

No Sympathy For The Unemployed

Many workers foolishly imagine that a future Labour government would be more sympathetic to the unemployed than the present government, but they should pay attention to what the Labour Party’s position really is. ‘Labour will be tougher than the Tories when it comes to slashing the benefits bill, Rachel Reeves, the new shadow work and pensions secretary, has insisted in her first interview since winning promotion in Ed Miliband’s frontbench reshuffle. The 34-year-old Reeves, who is seen by many as a possible future party leader, said that under Labour the long-term unemployed would not be able to ‘linger on benefits’ for long periods but would have to take up a guaranteed job offer or lose their state support’ (Observer, 13 October). The Labour Party want to run British capitalism and there is only one way to do that – as cheaply as possible.

A Modern Denial of Pinker (2013)

From the November 2013 issue of the Socialist Standard

In 1999 Steven Pinker threw down the gauntlet with his book The Blank Slate: The Modern Denial of Human Nature in which he argued that selfish and aggressive human behaviour was hard-wired by the genetically-determined structure of the human brain. Writing as an ideologue and outside his specialist field of how the brain interprets sensations from the eyes, he proclaimed:

‘Those who believe that communism or socialism is the most rational form of social organisation are aghast at the suggestion that they run against our selfish natures.’

Although not written as such, The Marvelous Learning Animal: What Makes Human Nature Unique by Arthur Staats, a retired behavioural psychologist who specialised in child development, published last year by Prometheus Books, is in effect a rebuttal of what Staats calls the ‘Great Scientific Error’ and which Pinker exemplifies.

Staats traces this error back to a speculation by Darwin that human behaviours might also have been inherited by the same process of biological natural selection as the physical features of the human body. Staats argues that there is no validated evidence for this and that, on the contrary, ‘you are what you learn’; at birth the mind of the human child is, yes, a blank slate and its future personality and repertoire of behaviours depends on the way it will be brought up, on what and how it learns. He backs this up with the results of his own and others’ research in the field of child development.

Brain scans

Biological determinists like Pinker rely on findings revealed by brain scans which show that there are some differences in the brain features of, for instance, men and women, heterosexuals and homosexuals, people with personality disorders and people without, and children with autism and other children. The conclusion they draw is that it is these differences in the brain that determine the differences in behaviour.

But hold on, says Staats, this doesn’t necessarily follow; we know that learning must change the brain, so that the brain differences could equally reflect different learning experiences. This, he suggests, is more likely, especially as those who argue that the brain differences are inherited via genes have been unable to identify any gene governing behaviour (the only genes identified have been are ones governing bodily features and defects) or even to explain, if such genes existed, how they would or could influence behaviour. ‘Brain changing does not produce learning; learning produces brain changes.’ Staats accepts that it has not yet been worked out how exactly learning changes the brain and calls for more research into learning.

Learning animal

Part 2 on ‘The Human Animal’ explains how the human body (upright stance, binocular three-dimensional colour vision, vocal system capable of emitting a wide range of sounds, free hands with opposable thumbs, a big brain with a million million neurons), together with a prolonged period of growing up, makes humans a ‘learning animal’:

‘… we have been shaped by evolution to learn extensively. Humans encounter the richest of all learning environments. Systematic consideration indicates that our huge brains have been developed to learn the very complex behaviours needed to adjust to that complex environment. Evolution constructed us to do that according to learning principles. Huge learning ability constitutes an essential, fundamental, deep, extensive, and valuable part of human nature. The human is a learning animal, better than any other, by a huge difference.’

Cumulative learning

The distinguishing feature of human learning, he points out, is that it is ‘cumulative’ with what one generation of humans has learned being passed on to the next generation and extended. Most animals do learn some of their behaviour (more than is often assumed) but it is the same behaviour that is learned unchanged from generation to generation. Hence Staats’ conclusion that:

‘Generally it should not be assumed that the behaviour of any other animal can be studied as a means of knowledge of human behaviour. Humans are different than all other animals in learning.’

So much, then, for Konrad Lorenz, Richard Dawkins and their geese.

With humans, what has been learned can be passed on, by the non-biological means of culture, and has been:

‘There is no evidence of a genetically produced change in the human brain for a hundred or so thousands of years, during which time there have been fantastic advances in culture. This holds that the cultural advances in technology, entertainment, politics, language, economics, education, inventions, and other social features are due to learning. There is no cultural evolution.’

To say that there is ‘no cultural evolution’ may seem odd as there is a sense in which there could be said to have been, but he means that the growth of culture does not take place in the same way as the evolution of the human body did.

Human self-creation

Staats speculates that, in the later stages of the biological evolution towards homo sapiens, learned behaviour must also have played a part and he coins the term ‘the human creation theory’ of origin of humans. Some anthropologists have already come to a similar conclusion and talk of biological-cultural ‘co-evolution’, or that, in the title of one of Gordon Childe’s books, Man Makes Himself.

Staats calls for a paradigm shift away from genetic explanations of human behaviour to learning ones. Actually, until the 1970s, that humans were a ‘culture-bearing animal’ whose behaviour was learned was accepted by most cultural anthropologists. For instance, in his introduction to Man and Aggression (1968) Ashley Montagu wrote:

‘The notable thing about human behaviour is that it is learned. Everything a human being does as such he has had to learn from other human beings. From any dominance of biologically or inherited predetermined reactions that may prevail in the behaviour of other animals, man has moved into a zone of adaptation in which his behaviour is dominated by learned responses. It is within the dimension of culture, the learned, the man-made part of the environment that man grows, develops, and has his being as a behaving organism.’

So what Staats is calling for is not so much a new paradigm as a return to the situation that existed before the biological determinist counter-revolution.

While Pinker reflects the current popular prejudice that human nature is a barrier to socialism, Staats looks forward to a time (which he considers inevitable in the long run, even if gradually)

‘… when there is no race or other prejudice or mistreatment, no war, no exploitation of people by other people, no brutality, equitable abundance for all, and general kindness and compassion.’

Adam Buick 

‘Hovis Bakers Win Strike in Wigan’ (2013)

Strikers outside the Wigan bakery

From the November 2013 issue of the Socialist Standard

The recent workplace dispute at the Hovis Bakery on Cale Lane in Wigan involving the Bakers, Food and Allied Workers Union (BFAWU) was over the use of zero-hours contracts, the introduction of agency staff, and the reduction in working hours. Some workers at the Wigan bakery had been on temporary zero hours contracts for up to three years before they were given full-time posts. The dispute was a clear example of the struggle between capital and labour and what Marx called the ‘periodical resistance on the part of the working men against a reduction of wages, and their periodical attempts at getting a rise of wages’.

BFAWU are the old bakers union founded in 1847 in Manchester by journeymen bakers who campaigned to secure the Bakehouse Regulations Act of 1863. The Union represents 30,000 workers in the food industry in Britain.

A one week strike by 210 workers began on 28 August 2013 at the Wigan plant, which is the only producer of Hovis crumpets. Hovis is part of the UK food conglomerate Premier Foods. A second week long strike began on 11 September and the Bakers Union advised people that they would see a reduction in bread and crumpets in stores due to the walkout. BFAWU Regional Secretary Geoff Atkinson said: ‘This has always been a locally run site, by the local people. There’s many families that work on this site. If the hours are there, they should be permanent hours and not covered by agency labour. All our workers on this site took a drop in hours and in money to protect permanent employment on this site, not to protect zero hour contracts and agency labour’ (BBC News Manchester 11 September).

The dispute became increasingly bitter between management at Hovis and the striking workers with increasing use by Hovis of Greater Manchester Police. The Green Party Trade Union Group blog of 16 September reported ‘After a four hour battle with the Police and scab Management this morning Monday the 16th, nothing came out of the plant for two hours then escorted by the police the first wagon took 40 minutes to travel just over 500 metres, but a price was paid when three of the pickets were arrested at the main junction when the police used heavy-handed tactics and threw a female across the road on to her back narrowly missing the pavement edge and a set of railings.’

Striking workers blockading the gates at the Wigan site prevented up to 80 percent of scheduled delivery lorries from leaving the bakery, and those lorries which did leave were so heavily delayed that they would have failed to meet their delivery deadlines for stores in the Midlands and North Wales. Drivers based at the Wigan bakery had refused to cross the picket line with the Hovis lorries on health and safety grounds.

On 23 September news of a settlement between the Bakers Union and Hovis management came less than 48 hours before workers at the Wigan bakery were due to begin a third week of strikes. The official union statement said: ‘Our members at Hovis have achieved an historic agreement with the company. Having already brought the end of zero hours contracts leading to twenty-four new permanent jobs, the action taken by those workers has ensured that zero hours contracts will not be provided by a third party. This landmark action by 210 of a modest-sized union along with meaningful negotiations with the company has brought about significant change that could potentially have a positive knock-on effect throughout the entire labour movement’

(Food manufacture.co.uk 23 September 2013).

Atkinson said: ‘The BFAWU would like to thank Hovis for finally sitting down with us in order to find a solution to what was becoming a very bitter dispute over the use of zero hours contracts and agency labour at the Wigan bakery. It has been agreed that agency labour would only be used when there was insufficient commitment by employees to work overtime and banked hours. Agency employees who work 39 hours per week for 12 consecutive weeks will be moved to parity pay. (BBC News Manchester 23 September).

The Bakers Union success in the dispute at Wigan Hovis shows how, in Marx’s words, ‘Trades Unions work well as centres of working class resistance against the encroachments of capital and help to maintain the given value of labour’. The success can help ‘the initiating of a larger movement using their organised forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system’.

Strikes are necessary if the working class are to prevent themselves from being driven into the ground by the never-satisfied demands of profit. The working class must organise to defend and improve our wages and conditions of work. The strike is a working class weapon within the profit system that can limit the ambitions of the capitalist class.

Steve Clayton

Angels and Devils (2013)

Book Review from the November 2013 issue of the Socialist Standard

The Better Angels of Our Nature. By Steven Pinker. Penguin £12.99.

This is a real brick of a book (over eight hundred pages of text), but its message can be stated very simply: the extent of violence in society has been declining over many centuries and is still doing so. To support this claim, Pinker cites a mass of historical statistics, and to explain this supposed trend he appeals to both political and psychological factors. The title, by the way, comes from a quote by Abraham Lincoln.

In part this drop in violence involves the drastic reduction or effective elimination of such things as bear-baiting, execution by means of breaking on the wheel, human sacrifice and the most gruesome forms of torture. Murder rates have fallen quite drastically, for instance from 110 per 100,000 people per year in 14th-century England to less than one per 100,000 now. But above all it means a reduction in the number of deaths in war, or, more accurately a cut in the proportion of the population killed in war. The Second World War was responsible for 55 million deaths and was the bloodiest conflict ever. Yet the An Lushan rebellion in eighth-century China was responsible for 36 million dead, and, if scaled up to twentieth-century population figures, this would mean well over 400 million deaths.

It may be reasonable enough to speak in terms, not of absolute numbers of casualties, but of proportions and a person’s chances of being killed. Yet this emphasis on relative figures leads to some bizarre conclusions, especially the view that there was a Long Peace in the second half of the twentieth century: but then, all ‘peace’ under capitalism is relative. In the first decade of the present century, the annual global rate of battle deaths was less than one per 100,000 people. But this figure requires some careful redefinitions, such as saying that most of the deaths in Iraq were caused by subsequent ‘intercommunal violence’ rather than the American invasion itself. Moreover, a nuclear war is by no means out of the question now (see Material World in the January Socialist Standard). Also, it is not just war that needs to be considered: according to the One Billion Rising Campaign, one in three women on the planet will be raped or beaten in her lifetime.

As for the causes of war, Pinker claims that countries no longer fight over scarce resources, though he accepts the existence of a ‘resource curse’, whereby less-developed states with plenty of non-renewable resources are often extremely violent. However, the Senkaku/Diaoyu islands, currently in dispute between China and Japan, may well have oil reserves, and war there is by no means ruled out. He also treats cases for and against going to war as rational solutions to a problem in game theory, with positive and negative values for the different sides either fighting or not. But this assumes that those who may benefit (the rulers and owners) are the same people as those who are likely to be killed.

Pinker has featured in these pages before (for instance, see our April 2003 issue for a dissection of his views on human nature and his misunderstandings of socialism). And things have not improved much here: he uncritically considers Stalin and Mao as representatives of ‘Marxian socialism’, and there can be no excuse for referring to ‘the Marxist conception that all human behavior is to be explained as a struggle for power between groups’.

Paul Bennett

Steven Pinker Clarifies his Opposition to Socialism (2013)

Steven Pinker

From the November 2013 issue of the Socialist Standard

Socialist Standard: Given your view that socialist communal ownership and cooperation is against human nature, do you see yourself as a latter day Thomas Hobbes, justifying the need for a coercive state apparatus to protect us from ourselves?

Steven Pinker: I don’t think that communal ownership and cooperation are against human nature, period — they are natural among blood relatives, close friends, and tightly knit tribes — but I am indeed skeptical that they are natural among strangers and acquaintances, to say nothing of entire large-scale societies. But yes, I am a Hobbesian, in the sense that I believe the evidence shows that a society with a democratic government, including a police force and judiciary (the coercive apparatus) is vastly less violent than a society living in anarchy. Hobbes himself was squishy about the ‘democratic’ part — he imagined that the state would somehow perfectly embody the interests of the people — and I depart from him in believing that democratic constraints on state power must be an explicit part of the social contract.

Socialist Standard: Your argument that levels of violence were highest among hunter-gatherer societies, thereafter declining to a record low in modern capitalism, has been hotly contested on the grounds that a) the modern primitive communities you cite are not really hunter-gatherers and have in addition had decades of contact with modern capitalism and b) that you have overlooked many large wars and civilian war-related deaths in recent history. Are you simply cherry-picking the evidence to suit your theory?

Steven Pinker: Absolutely not. For one thing, my argument rests on the distinction between anarchic and governed societies, not hunter-gatherers versus the rest. For another, I separate data from hunter-gatherers on the one hand, and hunter-horticulturalists and other tribal groups, on the other; the latter are indeed more violent than the former (on average), but both types of anarchical societies have enormously higher rates of violence than modern ones. Third, many of these estimates come from societies that had little to no contact with Westerners; the archaeological record, and many reports of first encounters with native peoples, indicate that they had high rates of violence well before they made contact with the West. Finally, my data for modern wars come from every independent dataset in the literature that I could find (including those of Quincy Wright, Pitirim Sorokim, L. F. Richardson, the Correlates of War Project, and, for more recent wars, the datasets from the Peace Research Institute of Oslo and the Uppsala Conflict Data Project. It’s possible that they missed some small wars, particularly in earlier periods, but they certainly did not miss any large ones, particularly in recent times. The estimates all include civilian deaths. Some of them stick to violent battle-related deaths (as opposed to indirect deaths from disease or famine), others try to estimate total deaths; the text indicates which is which.

Socialist Standard: To evade the charge of genetic determinism in The Blank Slate you argued that we could tell our genes ‘to go jump in the lake’. Surely, then, you cannot rule out socialist common ownership on genetic grounds?

Steven Pinker: That’s right, not a priori. All modern political systems are artificial, implementing designs that try to allow their citizens to prosper. Yet all of them have to take human nature into account, including the scope of our cooperative instincts, the incentives that drive us, the sources of our pleasure and pain, the differences among us, and the limitations on our powers of reason and decision-making. I suspect that regulated, safety-net capitalism of the form found in, say, today’s Canada and Germany, are likelier to maximize human happiness under these constraints than the forced collectivism of Stalin and Mao. Presumably you have some third alternative in mind; in the absence of details I can’t judge how well it would deal with the constraints imposed by human nature, but I’d argue that its success in bettering people’s lives will depend on how well it deals with them.

(For a review of Pinker’s latest book ‘The Better Angels of our Nature’, see page 20)

Life Before and After Capitalism (2013)

From the November 2013 issue of the Socialist Standard

There were at least 200 people packed in a lecture theatre at last year’s Anarchist Book Fair on 27  October to listen to anthropologists Chris Knight and David Graeber discuss ‘Life Without Capitalism’.

Knight’s anthropological work is inspired by a statement by Engels in The Origin of the Family, Private Property and the State that ‘the overthrow of mother-right was the world-historic defeat of the female sex’ and that this led to the end of primitive communism and the rise of class society and patriarchy.

Knight opened by stressing that we need to break out of the fictitious bubble of ideology which contains capitalism, bourgeois society, and the nuclear family. He argued that we should look to the primitive communism of hunter-gatherer societies. He referred to the Hadza people in Tanzania and the Mbendjele pygmies in the Congo who lived in egalitarian systems of social relationships and also mentioned that the Mbendjele people experiment with ‘pendulum of power’ relationships which swing between women rule and male rule.

Knight spoke of ‘the human revolution’ that took place 100,000 years ago at the dawn of human society when there was a huge social, sexual and political revolution that brought about the primitive communist society of the hunter-gatherers. Knight believes this ‘human revolution’ can occur again.

Knight later discussed ‘Lunate’: the importance of the Moon in hunter-gatherer society, the menstrual cycle of 29.5 days, women’s power in the primitive communism of hunter-gather society, and the need for horizontal decision-making and organisation in society, and the desirability of ’pendulum of power’ relationships in a future anarchist communist society.

He concluded that we need to empower ourselves to take power, to slow time, manage the playful in the revolutionary process, build on the work achieved by the Occupy Movement, and that we need to set a future date for global insurrection, for example 2017, the anniversary of the Bolshevik Revolution.

David Graeber spoke of more recent history than Knight. He spoke of the Neolithic period of 5,000 years ago and the origin of money in violence, terror, the state, it arising out of a legal system to remedy violence, and as payment to standing armies (see August Socialist Standard on Graeber’s book Debt: The First 5,000 Years).

Graeber also spoke about the early cities in Mesopotamia which he said were obsessed with equality, the paradox of commercial activity taking place in an equalitarian society, and that inequality was a reaction against standardisation. He referred to the rise of slavery, the enslavement of women, and the equivalences of the monetary system based on female fertility.

Graeber observed that the emergence of the state coincides with the appearance of beer. He is an Anarchist and was active in the Occupy Movement. He is also the author of the 2011 book Debt: The First 5,000 Years while Knight is author of the 1991 book Blood Relations: Menstruation and the Origins of Culture.

Steve Clayton

Film Review: ‘Elysium’ (2013)

Film Review from the November 2013 issue of the Socialist Standard

‘Elysium’ – Written and directed by Neill Blomkamp

By the middle of the 22nd century, the super-rich have gone beyond gated communities and exclusive enclaves. They have moved off-planet to an orbiting space station called Elysium, where they live in idle luxury with mansions and swimming pools, enjoying the best possible health care. Back on an overpopulated and polluted Earth, workers live in slums, battle unemployment and hard and unpleasant work, and have rudimentary health care.

That is the scenario in this film, starring Matt Damon and Jodie Foster. The stark class division is driven home in a scene where the scumbag CEO of one company tells a foreman not to breathe on him. The drive for profits means there is little or no concern for the workers who produce the goods and services.

[Spoiler alert] Let’s not worry too much about the plot, which is so flimsy it has to be padded out with a lot of fighting. A power struggle among the elite results in the inhabitants of Earth being granted Elysium citizen status, and the film ends with shuttles leaving the space station to provide decent health care on the planet below.

Unfortunately it is this power struggle, plus a few rebels from among the workers, rather than a mass revolt, that leads to this optimistic ending. It is also left unclear to what extent the Earth–Elysium division will be overthrown. But the political strength of the film lies elsewhere, in its depiction of a society divided so obviously that it is undeniable. And this is surely meant as a comment on the present day, not just a fable about the future.

Paul Bennett

Mixed Media: Dick Gaughan: Exmouth Arms, London (2013)

Dick Gaughan in concert.

The Mixed Media column from the November 2013 issue of the Socialist Standard

Dick Gaughan, the singer-songwriter, recently played at The Cellar Upstairs folk club at the Exmouth Arms, Euston in London. Gaughan, of Irish descent was brought up in the musical traditions and culture of the Gaels; the Scots and Irish in the port of Leith near Edinburgh.

Gaughan began his recording career in 1972 in the Scots-Irish celtic band, The Boys of the Lough, played with Brian McNeill, fiddle player with The Battlefield Band, recorded a tribute album to Ewan MacColl, recorded a tribute album with Bert Jansch to Woody Guthrie, duetted with Billy Bragg on The Red Flag on the album The Internationale, and worked with 7:84, the 'left wing agit prop' theatre group.

Gaughan interspersed his set with anecdotes of his life in music and slices of Scottish radical, nationalist and Irish socialist history. He tells the audience that somebody said he was an 'unreconstructed socialist'. His website lists Karl Marx, Lenin, John Lennon and Groucho Marx as influences, and he supports the Morning Star newspaper. His song Ballad of '84 describes the 1984-85 Miners Strike and salutes Miners leaders Arthur Scargill, Peter Heathfield, and Mick McGahey.

Gaughan performed The Yew Tree by Brian McNeill which describes the 1513 battle of Flodden, and also Calvinist John Knox. He performed Now Westlin Winds by the Scots bard Robert Burns and another Brian McNeill song No Gods (and Precious Few Heroes) which describes the defeat at Culloden. The song Thomas Muir of Huntershill by Adam McNaughton is about the Scots political radical Thomas Muir, supporter of the French Revolution, friend of Tom Paine, and who in 1794 was sentenced to 14 years transportation to Australia for high treason.

Gaughan performed the elegiac Song for Ireland by Phil & June Colclough, and then speaks of the James Connolly, 'Big Jim' Larkin and the 1913 Dublin Lock-Out which involved 25,000 workers and lasted five months. Connolly was a Scot of Irish descent like Gaughan, for a while a socialist in the Scottish Socialist Federation and later the Socialist Labour Party. Stephen Coleman wrote that Connolly's impossibilist ideas (socialism is impossible until the working class understands what socialism means) were an influence, among others, upon Jack Fitzgerald, a founding member of the SPGB in 1904. Connolly later abandoned this socialism and took up Irish nationalism and the armed struggle in the 1916 Easter Rising for which he was executed by the British.

Gaughan concluded his set with Geronimo's Cadillac by Michael Martin Murphey which describes how Indian land was taken by the White Man and the Indian people given capitalism in return.

Steve Clayton

50 Years Ago: Memories of a Lovely War (2013)

The 50 Years Ago column from the November 2013 issue of the Socialist Standard

In a few month’s time we are going to be submerged in an orgiastic flood of journalism to mark the fiftieth anniversary of one of the formative experiences of modern history. Already, hardly a week goes by without some promise of the coming deluge of words. This, in itself, is an indication of the enormous effect which the First World War has had upon the world.

Without wishing to anticipate any of the articles which are going to pour out of Fleet Street we can see, looking back, that 1914 marked a stage in the growing up of modern war. It was a terrifyingly new, different war, which gathered the strands of the wars of the previous fifty years and plaited them into a rope which noosed in millions of people. It flattened and mangled beyond recognition an immense area of the Franco/German frontier. It terrorised civilian populations who, behind the firing lines, had previously thought themselves safe from danger. It subjected its combatants, in the liquid trenches of the Western Front, to agonies of fear and endurance such as they had never conceived of in their worst nightmares. (…)

And what did all this achieve? The soldiers of both sides were promised that they were suffering and sacrificing in a great enterprise to build a better, safer world. But the events which followed 1918 justified those people who, for one reason or another, had maintained that war was futile. 1914-18 solved no problems—it only lined up the world for the next great conflict, which in its turn created the problems over which another world war has so often threatened to break out. What war does, very effectively, is to debase and to brutalise human beings, to encourage the worst aspects of human behaviour, to turn the world into a charnel house in which worthwhile human values are battered down and overridden in the general glorification of violence, lies and prejudice.

(from article by Ivan, Socialist Standard, November 1963)

Karl Marx’s Declaration of Principles (1980)

From the May 1980 issue of the Socialist Standard

A hundred years ago this month four men met in the study of Marx’s house in North London: Marx himself, Engels, Paul Lafargue (who was then still living in London) and Jules Guesde, who had come over specially from France.

Guesde (pronounced “Ged”) had played a key role in persuading a conference of French political and trade union organisations in Marseilles in October 1879 to adopt  “the collective ownership of the soil, sub-soil, instruments of production, raw materials” as the aim “the Federation of the Party of Socialist Workers in France”. He was now in London to get Marx’s help in drawing up a declaration of principles for this new party.

Marx dictated to Lafargue, who acted as secretary of the meeting, the following preamble to a list of immediate demands which had been prepared by Guesde for the elections of 1881. We have translated it ourselves from the version which was published on the front page of L’Egalité of 30 June 1880 under the heading “Electoral Programme of the Socialist Workers”:

Considering, 

That the emancipation of the productive class is that of all human beings without distinction of sex or race; 

That the producers can be free only insofar as they are in possession of the means of production; 

That there are only two forms under which the means of production can belong to them:

 1. The individual form which has never existed generally and which is being more and more eliminated by the progress of industry;

2. The collective form whose material and intellectual elements are being formed by the very development of capitalist society; 

Considering, 

That this collective appropriation can only be the outcome of the revolutionary action of the productive class—or proletariat—organised in a separate political party; 

That such organisation must be pursued by all the means which the proletariat has at its disposal, including universal suffrage, thus transformed from the instrument of trickery which it has been up till now into an instrument of emancipation; 

The French socialist workers, in setting as the aim of their efforts in the economic field the return to the collectivity of all the means of production, have decided, as a means of organisation and struggle, to enter the elections with the following minimum programme.[1]

Guesde’s election programme which followed was a list of reforms such as full freedom of the press, assembly and organisation; separation of the Church and State; an eight-hour working day; a legal minimum wage and workmen’s compensation. Marx was not involved in drawing up this programme and was in fact critical of certain parts of it, especially the demand for a legal minimum wage, though he did not contest the desirability of the party adding such a programme of reforms to its socialist objective (one of the points on which we say he was in error).

It is quite clear that this excellent statement of basic socialist principles drawn up by Marx must have been one of the documents before those who drafted our Object and Declaration of Principles in 1904. Its first clause is incorporated, almost word for word, in our Clause 4 and the phrase “instrument of emancipation” appears in our Clause 6 as “agent of emancipation”. According to Bracke, who was a close collaborator of Guesde before the first World War, the words “thus transformed from the instrument of trickery which it has been up till now into an instrument of emancipation” were suggested by Guesde (see his foreword to Programmes Socialistes de Gotha, Erfurt, Le Havre, Spartacus, Paris, 1947). Presumably his source for saying this would have been Guesde (who died in 1922), though Guesde himself is not on record as making this claim. But in any event, whoever suggested the phrase, it was accepted and endorsed by Marx and became part of the terminology of Marxian socialism inherited by the Socialist Party of Great Britain.

All the currently available French versions of this preamble differ from the version published in L’Egalité (and various other French journals) in June 1880. One of these differences is important and has long been a source of embarrassment to us: the inclusion after “means of production” in the second clause of “(land, factories, ships, banks, credit, etc)”. The Pelican translation does not contain this but Aaron Noland, in his The Founding or the French Socialist Party (p.7), quotes this phrase as if it had been in the draft dictated by Marx.

Now, if Marx really had included this phrase, it would have detracted from the value of the document as a very good statement of socialist principles as well as calling into question his own theoretical consistency. For how can there be common ownership of “banks” and “credit” when, as buying and selling institutions, these are features only of a society where private property exists? When there is common ownership of the means of production there will be no money, no buying and selling and hence no banks or other financial institutions, as Marx made quite clear in other of his writings.[2] Besides, banks and other financial institutions are not “means of production” and Marx was always careful about the definition of economic terms.

There were thus two prima facie reasons for doubting that Marx had had a hand in including this phrase. Having looked up the issue of L’Egalité of 30 June 1880 we are now in a position to confirm that it was not inserted by Marx, since the phrase is nowhere to be found in the version published there. All the current French versions are therefore wrong, their publishers not having taken the elementary step of going back to the original source. We can only speculate why, but an important factor must have been that, being either Social Democrats or “Communists”, they saw no contradiction in Marx seeming to suggest that banks and credit would continue to exist in socialism.

Where, then, did this addition come from and who inserted it? In July 1880 the preamble and election programme were adopted by the Centre region (which included Paris) of the French party. The version they adopted, as published in L’Egalité of 28 July, does not contain this phrase nor, more importantly, does the version adopted by the party as a whole at its national congress held in Le Havre in November (Le Proletaire No.114, 4 December 1880).

The offending phrase first appears, together with a couple of other changes, in a version adopted at a Congress held in Roanne in September and October 1882 (see L’Egalité, 8 October 1882). The mystery is now near to solution, since this was the congress at which Guesde and his supporters, who had been outvoted on the issue of maintaining a single national election programme, broke away from the Federation of the Party of Socialist Workers and set up the Parti Ouvrier Francais (French Workers’ Party).

Because of its unwieldy name the Federation had been known popularly as the “parti ouvrier” but this was not its official title. It is thus inaccurate to describe, as has become customary, this document as the preamble or introduction to the programme of “the French Workers’ Party”. Marx did not draft it for this party since it did not exist as such in 1880 but for its predecessor, the Federation of the Party of Socialist Workers in France, to give it its full title. Naturally, as tends to happen when there are splits, the two organisations resulting from the 1882 split both claimed to be the inheritors of the original party and traced their origin back to it. In addition, Guesde, Lafargue and the others in the POF hoped to derive prestige from the fact that their declaration of principles had been drafted by Marx.

And in fact, from 1882 onwards, the POF was the recognised “Marxist” organisation in France and, like the Social Democratic Federation in Britain (formed about the same time), did carry out some useful work in introducing and spreading socialist ideas in France before finally getting bogged down in reformism. Consider, for instance, the following passage by Guesde, written in 1879, in an article “The Social Problem and its Solution” which was translated into English and published in the Socialist Standard  in January and February 1905:

Commercial production of exchange values with an end to realising profit will disappear, and be replaced by the cooperative production of use values for consumption with a view to satisfying social wants.

Alteration to Marx's draft
In view of this recognition that there would be no buying and selling in socialism, it is strange that Guesde and Lafargue should have taken it upon themselves to “complete” Marx’s draft in such a way as to suggest that banks and credit would exist in socialism. In doing so, they distorted Marx’s meaning and blurred the distinction between state capitalism and socialism, the beginning of a process which led to the Social Democratic parties of Europe, in which Marx and particularly Engels had placed such hopes, coming to work in practice for state capitalism rather than socialism.

Guesde and Lafargue had no right to change Marx’s draft and then claim that it had been dictated by him in the changed form in which they propagated it. A mark of their success—and damage—here  is the fact that most people in France who are aware of the document think that Marx accepted the contradiction in the POF version, that is, the “common ownership of banks”. It would be nice if Marx’s famous remark “One thing is certain, I’m not a Marxist” (Engels’ letter to Bernstein, 3 November 1882) had been occasioned by this change to his 1880 draft, but there is no evidence at all for this conclusion! It was, however, made in connection with the Guesdists.

We shouldn’t be too hard on the Guesdists though, since they had some influence on the early thinking of the SPGB. Marx’s preamble, for instance, would only have been known to our founder members in the form of the “considérants” to the programme of the Guesdist Party. The POF, after becoming “the Socialist Party of France” in 1901, joined the united Social Democratic party in France set up in 1905 under the auspices of the Second International. The Guesdists continued to exist as a group with their own publication Le Socialisme. The early Socialist Standards contain a number of articles translated from this journal. For instance, an article by Guesde on “Legality and Revolution” (February 1908), one by Lafargue on “The Law of Value and the Dearness of Commodities” (May 1908), two articles by Charles Rappoport, author of a number of books and later a leading theorist of the French “Communist” Party (September 1908 and April 1911) and a short, and not very consequential, article by the Bracke we have already mentioned (January 1910). There were others too. In addition, our traditional definition of the State as “the public power of coercion” comes from the early Guesdist (later an open reformist and top French diplomat) Gabriel Deville.

So, when our supporters in France are numerous enough, the declaration of principles of the party they will form will not be something totally alien to the French working class political tradition, but will include passages originally drafted by Marx for a French workers organisation.

Adam Buick

[1]  An English translation also appears in The First International and After, in the Pelican Marx Library, but contains a mistake, probably because it was re-translated from the German and not directly from the French. Instead of "That such consideration must be . . . " it has "That this collective appropriation must be . . ."

[2]  "As soon as the means of production cease being transformed into capital (which also includes the abolition of private property in land), credit as such no longer has any meaning" (Capital, Vol III, Moscow, p. 594).

Socialism and Trade Unions (1980)

Party News from the May 1980 issue of the Socialist Standard

Many people think the Trade Unions run the country. Others believe they are at the root of all social problems. Trade Unions are certainly front page news, and the Tory Government has promised to "put them in their place”.

The Socialist Party of Great Britain has just published a new pamphlet giving our analysis of Trade Unions, their uses and limitations and the urgent need for workers to consider the socialist alternative.

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“The Socialist Party of Great Britain has a distinctive view of the problems facing the Unions. It is that, necessary as they are to prevent employers depressing wages, the Unions are strictly limited in what they can achieve for their members within the capitalist system of society out of which Unions arise and within which they operate . . .”

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“The trade union weapon for bringing pressure to bear on the employer is the strike, by means of which production can be halted. It is however effective only when market conditions are such that the employer can sell at a profit all that is produced.”

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“Trade Unions, fighting the same old battles over and over again, offer no way out of the dead-end of capitalism. There is nothing the Unions can do which wall substantially alter the way capitalism works. However, there is a solution, the one for which the Socialist Party of Great Britain is organised. It is the replacement of capitalism by socialism — which, it must be emphasised, has nothing to do with nationalisation or with having capitalism run by a Labour Government.”

The Evolution of Money: From Barter to Inflation (Pt. 2) (1980)

From the March 1980 issue of the Socialist Standard

Link to Part 1.

Paper token money was re-invented in Europe in the 17th century when goldsmiths began issuing receipts to those who had deposited gold with them. These receipts came to be accepted as a means of payment because people knew that they could convert them into gold at any time. This is one of the origins of the modern banking system. At one time any bank could issue its own notes, but later this became, in most countries, a government monopoly—in Britain through the semi-official Bank of England.

The first paper notes were "as good as gold" in the sense that they were convertible on demand into a fixed amount of gold laid down by law. For nearly one hundred years from the end of the Napoleonic Wars to the outbreak of the First World War notes in England were fully convertible into gold at a rate of about ¼ oz per £. During this period the "I promise to pay the bearer on demand the sum of five pounds" (there were no £1 notes then) meant that the Bank of England would give you about 1¼ oz of gold for the note. Now you will only get another note.

With convertibility, the management of a paper currency is relatively easy, since the number of notes in circulation is regulated by the economy as its demand for money rises and falls.

Convertibility of paper notes into a fixed amount of gold was suspended in Britain during the First World War, resumed in 1925 and abandoned in 1931. Currency today in all countries is inconvertible paper (token) money (topped up by metallic coins). The problems of managing an inconvertible paper currency are immensely greater than those of managing a convertible paper currency since it is the monetary authority itself which now has to gauge how much money the economy needs. The amount is no longer more or less automatically regulated by the economy itself, but is determined by the government through its monetary authority. It is not impossible to get the amount approximately right from studying economic trends (level of economic activity, growth of population); it was done in the Weimar Republic after the terrible runaway inflation immediately after the First World War as well as in Britain after 1920. But governments with a monopoly in the issue of inconvertible paper currency face the same temptations as the rulers in the past who issued debased coins: printing money can serve as an easy source of finance. Indeed, convertibility was suspended during the First World War (as it had also been during the Napoleonic Wars) precisely in order to finance the war.

The effect of over-issuing inconvertible paper notes is exactly the same as debasing gold or silver coins: a rise in the general price level. This inflation is in fact the modern equivalent of debasement. It is the depreciation of an inconvertible paper money just as debasement is a depreciation of coined real money.

The word "over-issue" of course implies that there is a "correct" amount of an inconvertible paper currency to misuse. This "correct" amount is that whose face-value equals that of the gold which would be in circulation were it the currency, the amount (total weight) of gold that the economy requires as determined by the formula we discussed last month (no. of transactions x total prices, divided by the velocity of circulation of money).

Suppose that, with inconvertibility, "pound" continues to be defined as ¼ oz of gold and suppose that the amount of money required by the economy, measured in weights of gold, is 100m. oz. To be correct — not to be over-issued — the face-value of the inconvertible currency must total £400m. This is the only amount which will maintain the definition of one pound = ¼ oz of gold.

Inflation as a policy
If the government issues, say, notes with a face-value of £800m, or 100 per cent more than the economy requires, what will happen? The economy still needs the same amount of money, measured in terms of the weight of the money-commodity, as before — 100m oz. of gold. The issue of a paper currency with a total face-value above this figure — and £800m would be the nominal face-value of 200m oz of gold — will not alter this. What will is the real, as opposed to the legal amount of gold designated by the word "pound". £800m, instead of representing 200m oz of gold, will become, in economic practice, the equivalent of 100m oz. "Pound" will change from being the name of ¼ oz of gold to be the name of 1/8 oz (100/800).

The standard of price will have effectively been changed so that, as with a debased coinage, all prices will rise — in this case by 100 per cent, the same proportion as the over-issue of the currency. Once again, this rise won't take place all at once but will gradually work its way through the economy till the general price level has risen by 100 per cent.

The over-issue of an inconvertible paper currency, or inflation, always results in an increase in the general level of prices. This has been confirmed so many times that it can be regarded as an established law of monetary economics.

Over-issuing an inconvertible paper currency has been the cause of the continuous rise in the general price level since the last World War. Governments everywhere have resorted to inflationary currency policies because this is an easy way of raising money to finance their spending — and of course government spending has grown immensely this century. But there is a difference compared with past inflations. In the past when governments inflated the currency they knew exactly what they were doing and what the result would be. Thus the government during the First World War knew full well that the result would eventually be a rise in prices. But today governments seem no longer to realise that there is this direct causal link.

The economics of inconvertible paper currencies has been forgotten under the influence of economic thinkers who proclaimed that they had devised new and better theories. The man mainly responsible for confusing the question here is John Maynard Keynes (1883-1946). Keynes, who was already a leading British economist in the 1920s was at one time aware of the consequences of currency over-issue, but that was before he developed his "general theory of employment, interest and money", the title of his major work published in 1936.

In this work Keynes argued that, in order to ensure full employment, governments should concentrate on trying to control the economy by appropriate tax and spending policies. He relegated monetary policy to a secondary role, saying that it should be framed to fit in with the government's tax and spending policies. Governments interpreted this as meaning that they could safely issue whatever amount of money they needed to carry out their policies, without having to worry about whether or not this might be more than the economy needed. Predictably, they over-issued the currency and the general price level rose.

The first Keynesian budget was that of 1940, when inflation was once again deliberately adopted as a way of financing the war. This policy was continued after the war to finance other government spending, including that on social reform measures (education, health service, social security benefits). While the post-war boom lasted it seemed to some that Keynesian policies had at least achieved the aim of full employment, if not that of a stable price level, and Keynes' view that a certain amount of inflation encouraged investment came to be generally accepted. This myth has now been exploded, as recent years have seen growing inflation accompanied by growing unemployment. As a result Keynes is now almost completely discredited (though he still has a few supporters left in Labour Party and TUC circles). Keynesian economics is now being replaced by a new school known as the "Monetarists" (because they reject Keynes' teaching that monetary policy doesn't matter) who at least realise the connection between an increase in the "money supply" (however defined) and an increase in the general level of prices.

Printing £ notes!
When it is said that government spending is financed by recourse to the printing press, this should not be taken to mean that the government simply prints more paper notes and uses them directly to pay, for instance, its suppliers or civil service salaries. This does indeed happen in some countries but in Britain the method is not so crude as this. What essentially happens is that the government always makes available enough credit for the banking system (commercial banks, discount houses) to be able to lend it whatever it wants. The process works something like this: (i) the government, through the Bank of England, sells bonds to the Big Four Banks (Barclays, Lloyds, Midlands, National Westminster); (ii) to get money to pay for these bonds the banks call in some of the short-term loans they have made to the discount houses; (iii) the discount houses go to the Bank of England which, as the lender of last resort, lends them what they need, at a price — what used to be called the bank rate. The resulting increase in credit in the banking system means, sooner or later, an increased demand for currency (notes and coins). This the Bank of England, as the note-issuing authority, passively makes available by a simple transfer from its Issue Department to its Banking Department. As and when necessary the former arranges for more notes to be printed. So lax is control over the issue of notes these days that Parliament is told afterwards by a mere Treasury Minute which passes automatically unless challenged.

The politician in Britain who comes closest to a real understanding of inflation is Enoch Powell. But there is one thing lacking in his analysis: a concept of what would be the "correct" amount of convertible currency to issue to maintain price stability, or, what is the same thing from another angle, its purchasing power. Powell lacks this concept because it can only be explained on the basis of Marx's Labour Theory of Value (1) and the last thing that Powell is (or wants to be) is a Marxist!

Inflation can be understood only after the acceptance that money is itself a commodity, a product of labour produced for sale, having its own value determined in the same way as that of other commodities (by the amount of socially necessary labour incorporated in it). Despite the surface appearance, gold is still the money-commodity, both internally and for external trade. It has been replaced as the circulating medium by tokens, the metallic coins and coloured paper notes we use in everyday transactions, but is still the ultimate standard of price.

It is still gold that determines whether or not a currency has been over-issued. The various paper currencies of the world are still defined, in economic reality, as weights of gold, even though most of them are no longer legally so. This economic definition of currencies in terms of weights of gold is continually changing; their "gold content" is being continually reduced as a result of inflation.

Although it follows from the Marxian analysis of inflation that the continual rise in the general price level could be stopped by strictly limiting the issue of paper money, it is not the business of socialists to tell the capitalist class how to run their economy. We must not be understood as advocates of a non-inflationary monetary policy since we are against capitalism with or without inflation. An end to inflation would not leave workers much better off; their struggle to defend wages and conditions would still have to continue whatever the currency policy of the government.

We are for a system of society in which inflation could not arise as there would be no money. On the basis of the common ownership of the means of wealth production and their democratic control by the whole people, wealth can be produced in abundance to satisfy people's needs. In socialism every man, woman and child will have free access to the abundant store of wealth set aside for individual consumption. There will be no need for money. Further, being based on common ownership, there will be no private property and so no basis for the exchange of goods out of which money evolved. A moneyless society, then, is our answer to inflation.

Adam Buick

(1) Marx explains inflation clearly and simply in the section on "coins and symbols of value" in Chapter III of Vol I of Capital.

Opportunism Knocked: Bradford Debate With SWP (1980)

Party News from the March 1980 issue of the Socialist Standard

The lively and well-attended autumn debates between the Socialist Party and the Socialist Workers’ Party in Bradford were also revealing. Each highlighted the SWP’s complete lack of a class viewpoint and their opportunist support for any section in society who claimed a “special” grievance.

In the second debate, the SWP speaker boasted of his support for the most “Right wing” national liberation groups against his own ruling class. No talk from the SWP of the Socialist idea of the self-organisation of the working class irrespective of nationality, with world socialism, rather than the redrawing of national boundaries, as their aim.

Behind a veil of hypocrisy about the need for workers to reject their leaders reared the ugly head of Trotskyist elitism, with its view of the workers as sheep to be led (no prizes for guessing the shepherds). Time and again the SWP endeavoured to draw the audience into its web of trendy reformism, manifesting itself in such pressure groups as the Anti-Nazi League, led by their Che Guevara, Peter Hain, and that guitar-strumming leftist Tom Robinson; various women’s groups, and the “Right to Work” campaign, telling us all that it is indeed our right to be exploited! Such prescriptions for our ills, misleadingly attractive in their initial emotional appeal, are futile and dangerous blind alleys for workers. Yet these reformist movements were proudly held up as examples of Marxist theory in practise.

Both socialist speakers pointed out that for all the lip-service paid to socialism by the SWP, all they had to offer the audience was the “fight” for immediate demands, from the provision of a coffee-machine locally to the national banning of the National Front. Such reformist struggles indicate the SWP attitude of “Blow the disease, let’s fight the symptoms”. The socialist speakers’ answer to this utopian line of thought was that the immediate abolition of capitalism and the implementation of socialism is the only realistic way forward, precisely because the social problems thrown up by the capitalist system are insoluble within capitalism, that the struggle to build up a mass working class movement, rather than the idealistic demands for full employment or a mere change of political leaders, that on both occasions the SWP speakers so vehemently rejected.

In reply, most of the SWP’s speakers’ time was focussed on the SPGB’s refusal to ally with the so-called “Left Wing” to fight off the extreme right—to vote Labour at elections to keep out the Tories and the National Front. In answer to this, our speaker expressed the Socialist Party’s non-compromising opposition to capitalism, “be it run by politicians wearing jack-boots, or by politicians wearing denim jeans”.

Finally, all the SWP could offer was the romantic policy of “getting the workers into the day-to-day struggles”. All very well, for those non-socialists who like that sort of thing—but let them do it under a banner other than socialism.

RNW

The Evolution of Money: From Barter to Inflation (Pt. 1) (1980)

From the February 1980 issue of the Socialist Standard

Since inflation is a monetary question and nothing but a monetary question, it cannot be understood without first knowing what money is. To most people money is the notes and coins they use to buy things, a convenient technical device for ensuring the smooth exchange and distribution of goods. While it is indeed such a medium of exchange, the currency we use today is not, strictly speaking, money at all, but only tokens for it. But to explain money it is convenient to start with this role of medium of exchange.

Exchange, as the exchange of goods, only exists in societies where there is private property: the goods involved pass from one property owner to another. In societies where there is no private property, where wealth is regarded as the common property of all the members of society, there is no exchange. People don't get what they need through exchange but directly, either by being given it or by taking it in accordance with established rules for sharing wealth. The original human societies were organised on this basis, without property and without exchange –and without money.

Exchange probably originated not within such primitive communistic societies but between them, and would have been on the basis of barter, the direct exchange of so much of one good for so much of another. Barter is the most primitive form of exchange and has obvious problems which don't need explaining at length. A person with two pots who wants a blanket must find another person with a blanket who wants two pots before any exchange can take place. At a certain stage in the evolution of exchange, the need becomes apparent for a good which can be exchanged for all goods. Then the person with the two pots can exchange them for this good and then later exchange this good for a blanket. The good that can be exchanged for all other goods is precisely money, and this gives us the basic definition: money is the good or commodity that can be exchanged for all others.

Various goods have functioned as money in the history of humanity, from cowrie shells to cattle (the word 'pecuniary' comes from pecunia, the Latin word for cattle), but in the end the most convenient have proved to be the precious metals, silver and gold. With barter, goods exchange in proportions determined by the amount of time it took to make them. Primitive people would have had a pretty shrewd idea of how long it took to make particular goods and would have regarded an exchange as fair where the goods involved had taken more or less the same period of time to make (or to gather from nature). Thus, if two pots habitually exchanged for one blanket, a blanket took twice as long to make as a pot.

In other words, commodity exchange is essentially an exchange of equivalents. When one good becomes money, this is not altered. The person with the two pots is not going to exchange them for the money-good unless both goods are considered equivalents. The money-good itself must therefore have value, must be the product of labour. This leads us to the second function of money, that of being a store of value. Someone who has exchanged their goods for the money-commodity is not obliged to exchange the latter straight away for some other good. They can keep and, if wanted, store and accumulate the money-good.

The money-commodity can best perform its role if it is not too bulky — if, in other words, it concentrates a relatively large amount of value in a relatively small bulk. This is precisely what the precious metals do. They are 'precious', or valuable, because it takes considerable labour to obtain a small amount of them. This feature would be a disadvantage had the precious metals not another characteristic — that of being easily divisible. A precious stone such as a diamond also concentrates much value in a small bulk, but because it cannot be easily divided it can't serve as the money-commodity, since the differing values of goods to be exchanged (the different times it took to make them) demand that the money-good be available in finely distinguished different amounts.

The precious metals, gold and silver, because they possessed these two features and had a fairly stable value, eventually emerged everywhere as the money-goods. Once one good has become money then exchange becomes buying and selling. Selling is the exchange of a good for the money-good, while buying is the exchange of the money-good for a good. This is still the case today but is no longer obvious because of the complications brought about by the subsequent evolution of money. The price of a good is its labour-time value expressed in amounts of the money-good. (1) This, being the standard of price, is money's third function. Prices were in fact originally expressed directly as weights of gold or silver.

The next stage in the evolution of money is the introduction of coins. About 2,500 years ago a ruler of Lydia (now Turkey) struck the first coin by stamping its weight on a piece of precious metal (electrum, an amalgam of gold and silver). This stamp served as a guarantee that it really did weigh the amount indicated. And this is all coined money is: a piece of the precious metal which is the money-commodity stamped with a guarantee of weight. At first anybody could issue coins, merchants as well as rulers, but this soon became a government monopoly.

The names of coins were originally weights of the metal of which the coins were made. Thus a pound (£) was originally, in early medieval times, a pound (lb) of silver. But over the years, if only because coins lose weight through wear and tear (but in practice for other reasons as well, as we shall see), the names given to coins came to differ from the names of the units of weight. This did not mean that the money-commodity had ceased to be measured in terms of weight; it merely meant that the money-commodity could always be translated into the more usual unit. Indeed, the new unit of monetary weight was legally defined in terms of the general unit of weight. Thus, in Britain for most of the nineteenth century, the gold coin known as a sovereign or pound was legally defined as being slightly more than a quarter of an ounce of gold (one ounce of gold was equal to £3 17s l0½d). In other words, 'pound' was an alternative name for about a quarter of an ounce of gold. Similarly, other names of currencies – dollar, mark, franc –were also alternative names for (other) weights of gold (or silver).

Gold and silver coins can lose weight not only through wear and tear but also through people deliberately filing them down, a criminal offence generally punished in the past by death. But there was a third way which was perfectly legal and unpunishable, since the 'criminal' was the government itself! Governments discovered soon after the invention of coins that issuing underweight coins – stamping one weighing, say, only 0.24 ounces as a 'pound' or 0.25 ounces –was an easy source of finance, at least in the short term. Such debasement of the coinage, however, had an unfortunate side-effect: it led to a rise in prices, not just of some goods but of all goods, a rise in the general price level. Since exactly the same mechanism operates here as with modern inflation, let's examine it in more detail.

Exchange, remember, is the exchange of equivalents (of equal amounts of socially necessary labour), selling is the exchange of a particular good for a certain amount of the money-commodity; and price is the expression of the value of a good in terms of amounts of the money-commodity. Say that four blankets are worth the same as an ounce of gold. That means that it takes as much socially necessary labour to produce four blankets as it does to produce one ounce of gold. The price of one blanket would then be a quarter of an ounce of gold, or £l.

This is an underlying real economic relationship which remains in force whatever the government does. If the government debases its coins by stamping 'pound' (quarter-ounce) on coins weighing only one-eighth of an ounce, (2) then this economic reality does not change. One blanket will still tend to exchange for a quarter-ounce of gold. If the government, by debasing the coinage, in effect changes the weight designated by the name 'pound' from a quarter-ounce to one-eighth of an ounce, then the price of one blanket will no longer be £1, since this now signifies one-eighth not one quarter of an ounce. The price will now be £2, the new way of indicating a quarter-ounce of gold. All other prices will also rise in the same proportion of 100 per cent. Prices will in fact tend to rise in the same proportion that the coinage has been debased. This would not happen immediately and all at once but would be spread out over a period of time as the effect of the debased coinage worked its way through, but the end result will be the 100 per cent rise in prices.

What will have happened is that the government's action will have changed the standard of price. This is a purely monetary matter and is in the end just a question of definition, of the weight of the money-commodity named by the word 'pound'.

The general level of prices can also change for real economic reasons as well as through the action of a government, intended or otherwise. If the amount of socially necessary labour required to produce an ounce of gold changes — if its value changes — then the prices of all other commodities are necessarily affected. To come back to our example of four blankets equal to one ounce of gold, we saw that this meant that four blankets and one ounce of gold contained the same amount of socially necessary labour, let us say five hours. Suppose that as a result of a new mining machine the average time it takes to produce one ounce of gold falls by ten per cent, to 4½ hours, while the time taken to produce four blankets remains unchanged. Four blankets will now no longer tend to exchange for one ounce of gold but for the amount of gold that can now be produced in five hours, 1.11 ounces. Since no government monkeying with the currency is involved here, 'pound' remains the name of one ounce of gold, so the price of four blankets now rises to £1.11. This happens to the price of all other goods too. This has in fact occurred a number of times in history, the last being in the thirty years up to the First World War when the value of gold fell due to the opening up of the South African and Alaskan gold mines.

A rise in the value of gold, on the other hand, due for instance to geological difficulties in working mines as they get older, would have the opposite effect, leading to a fall in the general level of prices.

The amount of money in circulation — the total weight of the coins made of the money-commodity (say, gold) which circulate as the currency — is determined by the workings of the economy and depends on three factors and their changes in particular:

1. the number of buying and selling transactions to be carried out, or the level of economic activity;
2. the total of the prices of the goods and services involved in these transactions (reflecting their value as measured by the amount of socially necessary labour they contain);
3. the average number of transactions carried out by a single coin in a given period (since coins of course circulate and are not cancelled after use), or the 'velocity of circulation' of money.

Other factors can be introduced, such as the number of debts to be settled and taxes, to be paid, and their amounts, but the basic formula is:

• Amount of money (total weight of gold) needed =
• Number of transactions x total price Velocity of circulation

This has been expressed algebraically as M = TP/V, and is known in the history of monetary theory as the Quantity Theory of Money.

Various versions of it exist, not all of which are correct. But if it is understood not as an equation but as a formula for what determines the amount of money (weight of gold coins) needed by the economy, then it is a key concept for understanding inflation. For it is saying that the amount of money needed by the economy at any time is a real economic fact determined by other economic facts, and as such not something that can be changed at will by government action. In fact it continues to be valid even when gold itself does not circulate as the currency and has been replaced in this role by paper and metallic tokens.

Adam Buick

1. "A relation between a weight of metal and the value of an object" is how Belgium's leading economist, Fernand Baudhin, who died in 1977, defined price in his Dictionnaire de l'économie contemporaine (1973 edition).

2.  This of course is an unreal example, but the mathematics is easier to follow.

Link to Part 2.