Friday, November 1, 2019

Between the Lines: Simon’s war (1985)

The Between the Lines column from the July 1985 issue of the Socialist Standard

Simon’s war
Most of us experience war only through the medium of television. Too often it is presented as a ninety-minute, small-screen fiction — an appealing and heroic adventure which depicts "Our Boys" kicking hell out of those who dared to affront the Nation. War films glorify killing and condition innocent viewers to imitate the violence they see — but only when the state requires them to. Needless to say, moralising Mary Whitehouse and her crowd of repressed would-be censors are more concerned to ban explicit acts of love from the screen than the filthy portrayal of war. Copulation is regarded as an obscenity, which affects impressionable minds, but legally sanctioned guns and bombs seem not to offend.

All of this comes to mind after watching a repeated QED documentary called Simon's War. In an unpretentious way, it showed the horrors of legalised violence better than many a more politically-motivated documentary might have done. It was the moving story of Simon Weston, a Welsh Guardsman on board the Sir Galahad when it was hit. Forty-six men died, but Simon lived — in a sense. He was not one of the forty-six whom the government (and the loyal Opposition) need have on their consciences. He survived with 46 per cent burns to his body — mainly on his face and hands injuries described as "minor" by the Ministry of Defence when breaking the news to his parents.

The opening-shots showed the patriotic parade of whipped-up lunacy which preceded the pain — flags waving, wives crying, children bewildered. and bands playing. And then off they went to perform their violent duty to the tune of the national anthem. Next scene: the dead and dying being airlifted from the area of slaughter. Cameras beside a stretcher in the military hospital showed the anguish and recorded the screams of pain of the soldier whose injuries they had decided to make a documentary about. The film then followed Simon's struggle to come to terms with the severe physical and emotional injuries which had been inflicted on him. Physically, he has been transformed from a robust, able lad who used to be a good rugby player. Emotionally, he has been stripped of his independence and turned into a hideously deformed person who is frightened of scaring his own nephew. He returns home to Nelson in Wales for a birthday celebration, but is too weak to spend the evening in the social club where he used to be "one of the lads". An old mate comments, after seeing Simon: 'I couldn't say nothing to him. I just felt like throwing up and crying." During the period covered by the programme Simon's girlfriend, who was going to marry him. ceases to be his girlfriend. These are the consequences of war — good old conventional war, remember — which don't always make the columns of the Sun. Towards the end of the programme Simon is seen at a medal-giving parade, standing to attention before the arch-parasites, the Princes Philip and Charles. As they inspect the damage to their subjects there is a voice-over, with Simon summing up his predicament: "It's all part of war really . . . I’m just a working guy who tried to do his job and got injured."

Simon's War should be compulsory viewing for every young worker who is thinking of joining the army. Let them see what it means to survive in a war: let them know what they will be asked to sacrifice in order that a minority may grow richer and stronger; let them hear the cries of pain, which are but echoes of strident nationalist rhetoric. After the Falklands war they called Margaret Thatcher the Iron Lady. But iron doesn't burn; skin does.

Terrace war
In the South Atlantic workers were paid and given medals for behaving like thugs. In Brussels, where the actions of certain so-called football supporters led to thirty-eight deaths, the violence was not ordered by the government and we are therefore expected to be full of condemnation.

Turning on the football only to watch a two-hour riot was a miserable experience. Here were workers wasting their energies in a fool's war between one set of wage slaves and another. The sport experts in the studio, led by Jimmy Hill, became more and more like propagandists for state violence. Hill proposed bringing back national service; the studio team agreed. Terry Venables suggested giving all football hooligans a minimum prison sentence of five years; there was no dissent from his fellow pundits. From the stadium in Brussels, the Ayatollah Bobby Charlton proposed a revival of good old corporal punishment. This is what happens when sports commentators panic and become so frightened by the ugly symptoms of the present system that they have no concern for the cause. The crescendo of repressive propositions coming from the TV set that night showed just how easy it is for fear to give rise to totalitarian solutions. And television allows the cultivation of such collective hysteria to be even more controlled by the state than it was in Europe in the 1930s.

Millions of people have been trained to think about what they buy through advertising slogans. They go into the grocer for a packet of "exceedingly good cakes" and some "prolongs active life" for the dog; in the sweet shop they pick up a "helps you work, rest and play" bar and perhaps "Just one Cornetto" — to the approved tune, of course; then on to the travel agent to book two weeks in Benidorm with "Well take more care of you"; down to the garage to pick up the "Vorsprung durch Technik" and fill it up with a few gallons of the petrol which "you can be sure of". It is hardly surprising that a buying and selling society has taught the consumers to go in for commodity-talk. Think of all the language we'll lose in a world of free access: no more mindless slogans and jolly tunes to persuade us to buy shoddy brand A rather than bargain brand B. In a moneyless society I suppose we will have to learn to survive without the ad-men telling us what we want.
Steve Coleman

Questions Answered (1985)

From the July 1985 issue of the Socialist Standard
You in the SPGB agree with and teach the Materialist Conception of History and the Labour Theory of Value. You kicked off in 1904, but what have you contributed to the Socialist Movement, what else have you learnt or taught?
Before answering this question it is appropriate to state what the Socialist Party of Great Britain has not done. The problems facing the working class under capitalism broadly come under the headings War, Want & Insecurity.

The British capitalist class have been involved in two major wars in this century. The SPGB has not encouraged the working class to lay down their lives to maintain British capitalism or to defend the revolution, "gone wrong” or not, in Russia. In the First World War we issued a statement pointing out that war was endemic to capitalism and that only socialism could end war:
  Having no quarrel with the working class of any country, we extend to our fellow workers of all lands the expression of our good will and socialist fraternity, and pledge ourselves to work for the overthrow of capitalism and the triumph of socialism.
In the 1914-18 war the Labour Party urged workers to fight in order to “crush militarism and end all war". It supported the 1939-45 war for "freedom and democracy". and promised a programme of social justice after the war. Organisations "left" of the Labour Party either supported the war to defend Russia, or because they thought the Russian revolution was socialist but had taken the wrong path and needed to be preserved to get it back on the correct one. The SPGB in 1918 had pointed out that Russia could only develop state capitalism — a fact widely accepted today.

Want & Insecurity are both endemic to capitalism. When the Beveridge Plan was proposed, workers were to be given the princely sum of £2 a week benefit. Conservatives and Liberals endorsed this amount. The Labour Party, the Communist Party and the Tories entered the market offering £2.10. £2.50 and £3 benefit respectively. The SPGB issued a pamphlet Beveridge Re-Organises Poverty. How right we were. Another policy in the left s attack on want is nationalisation; they all advocated it, and trade unionists supported it thinking that industries were being brought under common ownership and that they would take part in the control of their industry. The SPGB has continually pointed out that nationalisation is not socialism, but state capitalism. There is no evidence that nationalisation has guaranteed security for the worker. In some respects the worker is worse off, having no alternative employer.

With the fear of atomic annihilation and the periodic crises of capitalism, increasing the unemployed from hundreds of thousands to millions, in no way can it be argued that workers are any more secure today through the efforts of Labour governments. They have instituted reform after reform, but they have been powerless to remove any problem facing the working class.

Marx had another theory as well as the two mentioned in the question: the Theory of the Class Struggle. In any suggested political, social or economic programme the socialist asks: "What is in it for the working class as a whole in the long run and what are the consequences for the capitalist class?" The capitalist class want their system to run smoothly and so will offer reforms that may give temporary benefit to a section of the working class. Similar reforms advocated by organisations that have mass misguided support from the working class may also be acceptable to the capitalists. This is the reason why the parliamentary parties keep complaining that the other parties have stolen parts of their programme. Reforms do not change the basic structure of capitalism and do not endanger the class ownership of the means of production and distribution.

We have learned the correctness of the analysis of capitalist society made by our founder members, and which they detailed when they compiled the Object and Declaration of Principles.

We have taught:

  • That the capture of political power is essential before any fundamental change in the social system can be made.
  • That leadership is a necessary principle for capitalist society whereas the socialist revolution requires the conscious understanding and participation of the majority of the working class.
  • That a socialist party cannot advocate reforms of capitalism, must not encourage support from non-socialists. and must be independent of all other parties.
  • That socialism can only be a world-wide system, and therefore must be a world wide (not inter-national) movement; to this end the growth of companion organisations in the USA, Canada, Australia, New Zealand, Ireland, Austria, Sweden, as well as members in Belgium and France, demonstrates the developing geographical spread of socialist ideas.
  • That there is no need for a transition period between capitalism and socialism.
  • That all wars must be opposed, without distinction between alleged wars of defence, offence, or opposition to tyranny.
  • That nationalism will not exist in socialist society.
  • That taxation is a burden on the capitalist class and not on the working class, whose take-home pay must approximate at least to the minimum of wages in order to reproduce the commodity labour-power.
  • That all Socialist Parties in different areas of the capitalist world must be open, democratic parties, with no leaders, no closed or secret meetings, with all members of equal footing, operating by majority decision, and thus demonstrating the society they seek to establish.
  • That capitalism will not collapse of its own accord, but crisis will follow crisis until the working class of the world unites to abolish it.
Ken Knight

Tiny Tips (2012)

The Tiny Tips column from the February 2012 issue of the Socialist Standard

The majority of psychiatrists, psychologists and other mental health professionals “go along to get along” and maintain a status quo that includes drug company corruption, pseudoscientific research and a “standard of care” that is routinely damaging and occasionally kills young children:

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If the federal minimum wage had been updated since 1974 using the Social Security yardstick, it would now stand at $10.74 an hour. In other words, after adjusting for inflation minimum wage workers today are paid less — about 26 percent less — than they were in 1974:

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Rape within the US military has become so widespread that it is estimated that a female soldier in Iraq is more likely to be attacked by a fellow soldier than killed by enemy fire:

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The number of empty houses in England has risen by nearly 12,000 to stand at 662,105:

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Homeless men live to an average age of 47 while women who live rough generally die four years earlier, new figures show:

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“At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles.”

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She holds in even greater contempt the Islamist parties that have emerged in the first rounds of Egypt’s elections as the revolution’s biggest winners. Though a devout Muslim who covers her hair, she thinks politics and religion shouldn’t mix. The Islamists, she says, “have hijacked the revolution.” “I hate them,” she says. “The real owners of the revolution are the workers.”

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With over 20 million internet users and growing fast, Pakistan has managed to secure the number one slot for searching the term ‘sex’ globally for all years:

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Airlines’ accident risk is highest when they are performing very close to their financial targets, according to a study by a professor in BYU’s Marriott School of Management:

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Software developed for closed-circuit television systems can identify individuals and track them across entire networks of cameras:

Greasy Pole: Getting on at Westminster (2012)

The Greasy Pole column from the February 2012 issue of the Socialist Standard

How would an ambitious politician make their way in the world if not through attracting the maximum of attention to themselves? Regardless of the effect on our limited reserves of patience and of the cruel reality that whatever attention they get only reveals their self-publicity as a substitute for any kind of talent?

Louise Mensch is the Conservative MP for Corby in Northamptonshire, a seat which she wrested from Labour junior minister Phil Hope (whose talents include tap-dancing and juggling) in the 2010 election. Corby was a steel town stricken with unemployment when the industry was shut down in the early eighties. Mensch benefited from David Cameron’s controversial “A” list designed to ensure that Tory constituencies select their candidates free of any bias about their race or gender. One of their MPs protested about the party choosing such a “minor celebrity” – possibly a reference to Mensch being the author of (and making a lot of money from) a series of “chic-lit” novels with names like Glitz and Glamour. Since arriving at Westminster she has arranged to have herself persistently in the news, among other things aligning herself as one of a group of “Tory feminists” who may have had their reservations about a member who profited so well from what she described as ”escapist female fantasy”. Similarly in 1998, when she was in the United States churning out another of her financial masterpieces – Venus Envy – she wrote in the Daily Telegraph about her intention to flush out a suitable husband. This produced an acceptably wealthy property developer, Anthony LeCicero.  He was replaced in 2011 by Peter Mensch, promoter of rock stars, who aroused in her “strong feelings of hero-worship”.

Tory and Labour
Born into a family described as “Catholic gentry”, with a stockbroker father, Mensch was prepared by boarding school in Surrey for the boisterous style of her employment and political career. When she was 14 she was inspired enough by Margaret Thatcher to join the Conservative Party but after about ten years she was equally impressed by Tony Blair as “socially liberal but an economic Tory” and switched to the Labour Party, only to return to the Tories a year later. Justifying these changes, bewildering even to anyone who had been able to follow them, she said, “I’m proud to say I was once in the Labour Party. It shows I think for myself…” which was rather weakened by “…but I don’t judge anyone, and I don’t like politicians who do”. During this time she was working in the press office of EMI Classics, from which she was later fired because she was said to be a “bad influence” on their client, the famous violinist Nigel Kennedy. The matter of who was being influenced was confused by the allegation that they had been taking drugs together in a night club – which, she agreed, “…sounds highly probable …we all do idiotic things when we are young” – the same evasion as used by David Cameron when that same question was put to him.

Commons Committee
But how has she fared in her new, exciting job as a representative of the people at Westminster? Her most prominent role has been as a member of the House of Commons Culture, Media and Sport Committee which at one time might have been a kind of refuge for insomniac Members but now, with the probing of the Murdoch empire’s phone hacking, has become a focal point of popular attention. Well, Mensch has been alive to the opportunity before her, casting off that avowal about not judging others while she busily probed and condemned, so that the normally staid Economist  eulogised her as the: “surprise star,” with her “sharp, precise, coolly scornful questions”. Perhaps this praise was too much for Mensch for she was impulsive enough to say in the committee that the ex-editor of the Daily Mirror, Piers Morgan, had stated in his autobiography that in that job he oversaw phone hacking. Morgan angrily challenged this but Mensch refused to back down and tried to take refuge in parliamentary privilege, making matters worse by misquoting a page from Morgan’s diaries. Eventually she had to withdraw her accusation and retire to soothe her wounded conceit. Until, that is, she popped into the news again after the August riots in London and elsewhere, suggesting that at times of such crises the Twitter and Facebook services should be closed down to prevent them being used as a method of summoning and directing the rioters. She did not seem to be aware, until it was gently pointed out to her, that the police use those services themselves at such times.

The anti-capitalist demonstrations outside the Stock Exchange and St. Paul’s gave Mensch another chance to expose her impetuous need for self-exposure when during the 22 October edition of Have I Got News For You she complained that while the demonstrators claim to oppose capitalism they are happy to accept what the system brings to them: for example coffee from the nearby Starbucks and nights spent in “very smart tents” on the pavements. The Have I Got News For You  regulars Ian Hislop and Paul Martin had problems dealing with such a naïve, ignorant, undeveloped argument so that at one stage Hislop said he would have to give up trying: “It’s all so obvious,” while Mensch did her best to conceal her chagrin behind a succession of grotesquely fixed and humourless “smiles”. For some politicians the experience of repeated exposure to such ridicule and contempt might have been overwhelming, but Mensch is driven by an unusual energy. A couple of months later she was whinging to GQ:  “I’m not even a Parliamentary Private Secretary. It’s kind of annoying. What do I have to do to get promoted here?” Well perhaps she might start by recognising that she has chosen to immerse herself in the business of capitalist politics where remorseless failure has seen off so many before her. Then she might make a clean breast of it to the voters of Corby.

Where Money Comes From: A Reply to the New Economics Foundation. (2012)

Book Review from the February 2012 issue of the Socialist Standard

In a 140-page booklet entitled Where Does Money Come From? the New Economics Foundation (NEF), a greenish think-tank, set out to refute one theory of the nature of money and banking and replace it by another which they consider more accurate.

“What is Money?” is not just a question of fact but of definition. “We disagree with the view of money as a commodity,” says the NEF, “and show instead that money is a relationship of credit and debt” (p. 9). More boldly, they declare “money has never been a commodity” (p. 51).

In Classical Political Economy (Adam Smith, David Ricardo, John Stuart Mill), and in Marx too, a commodity is an article of wealth produced to be exchanged. Wherever commodity-production has been widespread one commodity has emerged that can be exchanged for any other commodity. To be able to be such a “universal equivalent” this commodity must have its own intrinsic value, i.e. must also be the outcome of a certain amount of labour; otherwise nobody would exchange the product of their labour for it.

Other commodities have functioned as the universal equivalent, but in the end it was the precious metals, gold and silver, that proved the most convenient (because of their divisibility and their concentration of value in a relatively small bulk). To make things even more convenient states eventually stamped pieces of gold and silver as a guarantee of their weight and value. Hence coinage, which is still the popular idea of what money is.

To deny that the commodities that have functioned as a universal equivalent were “money” is to give a quite new definition of what money is. The NEF don’t deny that to be called “money” something has to be, as in the traditional definition, a medium of exchange, a store of value and a unit of account.

If they had just claimed that, today, money is not a commodity, they would have had a point. But to claim that no commodity has ever served as a medium of exchange, store of value and that accounts have not been kept in units of it, is clearly at variance with the historical facts. But, to sustain their definition that money is essentially a “social relationship of credit and debt”, they had to make this extravagant and historically incorrect claim. They are right, however, to see money as a social relationship but it’s one between buyers and sellers rather than creditors and debtors.

It is true that it does seem strange to still describe money today as a “commodity”, even though modern money does have a commodity ancestry. Modern money consists of paper notes and metallic coins that are accepted in payment (of taxes and debts as well as to buy things). These notes and coins have virtually no intrinsic value; they are like all-purpose, re-usable vouchers that can be used for any payment, just as the old commodity-money (such as gold) could be. We know where they come from: the state, which issues them via its central bank or finance ministry, and makes their circulation and acceptance compulsory. Because such money is entirely a state’s creation it is sometimes called “fiat” (“let there be”) money.

Purchasing power
“Money” and “purchasing power” are not the same. If they were, the total face value of the currency would have to be equal to the value of all the newly produced wealth. One feature of money (in the classical sense) is that it circulates: one coin or note can be used for many transactions. Hence the concept of the “velocity of circulation” of money. The amount of money needed by the economy to make payments is thus not the total value of these payments but this divided by the velocity of circulation of money.

One thing banks do is to reduce the need for cash. They have done this ever since, in the 17th century, they became an important feature of the capitalist economy. In addition, through clearing houses, they settle payments without the actual transfer of cash. Nowadays the vast majority of transactions are made through banks using cards, cheques and bank transfers, with cash (notes and coins) reduced to being the small change of the economy.

What this means is that today most purchasing power is exercised via the banks. But can banks create extra purchasing power that did not exist before? The NEF are in the tradition of economic thinkers (and monetary cranks) who have said “yes”. In the past the argument used to be that banks could create extra purchasing power in the form of “credit”.  Nowadays, as the distinction between deposits in banks made by savers and deposits created by banks for borrowers has become blurred, the same idea has come to be expressed by saying that banks can create new “money”.

Though this looser definition of money is popular today, even those who favour it feel obliged to distinguish between traditional money (today, notes and coins issued by the state) which they call “base money” and “bank money” (bank loans).

Calling bank loans “money” instead of “credit” doesn’t alter the facts. When banks make a loan, or extend credit, they do enable idle purchasing power to become effective; they do allow spending to take place – which is something that modern governments do strive to control. But the basic question remains: when banks make a loan do they create new purchasing power?

Purchasing power is generated in production as added value and is distributed in the first instance as the wages and salaries of productive workers and as the profits of capitalist firms. A large proportion is later redistributed by the state as “transfer payments” to others, via taxes and public service salaries, pensions and other state payments. But National Income (total new purchasing power) and National Product (total new value added) are always equal (there is no built-in or chronic shortage of purchasing power compared to new production, as economic theorists known as ‘underconsumptionists’ claim).

Some of the purchasing power is saved (not spent) by the recipient on consumption. When income is saved it is not simply hoarded. It is typically deposited in a bank or a building society. The bank doesn’t hoard it either. It lends it to someone else to spend: to capitalist firms to expand production; to the government; or to workers (to buy a house or a car or a holiday). It should be clear, then, that such bank loans come out of income (purchasing power) that others have saved (refrained from spending themselves).

Banking a fraud?
This, however, is not clear to the NEF. In fact, they vehemently deny that this is the case. They attack the view that banks are financial intermediaries whose core activity consists of “taking money from savers and lending it to borrowers” and even criticise the recent Independent Commission on Banking for accepting this view. They declare:
“private banks can really create money by simply making an entry in a ledger” (p. 5).
“when a bank makes a loan it does not require anyone else’s money to do so” (p. 21).
“Banks create brand new money whenever they want by extending credit or buying assets” (p. 100).
“Those with the power to create new money have enormous power – they can create wealth simply by typing figures into a computer” (p. 51).
That banks can lend something they haven’t got is an extravagant and extraordinary claim. The NEF attempt to trace this back to goldsmiths in seventeenth-century London who, they claim, as custodians of other people’s money, adopted the practice “of issuing deposit receipts to a value greater than the value of the deposits the custodians actually possessed – a practice that would later be described as fractional reserve banking” (p. 35).

If goldsmiths did do this, it would have been fraud. In theory they could have done but there is no historical evidence that this was the normal and widespread practice that the NEF and others allege it was.

Because they think that banks today behave like they imagine the London goldsmiths did, the NEF describes modern banking as an “innocent fraud”. They have also misunderstood the nature of “fractional reserve banking”. It merely means that anyone taking in someone else’s money can safely lend only a proportion of it, a “fraction” having to be retained as a “reserve” against likely withdrawals.

The NEF claims that, “commercial banks can be seen to generate ‘special profits’ from their power to issue money in the form of credit through the interest charged upon loans and used overdraft facilities” (p. 68) and that “bank loans are rather special since they do not cost the bank anything to create, but the bank can charge very profitable rates of interest on them”. (p. 97)

But there is nothing special about bank profits compared to those of other businesses. Banks do not make their profits by charging interest on loans they conjure up out of thin air. Their income comes from the difference between the rate of interest they charge borrowers and the lower the rate of interest (if any) they pay savers. Their profit is what remains after they have paid the expenses of the business (buildings, computers, staff salaries).

Incredible credit unions
Any organisation that lends other people’s money has to keep a part of what is deposited with it as cash but can lend the rest, and so practises “fractional reserve banking”. The NEF does not shrink from this logical deduction from their position and asserts that banks are not the only organisation that can create money (new purchasing power) out of nothing:
 “Building societies and credit unions also have the right to create money through issuing credit” (p. 18).
A credit union, as a mutual society in which members save and lend to each other, is a good example to judge whether or not a lending organisation can lend more than has been saved with it. Merely to pose the question is to answer it – with a ‘No’. The only source of what a credit union has to lend is what its members have paid in; the loans it makes come entirely out of this.

Suppose that a credit union tried to lend more than had been saved with it. If its loans were payable in cash, clearly it would be impossible to hand out more cash than it had. If the loan were paid out by a cheque or some other kind of money order, if more of these were issued than the union had in savings then not all of them would be able to be honoured. The union would go bankrupt. The same would apply in the case of electronic transfers.

Building societies were originally like credit unions – members saved to be able to later get a loan to buy a house, their money in the meantime being loaned to other members to buy one – but these days they accept savings from anyone. But what they can lend is still limited by what has been saved with them. Building societies are in competition with each other and with banks to attract savings. If they could simply give a loan by typing figures into a computer then they wouldn’t be under such competitive pressure.

Banks are no different in principle from building societies and credit unions, although the link between savings with them and the amount of loans they can give is perhaps not so obvious. They can lend more than has been saved with them, but only by borrowing from elsewhere (“wholesale” from the money market, as their jargon puts it).

Banks cannot create extra purchasing power; they can only redistribute it from those who don’t want to use for the moment (“savers”) to those who need money to spend immediately, whether for consumption or investment (which is really spending on production). Contrary to what the NEF asserts, banks essentially are financial intermediaries.

Central banks
The NEF seems to have been carried away by its own arguments when it claims that commercial banks (and, by inference, credit unions) create new money not only when they make a loan but even whenever they spend any money, as on buildings, computers and the wages and salaries of their staff:
 “the bank creates new money when it buys assets, goods or services on its own account, or pays its staff salaries or bonuses” (p. 57).
This is an own goal as it would mean that to set up a bank you wouldn’t need any capital. You could go to an internet café, conjure up some money by typing some figures in a ledger and then spend it to buy a building and hire staff, which is ridiculous.

There is, however, one type of bank that can and does do this – a state’s central bank. A central bank can create purchasing power out of thin air and use it to acquire assets, as recently with so-called “quantitative easing”. However, this action does not create any new wealth (that can only be done by people actually working, not by any bank operation). It is popularly called “printing more money” but this does not necessarily involve in the first instance actually printing more bank notes. The new purchasing power is created in the way the NEF mistakenly thinks commercial banks can do it, electronically as digital money, though with quantitative easing it is a temporary phenomenon.

Banking is neither a form of magic nor a fraud. Those who believe that it is (and the NEF is far from being alone in this) are led to waste their time campaigning to reform something which doesn’t exist. In fact, the situation most of them want to achieve – control of the creation of nominal purchasing power by the government instead of by private bodies that profit from it – is what already exists but they can’t see it.
Adam Buick

Cooking the Books: Profitability (2012)

The Cooking the Books Column from the February 2012 issue of the Socialist Standard

Every quarter the Office for National Statistics (ONS) publishes figures for the ‘profitability’ of UK non-financial companies. The latest are for the third quarter of 2011. They showed that the “net return on capital employed” for all companies was 12.9 percent. For manufacturing it was 5 percent, for services, 15.9 percent and for North Sea oil and gas companies, 60.5 percent.

Over the last ten years the annual average has been around 16 percent for services and 9 percent for manufacturing.

Why the difference between these two sectors? Surely, according to the way that the competitive profit system that is capitalism works, capital should flow out of manufacturing and into services until the rate of profit is the same for both, as Marx explained in the section of Volume III of Capital on the averaging of the rate of profit.

The explanation lies in the fact that the rate of profit used by the ONS is not the same as in Marx.

There is no problem with the definition of ‘profits’ which are defined as “that part of a company’s income which arises from trading activities” less depreciation but “before payments of dividends, interest and tax”. It’s “capital” that is the problem. Here’s how the ONS calculates ‘profitability’:
 “Profitability is defined as the net rate of return on capital employed. That is, it is the value of profits (allowing for depreciation) divided by the value of fixed assets (allowing for depreciation) and inventories.”
In other words, “capital” is defined as fixed assets, i.e. buildings, machinery, office equipment and the like, or “fixed capital”. But this is not the only part of capital as it excludes “circulating capital”, i.e. the capital invested in what is entirely used up in the course of production (material, power, labour).

Marx divided capital in another way. That part whose value was only transferred, whether wholly or gradually, to the product (which he called “constant capital”) and that invested in employing productive labour (which he called ‘variable capital’ because, besides transferring its own value, it added new value).

So, the rate of profit in Marx is the ratio between profits and total capital while the ONS’s rate is the ratio of profits to fixed capital only. This is not even how companies calculate their rate of profit and its only usefulness would seem to be to record short-term variations in profits.

The different rates that the ONS formula results in for service and manufacturing companies does, however, neatly illustrate another point Marx made.

Marx argued that because the tendency under capitalism was for constant capital (mainly fixed capital) to increase more than variable capital (productive labour) – in economic textbooks, ‘capital intensity’ – and because variable capital alone generated profits, there was a tendency for the rate of profit to fall. This could be shown mathematically but wouldn’t necessarily happen in practice since there were counter-acting tendencies, notably an increase in the exploitation of labour and the cheapening of fixed capital.

Since manufacturing is more ‘capital intensive’ than services, if you compare profits to fixed capital you would expect this ratio to be less in manufacturing. Which is precisely what the ONS figures show.

How explain, then, the huge ‘rate of return’ on fixed capital in North Sea oil and gas which is a more capital intensive industry than most? It’s that most of their ‘trading profits’ are ground rent rather than profits proper.

Oil and gas have the same price on the world market wherever they are extracted but the difficulty and so the cost of extraction varies depending on geological conditions. The price is set by the most costly oil and gas fields, which means that the less costly ones get an extra, windfall profit that is actually ground rent. In Saudi Arabia and the Gulf States it goes to enrich the despots there. In Russia, it has created oligarchs. In Britain, it is largely taxed away by the government.

Fancy a Pint? (2012)

The Proper Gander TV column from the February 2012 issue of the Socialist Standard

How many of us unwind after yet another unfulfilling day of wage-slavery with a glass or two of temporary escape? Alcohol is one of our coping strategies, but it’s also, of course, a great social lubricant. Pubs, bars and clubs just wouldn’t be the same without “the magic liquid that unlocks the door to the human heart”. And our drinking takes place in a context of the “unwritten codes and rituals” which govern what, when and how we drink. BBC4’s documentary The Rules of Drinking took us on a pub-crawl through Britain’s boozing habits. Along the way it showed how the etiquette around alcohol has changed over the last seventy-odd years.

For example, our place in society has often been reflected in what we drink. Programmes like this rely on generalisations. So, if you’re a miner wanting to wash your throat of grime from t’pit, then you’d choose beer. If you’re a demure debutante, then you’d sip cocktails until you got terribly squiffy. And if you’re a twenty-first century teenager, then it’s nine pints of lager, two flaming sambucas and enough vodka to drown an elephant.

The programme also showed how alcohol’s etiquette extends to how we drink. In working men’s clubs, beer and whisky was the usual tipple for everyone, so your status within the club was reflected in where you drank it. Apparently, the younger members would stand on the lino until they were invited to stand on the carpeted section by one of the older clientele, a sign that they had been accepted. Women usually only stood behind the bar.

Nowadays, we’ve gone back to drinking the same amounts as before the First World War, albeit in different ways. Keeping up with other social changes, the rules around drinking have became less rigid over the decades – cue inevitable footage of plastered twentysomethings vomiting up alcopops in the gutter and picking fights with double-decker buses.

Even when alcohol is used to try and blot out the pressures of capitalism, the ways we drink it still reveal something of our class position. Documentaries like this can get away with glossing over the details as long as they distract us with enough archive footage of garish 70s dinner parties or men in flat caps. And The Rules of Drinking served up enough enjoyable old shots to get you drunk on nostalgia.
Mike Foster

Voice From The Back: The Socialist Alternative (2012)

The  Voice From The Back column from the March 2012 issue of the Socialist Standard

The Socialist Alternative

It is difficult to imagine someone disputing Professor Hawking’s views on cosmology or theoretical physics, but some of his other views are open to challenge. ‘It is possible that the human race could become extinct but it is not inevitable. I think it is almost certain that a disaster, such as nuclear war or global warming, will befall the earth within a thousand years,’ Professor Hawking, the Cambridge University cosmologist and theoretical physicist said. ‘It is essential that we colonise space’ (Daily Telegraph, 6 January). Rather than wait a thousand years for space colonisation we think a more realistic view is to change the basis of society now from one of production for profit to one of production solely for use.

Malaria And Social Madness

There are many reasons for the world’s working class to get rid of capitalism. Here is one of them. ‘Worldwide malaria deaths may be almost twice as high as previously estimated, a study reports. The research, published in the British medical journal the Lancet, suggests 1.24 million people died from the mosquito-borne disease in 2010.This compares to a World Health Organisation (WHO) estimate for 2010 of 655,000 deaths’ (BBC News, 3 February). While billions of dollars are spent world-wide in armaments to destroy human lives, capitalism refuses to spend a few pennies on mosquito nets that could save over a million lives a year.

Distorted Values

For want of a few pence, children are dying of lack of clean water and millions die every year from malaria when all that is needed to prevent it is a mosquito net. Yet millions are spent by parasitic capitalists on their stamp collection. ‘Printed in Sweden in 1855, the tiny Treskilling Yellow is thought to be the most valuable thing in existence by weight and volume. Weighing just 0.03 grams, the three-shilling stamp is now worth £5m. It is so prized because it was printed in yellow by mistake, and should in fact have been green’ (Daily Telegraph, 21 January). It speaks volumes for the values of capitalism when the health of millions is valued less than a scrap of paper.

Behind The Diplomacy

The Philippines is in talks with the Obama administration about expanding the American military presence in the island nation. An arrangement would follow other recent agreements to base thousands of U.S. Marines in northern Australia and to station Navy warships in Singapore. Under each scenario, U.S. forces would effectively be guests at existing foreign bases. ‘The sudden rush by many in the Asia-Pacific region to embrace Washington is a direct reaction to China’s rise as a military power and its assertiveness in staking claims to disputed territories, such as the energy-rich South China Sea’ (Washington Post, 7 February). Behind the niceties of diplomacy lies the naked economic drive of modern capitalism.

A Strange Sort Of Advance

Some years ago with the advent of advanced technology many workers were promised that the working week would be cut drastically, but capitalism just doesn’t work that way. ‘Workers in the digital era can feel at times as if they are playing a video game, battling the barrage of emails and instant messages, juggling documents, Web sites and online calendars. To cope, people have become swift with the mouse, toggling among dozens of overlapping windows on a single monitor. But there is a growing new tactic for countering the data assault: the addition of a second computer screen. Or a third. This proliferation of displays is the latest workplace upgrade, and it is responsible for the new look at companies and home offices – they are starting to resemble mission control’ (New York Times, 7 February). For many office workers the advance of technology has meant more arduous working conditions, not easier ones.

Rolling In It

At a time when unemployment is rising and many companies are feeling the economic pinch it is not all doom and gloom for investors. ‘Another year another bumper set of figures for investors in Rolls Royce. … Analysts have pencilled in £1.2 billion of profits on £11.4 billion of sales, increases of 16% and 5%, respectively’ (Sunday Times, 5 February). It is reassuring no doubt for the unemployed that the owning class can still lord it over us in their splendid new Rollers.

Material World: Hong Kong (2019)

The Material World Column from the November 2019 issue of the Socialist Standard

Hong Kong: the struggle for political democracy

Socialists can only applaud when workers around the world struggle for political democracy and freedom to organise as this is essential for the eventual struggle for socialism. After all, if workers are not willing to struggle for what they hold to be legitimate democratic rights, they are unlikely to strive for the transformation of society, or have the wherewithal to effect that transformation.

In Hong Kong, hundreds of thousands have carried out a campaign to protect and extend the limited democratic rights which were granted to them when the People’s Republic of China took it over in 1997 under an agreement called ‘one country, two systems’, where there is extensive devolution of administrative powers giving Hong Kong a degree of limited sovereignty. Due to anomalies this created, Beijing pressured the Hong Kong Legislative Council to amend some of their legal independence and permit the extradition of suspects to mainland China to face trial. This was perceived as undermining the freedom of political dissidents. The extradition bill has been withdrawn yet the protests continue unabated. They have now evolved into a direct challenge to Beijing as well as to the local authorities. Protesters are provocatively using slogans such as ‘Free Hong Kong’ and ‘Hong Kong is not China’. This battle for basic political democracy is a battle against authoritarianism and to take the power out of the iron grip of Hong Kong and Chinese elites and – or so is the hope of the demonstrators – place it in the hands of ordinary people.

The protests are a repetition of the 2014 Umbrella Movement but because of the informal amorphous structure of the 2019 protests it is proving harder for the authorities to clamp down upon it. They organise through social media on the instant messaging apps like Telegram, on dozens of Instagram sites and online forums. There are no high-profile leaders to arrest. Unlike those 2014 protests, when leaders like Joshua Wong became widely known, activists are deliberately staying anonymous, using pseudonyms, making it difficult for the authorities to effectively target. It is a movement without leaders. Alex Chow, one of the 2014 leaders at the time, had the premonition that ‘People will come back again, and they will come back with stronger force’ and concerning the present movement, he confirms it is leader-free. It’s not an issue of having ‘no leader, it simply means that everyone is a leader,’ one 22-year-old Hong Kong student was reported as saying.

There are those on the Left who equate anti-capitalism with anti-Americanism and so claim that those involved in the Hong Kong democracy movement are being manipulated by the CIA and its many fronts. Some protestors have been highlighted who, in an effort to lobby for diplomatic support and a means to capture the attention of the global media, waved the Stars and Stripes and others sang the British national anthem, ‘God Save the Queen’. For sure, some countries seek to take advantage of the political instability but to assert that the protesters are pawns being controlled by foreign powers is a wild exaggeration. Some governments might support the protests in Hong Kong to advance their own interests, but it doesn’t mean that the whole movement is promoted by them. What is disappointing but not unsurprising is that the protests are not resonating with mainland Chinese, who also believe that the protesters are dupes of Western propaganda, with Beijing concentrating its reporting on the violence of the demonstrators.

‘Be water!’ is an expression protesters have deployed, a phrase borrowed from Bruce Lee, who used it to describe his kung fu known for its flexibility and creativity to press an advantage and pull back when a strategic retreat is needed. It reflects the flash mob strategy being employed to confront the police. However, the demonstrators need to guard against inevitably self-defeating violence that suffering and resentment are so likely to prompt. Non-violent resistance is a more effective method. A non-violent movement that challenges a well-entrenched dictatorship must be prepared for a long struggle and numerous casualties. After all, only one side is committed to non-violence. To combat despots with violence is to cede to them the choice of battleground and tactics. Amateurs using violence against experts is the quickest way to defeat. At the time of writing, China has doubled the number of troops garrisoned in Hong Kong, including specialised anti-riot units.

We can do little in support of our fellow-workers in Hong Kong except to voice our solidarity while at the same time maintaining our constant campaigning for socialism as the real hope of humanity.

Cooking the Books: Divided Business Elite (2019)

The Cooking the Books column from the November 2019 issue of the Socialist Standard

Writing in the Times (3 October), its chief leader writer, Simon Nixon, insightfully explained the Brexit controversy as resulting from a ‘division among Britain’s business elite’, or, as we would put it, among the British capitalist class.

Noting that ‘one of the surprises of Brexit has been the strong support for leaving the European Union in some parts of the City and among a handful of Britain’s wealthiest entrepreneurs’ and that ‘this support is in contrast with the continued anxiety over Brexit among the bulk of Britain’s business leaders,’ he explained that ‘the hedge fund industry sits at the apex of the shadowy world of offshore finance that emerged in London in recent decades. This world is quite distinct from the traditional business of the City, which is serving as a domestic capital market for British and, since the creation of the single market, EU companies.’

It was not therefore surprising, he pointed out, that:
  ‘[P]rominent hedge fund tycoons have turned out to be enthusiastic Brexiteers. The hedge fund industry likes to operate in the shadows. It manages private pools of capital and believes that this entitles it to be exempt from the more onerous rules that govern the rest of financial services. What turned much of the industry so virulently against the EU was the introduction of the Alternative Investment Managers Directive in the aftermath of the global financial crisis, which imposed modest reporting requirements on the sector. Although the impact of these rules was close to nil, this shot across the bows was deeply resented. Whereas the EU’s status as a regulatory superpower has bought benefits to most sectors, creating opportunities to reap economies of scale across a single market, for the hedge fund industry it poses a threat.’
There you have it. A split in the British capitalist class. On the one side, the traditional and normally dominating section which benefits from frictionless access to the European Single Market and, on the other side, a section that wishes to avoid EU regulation of its lucrative financial activities.

The capitalist class is not a monolithic bloc with a single common interest (beyond – that is – seeing their property rights protected and the working class kept in its place). It is every section, indeed every company, for itself. Who gets their way depends on who has the ear of the government as their class’s executive committee. The normal way capitalists seek to influence government policy and legislation is through lobbying but, when this fails and the section concerned feels the issue is vital to their profit-making, then that section takes the matter to parliament and ultimately to the electorate, the vast majority of whom are members of the majority class of wage and salary workers.

With the referendum called by David Cameron in 2016, those that Nixon called ‘the hedge fund industry’ saw their chance. They poured millions into the Leave campaign (while the other capitalist section poured millions into Remain) and, unexpectedly, won. However, a subsequent general election returned a majority of Remain MPs. Hence the political impasse that has dragged on for over three years now, providing an initially amusing but now somewhat boring side-show.

It looks as if the working class is going to be called in to settle the matter. But why should we back one or other of the sides in this ‘division among Britain’s business elite’? Better to abstain or, even better, write ‘World Socialism’ across the ballot paper whether it’s a referendum or a general election.

The coming general election (2019)

Party News from the November 2019 issue of the Socialist Standard

If, or more likely when, the the touted general election comes, the Party will be contesting two seats: Cardiff Central in Wales and Folkestone & Hythe in Kent.

Further information from Head Office or from the branches running the campaign, South Wales and Kent & Sussex respectively.

50 Years Ago: The Red capitalist class (2019)

The 50 Years Ago column from the November 2019 issue of the Socialist Standard

Any thoughtful person must have realised that opposition to Mao in China over recent years has not been confined to the proverbial ‘handful of top people in authority taking the capitalist road’. A recent issue of the weekly journal of the Union of Soviet Writers carried a letter from a schoolboy in Peking who wrote that ‘. . . the eyes of a majority of the youth are open. Many no longer believe in Mao Tse-tung. But there are still quite a number who do believe in him and who do not understand that he is the cause of all the difficulties of China.’ This sort of comment comes as no surprise to socialists. Even in the current world situation where the vast majority of people (in China as elsewhere) look upon capitalism as the only practicable method of running society, it is inevitable that sizeable groups of working men and women should come into conflict with the capitalist class in every country. ( …)

In China the Maoist representatives of the capitalist class have long been engaged in spurious polemics with their rivals in the Soviet Union and other countries such as Yugoslavia, emphasising that these cannot be socialist since a ‘privileged bourgeois stratum’ exists there. It is hardly surprising, then, that numbers of workers in China who have been fed a staple diet of these sorts of comments in the editorials of the People’s Daily and Red Flag should quite naturally apply a similar analysis to China itself and decide that ‘a red capitalist class’ is in power rather than the official myth that it is the workers themselves who rule.

(Socialist Standard, November 1969)

Editorial: Towards a general election (2019)

Editorial from the November 2019 issue of the Socialist Standard

For over three years political debate in Britain has been dominated by the inability of capitalist politicians to agree if, when and how capitalist Britain should leave the capitalist EU. In July 2016 the issue was put to the people and the people voted to leave. However, this didn’t settle matters as it left open the question of what this meant. Did it mean simply leave the EU’s political institutions and its political project or did it mean also leave its single market and customs union which provided for friction less and tariff-free trade throughout Europe?

As explained on page 6, the capitalist class has been divided over the issue. Most of the ‘business elite’ never wanted to leave and favour as soft a Brexit as possible, one that would maintain free access to the EU’s single market. A minority, mainly maverick financiers, want a clean break in order to avoid any EU regulation of its activities.

This split is mirrored amongst capitalist politicians, with parties and individuals lining up behind one or other section of the business elite. The Liberals, most of the Labour Party and some Tories are behind the mainstream majority and, counter-intuitively, the Tories under Johnson and Farage’s Brexit Party are behind the financiers who funded the Leave campaign and Johnson’s Tory leadership bid. The SNP, who want an independent capitalist Scotland, have joined those opposed to Brexit, while the DUP, still fighting yesterday’s battles in Northern Ireland, initially allied themselves with the Tories until Johnson decided to sacrifice them to get the sort of deal those who financed his leadership campaign want – one where Britain leaves both the single market and the customs union.

However, even this is not in the bag as it remains to be negotiated. The dominant section of the business elite can still get a softer Brexit if there’s a change of government. Most of them are resigned to seeking a softer Brexit rather than reversing it in a second referendum, which is just a LibDem vote-catching ploy and would be a festival of xenophobia.

Where do the workers come into this? Good question. We don’t. While a no-deal Brexit would temporarily cause us unnecessary inconvenience and any Brexit will remove our freedom to move throughout the single market area (and cause problems for those who have moved), basically this is not our dispute.

As we go to press, Boris Johnson has proposed an election on 12 December. One advantage of an election would be that it would allow other issues to be discussed. Unavoidably Brexit will be an issue, but it won’t be the only one. This will allow socialists to go beyond saying that Leave or Remain is irrelevant as far as the class of wage and salary workers is concerned and to point out that the other issues – climate change, health, schools, transport, etc. – cannot be solved by the reforms to capitalism the other parties will be promising, but only within the framework of common ownership, democratic control, production directly to meet people’s needs, and distribution on the basis of ‘from each according to ability, to each according to need.’