Marx's Financial Articles (1983)

From the December 1983 issue of the Socialist Standard

In the critique of political economy which became his life work Marx set out, as he put it in the Preface to the first German edition of Capital, to “lay bare the economic law of motion of modern society”. One of his conclusions was that the expansion of production under capitalism did not proceed at a smooth, steady pace, but was “a series of periods of moderate activity, prosperity, overproduction, crisis and stagnation” (Capital Vol I, Pelican, p.58), in which the long-term trend was nevertheless upwards.

The crisis which marked the end of the period of boom took the form of a financial crash—that is, a collapse of credit and a strong demand to be paid in cash. This gave rise to the illusion that the crisis was simply a monetary question whereas in fact the monetary crisis was a reflection of the real overproduction that had taken place.

Overproduction reflected itself as a monetary crisis, since, in the middle of the 19th century, the main form of credit was the trade bill, or bill of exchange, a promise to pay issued by a manufacturer or merchant which would be honoured when he had sold his product. Such bills could be discounted, that is, cashed below their face-value, the precise deduction depending on the going rate of interest (discount rate). In normal times these bills circulated alongside bank notes as an accepted means of payment.

Clearly, if overproduction has taken place, all the bills are not going to be able to be honoured, so that as soon as people realise—or even suspect, with or without reason—that  overproduction has taken place they will no longer be prepared to accept these bills in payment and will insist on cash. Nor will banks be prepared to discount the bills, except at a very high rate of interest. The result is a credit squeeze, high interest rates and a financial crisis.

Marx studied two of these crises in close detail, that of 1847—when just after arriving in London in 1850 he was investigating the relationship between crises and revolution—and that of 1857. In fact, by co-incidence, 1857, besides being a crisis year, also saw the publication of two British parliamentary reports on financial questions: the secret evidence taken by a House of Lords committee which investigated the 1847 crisis and a House of Commons report on the workings of the 1844 Bank Act. Marx replied on these two documents, together with the House of Lords report itself which had been published, without the evidence, in 1848 and a report on the 1857 crisis published in 1858, to write a considerable number of articles for the New York Daily Tribune in 1857 and 1858 as well as to make notes for the section of Volume III of Capital to be devoted to interest-bearing capital. Marx had also frequently written on financial subjects before 1857 for the NYDT, especially when a financial or industrial crisis seemed about to break out. He always commented on the British budget when it was presented to the House of Commons and as early as 1853 had written an article explaining the principles and working of the 1844 Bank Act to his American readers.

Since, in the end, Marx never got round to preparing for publication these notes he made for Capital –they were very scrappy and had to be put into some sort of order by Engels—it is these NYDT articles which must be regarded as expressing in a final form for publication his views on financial crises. Hence these articles are to be regarded as an important complement to Volume III of Capital.

The British banking laws of 1844 and 1845 which Marx analysed in detail were an attempt to put into practice the doctrine of the so-called Currency School. In 1797, at the beginning of the Napoleonic Wars, the convertibility of Bank of England notes into gold had been suspended and was not restored until 1819. As a result of the experience of this period of inconvertibility a controversy arose in the first part of the 19th century over whether or not the number of paper notes issued by banks should be controlled by legislation. The Currency School argued that it ought to be, in order to ensure that the circulation of paper notes conformed to what they believed to be the economic laws governing the circulation of a metallic currency (gold and/or silver). Their opponents, known as the Banking School, denied the need for such control arguing that, as long as the paper notes were ultimately convertible into a fixed amount of gold, the number that would in actual practice circulate would always be governed by the economy’s need for currency. It was thus impossible, in their view, for the number of convertible paper notes to be over-issued since if more were issued that the economy needed the surplus notes would eventually find their way back, one way or another, to the bank that had issued them.

The Currency School based their theory on the views expressed by Ricardo on the circulation of a metallic currency like gold. According to Ricardo, there was a direct causal relationship between the amount of gold in a particular country and the general level of prices prevailing there. When a country had a favourable balance of trade, with exports exceeding imports, there would be an inflow of gold to that country; this increased quantity of gold would lead to an increase in the general price level; exports would therefore tend to fall off and imports to increase; as the balance of trade shifted from favourable to unfavourable so gold would flow out of the country, bringing about a fall in prices again. In other words, according to Ricardo, with a metallic currency the amount of money in circulation was automatically regulated by the flow of gold into and out of a country as its trade balance changed one way or the other. [1]

The Currency School wanted to make the circulation of a paper currency (or rather of a currency composed partly of gold and partly of paper notes) conform to this automatic model described by Ricardo. They thus proposed that the number of notes that could be issued should be tied to the amount of gold in the vaults of the bank that issued them. In 1844 led by the banker Samuel Loyd (later Lord Overstone, 1796-1883) they persuaded the then Tory Prime Minister, Sir Robert Peel, to try to put their so-called currency principle into practice. The Act was piloted through the House of Commons by Peel himself and so is often known as the “Peel Bank Act”. Marx explained its principle and main features in an article published in the NYDT on 24 September 1853:

  It assumes that £14,000,000 of bank notes form the necessary minimum amount of circulation. All notes issued by the Bank of England beyond that amount shall be represented by bullion. Sir Robert Peel imagined he had discovered a self-acting principle for the issue of notes, which would determine with mechanical accuracy the amount of the circulation, and which would increase or diminish it in the precise degree in which the bullion increased or decreased. In order to put this principle into practice, the Bank was divided into two departments, the Issue Department and the Banking Department, the former a mere fabric of notes, the latter the true Bank, receiving the deposits of the State and of the public, paying dividends, discounting bills, advancing loans, and performing in general the business with the public, on the principles of every other banking concern. The Issue Department makes over its notes to the Banking Department to the amount of £14,000,000, plus the amount of bullion in the vaults of the Bank. The Banking Department negotiates those notes with the public. The amount of bullion necessary to cover the notes beyond £14,000,000 remains in the Issue Department, the rest being surrendered to the Banking Department. If the amount of bullion diminish beneath the circulation exceeding £14,000,000, the notes returning to the Banking Department in discharge of its advances, or under the form of deposits, are not reissued nor replaced, but annihilated (Marx-Engels, Collected Works, Vo112, pp.298-9).

Marx regarded the theory of the Currency School as wholly mistaken and described the attempt to apply it through the 1844 Bank Act as a “fiasco” even in Volume I of Capital (Pelican, p.939). His first objection was to their view, derived from Ricardo, that the quantity of money in circulation governed the general level of prices. In his view the relationship was exactly the reverse: that more or less money was in circulation because prices were high or low, (see Volume I of Capital, Chapter III, 2b). In other words, money was essentially only a secondary factor, the amount circulating depending on the needs of the economy as determined by real economic factors such as the prices of the commodities to be traded (reflecting their value, or amount of socially necessary labour-time spent in producing them from start to finish) and the level of productive activity and trade. His views are summed up rather well at the end of his A Contribution to the Critique of Political Economy, where he says that Thomas Tooke (1774-1858), who had started out as a partisan of Ricardo’s theory but who later became a leading opponent of the Currency School, was led

  to recognise that the direct correlation between prices and the quantity of currency presupposed by this theory is purely imaginary, that increases or decreases in the amount of currency when the value of precious metals remains constant are always the consequence, never the cause, of price variations, that altogether the circulation of money is merely a secondary movement and that, in addition to serving as a medium of circulation, money performs various other functions in the real process of production (Lawrence & Wishart, 1971, p.186).

Marx had the highest regard for Tooke. He was particularly impressed by his History of Prices from 1792 to the Present Time which appeared between 1823 and 1857. When he wrote that detailed confirmation of the economic law that “prices are thus high or low not because more or less money is in circulation, but there is more or less money in circulation because prices are high or low” was “the only achievement of the post-Ricardian English economists” it was clearly the work of Tooke he mainly had in mind. When Tooke died in 1858 Marx wrote to Engels that the last English economist of any value was dead (letter of 5 March 1858).

Marx’s second objection, based on the empirical research of men like Tooke, was that it was not possible in practice to increase the amount of convertible paper money in circulation beyond what the economy required, as he argued and demonstrated with statistics many times in his NYDT financial articles. The needs of the economy determined the amount of currency in circulation just as much when the currency was gold and convertible notes together as when it was gold alone.

This does not mean that Marx is to be regarded as a member of the Banking School; in fact he criticised people like Tooke for not going beyond the currency question to examine the real economic factors at work. Nor should he be seen as an advocate of the reform of the banking legislation in Britain, even though he knew that this aggravated the monetary crisis phase of the industrial cycle:

  Ignorant and mistaken bank legislation, such as that of 1844-45, can intensify this money crisis. But no kind of bank legislation can eliminate a crisis (Capital, Volume III, Moscow, p.478).

His concern was to show that capitalism was a system that worked according to economic laws which arose from deeper causes than mere monetary reform. A surprisingly large part of Marx’s writings on economics—not just these articles in the NYDT but also his A Contribution to the Critique of Political Economy and the notebooks known as the Grundrisse—was devoted to exposing incorrect theories about money. For Marx, the only way to end recurring economic crises was a social revolution as a result of which money would be abolished.

The exact way in which the 1844 Bank Act proved to be a “fiasco” is well described by Engels in an explanatory passage he added to the chapter on “The currency principle and the Bank legislation of 1844” (chapter XXXIV) of Volume III of Capital which he edited after Marx’s death and which was published in 1894:

  the separation of the Bank into two independent departments deprived its management of the possibility of freely utilising its entire available means at critical times, so that situations could arise in which the banking department might be on the verge of bankruptcy while the issue department still had intact several millions in gold and, in addition, its entire 14 million in securities. And this could take place so much more easily since there is a period in almost every crisis when heavy exports of gold take place which must be covered in the main by the metal reserve of the bank. But for every five pounds in gold which then go abroad, the domestic circulation is deprived of a five-pound note, so that the quantity of circulating medium is reduced precisely at a time when the largest quantity is most needed. The Bank Act of 1844 thus directly induces the entire commercial world forthwith to hoard a reserve fund of bank-notes at the outbreak of a crisis; in other words, to accelerate and intensify the crisis. By such artificial intensification of demand for money accommodation, that is, for means of payment, at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis. In 1847, the assurance that bank-notes would again be issued for first-class securities sufficed to bring to light the £4 to £5 million of hoarded notes and put them back into circulation; in 1857, the issue of notes exceeding the legal amount reached almost one million, but this lasted only for a very short time (Moscow, pp.542-3).

The Act was suspended for a third time on 11 May 1866 during the crisis of that year by the then Chancellor of the Exchequer, Gladstone. Marx did not analyse this crisis in as much detail as he did those of 1847 and 1857, though he does refer to it in passing in Volume I of Capital (Pelican, pp.822-3) and he did discuss the 1866 suspension in a letter he sent to Collet in 1868 and which the latter published in the Urquhartite journal he edited, the Diplomatic Review (as the Free Press became) under the somewhat misleading title “How Mr Gladstone’s Bank Letter Procured a Loan for Russia” (Gladstone had in the meantime become the Prime Minister).

In Volume III of Capital Marx also argued that the 1844 Act had been deliberately designed to keep interest rates artificially high, so benefiting the financial section of the capitalist class at the expense of the industrial section. He thus regarded the bankers like Lord Overstone and George Norman (1783-1882), who both came in for his harsh comments, as being motivated by self-interest as well as being ignorant of monetary economics. In fact as early as 1850, in their notes for the Revue of Neue Rheinische Zeitung, Marx and Engels had spoken of “the Bank Acts of 1818 and 1844, which strengthened the financial aristocracy” (The Revolutions of 1848, Pelican, pp.305-6).

In case it should be thought that Marx’s remarks can be simply transposed to the modern discussion on money and inflation, we should bear in mind that he was talking about the circulation of a paper currency convertible on demand into a fixed amount of gold. This situation no longer obtains today. All modern currencies are now inconvertible paper money, the laws governing which are quite different—the opposite, in fact, insofar as the quantity issued does directly affect the level of prices rather than vice versa—to those governing the circulation of a metallic currency and a mixed metallic/ convertible paper currency. Marx did have something to say on this also in his A Contribution to the Critique of Political Economy and in Capital (chapter III, 2c) where his comments still provide a basis for an analysis of modern inflation as resulting from the over-issue of an inconvertible paper currency.

Adam Buick

[1] A detailed, and very clear, discussion and history of Ricardo's currency theory is to be found in the last section of Marx's A Contribution to the Critique of Political Economy on "Theories of the medium of circulation and money".

Apartheid lives (1983)

From the December 1983 issue of the Socialist Standard

The term “apartheid” was not coined when the National Party, after it came to power in 1948, presented its policies in the form of a comprehensive doctrine. As that wily old opportunist. General Smuts, declared during the 1948 General Election: “Room must be found for them (Non-Whites) on the principle of apartheid. It is neither a new word nor a new thing" (South Africa: An Historical Introduction, F. Troup, 1972, p.285).

Indeed, much of what constitutes the bloated corpus of apartheid legislation today can be traced back to the early part of this century after the formation of the Union of South Africa in 1910. For instance, the present-day allocation on paper of 13 per cent of the land to the African majority is based on the 1936 Native Land and Trust Act. This, in turn, built on the crucially important 1913 Native Land Act prohibiting Africans from purchasing land outside the reserves designated for them as part of the strategy to force them into the migrant labour system on which the mines depended — and still depend. Then there are the stringent conditions under which Africans today are allowed to reside in the urban areas of so-called “White” South Africa, conditions laid down in the Urban Areas Act first promulgated in 1923 and amended since. (The 1922 Stallard Commission recommended that “Natives should only be allowed to enter the urban areas to minister to the needs of the white man and should depart therefrom when he ceases so to minister." This is strikingly similar to the view expressed by M. C. Botha, later Minister of Manpower Utilisation, in 1976, that “The basis on which the Bantu is present in the white areas is to sell their labour here and for nothing else".) Such examples, and there are many more, illustrate the historical continuity of Nationalist rule and what one author has described as the "Age of the Generals" preceding it, presided over by the bitter old rivals. Smuts and Hertzog.

Nevertheless, 1948 was a significant watershed in the history of South Africa. The somewhat haphazard racist legislation inherited by the Nationalists was systematically reworked and extended into the rigid and comprehensive structure with which the term “apartheid" is commonly associated. More recently, however, some shifts in policy have occurred which have been interpreted (as, indeed, the "reformist" Botha government would wish to have them interpreted) as suggesting a somewhat more flexible, pragmatic approach on the part of government to apartheid.

But “neo-apartheid" (as some have called it) has clearly disturbed a growing proportion of the all-white electorate. Several developments have fuelled this white reaction. There is the much talked about but rather limited relaxation of "petty apartheid" (which applies to the mixing of races in public places like hotels, restaurants, beaches and parks). There is, too, the erosion of the traditional colour bar restricting skilled work mainly to whites. While most of the legislation that entrenched this colour bar has been scrapped (due to the tremendous shortage of skilled labour that developed with the growth in manufacturing industry after the Second World War) traditional practices are sometimes maintained by closed shop and apprentice agreements with white unions. Finally, there is the constitutional proposal to co-opt the Coloureds (mixed race) and Asians into an expanded (but segregated) electorate which would vote for representatives for a three chamber parliament in which the white chamber would be dominant. The African majority would remain totally excluded on the grounds that they must seek their political emancipation in the ten "ethnic” homelands, four of which have already achieved "independence".

In particular, this proposed change to the constitution has been the subject of intense political debate over the past few years (and a national referendum held last month). In 1982 it precipitated the formation of the ultra-right Conservative Party, led by Dr Andries Treurnicht, as a result of a split within the National Party. Together with the smaller but similarly inclined Herstigte National Party — which likewise broke away from the NP in 1969 — the Conservatives have recently been gaining ground. This will obviously influence how far the government is likely to proceed down the road of "neo-apartheid" as it anxiously surveys its (once massive) support draining away. There is, after all, the precedent of the National Party itself to make the government wary of a political opponent eager to assert its claim to be the true heir to Afrikaner nationalism. In 1934 the “Purified Nationalists" under Malan split from the old Nationalist Party led by Hertzog on account of the latter's fusion with Smuts’ South African Party to form a huge party of the “centre” — the United Party. Yet it took just 14 years for the comparatively small and reorganised National Party to become, with the aid of the sinister Afrikaner Broederbond, the government of South Africa in 1948.

Thus the so called monolith of Afrikaner nationalism is, once again, visibly cracking under the strain of conflicting views. At issue is not whether the apartheid system ought to continue but the form it should take in the circumstances prevailing today. According to the Johannesburg Financial Mail, the difference between Botha and Treurnicht is that “The first is seeking an accommodation with certain blacks — but only on white terms; the second is contemptuous of such an accommodation — it is seen as weak” (Apartheid: The Facts, p.51).

This attempt on the part of the Botha government to accommodate a black elite is a key component of what it has called its “total strategy”. This strategy — a hint of the close links that have been forged under Botha between the military top brass and their political counterparts — is based on the realisation that it will take more than the military might of the state to counter the threats to the apartheid regime. In the words of the 1977 White Paper on Defence and Armaments Production, "The resolution of a conflict in the times in which we live demands inter-dependent and co-ordinated action in all fields — military, psychological, political, sociological." (Apartheid: The Facts p.68). What prompted this new approach was, partly, the events in Mozambique, Angola and Zimbabwe which swept away the cordon sanitaire of Portuguese colonialism and Ian Smith's Rhodesia, making South Africa more vulnerable to guerrilla insurgency; partly, the rising resistance to apartheid within South Africa itself which culminated in the riots on the streets of Soweto in 1976; and partly the growing international pressure against apartheid during the seventies.

It is against this background, therefore, that the Government has sought to woo the urbanised black elite by modifying certain aspects of apartheid. The aim of this, according to Patrick Laurence (Guardian 22 November 1978) is to build "a buffer between the white elite and the relatively impoverished black masses, and thereby transfer a racial struggle between white and black into an ideological one between capitalism and marxism". For the majority of blacks, however, there has been little change and indeed in some respects there has been a deterioration. The number of arrests for passbook violations in 1982, for example, exceeded 200,000 — a 90 per cent increase since 1981. For all the talk of reform, the traditional pattern of apartheid — its draconian pass laws and the deportation of "superfluous" people to the desperate poverty of the Homelands — is still remarkably resilient.

With hindsight it is easy to see how wildly over-optimistic was Lord Milner's observation in the last century that “Two wholly antagonistic systems, a medieval race oligarchy and a modern industrial state" could not exist permanently side by side. The emergence of capitalism in South Africa did not, in some mechanistic fashion, erode the racist outlook of a hitherto pastoral Boer community. On the contrary, the latter was successfully and insidiously grafted onto this emerging capitalism — above all in the mining industry whose white union is still today a bastion of staunch conservatism and racist bigotry.

On the other hand, it does not follow at all that apartheid and capitalism are inextricably intertwined and that the struggle against apartheid is thus intrinsically "anti-capitalist". Yet clearly it would suit the government very well if this was widely accepted. It could then better mobilise the support of the comparatively privileged section of the black population (as Laurence suggests) against the supposed “marxist" threat to the South African "way of life”. It could also more easily tar its liberal critics with the "communist" brush as it has long tried to do.

But the plain fact is that the overwhelming majority of apartheid’s opponents are not opposed to capitalism as such. While some elements within the black nationalist camp (in particular within the banned African National Congress) adopt the terminology of socialist revolution, their goal is the discredited leninist one of state capitalism. Yet even this misrepresentation of the socialist objective seems to attract little support: a recent report of the Buthelezi Commission estimated that a resounding majority of more than five to one blacks preferred private enterprise to state ownership (New Society, 13 May 1982). The paradoxically strong support the "socialistic” ANC enjoys, particularly amongst urban blacks, is not because of any leanings it may have towards “socialism” but rather the result of its militant opposition to apartheid.

The workers of South Africa must look beneath the skin deep changes that apartheid’s demise can at best offer. It is towards their own emancipation as a class that they must turn their eyes. The impressive growth of independent non-racial trade unionism since the early seventies is a tribute to the courage of many thousands of black and white workers but also a hopeful indication of what can be done even in a climate as repressive as South Africa’s.

Robin Cox

Running Commentary: Defeat at Greenham (1983)

The Running Commentary Column from the December 1983 issue of the Socialist Standard

Defeat at Greenham

Unless, under Heseltine's Law, any of them chooses to rush the fences and get themselves shot, the Greenham Common demonstrators are now reduced to watching despondently as the American transport 'planes drop into the base with their cargoes of cruise missiles.

The protests have been inspired by sincerity and concern for what may be left of the future of the human race but that is not enough. Their first objective was to prevent the base being set up. It was set up. Then they tried to stop the missiles coming. The missiles came. Then they declared an intention of preventing the missiles becoming operational. The missiles have been set in working order, ready to fly off and do their deadly, obliterating work.

Between the protesters and their objectives stood the forces of the state, which erected the fences and the wire and stationed the police and the soldiers who were ordered, if there should be no other way. to shoot the intruding demonstrators. The Greenham women joined together and protested on the assumption that they could defeat the state machine by hanging dolls and baby clothes on the fences, by breaking through the wire, by daubing the ’planes, by getting themselves arrested. They were wrong; the state is still there, intact in its intention to protect the base with its murderous implements.

Greenham Common is only the latest example in capitalism’s history to illustrate the futility of challenging the state machine through anything less than a policy of socialism. The state has survived many such assaults on it, some of them more popular than the anti-nuclear movement is at present. This survival happens because — as was clearly demonstrated at the last election — the working class would have it so. Capitalism, with its state and military agencies, does not exist through the will of people like Michael Heseltine but through the support it receives from the very people who are damaged and destroyed by it.

This vital fact has yet to make any impact on members of CND many of whom, although hating the effects of capitalism, ardently support the system through organisations like the Labour Party, Communist Party and the Liberal/SDP Alliance. The Greenham demonstrators may feel more cheerful if they realise that they can learn from their dismal, wasted experience. There is a way to defeat capitalism, to end state coercion, to abolish war and all its weaponry. It is a matter of getting it right, of grasping the need for social revolution above doomed efforts to reform capitalism — and then working for it.

For that, there is no need to get shot, either.

Smug about poverty

Any smugness in the Labour Party at the news that working class conditions under the Thatcher government have worsened dramatically was, like the announcement of Mark Twain’s death, rather premature. According to a recent report by the Department of Health and Social Security, there are now 15 million people living in what is officially defined as poverty, compared to 11.5 million in 1979. It will help in understanding these figures to remember that the official poverty line is based on the level of Supplementary Benefit, which tells only part of the story.

Especially hard hit are families with a lot of children and one-parent families. The increases are largely due to the rise in unemployment, which is steadily changing workers' everyday poverty into deep deprivation, at times outright starvation. And all of this after nearly five years of Tory rule, which was going to usher in a new age of monetarist prosperity. Should the Labour Party, then, feel smug and justified? Did the voters make a big mistake in preferring Thatcher to a Labour government?

The facts say otherwise. Under the last Labour government — which was a great disappointment to the whole poverty lobby — unemployment doubled to 1½ million. Unemployment benefit became worth less in relation to average earnings and when it ran out, after 12 months, the new system of means-tested Supplementary Benefit which Labour introduced ensured that the claimants were worse off than before. Meanwhile, according to the Royal Commission on the Distribution of Income and Wealth, under Labour the richest ten per cent had their share of wealth increased from 57.5 to 60 per cent.

And that was only the beginning; Labour's policies in response to the gathering slump paved the way for Thatcher and Howe and Lawson. It was the Tories' bad luck to come into power at such a time in world capitalism (although it does not yet seem to have done them much harm) and they have sturdily carried on where Labour left off.

So there is really nothing to choose, except in terms of trivial detail, between the two of them. The mistake the working class made in 1979 and again this year was not in choosing between Labour and Tory but in failing to make the election a choice between the parties of capitalism and a new social system.

Full board

In deepest Cambridgeshire, a recently formed company is applying for planning permission to build a large fallout shelter — which does not mean, Reagan and Andropov will be pleased to hear, that such formalities will be needed before the bombs and missiles are loosed off.

A place in the shelter — the company-calls itself Phoenix and wants to build all over the country — will cost about £2000 for each person. This price covers what is known in the holiday trade as Full Board; the shelters will have water for 14 days and food for six months. Like any good seaside guest house, they will also provide a car park for the patrons, although there are probably no plans to issue tickets for reclaiming the vehicles after the nuclear holocaust.

But when the holiday is over, or the food and water run out, the guests will have to emerge into a landscape which will not necessarily persuade them that they did the right thing by so carefully staying alive. And being well fed and watered, they may be seen as an unexpected food source by any demented people who have survived on the surface.

The prospect of nuclear war is its own particular madness. Is it really possible, at a time when human life is blighted by so much impoverishment, that so vast an amount of energy, knowledge and resources can be given to wiping us out? Even worse — that the enterprise can be given so high a priority in the allocation of resources?

And the answer, of course, is yes it is perfectly possible, even consistent, once we accept the basic premise of the social system we live under, whose priority is to protect the interests of the world ruling class. Beside that the welfare of the rest — who are the useful, working, productive majority — is of little account. It is to protect the interests of the ruling class that wars are fought and arsenals of incredible power are laid down. In the event of their being used, the best that the majority can hope for is to buy a place in a fragile shelter. In death, as in life, the ruling class assert their privilege.

Letters: Electoral channels (1983)

Letters to the Editors from the December 1983 issue of the Socialist Standard

Electoral channels

Dear Editor(s),

The Socialist Party is a revolutionary party, that is to say. it eschews any association with reformist elements or single issue policies; instead, placing first and foremost the revolutionary call for the abolition of capitalist society.

It is also committed to attain this objective through the democratic channels of Parliament and local government. But it hasn't, as far as I know, published any material discussing the working and implications of this strategy. Yet serious questions are at issue here; because. prima facie, the two stands are incompatible.

Capitalist institutions of government exist for the sole purpose of administering capitalist reality: that is their raison d'etre. They are also, by nature, policy-making chambers, i.e. forums where specific policies compete.

But the Socialist Party (rightly) has no policies. There is apparently no function that a revolutionary could perform in these bodies. What can s/he do? If s/he is to remain true to anti-reformist principles, s/he would be reduced to an anomaly — a mere cipher.

Or, taking a more adventurous hypothesis: say, where the Socialist Party gains control of a local council; how on earth is it to function if not by administering to the needs of capitalist society? The day-to-day business of local authority departments, dictated by capitalist Law and Bye-law must go on.

It would seem that a consistently held anti-reformist position is impractical and virtually impossible within the governmental institutions of capitalism.

I should be interested to know how the SPGB candidate at the last election envisaged his future role in concrete terms.

R Alderson

Manchester

Reply:

The question raised by R. Alderson is of great importance and has been dealt with in Socialist Party publications such as the pamphlet Questions of the Day. It is certainly true that the revolutionary transformation of society could not be achieved by a few isolated socialists stepping into capitalist institutions of government. They would, as R. Alderson rightly points out, be reduced to administering the very system of class division which they had set out to oppose. But the missing factor, which he has so far left out of account, is that of consciousness.

Once a majority of workers have come to reject capitalism in all its forms, the path will be clear for the establishment of the socialist alternative. Before the formation of the Socialist Party of Great Britain in 1904, there had been a division in the European labour movement between the “revolutionary" policy of minority insurrection (undemocratic coups) and reformism, using working-class representation to try to humanise the administration of capitalism. Neither of these options offered the possibility of genuine self-emancipation by the working-class majority.

The Socialist Party proposed that the profit system could only effectively be replaced by democratic production for use when a socialist consciousness allowed the working-class majority to democratically take control of and dismantle the capitalist machinery of government, without becoming at all involved in the running of capitalism.

Had the SPGB candidate this June been elected, he would have been able to use his seat as a platform for the wider propagation of socialist ideas. It seems highly unlikely, however, that one isolated seat, local council or indeed national, will be won over to socialism without similar success elsewhere. The developments in working-class consciousness across the world are remarkably uniform in pace, particularly as the progress of industrialisation continues to unite the world as (potentially) one productive area.

When there is a politically organised, conscious movement for socialism in a majority, it will be able to complete its democratic taking over of the state (the capitalist machinery of government). Where previously socialist delegates would have sat in the council chambers and parliaments as a vocal minority, they will then be able to form controlling majorities in such centres of social power. But socialist delegates are elected only under a strict mandate to abolish, rather than to administer, the capitalist system of society. Their presence as a majority in the parliaments and so on will be a reflection of a majority of the population having come to see socialism as a practical alternative, which they are ready to implement and to be responsible for running democratically. It only remains, then, for those delegates to fulfil their mandate of formally annulling all property titles, state and private, and ensuring the removal of the immediately redundant machinery of government. New, and far more democratic, channels of communication and control can then be introduced.

This use of electoral channels to complete the socialist revolution will have achieved two purposes. First, the demonstration beyond all doubt that there is a majority who reject capitalism and are prepared to organise socialism as a workable alternative. Second, the disarming of the capitalist class, who otherwise may attempt to prevent a majority from dispossessing them of the means of wealth production, by retaining control of the machinery of government. But first we face the urgent task of encouraging and accelerating the spread of a revolutionary socialist consciousness among wage and salary-earners, on which this whole process depends. We would urge R. Alderson and all other workers to join us in this great challenge of bringing society under conscious and democratic human control.

Editors

Offensive about religion?

Dear Editors

We refer to your article in the September Socialist Standard “Vote For Yourself For A Change". We feel that the comments regarding religious practices: ". . .  they would be able freely to indulge in their primitive superstitions" were unnecessarily condescending, and could be seen as offensive to some readers, and we feel will do nothing to further the socialist cause.

David Roberts, Jude Rafferty, 

Peter Hunt, Phil Darsch 

Warley, West Midlands

Reply:

We described religious practices as “primitive superstitions" because that is what they are — attempts to explain away gaps in human knowledge through putting forward unsupported beliefs, which are rarely better than superstitions, in supernatural life. There is nothing of condescension in our attitude to this: we take religious ideas, as an enemy of working class interests, too seriously for that. We are sorry but we cannot apologise, if some readers are offended for, at a time when the theories which maintain capitalism are so firmly entrenched, the case for socialism often has that effect. That is no reason to compromise, which would in fact be certain to harm the cause of socialism. That can best be protected and advanced by stating our principles clearly and cogently.

Editors

Animal liberation

Dear Editors

I am not a member of any political party but I have recently been reading your monthly magazine and have found that I am drawn to what you have to say about society.

However in the declaration of principles I find no mention of the animal kingdom although it is also enslaved and by its labour produces wealth. There is also an antagonism of interests between the animal world and the capitalist system. I would like to think that when socialism comes about then it will mean the emancipation of all living species and that cruelty will give place to compassion and slavery to freedom.

I would be obliged if you would tell me what the view of the SPGB is on the exploitation of animals for food, clothing, cosmetics services and in experiments.

Yours sincerely.

John Mitchell

Glasgow

Reply:

Under capitalism wealth is produced for sale and profit, which is the cause of. among many other undesirable things, the ruthless treatment of animals in the production of food, in the cosmetics industry and in experiments with the object of testing drugs. The change which socialism will bring, to production for use will end that: the motive for production will be the welfare of human beings. However, people cannot be separated from their environment and in socialism a regard for human interests will obviously entail a cherishing of animals and what is called wildlife. That is not to say that socialism will be a world of sentimentals; as human interests require it animals will be used for food and, if such were necessary, in experiments with the object of saving human lives.

Editors

50 Years Ago: Importance of Marx’s Economics (1983)

The 50 Years Ago column from the December 1983 issue of the Socialist Standard

The economic conditions which make socialism possible simultaneously make it necessary. Indeed, logically, there can be no distinction between the terms. Socialism can be possible only if the forces making for its establishment are stronger than those retarding it, in which case it is inevitable. Seeing, however, that society consists of human beings, social development must inevitably consist of the more or less conscious activity of human beings. The social development will force them to recognise the problem and the solution to it. Mr Postgate's final chapter (of Karl Marx), however, merely sums up the fallacious attitude which peeps out in his winding up of his earlier chapters.

For example, on page 72 he says: "We see that the labour theory of value explains the growth and composition of capital as accurately at least as any other." What astuteness! One would have thought that if the theory which finds the source of value in labour is accurate, then "other" theories (which find it elsewhere) are decidedly inaccurate.

Mr Postgate follows the current fashion among "intellectuals" of professing to regard the economics of Marx as of much less importance than the materialist conception of history. The absurdity of this is apparent on the face of it. According to Marx's view no epoch can be understood apart from its economic basis. His critical examination of capitalism as a system of production is, therefore, of fundamental importance. The understanding of previous history is necessary, since out of the past capitalism arose: but in Marx's own words, we have not merely to explain the world but to change it, and must therefore understand what it is that we wish to change.

(From an article, "Marx and Lenin — Distorted Views", by E. Boden, Socialist Standard, December 1933.)

The Socialist Objective (1983)

From the December 1983 issue of the Socialist Standard

  With the seizing of the means of production by society, production of commodities is done away with, and, simultaneously, the mastery of the product over the producer. Anarchy in social production is replaced by systematic, definite organisation. The struggle for individual existence disappears. Then for the first time man, in a certain sense, is finally marked off from the rest of the animal kingdom, and emerges from mere animal conditions into really human ones. The whole sphere of the conditions of life which environ man and which have hitherto ruled man, now comes under the dominion and control of man. who for the first time becomes the real, conscious lord of Nature, because he has now become master of his own social organisation. The laws of his own social action, hitherto standing face to face with man as laws of Nature foreign to, and dominating him, will then be used with full understanding, and so mastered by him. Man’s own social organisation, hitherto confronting him as a necessity imposed by Nature and history, now becomes the result of his own free action. The extraneous objective forces that have hitherto governed history pass under the control of man himself. Only from that time will man himself, more and more consciously, make his own history — only from that time will the social causes set in movement by him have, in the main and in a constantly growing measure, the results intended by him. It is the ascent of man from the kingdom of necessity to the realm of freedom.

The above passage is taken from Socialism: Utopian and Scientific by Frederick Engels. It has a number of important points to make about socialism which this article will examine further.

1. Abolition of Commodity Production

Capitalist production is geared to creating wealth in the form of items for sale on the market with a view to profit. Wealth produced primarily for sale rather than use takes the form of commodities. A socialist society will do away with commodity production and will produce solely for use. This means that buying and selling will no longer take place and money will be obsolete. In a system based on free access to goods and services members of the community will not need to purchase from themselves the wealth which they already possess. Along with all other commodities, human labour power will be abolished as an item of sale: the abolition of the wages system will give way to a society of cooperative labour where each will give according to ability and take according to need.

2. Organisation, Not Anarchy

The capitalist system cannot be planned. The market gives rise to anarchy because its economic laws are based on speculation rather than the efficient measurement of social needs. Periodic crises are endemic to the profit system. In a socialist society, where the means of wealth production and distribution are owned and controlled by society as a whole, it will be possible to use the technology of mass communication to allow decisions to be made by the community about the best ways of satisfying human requirements. Of course, democracy will not always lead to the right answers and socialist society might occasionally suffer as a result of wrong decisions but, unlike capitalism, at least production and distribution will be regulated.

3. No More Individual Struggle for Existence

In the capitalist jungle people are forced to compete in order to survive. Worker is set against worker in the struggle for jobs and promotion and decent housing. Socialism is based on the recognition that the individual is not able to survive without society, and therefore the individual aims which capitalism conditions into us must be replaced by the understanding that only by co-operation with our fellow human beings can we exist in comfort. Unity is strength; in socialist society individuality will not be replaced by Maoist grey uniforms, but it will be understood that humans can only express themselves fully as social beings.

4. From Animal to Human Conditions

Unlike our older animal relations, human beings have the capacity to control the environment. Animals are, to a great extent, the inevitable victims of nature. Human beings have the unique ability to understand and change our conditions — to become "the conscious lord of Nature". Hundreds of years ago. when our forebears had yet to dominate their surroundings, they invented the myth of god which was supposed to be the prime mover of all things, natural, and social. These days there is the myth of "human nature", often used by anti-socialists to argue that social behaviour is fixed within the mould of capitalist social relations. Consciousness is the tool which makes it possible for humanity to master its social environment.

5. Making Our Own History

In the past most people have been pawns in the game of ruling class history. Socialism presents the possibility of making our own history in line with conscious plans. Planning does not mean that socialist society will determine its affairs in accordance with some master plan or blueprint. To plan on the basis of conscious thought is quite different from the undemocratic, centralised planning of capitalism. Of course, there is one other crucial difference between capitalist and socialist planning (or history-making): the capitalist planners are nearly always incapable of predicting what is going to happen to their system in the near or distant future; only in a society of conscious human control can it be meaningful to make decisions about the future.

6. From Necessity to Freedom

Capitalism sets up its own needs: it cannot avoid wars, unemployment, and mass starvation. Well-intentioned reformers want to see these symptoms of the capitalist disease — or, needs resulting from the power of capital — eliminated without ending capitalism. As the history of reformism has shown, this simply cannot be done. Only when we have removed the cause of these problems will they no longer be necessary. In "the realm of freedom” needs will be determined by the men and women (Engels refers to "man" but means both) who inhabit society.

If you read the Object of the Socialist Party, which is printed in every issue of the Socialist Standard so that nobody need be in any doubt about what we stand for, you will see that it is consistent with Engels’ vision. Clearly, socialism does not exist in countries like Russia. China, Cuba and Albania, where commodity production still exists, and where the features of socialism outlined by Engels are far from present. Socialism has never been tried, just as capitalism at one time was a system in the historical future. When a majority of workers want and understand socialism it will be established.

Steve Coleman

Hi-tech horror (1983)

Book Review from the December 1983 issue of the Socialist Standard

Andrew Wilson: The Disarmer's Handbook of Military Technology and Organisation (Penguin. 1983).

The NATO “dual track" decision of December 1979 to deploy ground launched cruise and Pershing II missiles in Europe as a political response to continued Russian deployment of SS-20s was soon followed by the British government's decision to replace Polaris with the Trident C-4 missile. This theatre nuclear force modernisation programme, coupled with strategic systems modernisation programmes in the United States, marked a disturbing escalation of the arms race. In addition, the Russian invasion of Afghanistan and the election of Ronald Reagan seemed to confirm the emergence of a new Cold War. These events forced many people to question their acceptance of the concept of nuclear "‘deterrence" — one being Andrew Wilson. Defence Correspondent of the Observer for sixteen years. The Disarmer’s Handbook of Military Technology and Organisation is the product of his change of heart.

The book may be divided into three sections; the first deals with theories of war; the second with military technology itself, including nuclear, conventional, chemical and biological warfare; and the latter part with efforts aimed at halting and reversing the arms race.

In the chapter on the theory and history of war there is an outline of the thinking of modern theoreticians such as Clausewitz, A.T. Mahan and Herman Kahn. It was Kahn in his book On Thermonuclear War, mentioned by Wilson, who outlined ways in which nuclear weapons could be used in crises or wars to effect tolerable outcomes. Kahn's book appeared in I960, but it was by no means the first articulation of a theory or doctrine for the use of nuclear weapons in war. US targeting plans of the 1940s. such as “Dropshot" formulated in 1949, called for the delivery of atomic weapons against Russian industrial and military centres. In referring to “counterforce", Wilson notes that it began in 1980, but qualifies this statement by referring to McNamara's “no cities" doctrine of the early 1960s in which it might be possible to limit damage to the US by concentrating nuclear strikes on military targets. But ''counterforce" targeting had always been a part of United States strategic doctrine.

Wilson devotes some space to Marx and Engels, especially the latter’s writings on military science. It was not for nothing that Engels was known to his contemporaries as "The General". It is, however, not true to say that Marx and Engels “turned to military science as a means of establishing the ‘revolutionary state’ after the failure of the barricades" (p. 23). Although in the 1840s Marx thought that a revolution could only result from violent insurrection, he and Engels had completely changed their view by the end of the century. For example, writing in the 1895 Introduction to Marx’s Class Struggles in France, Engels noted, "Let us have no illusions about it: a real victory of an insurrection over the military in street fighting, a victory as between two armies, is one of the rarest exceptions . . . even where the military are in the minority, the superiority of better equipment and training, of single leadership, of the planned employment of the military forces and of discipline makes itself felt"

Illustration by George Meddemmen.

The nuclear arms race has continued unabated since 1945, as has the conventional arms race the world over. In 1947 the US had only thirteen atomic bombs; the most recent estimate of world nuclear weapon stockpiles is 50,000 but since the nuclear arms race is more than just a numbers game, or what the Americans would call a "bean count", Wilson attempts to outline the qualitative differences between the American and Russian forces. For instance, the Russians lag behind he Americans in warhead miniaturisation and microelectronics. Intangible factors such as warhead accuracy and overall system reliability and performance are more important than mere quantity. The key to the whole system is the durability of command, control, communication and intelligence systems, which is a factor that Wilson does not really deal with at all.

It is not unusual to come across widely diverging estimates of weapons characteristics, or widely exaggerated estimates of weapon systems performance. For instance, data about Russian nuclear forces comes primarily from US intelligence estimates, hardly an impartial source. In Britain there has been no official announcement about the number of warheads on the new Chevaline warhead for the Polaris missiles. Andrew Wilson estimates that the number could be as high eight (p. 66). Other estimates have come up with numbers as low as two and as high as six.

The chapter on “Sick War — Chemical and Biological" makes clear that nuclear warfare is not the only form of potential mass murder. In describing chemical agents and their effects, such as the nerve gas Sarin and 2,4-D a defoliant, Wilson highlights the possibility of destroying not only people but whole ecological systems without any assistance from nuclear weapons — a factor which tends to be forgotten by the peace movement.

The Disarmer’s Handbook is aimed primarily at the resurgent peace movement. Although it provides a useful collection of technical details as well as notes on further reading, its conclusion is not one with which socialists agree. For example, in the Postscript Wilson writes:

  Spontaneous demonstrations of popular feeling — in Central Park or Bonn or at Greenham Common — are one element, and an indispensable one, of the process needed to bring governments to action.

How this is supposed to square with the evidence in the preceding chapters, such as the failures of disarmament, the technological momentum which propels the arms race and the causes of war, is not made clear. The military hardware described in the book bears adequate testimony to the horrific society in which we all live, and that is the book's main achievement.

John Walker

Up the arsenal (1983)

Book Review from the December 1983 issue of the Socialist Standard

Philip Webber. Graeme Wilkinson. Barry Rubin: Crisis Over Cruise: a Plain Guide to the New Weapons (Penguin. 1983).

This study opens by pointing out that during the last 38 years there has been a steady increase in the size, diversity and sophistication of nuclear weapons and that no treaty has been able to arrest that growth. The world now has "the equivalent of over three tons of high explosive for every man. woman and child on the earth" (p. 10). The authors argue that the superpowers attempt to use propaganda in order to secure the tacit approval for nuclear weapons. The issue of cruise missiles has brought about a new fear of the implications of possessing such weapons and therefore thrust the whole question of nuclear arms into the arena of public debate.

The book argues that the development of cruise missiles marks the biggest escalation of the arms race since the development of multiple warheads on ballistic missiles. The major significance of the new missiles is their extreme accuracy and their positioning within Europe. The use of European sites for cruise missiles is also accompanied by the European siting of the new Pershing II ballistic missile. The accuracy of these weapons, according to the authors, is greater than that needed for a specifically deterrent role. At the same time the Russians have developed their most sophisticated missile yet, the SS 20, and have deployed it west of the Urals. These missiles could strike at any part of Western Europe.

The fact that cruise missiles will be under American control is, the authors say. "tantamount to relinquishing national sovereignty" (p.44) and they are keen that such sovereignty be maintained. They also argue that the new missiles are not required because Britain has its own force in Polaris. Polaris, they say, is deterrent enough and any new weapon will pose unacceptable risks of a limited nuclear war and its inevitable conclusion, full-scale nuclear war. The authors argue the case for unilateral disarmament because:

unilateral reductions in nuclear weapons would be a trust-building exercise which could only lead to greater mutual security, (p.54)

The current stance of the British government on nuclear weapons negotiations has two facets. On the one hand it claims to maintain an independent armoury in Polaris (to be replaced by Trident) while adopting Cruise as part of a NATO strategy. It is this, and the nature of the propaganda exercise undertaken by all governments, that hide the facts of the nuclear arms race. While accepting that nuclear arms represent an awesome threat to the future of humanity, it is difficult to draw much comfort from this book which never fully analyses the causes of war. Too much attention is paid to the notion that wars occur as a result of having weapons and manipulating propaganda rather than to economic considerations. The authors do recognise that each superpower is "engaged in a power struggle to maintain its spheres of influence and extend its own interests" (p.64) but do not grasp the implications of this fact. In arguing the case against nuclear weapons the authors even give some credence to the currently popular but facile belief that the retention of weapons and the use of them is primarily a masculine characteristic.

For the future the authors argue that countries should begin to reduce their nuclear arsenals. Given the tremendous overkill of weapons in existence this would not undermine the "deterrent” value of the weapons retained. They would like to sec an "immediate bilateral nuclear weapons freeze" (p.82) and the setting up of a UN agency to control and ensure treaty verification. They argue for a nuclear test ban and the establishment of “a battlefield-nuclear-weapon-free zone in Europe” (p.83). Should we understand the implication of this to be that non-nuclear battlefields are acceptable? They also argue for bans on the development of space weapons, the production of high grade fissionable nuclear material for weapons and a world wide ban on nuclear weapons research and development. It would be interesting to see how this treaty would solve the problems that have beaten previous treaties. In that sense the authors are only offering more radical treaties to the minor ones which have already failed to halt the arms race.

It is only towards the end of the book that the authors go beyond attempting to reform the problems that have occurred as a result of conflicting capitalist interests when they say that:

  ultimate and lasting change can only come through radical changes in perspectives, perceptions and interactions of people on a very individual level which will occur hand in hand with the reorganisation of society and nations on a local and global scale (p.87)

How this is achieved is not discussed in any depth except in terms of changing consciousness. The authors also talk of the need for “revolutionary change" (p.88) but do not explain how such a revolutionary change is to be brought about. They also avoid suggesting on what basis that change will be made. It is not sufficient to talk about revolutionising society unless there is some perception as to how that revolution can be achieved and how the future society will be organised. It is for this reason that, while accepting that the book provides a useful factual description of the new weapons and a concise history of the development of the nuclear arsenal, it provides little in the way of practical advice on how to combat the threat of nuclear annihilation. Taking the issue of Cruise missiles as a reform programme leading to a revolutionary transformation of society is to limit the terms of reference in which a revolutionary programme can be considered. The arms race has occurred as a result of the conflicting interests of rival economic units. To focus attention solely on the nuclear issue is to detract attention from the real problem.

Philip Bentley