A Ray of Hope — For the Capitalist. (1922)

Book Review from the April 1922 issue of the Socialist Standard

"Wages, Prices and Profits." The Labour Publishing Company, Ltd., 6, Tavistock  Square, W.C.1. Price 6s.

At a moment when the capitalist Press and apologists are shrieking to the workers that "business is being ruined" by the huge wages paid to the employees, when drastic wage cuts and longer hours are being enforced in every industry, it will be comforting and refreshing, as well as reassuring, for those workers to turn to the pages of this slim volume.

In its 110 pages the workers who are greatly worried by "the serious difficulties" of the employers, and who wonder how the masters can stand the strain of "high wages" and "bad trade," will find balm and solace for their harassed feelings. A wave of relief will surge through their minds when they find that, after all, there are a few gleams of hope—for the masters —and even a fragment or two of resources left to them to tide over the present "time of terrible strain."

The book consists largely of tables and figures dealing with wages, prices, profits, capitalisations, etc. These tables are compiled almost entirely from "official" sources—that is, sources provided by the masters themselves in various Government Departments. It is well known, however, that Government officials are terribly busy men, and thus some of the information they supply is sometimes deficient in certain details. The compilers of this book have endeavoured to make good such deficiencies from other sources.

The essential reason for the existence and continuance of capitalism is Profit— of course, "Fair" Profit—so we will take one or two points from that section first.

The vast majority of business undertakings to-day are in the form of joint stock companies. When these are public companies, they must issue a balance-sheet each year. A useful account and analysis of these balance-sheets, and how they are "arranged" to conceal the truth, is given on pages 31-36 of this work. On these sheets the nominal profits made during the year are shown. These profits are usually tabulated as a percentage of the capital of the company, and here one of the gleams of hope shines, through the somewhat mystifying figures of the balance-sheets.

The ordinary uninstructed person would imagine that the "capital" shown on the balance-sheet was the amount of actual cash invested by the shareholders. Fortunately for the shareholders, this need not be so, and in many cases is far from being so. Sometimes the shareholders are given shares, called "bonus" shares, for which they pay nothing, but on which they are entitled to draw dividends. Thus a company with £200,000 capital might distribute "bonus" shares in the ratio of one new share for every two original shares. This would increase the "paid-up" capital—so called—to £300,000, and the profits would now be reckoned against this new figure, although the shareholders had only provided two-thirds of that amount.

If the profits made in a year were £20,000, this would be entered as 10 per cent, on the original capital, but the same amount of profit would only represent 6.6 per cent, on the new "watered" capital.

On page 92 the following table is given of the Bonus shares issued in 1920, as far as these are obtainable :—

The totals show that bonus shares were distributed over all the industries mentioned, in the ratio of two new shares for every three original ones held; but in certain cases—as Tea and Textiles—the bonus shares distributed exceeded the original capital—in the latter case by over £4,000,000. In some cases bonus shares are paid for, but always at a price below the market rate prevailing at the time. Some instances are given on page 94 :—

  "The Imperial Tobacco Co., for instance, issued in 1920 new £1 shares to its ordinary shareholders in the proportion of one new share for every three held, at the price of 40s. ; immediately after this operation the shares were quoted at 55s. 6d., thus enabling the shareholder to sell out his holding and pocket 15s. 6d. per share on the transaction, and enabled the company to increase its reserve (generally entitled 'share premium account ') by 20s. on each share issued."

Further on we are told :—

   "The Aerated Bread Co., for instance, in February, 1920, issued 63,750 £1 shares to its shareholders at the price of £4. The premiums derived from these shares were put to reserve. In the next month, however, the company capitalised these premiums, together with certain other reserves, and issued fully paid-up bonus-shares to its ordinary shareholders in the proportion of one new share for every share held, the new shares ranking for dividend as from March 28th of that year." ....
   "Thus the Shell Transport & Trading Co, issued 6,433,852 £1 shares at par to its ordinary shareholders. The price of the ordinary shares, immediately after this operation, was quoted at £6 ; at this price consequently by selling all these shares, the shareholders would have been able to. make a profit of £38,603,112."

While on page 100 we read that the coal firm of William Cory and Son "distributed a bonus in April, 1919, of two new shares for every one held."

Not so bad. Quite a few contingencies could be met from these little emoluments. The worried workers who were so anxious about how the poor employers could exist in the present state of affairs may now breathe more freely. The resources of these employees would seem to at least compare with the funds of the Amalgamated Engineering Union.

Another table is given on page 101 wherein it is shown that the nominal capital of new companies registered in Great Britain (Black-and-Tans are not given in this list) in 1920 was £593,189,032. It is thus evident that those wonderful high wages did not extract every penny from the employers' pockets.

The "concentration of wealth" theory of Marx has been disputed at various times by more various people, but a table on page 101 supports this contention. The number of Joint Stock Banks has decreased from 43 in 1913 to 20 in 1920—or by more than half. This has been due to amalgamation. The Capital and Reserves, however, have stood the strain fairly well, as they have increased from £83,068,000 in 1913 to £128,154,000 in 1920. Another factor that seems to possess moderate stamina is that of Deposits, which have risen in the same period from £809,352,000 to £1,961,527,000, or 142 per cent.

This is only part of the story. Of the above 20 Banks there are five (the "Big Five") that hold £1,628,375,000 of the deposits, or, roughly, 83 per cent, of the total.

Numerous other tables are given that are of great interest to the workers, and certain features are shown more clearly by means of charts at the end of the book. We have only room for two further quotations. Referring to war bonuses, we read :—

  "Nor did the workers succeed by this means in keeping wages fully abreast of prices, but the advance always followed behind, and never went before, the rise in the cost of living " (page 14).

While with reference to wages and prices we are told :—

  "There is, moreover, no necessary connection between wages and prices. It is significant that the drastic reduction of wages to which the miners were subject at the end of the coalowners' lockout, was immediately followed by a rise of 3s. per ton in the price of domestic coal " (page 43).

A most comforting and valuable book. The only regret is that it has not been found possible to issue it at a price within the reach of every worker. Still, even at 6s., it is well worth buying—if one can spare the cash—for it shows that, even without Reparations, the capitalists of this country can still hold out a little longer against the "bad times."

Jack Fitzgerald

Some Errors of A Syndicalist (1920)

Book Review from the March 1920 issue of the Socialist Standard

My Second Country, by Robert Dell. John Lane, The Bodley Head. 75. 6d.

Written with sympathy and insight, and in a taking style, this book gives one of the best descriptions of conditions in France that has appeared since the war.

Beginning with an examination of the French character, the author then describes the political Constitution, tracing its developments from the Revolution, and afterwards looks into the economic conditions.

One conclusion that he draws from his survey is that France is bankrupt, and must either repudiate her National Debt or

Face a Revolution.

But Mr. Dell holds out no hope of the former solution, for he believes that while the French Bourgeoisie cannot agree to repudiation, neither will they submit to a heavy capital levy, nor to the huge taxation that would be necessary to tide over the difficulty even temporarily. "These people are quite willing to

Let their Sons be Killed,

said an eminent Frenchman two or three years ago, "but you mustn't ask them for five francs." (P. 191.)

The way in which the French capitalist class have resisted the increase of taxation during the war on the claim that "Germany will have to pay in full," is well described. Now the fact emerges that Germany cannot "pay in full," but no serious attempt is made to meet the situation, and hence Mr. Dell thinks a revolution is inevitable.

He shows the grip of the big financial interests upon the political machine, and thinks the political corruption in France is greater than in England, but as he admits that the thing is done more openly there than here, anyone who has looked at affairs that have been exposed in England during and since the war will be more inclined to hold the view that the difference, if any, is small, and that it is only a matter of how much more is concealed here.

Combined with this corruption there is a host of forms and methods connected with Politics and Administration that are obsolete and

A Considerable Hindrance

to the smooth working of the machinery. The resentment against these methods and results, coupled with the corruption, leads the author to the conclusion that Parliament as a whole is discredited.

How erroneous is this conclusion is clearly shown by the increased number of people who take part in the elections and still more by the huge struggle between the "interests" for control of Parliament. Among many instances that the author gives is one of the metallurgical industries, of which he says "there is good reason for believing that they prevented the bombardment of the mines of Briey when the latter were held by the Germans." (P. 61.) This action would have been impossible without

Control and use of the Parliament.

The author's study of the economic conditions prevailing in France is, in general, excellent, though a few points call for criticism. Moreover, as it is a question seldom seriously examined by ordinary writers, its treatment adds considerably to the value of the volume.

Mr. Dell claims, and gives good evidence to support the claim, that the ideas engendered by small property or "petty bourgeois" conditions are the prevailing ideas in France. This accounts for the readiness of the people to subscribe for Government loans and similar "safe" securities, and their reluctance to invest their money in industrial undertakings at home, though wild cat schemes abroad have strong attractions for them. Hence France is a great lending nation, and this explains the vast control of affairs by the

Purely Financial Interests

as distinct from the industrial ones.

In dealing with the practice of family limitation, a practice French people have carried further than any other nation, Mr. Dell says:

  If families have been too much restricted in France that is the result of the economic system. In a capitalist state of society a man without property, who brings into the world a large number of children, is exposing them to the risk of a life of misery.
  The limitation of families in France is not due to the selfishness of parents but to their desire only to have children to whom they can give a decent chance in life. (P. 46.)

Now capitalist states of society exist in England, Germany, and other countries as well as in France, yet limitation of families is not practiced to anything like the same extent in those lands. Mr. Dell has failed to note the condition that is, in the main, responsible for the greater limitation of families in France than elsewhere. The reason is to be found in the land system established by the Revolution.

Under this system a proprietor of land cannot leave it to his eldest son, or any other child alone, but must allow it to be divided

Equally among the Children.

The plots, as first shared at the Revolution, were sufficiently large to maintain one family, but were quite inadequate to support two or three. The experience of a generation drove this fact home, and the peasant-proprietors began to limit their families to prevent their plots from being cut up into pieces too small to support a family. The population passing into the towns from the country carry these ideas with them and make the practice prevalent.

In this connection it is certainly surprising to find so acute an observer as Mr. Dell supporting the exploded lies of Malthus, written to justify the misery caused by capitalism in its early days, when, on p. 48, he says: "the world can support in comfort only a certain number of people," and "Malthus only formulated in a theory the conclusions of ordinary good sense.

The former remark simply begs the question —What is this "certain number"? None of us know, except that under Socialism it could be far greater than the present population, even if one only considered that the millions at present engaged on useless labour or in destruction would then be employed upon productive work. Yet in the same section in which he lends support to the Malthusian sophistry, the author calls for an increase of the population in France when he says:

  France can only be saved by a large immigration of adult men, or by a large number of illegitimate children, or both. (P. 51.)

and

  The only solution to the problem is the endowment of motherhood whether legitimate or illegitimate. The endowment should be limited to three children. (Pp. 47-48.)

Similar measures were openly advocated in this country during the later stages of the war when the wholesale slaughter of the male population began to deplete seriously the ranks of the wage slaves. Malthus then, and since, was

Pushed into the Background,

where, doubtless, he will remain till the question of unemployment looms large enough to bring him forward again.

If the French bourgeoisie will not submit to the confiscation of part of their wealth to meet their huge liabilities, what form will the inevitable revolution take? It is here that the author loses a large part of his grip upon essentials.

His admiration for Voltaire is so great that Mr. Dell holds the France of Voltaire as "the great, the true France." This is idealism of the type that looks to the past for its inspiration and guide, and fails to realise that each age must solve its problems with its own materials, and that attempts to revive the dead past must end in failure. Voltaire voiced the views and expressed the ideas of the then new rising class, the bourgeoisie. Those views and ideas do not fit the existing conditions; neither are they any guide to the class now rising to control the social forces, the working class. This class must work out its own salvation from the basis of

Its Own Conditions and Desires,

without any regard for past forms, or blind following of previous systems.

Under the influence of this idealism the author, who announces himself a Socialist, and says "I hope not only to live to see the dictatorship of the proletariat, but also to have the honour of assisting in it" (p. 274), is led to ignore the very facts he so clearly described. He is so obsessed with that insane thing, Syndicalism, that would pit unarmed men against machine guns and aerial bombs, that he advocates the abandonment of political action because it is, he contends, quite useless. He declares: "A Socialist Parliament, with a Socialist Government, could not establish Socialism." (P. 260.) If the reader should be rude as to ask why, the only pretence of an answer is found on pages 279-3, where it is said:

  Capitalism can never be abolished by Act of Parliament. Seeing the enormous pull the monied interests must always have in an election in our present social conditions, if only because elections cost so much money, I doubt whether a majority would ever be obtained at the polls for the abolition of capitalism.

Even the meanest intelligence should be able to understand that people who are not prepared to vote for Socialism will not take infinitely more troublesome and dangerous methods to establish it. Hence the only conclusion that can be drawn from his statement is—that Socialism is impossible.

But what alternative to political action does our author offer? The following:

  The modern revolutionary method is the general strike, not barricades in the street. That is the form that direct action will take, and if the general strike be properly organised, and the strikers hold, it can accomplish in a few days without bloodshed or violence what it would take years or generations to accomplish by constitutional methods, if they could ever accomplish it. (P. 277.)

We have exposed the glaring fallacy of this on numerous occasions, but it will bear repeating.

The first point to note is that for the General Strike to come into operation it is necessary that practically the whole of the workers must have agreed to the strike and its object. Compared with the work and time necessary to obtain this result, the convincing of a majority of the workers of the wisdom of

VOTING for Socialism

would be child's play.

Secondly, the immediate result of a General Strike is the stoppage of the production of foodstuffs. Moreover, the distribution of the foodstuffs existing is prevented.

What, now, are the conditions? This. On one side are the huge numbers of the working class, including the wives and children, whose total means of subsistence consists of the tiny stocks in their cupboards.

On the other side are the relatively small numbers of the capitalist class, whose well-stocked larders will keep them alive long after the workers' stores have vanished.

Result—mass starvation.

But what of the foodstuffs in the stores and granaries? it may be asked. The answer is simple. As the workers have left political power in the hands of the masters, the Government would pass a decree in about ten minutes "commandeering" all available foodstuffs "in the national interest." These stores would be guarded by soldiers and their contents used to keep the capitalist class and their supporters alive while

The Workers Starved.

"Could not the food producers stay at work and continue to produce food?" it may be argued. Quite likely, and as soon as it was produced it would be seized by the soldiers to feed themselves and the capitalists. Even this does not exhaust the methods open to the masters. When the French railway workers went on strike in 1910 the strike was broken by M. Briand mobilising the men—most of whom were on the Army Reserve—under military orders and then sending them to run the trains as soldiers. What is there existing that would prevent the masters, through the Government, calling upon the workers in the food industries and sending them to produce food, as soldiers, for the master class? Nothing—except the resistance of the unarmed men against the machine gun and the aeroplane.

Mr. Dell claims to be a follower, or acceptor, of Marx's teachings. What distinguished Marx and Engels throughout their career was their clear grasp of the importance of political action. All through their writings runs the slogan—"Every class struggle is a political struggle." Their famous Materialist Conception of History shows how every new rising class, in society had to seize the political machinery of its day for the purpose of destroying the old system and establishing the new.

Only when they had conquered this power and were thus able to

Control the Armed Forces

were they in a position to build up the constitution and social methods in harmony with the productive forces of society.

The modern proletariat cannot escape from the conditions that confront it. Until it has wrested the powers of control—the political machinery—from the hands of the master class it cannot own the raw materials, it cannot organise production for its own purposes, it cannot retain the things it manufactures. Whatever differences of opinion may exist as to the particular forms under which Socialism will operate or the details of any interim period that may come, these all fade into insignificance before the two great factors that must first be achieved.

The first is that a majority of the working class must have reached an understanding that social ownership of the means of life is the remedy for the social evils.

The other is that before they can put any form of social ownership into operation they must seize the power necessary to take control.

To the workers who have had actual contact and conflict with the powers wielded by the master class, it seems astonishing that men of the professional section who take up the study of social conditions should be so blind to these facts. The workers, in the main, are being converted to Socialism by the pressure of the class war, and not by the immature theories of the "intellectuals." Thus while granting praise for so much acute observation, presented in good they will reject the misunderstanding by the author of the lessons to be drawn from the facts.

Jack Fitzgerald

A Gloomy Professor. (1920)

Book Review from the May 1920 issue of the Socialist Standard

The Unsolved Riddle of Social Justice, by Stephen Leacock. London : John Lane, the Bodley Head, Vigo St., W.1. 5s. net.

This book, written by a professor of Political Economy at McGill University, Montreal, is one of the numerous attempts made to explain the "labour unrest" throughout the world, and to propose some remedial measures for it. To be, and remain, a professor at a University necessarily means that one must not put forth ideas or statements that are injurious to the interests of the master class. Should one do so one very quickly loses one's chair, and is forced to seek employment in another direction.

This does not prevent certain guarded criticisms being made, especially when "unrest" reaches a troublesome stage, but the edge of the criticism is always turned in the end against one or two "exceptional" employers while the majority are shown to be virtuous, hard-working, self-sacrificing benefactors of mankind.

Thus the present volume opens with several important admissions on the conditions existing today. On page 14 we are told.

  With all our wealth we are still poor. After a century and a half of labour-saving machinery we work about as hard as ever. With a power over nature multiplied a hundred fold, nature still conquers us. And more than this : There are many scenes in which the machine age seems to leave the great bulk of civilised humanity, the working part of it, worse off instead of better.

This point is further emphasised on page 76 where he says:

  Labour-saving machinery does not of itself save the working world a single hour of toil; it only shifts it from one task to another.

In the third chapter the author attempts to disprove the usual theories on Value and Price. Especially does he object to the views of Adam Smith and Ricardo that the quantity of labour governs value. After referring to the stock illustration of the primitive savage he contends:

  But in the complexity of modern industrial life such a calculation no longer applies; the differences of technical skill, of native ingenuity, and technical preparation become enormous. The hour's work of a common labourer is not the same thing as the hour's work of a watchmaker mending a watch, or of an engineer directing the building of a bridge, or of an architect drawing a plan. There is no way of reducing these hours to a common basis.

The falsity of this statement is proved by everyday experience. Engineers, Architects, trained Technicians, etc., make elaborate and close calculations to show how the time they have to spend in acquiring their special knowledge and training has to be taken into account when their remuneration is being fixed. Directly or indirectly these multiplications are always applied to the unskilled labourers' standard as the basis of the calculation. Thus in the agitation carried on to-day by the school teachers, many of the speakers are taking the dustman or coalman as a basis for their calculation of what the salary of the teacher should be. A striking illustration of this fact is given in places where technical and professional education is partly or wholly supported from the national taxes. This reduces, or in some cases abolishes the fees that were paid formerly by the students, who are then expected to take lower salaries because their training has cost them less. Chemists in Germany were a front rank instance of this.

It is quite true, as Mr. Leacock says later on, that the payments at a given moment are the outcome of "economic strength." But "economic strength" only determines the range of the "fluctuations," it does not fix the line about which these fluctuations take place. That is determined by the cost of production based upon the average unskilled labourer.

Having admitted so much of the evils of the present system the author turns to remedies. Apart from his own nostrums he only refers to one other proposed remedy, namely, Socialism. This is impossible—"Socialism is a beautiful dream, possible only for the angels" (p. 22). Still he objects to the proscribing and persecution of Socialism, and claims that "It will languish and perish in the dry sunlight of open discussion."

But what is the "Socialism" that Mr, Leacock combats? In this second decade of the twentieth century, sixty-one years after the publication of Marx's Critique of Political Economy, "a critic of Socialism, not an ignorant Christian Evidence ranter, or a Tariff Reform charlatan, but a full-blown "professor" of Political Economy, takes as the standard work on Socialism Edward Bellamy's Looking Backward! The laws of social evolution are not even mentioned. The stage of development that present society has reached, and the only alternatives before us are passed over and a philanthropic sentimentalist's dream of a future state of society, with all its details fully worked out, is put up to be shot at, while the scientific analysis of capitalism and the discovery of social laws by Marx, Engels, and Morgan are carefully ignored.

Even then what is the author's main objection to Looking Backward? It is to the elected managers. They, in his opinion, must work as angels. "Now," he says (p. 106) "Let me ask in the name of sanity where are such officials to be found?" And he answers that they cannot be found anywhere.

What, then, is to be done? For evidently something must be done to avert chaos.

  The time has gone by when a man shall starve asking in vain for work; when the listless outcast shall draw his rags shivering about him unheeded of his fellows; when children shall be born in hunger and bred in want and broken in toil with never a chance in life. If nothing else will end these things, fear will do it. The hardest capitalist that ever gripped his property with the iron grasp of legal right, relaxes his grasp a little when he thinks of the possibilities of a social conflagration. (P. 119.)

Mr. Leacock's remedies can hardly be described as heroic. "Work must either be found or must be provided by the State itself," he says, and points to the undeveloped lands of Canada, United States, and Australia as being capable of absorbing the labour of generations. Whether this means compulsory emigration we are not told. It is interesting to note in passing that he says much to discredit the Malthusian doctrine.

  Put into the plainest of prose, then, we are saying that the government of every country ought to supply work and pay for the unemployed, maintenance for the infirm and aged, and education for the children." (P. 130.)

The two great measures to be applied to this end are the establishment of a minimum wage and the shortening of the hours of labour. Even eight hours a day at a mechanical task is considered too long by our author. These measures are to be brought into operation gradually by the combined means of legislation and collective organisation.

It needs but a superficial examination to show that even a rigorous application of these measures would not affect more than the fringe of the subject. Despite the so-called shortage of commodities, General Haig has been appealing in vain to the employers to give work to hundreds of thousands of demobilised men and officers who are unemployed. Gibing at certain of the trade unions is mere clap-trap as these unions point to the number of unemployed already in their ranks. Above all this, however, is the over-riding constant factor of improving machinery and means of production. These grow far faster than the effective demands of the market can absorb their products. Hence, apart from certain times of fluctuation, the number of unemployed is not only maintained, but is bound to increase.

Against this great fact Mr. Leacock's puny measures are as useless as Mrs. Partington's broom against the sea.

And even then, with unconscious humour, our author turns his own arguments against Socialism upon his own case when he says :

  Yet it is clear that a policy of State work and State pay for all who are otherwise unable to find occupation involves appalling difficulties. The opportunity will loom large for the prodigal waste of money for the undertaking of public works of no real utility, and for the subsidising of an army of loafers. (P. 128.)

A terrible outlook, truly! And how can it be met? By the very means that our author declared impossible.

   Clearly enough a certain modicum of public honesty and integrity is essential for such a task; more, undoubtedly, than we have hitherto been able to enlist in the service of the commonwealth. But without it we perish.

Then perish we must, for Mr. Leacock has already stated that such people cannot be found.

The Socialist—a student of social evolution— has no use for either the well-meaning Utopias of the Bellamys or the despair of the Leacocks. He knows that the development of the powers of production, their increasing size and complexity, the steady concentration of the means of life into fewer and fewer hands, with its increasing slavery of the workers, will force the problem before mankind:—Either social ownership of the Means of Life, or Destruction.

The unrest, the rumblings, the strikes, are all signs that the working class are beginning to kick—still blindly, it is true—against the effects of this system. That restlessness, turned into right channels due to the education the conditions give, aided by the propaganda of the Socialist, will ensure that not destruction, but Socialism, will prove the solution of the problem.

Jack Fitzgerald