Paradox or Illusion ? : Old Ghosts in New Pyjamas (1920)

From the July 1920 issue of the Socialist Standard

Fair but False.

An article by Christopher Sandiway which appeared in “Reynolds’s Newspaper” of June 6th, while written in the fullest sympathy with the workers, presents in a new form errors that were exposed many years ago by Marx in his famous work, ”Value, Price and Profit.” If those who wish to help the workers towards their emancipation would only study this work, they would not be in danger of perpetrating the illusions so ably exposed there.

Mr. Sandiway tells an imaginary friend, who is, presumably, a so-called brain-worker, that when his wages go up the value of the hand-workers’ wages goes down.

Not so Simple.

Now this is obviously untrue, for if one section of the workers obtains a rise of wages the increase has to be paid by the capitalists, who cannot reduce the wages of the other sections, or raise prices because of that increase. They must therefore pocket the loss.

Mr. Sandiway is not aware of this fact, so he goes on to elaborate the idea. He says :

  “Let the entire population be represented by ten men, the product of whose labour is owned and controlled by the landlord and employing class. After the latter have taken all the produce they require, the remainder we will imagine, is placed in a store and will just supply the men’s material necessities. The allowance is a fixed quantity, or may vary in a slight degree at the will of the controllers.”

The True Facts.

This illustration by no means represents what happens. In the days of Pharaoh goods may have been stored and rationed in the manner suggested, but even then the total quantity had to vary according to the number of slaves to be fed and could not, therefore, be fixed. The capitalist method of production does not rest on chattel slavery; its method is wage slavery. Under the first the worker was the property of his master and was completely under his control. But the wage slave is free to bargain over his conditions because he is the sole owner of his labour-power. It is true that he bargains at a disadvantage, but the it he does bargain and can, if he prefers to starve or beg, refuse to sell his labour-power places him in a different position from the chattel slave. The share he obtains of the wealth produced is no longer dependent upon the will of the capitalist and the latter does not take what he requires but what he can.

Continuing, Mr. Sandiway says:

  “Supposing the wages of the men to be equal at first, each is entitled to l-10th of the contents of the store. But one man who goes to work in a silk hat and frock coat, demands an increase to keep up appearances. If therefore his wages are doubled the contents of the store must now be divided into eleven parts, for one man counts as two. This man’s share is thus 2-11ths, and the remaining nine get 1-11th each, prices have thus gone up for all, since the quantity for the same money is less.”

What it Leads To.

As Mr. Sandiway has failed to show that in capitalist society the total share of the workers is fixed, but only imagines it, his figures are purely imaginary and the ten workers, instead of continuing to receive the 10-10ths among them, now receive ll-10ths. The real value of the wages of the nine men has not changed : the tenth man has doubled his income, and the fact that he can buy double the quantity of goods that each of the others can buy does not make their position any the worse.

To see where his suppositions finally lead him we must follow Mr. Sandiway further.

First he supposes that another man of the ten obtains a 100 per cent, rise in wages, which, on his previous manner of reckoning (he cannot even take the trouble to get his own arithmetic right, and when his “silk hat” doubles his 1-10th he has, not 2-11ths but 2-11ths !) leaves the remaining eight with 1-12th each. Then he says

  “The remaining eight seeing prices rising, and being manual workers,’ down tools,’ and as it is a question of mere paper without real material loss to himself, the controller agrees to double their wages. The contents of the store must now be divided into twenty parts to correspond with the money out-flow, each man getting 2-20ths, or 1-10th, and things are as they began.”

There is one question that Mr. Sandiway might have asked himself. If the capitalists can by the issue of more paper money, or by raising prices at their own sweet will, cancel a rise of wages, why do they resist the demands of the workers at all? Why do they not adopt one or both of these expedients and save the disorganisation of business caused by strikes, of which they complain so bitterly ? He is cute enough to see that increased production might not, of itself, bring down prices. He says:

  “Extra production may merely take the form of luxuries for the well-to-do. It may even be wilfully destroyed to keep up prices, or cornered for the same purpose.”

But if any of these expedients are necessary to the capitalists in order to prevent prices from falling, Mr. Sandiway’s previous speculations fall to the ground. Capitalists destroy wealth by agreement when supply overtakes demand, thus showing that they are quite incapable of exercising collective control over the production of wealth. They only find out that supply is overtaking demand when prices fall. That they have to adopt such panic measures as destroying wealth shows how completely they are market ridden with regard to prices.

Among his other illusions Mr. Sandiways imagines that high prices can only be explained by the dwindling value of money. He calls it “the great bradbury illusion” and he thinks that he has explained what happens in his illustration where ” 2-20ths being found equal to 1-10th, things are as they began.” Of course he has really explained nothing.

If two bradburys will only buy the same amount of commodities that one did previously one of three things must have happened. Either the prices of commodities have gone up while the value of the gold represented by the bradbury remained the same, or the value of the gold has fallen, necessitating more of it to express the same value in commodities, or the value of the gold and the prices of commodities have both risen, but prices in far higher degree. If Mr. Sandiway thinks that the pound note does not represent one pound in gold, he must explain why it is that pound notes can be exchanged for gold at the Bank of England on demand.

As neither he nor any of the inflated currency cranks have yet succeeded in explaining this point, nor have attempted to show that the value of gold has fallen, they have failed to prove a paradox, and we are justified in presuming that things are what they seem — that prices have actually risen and not that paper juggling makes it merely appear so.

There are two factors that may cause prices to rise : first, an increase in the labour-time required to produce commodities ; secondly, the demand being greater than the supply. Under the first heading an increase in the labour time required to produce commodities, and under the second an extension of markets, which would increase demand, or the elimination of competition through the industrial paralysis of large wealth-producing areas.

With regard to the main stream of commodities that provides for the maintenance of society, it is an indisputable fact that the labour-time required for their production, instead of increasing, diminishes. Modern machinery and methods, constantly improving are continually reducing the labour-time required for production. It is obvious, too, that no new markets have been discovered. If there had been, the necessity for a world war to decide who should dominate existing markets would not have arisen. There remains, then, only one explanation of high prices—the elimination of competition through the commercial paralysis of large industrial areas. The countries that have been worsted in the world war are failing to compete, thus leaving a shortage of commodities to be made up by the victors, the irony of the situation being that the wage-slaves who fought and created these possibilities for their masters, have to submit to the higher prices, the capitalists strenuously resisting, all the while, every effort of theirs one-time “heroes” to raise wages.

All the cheap clap-trap about the “vicious circle” of wages rising, then prices, to be repeated again and again, is mere bluff, the object of which is to restrain the workers from asking for more. High wages are not the cause of high prices. Prices are high because demand is greater than supply, and the workers are compelled to struggle for higher wages in order to maintain their standard of living. When prices fall it will be because the markets cannot absorb all the goods produced, then unemployment will be greater and wages will fall. Thus wages are seldom for any length of time above the bare cost of living on the average, and such periods are about balanced by the periods when they are below. And it becomes increasingly difficult for the workers to force up wages, even on a rising market, because during the most prosperous times the supply of labour-power is always greater than the demand.

If Mr. Sandiway, therefore, examines the capitalist method of production in itself instead of looking at the results and imagining the process, he will find that the capitalists do not take from the wealth produced by the workers “all the produce they require.” Instead, they take all the wealth produced, and after realising by its sale the surplus value contained in it—the value added to the material over and above the wages paid to those who add that value (i.e., the workers) —use the proceeds partly to satisfy their personal needs and partly to extend the process of exploitation. The difference between the actual result and Mr. Sandiway’s being that the capitalists reduce the quantity of labour-power they purchase when the demand for commodities slackens, and, consequently, reduce the amount of produce that goes to the workers. The workers’ share is not fixed, but varies according to the capacity of the markets to absorb the products of their labour.

If Mr. Sandiways were to examine the figures relating to the number of workers engaged in productive work and the large number serving the capitalists personal interests. He might then realise how small a portion of the total wealth produced goes to the actual producers. He would also realise that prices would go up whether the workers asked for more wages or not, if the markets were favourable. He would also find that wages bear no relation to prices. Being the price of labour power, they can rise and fall quite independently of prices, and that without affecting them, as there is so wide a margin between the total wealth produced and the total wages paid.

If his sympathies are with the workers, therefore, Mr. Sandiway should study these facts instead of telling them that when “the brainworkers get a rise in wages it is at the expense of the handworkers” and vice versa. He should then tell them that the real antagonism is between the working class as a whole and the capitalist class, that while they are forced to struggle for higher wages when prices rise, their wages fall when the demand for labour-power slackens, thus keeping them always on the poverty line.

F. Foan