Capital's Strangle-Hold. (1922)

From the March 1922 issue of the Socialist Standard

In an article published in the review of the International Federation of Trade Unions a flood of light is thrown upon the question of the capitalists holding up production. It appears that the International Labour Office, acting upon the instructions of its governing body, instituted an enquiry as a result of a meeting held at Genoa in June, 1920. At this meeting a representative of the employers' group said:

"The cost of living has increased in every country to an alarming extent; this phenomenon is due to many causes, but under-production is certainly one of these causes. Under-production is in its turn a result of several causes, some of which (scarcity of raw material, lack of shipping, disorganisation of land transport, etc.), are not within the scope of this body; but it would be interesting to consider whether and to what extent conditions of labour (such as the adoption of the 8-hour day, the frequency of strikes and lock-outs too, if you like, opposition to methods of remuneration proportionate to individual or collective production, etc.) have influenced production."

After some discussion on this point, it was finally agreed to, that the enquiry should be of a general character and not exclusively confined to the conditions of labour.

The enquiry was entrusted to Professor Milhaud, of the University of Geneva, and the first volume of the "Enquiry on Production—General Report" is now to hand, and forms the basis of the article, "An Enquiry into the Causes of the Decrease in Production," from which we quote.

There are two lengthy quotations from well-known capitalist representatives, such as M. Millerand and Mr. Herbert Hoover, the American organiser, both of whom during 1919 and 1920 delivered speeches in which they called upon the workers for increased efforts towards greater production. Of course, neither of these gentlemen called upon the capitalist class to produce more, they apparently being well aware of the fact that it was useless, since the capitalists not only do not work, but have no intention of so doing.

Then follows several lengthy extracts from the report, showing the fluctuation of prices during December, 1919, and June, 1921, concerning such "products of primary importance" as silk, cotton, cast iron, wool, etc., which, reaching their highest price point in May, 1920, fell considerably between that date and June, 1921.

We insert this point because what follows shows that the writer of the article in question must have favoured the demand for increased production, for in commenting upon the great fall in prices, he (or she) asks as follows :

  "Was not this fall in prices just the very remedy of which the whole world was in need ? Was not the general high level of prices the scourge under which the world had been groaning ? Was not the return to normal prices the factor from which increased production was to be expected ?"

How the workers were to benefit by the great fall in prices, he does not show; in fact, although the attempt might have been made, it must have proved a failure.

When the markets of the world are glutted with the wealth produced by the working class, and a fall in prices takes place, it follows that the labour market is subject to the operation of the same factors as operate in the other markets, for besides producing a larger army of unemployed and thus increasing the competition for jobs, a decline in the cost of living cheapens the cost of producing the commodity labour-power, and consequently its price (wages) tends to fall.

The main point of the article to which we draw attention is, that with the fall in prices the writer seems very disagreeably surprised to find that something else had happened, and with an air of injured innocence he laments :

"The fall in prices gave rise to a crisis in production such us the world had not yet witnessed."

Strange ! For it was then discovered that this crisis brought forth a universal restriction of production, a huge systematic plan all over the world to hold up the production of wealth and thus maintain high prices. This was not the policy of the wicked workers in the Trade Unions, who, we are very often told, are guilty of slowing down and "Ca' Canny." On the contrary, it was the capitalists who, when faced with falling markets, decided upon restricting output.

Under the heading o£ systematic restriction the article gives several examples taken from Professor Milhaud's report, as follows :

  "In the first place there is the restriction of the production of Rubber, in which movement the Rubber Growers Association took the initiative in its circular issued on September 24th 1920, the result of which was a reduction in production amounting to 30 per cent.
"The situation with regard to cotton has been exactly the same. In December, 1920, the production of Japan was already reduced by 40 per cent., and further reductions were contemplated. In Egypt it was the public authorities themselves who took the initiative. The provincial councils unanimously decided to restrict the cultivation of cotton for 1921. In accordance with this decision the Sultan signed a decree on December 7th ordering that the area under cotton should be reduced by two-thirds and prohibiting the cultivation of cotton in upper Egypt except in the parts irrigated by the Nile."
"The American Cotton Growers Association succeeded in bringing about the largest percentage of reduction on record in the production of cotton. This Association boasted of the firm and vigorous attitude of the bankers of the whole of the cotton-growing districts, who refused to grant the necessary advances and credits to enable the cultivation of enough cotton to ensure a normal crop.'' 

The "Cotton News" of June 1st, 1921, refers, furthermore, to the radical restriction of the use of artificial manures in the old cotton-growing States along the east bank of the Mississippi,

  "which means to say that the growth and ripening of the new crop will be impeded and. furthermore, that the crop, already greatly restricted as regards the area under cultivation, will be seriously handicapped during the growing season. That applies even in those cases where the climatic conditions would be otherwise favourable."
"A similar policy has been applied by the International federation of Linen Manufacturers, comprising the linen manufacturers of France, England, Holland, Belgium, Ireland, and Denmark, who declared at their meeting held at Brussels on November 18th, 1920, that the most important consideration was to restrict production and stabilise the market."

Many more examples of this kind are given, showing to what an extent the capitalists have their grip on the world's resources. Figures are also given concerning the amount of unemployment in various countries.

Robert Reynolds