Saturday, February 13, 2021

A ‘Free’ Press (2005)

From the February 2005 issue of the Socialist Standard
  A free press is a de-facto sign of a liberal democratic capitalist state, and an independent media can often make things uncomfortable for those in charge. So why does the criticism persist that the free press is not really free, and that these champions of public opinion in fact collude in perpetuating not truth but capitalist mythology? 
  “The Primary Freedom of the Press lies in not being a Trade”
(Karl Marx, Rheinische Zeitung, May 1842.) 
   “Freedom of the press belongs to those who own one” (Anon)
For the last twenty years there has been increasing public awareness that journalistic integrity and the capitalist press are uneasy bedfellows. Various writers, particularly in America, have highlighted the incompatibility between a supposedly ‘free press’ and the production of a newspaper as a commodity for profit. Those who have criticised the press have every right to be scornful. But this is no breakthrough in investigative journalism; capitalism has always corrupted the press and led to it functioning as a mouthpiece for the ruling class, a point explosively demonstrated by Upton Sinclair in 1919 when he first published The Brass Check (republished by University of Illinois Press in 2002). In a timeless and scathing attack on the capitalist press Sinclair asserted “that American journalism is a class institution serving the rich and spurning the poor”, likening the journalist to a prostitute, enslaved in the business ideology of the owning class and functioning to work hand in glove with political leaders and big business to deceive public opinion.

Brass Check was written in the ‘Progressive Era’ at the beginning of the 20th century, a period that saw large swathes of US industry come under the sway of immensely powerful inter-linking monopolistic corporations controlled by a highly concentrated elite of powerful owners. The monopolistic ownership of the newspaper industry that spawned a new journalistic style that trivialised and sensationalised news, abandoning journalistic integrity and independence, caused particular outrage and was branded ‘yellow journalism’. But the essence of this condemnation was more seditious than a simple dispute over the presentation of newsprint. Critics argued that the newspaper monopoly strangled public awareness, censored all anti-business opinion and now served solely to express the owner’s class interests that operated, in Sinclair’s words, for the “hoodwinking of the public and the plunder of labour”. The press, it was argued, must be cleansed of corrupting class bias and function as a neutral conduit for the communication of meaningful information enabling the public to exercise informed democratic preferences.

Capitalist business
In Britain, a similar concentration of ownership had already dramatically altered the newspaper industry that stifled and later decimated the popular press. During the first half of the 19th century Britain had enjoyed a thriving and vigorous popular press that criticised appalling working conditions and was spurred on by the ‘betrayal’ of the 1832 Reform Act and anger at the 1834 Poor Law. The radical press produced numerous papers that “promoted greater collective confidence by repeatedly emphasising the potential power of working people to effect social change through the force of ‘combination’ and organised action” (James Curren and Jean Seaton, Power Without Responsibility: The Press and Broadcasting in Britain, p.24). The radical press was a major source of antagonism to government and the propertied class but neither libel actions nor stamp tax on newsprint were effective in subjugating it. Nevertheless, by 1865 the radical press was in decline, broken not by laws but by a combination of rising costs and market forces.

By the second half of the 19th century the rising cost of printing technology to support national newspaper circulation required major investment. Newspaper set-up costs in Britain rose from £1,000 to over £50,000 between 1840 and 1870 while in America these capital costs rose by 600 percent between 1855 and 1875, a huge investment that excluded all but the extremely wealthy. In addition to rising costs, the growing importance of advertising in Britain greatly disadvantaged the alternative press because successful advertising meant appealing to people who had money. The readers of the radical press were mainly working people on low incomes and advertisers discriminated against these newspapers because “their readers are not purchasers, and any money thrown upon them is so much money thrown away” (quotation from 1856, in James Curren and Jean Seaton, p.43). Advertising revenue acted as a subsidy enabling newspapers to be sold at a price below the cost of production and, once exposed to the realism of commercial capitalism, competitors without advertising revenue were forced from the market or sufficiently weakened to be taken over by larger companies. Newspaper production had become a capitalist business.

Sinclair too identified advertising as a main corrupting agent enabling wealthy advertisers to drive-out the US radical press and exert pressure on editors to mould content and editorial comment. “Everywhere in the world of journalism, high and low, you see this power of the advertiser,” Sinclair declared at a time when advertising, accounting for two-thirds of US newspaper income, greatly enhanced the concentration of ownership. Little has changed in an industry that allows little opportunity for new entrants to enter the market. Today, twenty-four inter-linking US corporations control over half of newspapers and most magazines, broadcasting, books and movies, while Britain is reputed to have the most highly concentrated newspaper ownership in the world, being dominated by five immense corporate groups.

Newspapers must appeal to wealthy corporations as a platform for advertising and to a readership with sufficient purchasing power to satisfy the advertisers’ selling aspirations. Making a newspaper attractive to advertisers is achieved by altering content to suit the values and prejudices of those who pay advertising revenues, as was pointed out in 1910 by US Professor Edward Ross: “When the news-columns and editorial page are a mere incident in the profitable sale of mercantile publicity, in it is strictly ‘businesslike’ to let the big advertisers censor both”(cited by Robert McChesney and Ben Scott, Monthly Review) A newspaper boasting a large circulation but lacking content that appeals to advertisers will rarely survive, a fact that provides an explanation for the disappearance of ‘labour news’ and the widespread growth of lucrative ‘business news’ aimed at a minority audience. The demise of the Daily Herald and Sunday Citizen in the 1960s also illustrate the point. In its final year the Daily Herald enjoyed 8 percent of daily circulation but attracted only 3 percent of the net advertising revenue while the Sunday Citizen received barely one-tenth of net advertising income of the Sunday Times. Both newspapers were considered hostile to business and therefore denied advertising patronage, while in the US the corrupting influences that Sinclair so scathingly criticised have free rein, frequently suppressing news carrying anti-business content by threatening to cancel corporate advertising accounts.

But besides advertising other, less obvious, factors have also worked to make newspapers a willing mouthpiece for corporations and for government. Newspapers demand a constant flow of low-cost material from reliable sources that avoids expensive research. With budgets squeezed, newspapers must focus where ‘meaningful’ news is most likely to occur. Government, corporations, trade groups and business lobbies with press and PR offices feed the press with stories that are presumed accurate, with mutual benefit derived by delivering cost reductions to the newspaper while tending to mute criticism by limiting the access of alternative views. Similarly, purchasing news from enormously powerful agencies like Associated Press or Reuters has cut costly international newsgathering. Of course, not all news can be printed, but when reputedly less than 2 percent of the world’s news gathered by these agencies is actually passed on to the news media, it raises serious questions about the criteria used to filter news deemed fit for our consumption. News that seriously threatens the status quo is given scant exposure or will simply be omitted – as if it never existed. Clearly, not all capitalism’s misdemeanours can be simply ignored because the consequences cannot always be hidden. The press must be seen as criticising the behaviour of a company or government, for no other reason than to maintain credibility, though such incidents are generally quickly forgotten as the press moves on to the next story.

But although censorship by omission certainly occurs it would be wrong to assume that journalism, in Britain at least, is consciously censored or that a conspiracy amongst journalists exists to hide facts from public scrutiny. Instead self-censorship linked to the personal economic necessity to conform to institutional and company requirements make journalists, in Sinclair’s words, drift “inevitably towards the point of view held by their masters”. This is precisely what George Orwell meant when he wrote in his unpublished introduction to Animal Farm, that “unpopular ideas can be silenced, and inconvenient facts kept dark, without any need for an official ban” (Times Literary Supplement, September 1972.)

In capitalist society the production of a successful newspaper means journalistic integrity and editorial objectiveness are subordinate to the institutional requirement of production for profit. There can be no other way, for as Professor Edward Ross pointed out in Sinclair’s era:
  “To urge the editor, under the thumb of the advertiser or of the owner, to be more independent, is to invite him to remove himself from his profession. As to the capitalist owner, to exhort him to run his newspaper in the interests of truth and progress is about as reasonable as to exhort the mill-owner to work his property for the public good instead of for his private benefit.” (Edward Alsworth Ross, ‘The Suppression of Important News’, Atlantic Magazine, March 1910, quoted in Monthly Review May 2002).

More recent testimony to this enduring law of capitalist newspaper production was expressed by Piers Morgan, former editor of the Daily Mirror, when he stated, “I only judge a story on what sells and what doesn’t” (Guardian, 30 November 1996).

Today, newspapers perform in much the same way as they did in Sinclair’s time, precisely because they operate in the same economic conditions. They lock-in our views to prevailing ideology by playing on prejudices and aspirations, incessantly communicating messages that instil working people with beliefs needed to integrate them into a life of wage slavery, with advertising assisting to create a ‘virtual’ world conducive to buying. “Journalism,” Sinclair wrote, “is one of the devices whereby industrial autocracy keeps its control over political democracy; it is the day to day, between elections propaganda, whereby the minds of the people are kept in a state of acquiescence, so that when the crisis of an election comes, they can go to the polls and caste their ballots for either one of the two parties of the exploiters”.

Sinclair’s book is a penetrating analysis of the early US capitalist press. But it is also the work of an author who, despite his stinging criticisms of the capitalist newspaper industry, believed that the press could in someway reform itself to stand outside class struggle and be recreated as a neutral independent force within capitalist society. Sinclair held the views that capitalism and genuine democracy could co-exist and journalism could be freed from the economic laws of capitalism to give expression to popular demand and abstract ideas of ‘social justice’ and ‘fairness’ that were divorced from the actual material conditions. But the reality is that as long as newspaper production is a profit-driven business it can never be free from the corrosive economic influence of capitalism. We need not lament this fact – for the press can perform in no any other way in capitalist society. But nor should we waste our energies on bankrupt delusions of press (or any other) reform, as Sinclair did, that at best can offer only temporary respite. Instead, we should organise to replace a society that corrupts and debases everything it touches and build socialism where a free and equal people will enjoy a free and informative press.
Steve Trott

Cooking the Books: Banks again (2005)

The Cooking the Books Column from the February 2005 issue of the Socialist Standard

An item on our website on the myth that banks can “create credit” by a mere stroke of the pen has elicited a response from Belgium, from three members of a party there called Vivant. Joseph Meyer, a member of the parliament of the German-speaking region of Belgium, emailed us: “In the article ‘Major Douglas Rides Again’ the author made an incredible stupid statement, when he wrote ‘. . . banks cannot create credit-money on their own . . .’ Because the banks do this all the time, you really should publish a correcting article, in order to maintain your party’s credibility”.

A key plank in Vivant’s programme is a “citizens’ basic income” for all (also favoured by the Green Party here) and it seems that they have been tempted by “funny money” theories to explain how this would be financed.  Actually, the passage our correspondent gives does not appear in the article. What we argue in it is that banks cannot lend out more money than has been deposited with them, which is indeed a denial that they can “create new credit-money on their own”. What banks do every day is lend out money deposited with them, making a profit out of the difference between the rate of interest they charge and the rate they pay to depositors.

The second correspondent refers us to a site of University College Dublin (Dead Link) on the “creation of money” which he claims backs up Vivant’s view. Despite the misleading title (banks don’t create money, just lend it), the site in fact backs up our claim since it shows clearly that, if there is a requirement that a bank must retain 10 percent of its assets in cash, and if 1000 euros are deposited with it, it can only lend out 900 euros and not 9000 (as is frequently misunderstood). True, if the 900 euros is eventually deposited in a bank, then a further 810 euros can be loaned, and if this is also eventually deposited, a further 729 euros, and so on until a total of 9000 euros is lent out, but only because in total 10,000 euros will have been deposited over the same period. In this (rather unrealistic, but not theoretically impossible) scenario which is used in all economics textbooks these days, if anybody could be said to have “created credit” it would be the depositors not the banks. It is their money that the banks re-)lend not money supposedly created by a mere stroke of the pen.

The third correspondent ends his email: “you are wrong, and if socialism is your concern, you should admit [it]”. Socialism is very much our concern, but why should an accurate description of how capitalism works, in this case in relation to banks, be regarded as somehow anti-socialist? In fact, by showing how monetary reforms, whether based on accurate or inaccurate theory, cannot solve the problems facing wage and salary workers under capitalism, this confirms that the only way out is to establish the common ownership and democratic control of the means of life, with production to satisfy people’s needs and not for profit, and distribution in accordance with the principle “from each according to their ability, to each according to their needs”. As such, socialism will be a society without money and its problems. Banks will become redundant and the buildings and computer equipment they currently take up will be freed for other purposes.