Cooking the Books: Clutching at green shoots (2009)

The Cooking the Books column from the July 2009 issue of the Socialist Standard

The textbooks may say that the banking system can create loans worth ten times more than an initial deposit in any bank in the system, and currency cranks may misrepresent this to mean that an individual bank can create money to lend out of thin air, but practising bankers and financial journalists know better.

A recent article in the Investors Chronicle (22-28 May), discussing the difference between banks in Asia and banks in Britain and America, gave the views of an investment manager, Mike Kerley:

  “‘Consider the banks in the US and the UK,’ says Mr Kerley. ‘They lend out far more than their deposit base and rely on credit markets to fund this, which has been shown to be ill-advised, costly and ultimately catastrophic.’ Although the Australian market is closely aligned with the UK banking model, elsewhere in Asia the deposit base more than covers lending, so there are no serious liquidity issues. ‘Banks are the opportunity in Asia. Asian loans to deposit ratios are 80 per cent,’ he says. ‘Asian banks do what banks should do and make money on margins’.”

This is a typical confirmation that banks make their core profit out of  borrowing money at one rate of interest and re-lending it at another, higher rate. No bank can lend money it doesn’t have so they have to get this from somewhere. In the past all banks used to get the money to re-lend, as banks in Asia still do, from what had been deposited with them. In recent years, however, banks in Britain and America, started to borrow money to re-lend from the money market.

Banks in Britain and America still make their profits (or suffer losses) out of the margin between the rate of interest at which they borrow and the rate at which they lend. The difference is their reliance more on borrowing money from the money market than from depositors (a deposit is essentially a loan to a bank). The money market is a much more volatile source of funds than deposits, as American and British banks eventually found to their cost.

When the crisis began interest rates on the money market went up, so squeezing the margin between the two rates of interest, in some cases wiping it out or even making it negative. Hence the banking crisis. Things seem to have settled down a bit at the moment.

Not that the banking crisis was going to last for ever. Nor will the economic crisis. However, before a recovery can begin stocks must first be cleared, though this won’t be enough in itself. There are signs that this may have started, but is being optimistically seen by some economic commentators as a sign that the depression is over. “Recession is over, says think-tank as it reports growth in April and May”, headlined the Times (11 June) reporting the opinion of the National Institute of Economic and Social Research.

The Times’s own Business Editor, David Wighton, was more cautious:

“If the upturn we are seeing now is in large part because of restocking, there will be a spike in orders which will inevitably fall back again”.

There is still some way to go before economic conditions will be ripe for a recovery to really begin. Unprofitable firms must be eliminated, their capital destroyed or devalued, and real wages must fall, so as to restore the rate of profit. That means more company failures and more unemployment. In short, more misery in a world that could provide plenty for all if it weren‘t for capitalism.

50 Years Ago: Race and Violence (2009)

The 50 Years Ago column from the July 2009 issue of the Socialist Standard 

Race & Violence

With the recent murder of a coloured man in Notting Hill, race-prejudice has once more become a subject of public interest.   It is not possible to say at this stage whether or not Kelso Cochrane died as a result of racial hatred.

What can be said is that passions, hatred and sympathies have been aroused. A large crowd of mourners, both white and black, followed Cochrane’s coffin through the streets. Many organisations have had their say about Notting Hill; some of them, such as the Union Movement, propagating racial discrimination. There is no doubt that the Union Movement is anti-coloured, and rabidly so. It considers that this country should be reserved for Englishmen. This is a “one way only” policy however. Not so many years ago a main plank in Mosley’s platform was the intensive economic development of British Africa; for the benefit of the British, of course. “Keep out the coloureds” does not mean keeping the Pinks out of South Africa, Kenya or Nyasaland. The left-wing too, have been having their little stir. They, poor souls, are in a bit of a quandary, for the Labour Government’s record does not look particularly attractive. The imprisonment of Nkrumah and the banishment of Seretse Khama must make the collection of coloured people’s votes a rather difficult matter. There are, too, plenty of advocates in the Labour Party for the policy of restricting or excluding immigrants. The supporters of such views, to be logical, should exclude or restrict the movement of anybody going anywhere to look for jobs.

(From front page article by F.R. Ivimey, Socialist Standard, July 1959)

Greasy Pole: Hogg’s ditch (2009)

The Greasy Pole column from the July 2009 issue of the Socialist Standard

What with all the talk about reforming Parliament, antagonising MPs by restricting their ravenous appetite for expenses, it may not be long for the famous green benches to be swept clean of those venerable persons wallowing in titles like the Right Honourable Douglas Hogg, Old Etonian, Third Viscount Hailsham, Privy Councillor, Barrister at Law, Queen’s Counsel, Member of Parliament (for the present) for Sleaford and North Hykeham, brother of a High Court Judge, husband of a baroness and owner of Kettlethorpe Hall, a stately home in Lincolnshire. With a moat – about the only exterior relic of the original 13th  Century  house. It is some time now since Hogg was at his most active politically; he was Minister of Agriculture Fisheries and Food from July 1995 until Labour’s victory in 1997 since when he has stayed contentedly inconspicuous.

Whistle Blower

But that was before the Daily Telegraph, digging into the secrets of the MP’s claims as revealed by that whistle blower’s expensive aids to research, turned the spotlight away from the drab fiddlers on the Labour benches and onto the gloating Conservative manipulators opposite. This made sickeningly fascinating reading, for among the claims for money for a chandelier and a swimming pool was one for clearing the moat at Hogg’s home. The new Poet Laureate, Carol Ann Duffy marked the occasion at a Manchester school: “What did he do with the trust of your vote?/Hired a flunky to flush out the moat”. A nation-wide rush to consult architectural reference books revealed that a moat is water surrounding somewhere – a castle, a fortified house – important enough to need such a defence against an invading  enemy or perhaps, in some cases, irate deprived Lincolnshire peasantry. A moat is expected to be, in scale with the place it defends, impressively large – wide and deep (Alan Clark, the late alcoholic and disreputable MP who owned the magnificent Saltwood Castle in Kent, was in the habit of taking a swim in the moat there) with a drawbridge to filter out unwanted visitors. The photographs of Hogg’s moat, however, showed it to be not much more than an above average sized ditch – although one which obviously needs regular, expensive cleaning paid for through parliamentary allowances. David Cameron was infuriated at the revival of the stereotypical image of the greedy Tory toff which he has worked so hard to eradicate.

Lord Chancellor 

As a lawyer Hogg is accustomed to defending the indefensible and his response to the Daily Telegraph’s exposure was desperately evasive: “That is not correct. It was in a letter which explained what expenses we had incurred, it wasn’t an expenses schedule…All the claims I made were agreed in advance”. Reinforcing this attempt to pass the blame for his behaviour elsewhere he conceded, when asked about his constituents’ anger at his claim for the moat, “It is true that the system is clearly flawed”. Hogg’s ancestors would have been proud of his lawyerly skills here; although he has remained a humble QC both his father and grandfather rose to the heights of Lord Chancellor, head of the country’s judges and in the House of Lords sitting, by ancient custom, on a large cushion called the Woolsack from where the noble lords were kept under control, speaking to the point and avoiding all challenge to the presumptions of property society. However humble, Hogg is a rich man, with shareholdings and property investments which protect him from the kind of penury familiar to some of his infuriated constituents.

BSE And CJD

Unlike his eminent forefathers Hogg did not make a name for himself in government. At his peak, in charge of Agriculture Fisheries and Food he was marked down as The Minister Without A Friend. Rivals on the lower reaches of the Greasy Pole happily fed the media with snide gossip about him, typically that he had been given the job when the first choice had turned it down because it was politically suicidal. When the BSE crisis broke in 1996 and the first cases of the human variant CJD were reported Hogg was cruelly exposed as lacking the sleight of word so essential to survival. Alan Clark, who could always be relied on to kick someone when they are down, recorded meeting “little Douglas Hogg” in 1983,when he was a Junior Whip: “I can’t decide whether he is likeable or not. (But I should say that many do not have this difficulty.) I don’t mind people being rude, provided that they are not uncouth with it. But he is colossally self-satisfied. Or is it a chip?…’Well,’ I said ‘how are you keeping all the new boys in  order?’…’By offering them your job’.

Sacked

Well very soon someone will be offered Hogg’s job. “I have decided” he said on 18 May “that now is the time to tell the Sleaford and North Hykeham Association that I will not be standing at the next election”. It was a polite way of saying that he had been sacked for failing to fit in with Cameron’s efforts to recast the Tory image into a youthful, classless, open party who can, by a process so far unattainable to all others, transform capitalism into a humane society. But euphemisms are essential to a  politician’s vocabulary; over the expenses scandal they have been extensively used to muddy the reality that while the amounts of money involved in the Lord’s and the MP’s wretched scams are mind-boggling to so many workers struggling to survive they are trivial compared to the cost, in every sense, of the damage capitalism does to the world and its people.  

Ivan

The Strutting Turkey and the Dancing Bear (1939)

From the November 1939 issue of the Socialist Standard

The international situation is changing with the rapidity of a cinema film, and those who aspire to the role of prophet are likely to make many mistakes; one fact we can state, however, and that is events have taken full control; even a Hitler or a Churchill no longer does what he would, but what he must.

In the hectic days of the First International it was considered a duty on the part of Socialists to lay bare the mysteries of international politics so that the real motives that animated statesmen could be perceived and, if necessary, thwarted by the class-conscious proletariat. Alas for the progress made in this connection; the present generation has little more knowledge of the forces at work than its predecessors : the son falls for the same slogans and catch-phrases that fooled his father.

Some of our masters talk peace, but those in charge resolutely pursue the war, the war to end Hitlerism.

After the war of 1914 there was a dispute as to who was to blame for it. Germany, under Hitler, made a vigorous protest against that country being saddled with the war guilt. This time Chamberlain has moved his chessmen in such a way that there is apparently no doubt about the matter. Hitler is caught. Britain is, as usual, fighting a righteous battle. The whole world is called upon to witness the fact. If it is discovered in the days to come that Britain’s moral feelings are, as of old, in strict accord with her material interests, well, what would you have? We live in a material world; all nations and peoples are in the clutch of circumstance. Britain and Germany confront each other because the development of capitalism has placed groups of capitalists in rival camps; the only way out is war. It is impossible for the exploiters to reconcile their differences; the antagonism between them must become ever more intense.

Those who talk so eloquently about Peace with a capital P do not seem to grasp the fact that the obstacles to peace are greater than those obstructing war. Capitalism is based on competition. The means of production are owned exclusively by a section of the community; those that are dispossessed must sell themselves to the owning section in order to live.

The owning class give those who sell their life-force to them sufficient to keep going as producers of commodities which become the property of the owning class as they are brought into being.

Commodities are articles produced for sale, for profit. The latter cannot be realised until the commodities are sold.

To sell you must find a buyer. The only portion the worker can buy is that equivalent to the wages he receives; all over and above this amount must be disposed of elsewhere.

Markets are found abroad which temporarily relieve the situation, but as the productivity of labour increases, and more and more countries are brought within the orbit of capitalism, the difficulty to sell is intensified.

The world is scoured for raw materials by rival gangs; the wage slaves are driven faster and ever faster, so that relative cheapness can enable one exploiter to undersell another, but all in vain.

The markets are decreasing comparatively and the powers of production are increasing. The capitalist class must sell in order to realise profits and yet they are compelled to set in motion factors that make the necessary sale ever more difficult.

The unemployed grow in number in all lands and eventually the situation becomes so bad that the harder pressed gangs of exploiters become desperate, arm their slaves, and demand at the point of the sword certain concessions in the way of a right to raw materials, markets, etc., from their rivals—the war is on.

The battle-cries of Democracy and Dictatorship should not blind us to the real issue, nor should the plausible piffle of the “only Socialist country in the world” fool us in such a way that we fail to perceive the enemy in ambush. Russia stands for capitalism, Russian capitalism, distinguished from other brands by the fact that it is, if anything, more treacherous, more hypocritical, and more ruthless than that of any other country.

The bear that walks like a man is now interfering with the life of other peoples without ceremony or apology. Poland, Latvia, Lithuania, Estonia, Finland, Roumania and the Balkan countries have all been made to feel that now that Britain’s hands are tied they are in duty bound to minister to the bear’s requirements. Russia has, at the same time, moved swiftly in Chinese Turkestan, and from the proximity of Kasgar now threatens British interests. Sinkiang, or Chinese Turkestan, will soon come into the picture and may be the scene of conflict. Not far from this area is to be found valuable mineral wealth. When I say not far, I mean the approach to the locality is from this region. Near the source of a tributary of the Yangtse River there is a district containing all the mineral wealth necessary to the establishment of an industrial country—iron, coal, silver, gold, etc., all in close proximity to one another. This will cause trouble in the not far distant future. Russia will grab it if she can, and others will try to prevent her getting it. Britain knows and is fully prepared for what is coming.

The Near East has not yet become the scene of large-scale operations, but recent movements round Palestine, Iraq, Iran, Egypt, right to the Afghanistan border, show to the observant mind what is pending.

Turkey occupies a very important position at the present time and although she may be compelled to apparently acquiesce to certain demands made upon her by Germany or Russia, there is one country she will always be faithful to, and that is Poland; she will stand, if possible, with Poland and her friends.

This is one of the mysteries of international politics. During the 150 years that Poland was dismembered Turkey always reserved a chair for the Polish Ambassador, and when Poland emerged again as a nation after the last war the Polish representative went to Turkey and took his place as if nothing had happened. The geographical position of Turkey in the present conflict enables her to wield an influence far greater than is generally supposed. Turkey is making rapid strides as a capitalist nation, and will not fail to make full use of her opportunities. Russia’s action in Poland will not be favourably viewed by Turkey and may have important repercussions.

The forces in the Mediterranean are regrouping. Mussolini is extending the hand of friendship to Hungary and Hitler’s influence is being curtailed. Italy and Britain have never fought: they probably never will.

The readers of the Socialist Standard may say, “Very interesting, but where does Socialism come in?”

We will sum up by drawing the attention of the reader to the fact that the Russians, through their Foreign Office, the Communist Party tried to get Britain, France, Italy and Germany involved in Spain, then in Czecho-Slovakia. They wanted Fascism smashed by any means necessary. “Leave off talking about Socialism; we must get rid of Fascism first. Down with Hitler.”

They formed Popular Fronts, etc., to work things up.

What was behind it all? Can’t you see?

Russia wanted her rivals to be involved in difficulties, so that they could not stop her grabbing what she wanted.

Look at the Communist Party now, and look at Russia. The Nazis are their comrades. Their anti-Fascist propaganda was a make-believe and a sham—to fool you. What a mix-up there will be should they shortly quarrel. “Thus bad begins and worse remains behind.”

We are on the eve of great developments in the United States. Passions there will be at fever heat shortly. The President will have a rough period to go through.

Where do the wage-slaves get off at ?

It is to be noted that the Government here has taken charge of the economic life of every individual in the community. The State has taken over.

We may never go back to the old state of things entirely. This is not Socialism. Far from it. But it makes Socialism easier to obtain; it enables us to get into the heads of our fellow-workers a clearer idea of what we are endeavouring to get him to do.

Amidst the waving of flags and the beating of the war drums let our battle-cry be “the common ownership of the means of life,” reiterated again until it penetrates into the consciousness of the class to which we belong.

When the aftermath of the struggle comes upon the world, when the dead are counted and buried and our wounded brothers surround us on every hand, when amidst grinding anguish, made bitter by poverty, the disillusioned wage slave cries “What shall we do?”

We can give the ringing answer, “Dare to be a man! Shake the chains of wage slavery from your limbs. Make the means of life common property. Stand erect, free!”

Charles Lestor

Notes by the Way: The Communist Yes—No—Yes Policy on Colonial Peoples (1939)

The Notes by the Way Column from the November 1939 issue of the Socialist Standard

The Communist Yes—No—Yes Policy on Colonial Peoples

The following pronouncements by Communists need no comment. Made at different dates, they reflect the Communist double-somersault on war.

Mr. T. A. Jackson, Communist writer and speaker, in 1937 : —

 “I have neither love nor liking for that evil thing—the British Empire. But rather than see a single African, Asiatic, American or Polynesian pass under the control of Fascism (whither Hitlerite, Mussolinite, or of any other brand), I would fight in the same way, and urge others to fight to preserve the British Empire. . . .—(Plebs, February, 1937.)

* * *

Communist Party Central Committee, September 2nd, 1939.

The Manifesto which the Central Committee issued on September 2nd, 1939, giving reasons why they supported the war, contained, as one of the Communist war aims : —

“Extension of full democratic rights to the Colonial peoples.”

* * *

Mr. Harry Pollitt, in “How to Win the War” (September 16th, 1939).

  “When Abyssinia was attacked by Italian Fascism some people in Britain said it was not our business to do anything about it; Abyssinia was an autocratic and feudal state, and it made no difference to the Abyssinian people whether they were ruled by their own monarch or by the Italian imperialists. The Communist Party did not accept this standpoint.”

* * *

The Daily Worker, October 7th, 1939 (after the Communists had stopped supporting the war) : —

  “And now Hitler repeats his demand for colonies. Shall British workers fight to decide whether the colonial people are to be oppressed by the imperialists of London or of Berlin ? The only fight we will wage is for the freedom of the colonies from all imperialistic masters, for democracy in the colonies, and the right of self-determination.”

War-Time Powers of the Government

The following Editorial was published by the Sunday Express (October 22nd, 1939): —

“Under Section 18B of the Order in Council amending the Defence Regulations, a Secretary of State can make an order—

(a) Prohibiting or restricting the possession or use by any person of any specified articles;

(b) Imposing on any individual such restrictions as may be specified in respect of his employment or business, in respect of his association or communication with other persons, and in respect of his activities in relation to the dissemination of news or the propagation of opinions;

(c) Directing that he be detained.

“So long as such an order is active against any individual he may—according to the regulations—be detained in such a place and under such conditions as the Secretary of State may determine and shall while so detained be deemed to be in legal custody.

“Such an order obviously destroys at the will of a Secretary of State the Habeas Corpus Act, which is the basis of the liberty and freedom of the citizen.

“In past wars there have been restrictions on liberty, but nothing so sweeping and so potentially dangerous as this.

“M.P.s ought to demand some limitation of these powers before it is too late. They might also ask whether any persons have already been detained in such circumstances—and why.”

* * *

The Times, October 27th, 1939, published further details :—

 "Another regulation deals with the causing of disaffection, and provides that no person shall “endeavour to cause disaffection among any persons engaged (whether in the United Kingdom or elsewhere) in his Majesty’s service.” A regulation on the subject of “propaganda” begins by laying it down that no person shall “endeavour, whether orally or otherwise, to influence public opinion (whether in the United Kingdom or elsewhere) in a manner likely to be prejudicial to the defence of the realm or the efficient prosecution of the war.” The expression “public opinion” is denned as “including the opinion of any section of the public.”

This regulation also includes the following sections: —

(2) The Secretary of State may make provision by order for preventing or restricting the publication in the United Kingdom of matters as to which he is satisfied that the publication, or, as the case may be, the unrestricted publication, thereof would or might be prejudicial to the defence of the realm or the efficient prosecution of war . . . .

Yes, But Which Attitude ?

From the Daily Worker (October 16th. 1939):-

“The Communist Party’s attitude towards the war is attracting a flow of new members to the Party.”

The Strange Case of “Professor Mamlock”

“Professor Mamlock” is a powerful anti-Nazi film produced in Russia, and shown to 30 million Russians since it was made in 1937. It was banned by the British Censor before the war, but in the first week of the war the Censor reversed his decision and it is now being shown in London.

In the meantime, Russia had signed her Pact with Nazi Germany, and according to the Daily Herald (October 7th, 1939) the film has now been banned in Russia !

The Man Who Did Not Know There Was a War On

The newspapers have been satirical about the German prisoners taken by the French, who said they did not know they were at war. They were told by the German authorities that they were on manoeuvres, and the explosions they heard were blasting and target practice. A strange but true story.

We know another equally strange. We know of millions of workers who have been suffering from capitalism all their lives, and yet, so powerful are the uses of advertisement, they are convinced that capitalism does not exist, and that poverty is an act of nature.

Suppose There is a Military Revolt Against Hitler, What Then ?

Mr. Duff Cooper, former First Lord of the Admiralty, recently gave an interview in New York in which he predicted that Hitler’s dealings with Russia would finally produce a revolution in Germany (Daily Telegraph, October 23rd, 1939). According to the Telegraph’s correspondent, he said that “it was likely that the revolution, although originating in the army, would produce a new monarchy rather than a military dictatorship.”

All of which looks very much like re-creating in Germany a military-bureaucratic Government like the Kaiser’s Government, against which the war of 1914 was said to be waged.

Children, We Have Need of You

  “Germany is returning to the employment of child labour on farms, according to an agricultural expert, speaking on the German radio.

  “On my own farm,” he said, “I employ children whose average age is 12.”—(Daily Telegraph, October 30th, 1939.)

* * *

  “The Isle of Ely Education Committee have decided that, owing to the serious scarcity of labour, they will raise no objection to boys and girls of 12 years of age and over being absent from elementary schools in the Isle of Ely at any time from September 27th to November 17th, to assist in agricultural work. “—(Times, September 28th, 1939.)

Truth, The First Casualty in War

From an article on Nurse Cavell, in the Evening Standard (October 10th, 1939): — 

“Her terrible inability to tell a lie.”

Edgar Hardcastle

Interest in Finland (1939)

From the November 1939 issue of the Socialist Standard

An Englishman who is watching the Finnish crisis with close interest is Lord Melchett. As a director of Mond-Nickel, Lord Melchett has valuable interests in Finland. The company own one of the country’s principal industries–the nickel mines in the north, which have only been working for two years, but which, outside Canada, are among the most important in the world.

Together with Finland’s unexploited mineral resources they provide some food for temptation to covetous neighbours.–(Evening Standard, October 27th, 1939.)