Those elusive profits. Economics from a Silk Hat. (1926)

From the March 1926 issue of the Socialist Standard

A few weeks ago the “Daily Herald” published extracts from the “Economist” showing that while wages have suffered substantial reductions during the past three years the average profits of some fifteen hundred companies have been steadily rising. It followed this up with the revolutionary proposal that Mr. Churchill should increase the income tax on the larger bugs.

Such unwonted temerity on the part of “Labour’s only Daily,” could not pass uncastigated by its Liberal tutors; and the following day there appeared in the “Westminster Gazette” a correction of the Rooster’s “fundamental errors” which reduced that lusty bird to silence.

Here is some of the stuff which the “Herald” could not answer, although it can find plenty of space for Mrs. Leonora Eyles' accounts of her hunt for God (who has, it seems, got himself lost), and similar rubbish.

“As to profits’ being something the ‘dividend-makers’ do not get, what does the D.H. think is done with the profits? Even that part which goes to ‘dividend-takers’ is spent on goods which ‘dividend-makers’ receive wages for producing.”

“That proportion of profits which is utilised in restoring plant and machinery similarly goes to pay wages to the workers in the industries concerned.” (“W.G.” 20/1/26),

Lest any irreverent reader feels tempted to explode in ribald laughter, let me solemnly assure him that this statement is made by no less an august personage than the W.G.’s City Editor; and let me further insist upon the necessity of taking him seriously, for the views he expresses are accepted by millions of our fellow-workers even to-day.

The possibility of advancing “arguments” such as those quoted arises from the illusion created by money in the process of circulation. The exchange of objects of utility is obscured by the commodity-nature of these objects. What appears to take place is an exchange of values expressed in the form of money.

Thus our City Editor would have us believe that in parting with the money-form of his profits the dividend-taker parts with the profits themselves ! What he has actually done, however, is merely to change about in them; nor does the similar case of other workers enable them to become the owners of factories, railways, docks, etc.

Let us turn the matter the other way round. The workers spend their wages upon food, clothing, shelter, etc., necessary to enable them to exist and produce wealth. The sale of food, etc., is carried on for profit. In selling goods to the workers the capitalists therefore are simply realising the profits (produced in the factories) in a money form. If we argued as does our City Editor, we should urge that our wages really go to the Capitalists, since they are spent in the manner above stated. Any such argument, however, would not alter the fact that the workers and not the Capitalists consume the impure food, shoddy clothing, and jerry-built structures that wages buy.

The most important point, however, which the Editor ignores, is the fact that in selling their power to labour in return for wages, the workers part with the force which produces all wealth. The wealth produced belongs to the purchaser of labour-power (i.e., the employer) as a matter of course, and he realises both wages and profits in the sale of his goods,

One piece of confusion which is surprising even in a City Editor is the statement that a portion of profits is “utilised for restoring plant”! What about raw material? Has not that also to be “restored”? Apparently the Editor does not grasp the fact that in transforming raw material and machinery, etc., into finished articles, the workers preserve the value of the materials consumed. The restoration, therefore, is made from the return of the original capital and not from profits. The increase of capital from profits is, of course, another matter.

The Editor then tells us that “wastefulness is bad” because it “consumes capital needlessly.” What becomes of his former argument that all expenditure employs labour, whatever its form? His standard of “goodness” or “badness” is, of course, a Capitalist one. If, instead of rioting in luxury, Capitalists invested all their profits in industry, perhaps the W.G. man will explain what would happen to the workers in the luxury trades or, for that matter, in the trades in which the superabundance of capital was invested ?

His closing paragraph, however, is a gem ! After stating that the increase of profit must be the object of all trade and all production he says : “That the margin of profit, at present is not large enough is proved by the existence of unemployment and distress.” Unable to market the wealth produced like water by the workers, the exploiting class have the cool cheek to suggest, through their mouthpieces, the pressmen, that not enough wealth is produced. Could anything give clearer evidence, fellow workers, of the hopelessness of the present system of society from your point of view. Could you ask for a more damning proof of the intellectual bankruptcy of the class which robs you?

Eric Boden