The Struggle for World Trade. (1926)

From the August 1926 issue of the Socialist Standard

Those members of the ruling class who have some understanding of the real nature of modern economic and political problems and are able to take broad views outside the narrow range of the professional politician, are not very numerous and seem fated to do most of their thinking after it has ceased to matter what they think. They discover the cause of the leak after the ship has gone to Davy Jones’ locker. The “Round Table” (June, 1926, page 478) has made the discovery that the Great War was, in the words used by a famous diplomat in another connection, “worse than a crime, it was a mistake.” The capitalist governments which went to war in 1914 for the dominance of Europe did so on the assumption that Europe was still “the undisputed centre of the world’s trade, the world’s finance, and the world’s military and industrial power.” Their mistake was in having overlooked the fact that that European supremacy was already being challenged. Had they been wise and realised this in time, “The Great War would probably never have been fought … ” While the allied and the central European capitalists were at war, the spoil for which they sent their conscript workers to fight passed out of the reach of both groups. America in the meantime has become a capitalist power of almost as much importance as the whole of Europe together, and other powers have also grown to an extent which threatens the basis on which West European capitalism rests.

“Fifty years ago there was no continent which was not economically dependent on Europe. To-day not only is North America completely emancipated, but she has actually become the universal creditor of Europe. … In Asia the war has given birth to a national consciousness in Russia, India, China and Turkey, which is giving them new powers of resistance to European control. Fifty years ago her peoples were the passive purveyors and purchasers who made the Eastern market the source of so much European wealth, but now they, too, are building their own factories, in which they are manufacturing goods for their own needs instead of buying them from Europe—and they are doing it largely with the aid of European machinery and European capital.”

The “Round Table” then goes on to give figures illustrating the economic basis of the new America :—

“In 1913 the average monthly production of hard coal in the United States was 43,088,000 tons, as against continental Europe’s 23,243,000 tons. In 1925 the disproportion had increased to 44,231,000 tons, as against 22,131,000 tons. … In regard to pig-iron the difference is even more striking. In 1913 the United States produced 2,601,000 metric tons per month, as against Europe’s 2,514,000 tons, but in 1925 the American monthly output had risen to 3,082,000 tons, while Europe’s had fallen to 2,143,000 tons. In crude steel the story is the same. . . Even in the matter of shipping an alteration in the balance may be found. . . In whatever direction one looks at the statistics, they point to a similar result. Although her population is only about two-fifths of that of Europe, the United States produces more maize, oats and cattle than all the countries of Europe (excluding Russia, Great Britain and Ireland) put together, to say nothing of cotton, oil and copper”

Then there is Japan, whose capitalists also found in the war between their European commercial rivals (both allied and enemy) a heaven-sent opportunity. The “Osaka Mainichi” in an “Overseas Expansion Number” (May 30th, 1926) analyses Japanese foreign trade over a series of years, in an article headed “European War, The Turning Point of Japan’s Foreign Trade Prospects.” While European manufacturers were busy with munitions, “Japan’s export trade suddenly increased to an enormous figure.” There was, of course, a temporary slump after the war owing to Japanese over-development and to the revival of manufacture in Europe, but again Japanese trade is developing rapidly, while the capitalists of Great Britain have had to face a long-continued decline. It is interesting to notice, too, that Japan is passing through the normal stages of capitalist evolution, “in the past, coarse manufactures and raw material occupied the leading position, but now the tendency of the trade is in manufactured goods. . . Industry has developed into machine industry” Exports since 1913 have increased nearly four times in value, and the more recent rapid growth has taken place particularly in some of Britain’s best markets, India, China, and Egypt.

The “Round Table” writer, having shown the extent to which the position of the British capitalists and those of Europe generally has worsened, then goes on to discuss possible remedies. The case is not quite beyond hope; the ship may, he thinks, be raised from the bottom of the sea. Great Britain is too small to stand alone, but she may yet hold her own either by throwing in her lot with the European nations, or by reorganising the British Empire on a stronger, more exclusive basis.

We are not concerned with the question as to which of these alternatives should be chosen by the ruling class of Great Britain. It is, however, necessary that we should be aware of the economic developments going on in the capitalist world, and that we should take note of possible regroupings on the lines discussed in the Round Table, especially as the question is presented in a way which deceives many workers into confusing other peoples’ interests with their own.

Already there are numerous international trusts and cartels in existence: for dyes, for shipping, for steel rails and other steel products, and an international coal association has lately been much talked of. The Federation of German Industry has expressed its favourable attitude towards a “European Customs Union” (page 491), and the whole of this field is to be covered by the forthcoming World Economic Conference of the League of Nations. On the other side there has never been a lack of advocates of the establishment of a British Empire customs union against the rest of the world. A serious feature is that these schemes have no difficulty in attracting the support of labour leaders and so-called working-class organisations. The attitude of the British Labour Party in support of the Empire idea is, of course, well-known. Within their ranks, however, in the self-styled left wing, the I.L.P., there is already a definite tendency to maintain, in opposition to the official view, an old-fashioned liberal attitude favouring the formation of closer relations with the continental governments. This they are pleased to call being “good Europeans.” The Social Democratic Federation in Great Britain has for a year or two advocated the “United States of Europe.” In March of this year there took place in Brussels a meeting between well-known labour M.P.s of Belgium, France and Germany, which adopted the following resolution (“Round Table”) :—

“The economic interdependence and interpenetration of nations proves the necessity for commercial agreements which will familiarise the peoples with the idea of a European Customs Union as a factor in a general scheme of international economics.”

We have Mr. Pugh, of the T.U.C. General Council supporting the international steel rail cartel (Daily Herald, March 26th), and Mr. Hodges proposing a similar association for the coal trade. According to the “Christian Science Monitor” (June 12th), the Austrian Social Democrats, through their official paper, the “Arbeiter Zeitung,” are urging the workers of Austria and Germany to work for a scheme of European federation, in spite of its capitalist origin and capitalist backers.

There are two main arguments used in support of these various plans to federate Europe, or develop the British Empire, or link up all the States of North and South America under the leadership of the U.S.A. First, it is said that “prosperity” can be obtained through the increase of trade which would result, and, secondly, that this is a way to prevent war. In defining the Socialist attitude (that is, the attitude which is in accordance with the interests of the working class), we have, therefore, to consider these two points.

First, what is prosperity? The “Osaka Mainichi,” quoted above, states that “Japan’s cotton industry is prosperous.” To prove the existence of prosperity, it shows that the employers have plenty of orders, are extending their plant, and finally that their reserves set aside out of profits amount to a very large sum. The cotton workers are not even mentioned. In fact, their conditions are so bad that the Indian manufacturers, whose workers are treated abominably, maintain that conditions in Japan are worse, and that this enables the Japanese exporters to India to undercut Indian textile products. “Prosperity,” whether measured in profits, or the amount of foreign trade, or the total amount of wealth production, or the amount of property owned by some sections of the population, is no guide whatever to the condition of the workers under capitalism. “Prosperity” does not mean prosperity for them. The recent large profits made by margarine companies have been ascribed, no doubt correctly, to the general depression and the general low wages among the workers (Observer June 27th). As the worker’s standard of living falls, he is less and less able to afford butter. His poverty produces prosperity for shareholders in margarine companies. The actual growth of the powers of the human race to produce wealth is still less an indication of the factors which improve the position of the workers. At the present moment there is depression in the coal industry, not only in Great Britain, but in almost every coal-producing country in the world. That depression is admittedly due to the fact that more coal is being produced than is required, and the falling demand for coal is in turn largely due to the discovery of better and cheaper ways of providing for fuel requirements. In other words, miners are everywhere threatened with increasing unemployment and lowered wages because the world has learned how to produce the same amount of power in a new way with the expenditure of less labour. The human race has become potentially richer, but, owing to the present organisation of society, great masses of workers are becoming actually poorer because of that improvement in the means of producing wealth.

Those means of wealth production in every capitalist country (including industrial Russia) are not owned and operated by the whole of society for the needs of society. They are owned almost exclusively by a numerically small class of property owners, and their use is not governed by human need for food and other necessaries and comforts of life, but by the condition of the market. Goods are produced for sale, and if sales decline so does production, although needs may be greater than ever. The cutting down of production means greater unemployment for the workers, and an increase in their poverty; but even if for short and exceptional periods capitalism in some part of the world does manage to find employment for all its workers, they do not on that account cease to be poor. The prosperity which such a condition spells for the shareholder, for the “industry,” and for the “nation” does not extend to the workers. There still remains on the one hand a class of wealthy persons living on income derived from the ownership of some form of property, and on the other the workers without any property worth mentioning. The private property system still permits the workers to be robbed of a large share of the wealth they have produced, and compels great numbers of them to be engaged in non-productive labour, essential only to capitalism.

And the evil does not stop there. Production for sale as inevitably produces war as it does working class poverty. Each capitalist or group of capitalists, whether in one country or combining several countries, comes into unavoidable conflict with rival interests. To realise his profit each must sell his goods; but demand is never great enough to absorb the whole mass of goods offered for sale. Productivity is always growing, but the amount the workers can purchase with their wages remains more or less the same absolutely, while in proportion to the total wealth produced it becomes relatively less. At the same time the luxury demands of the rich fail to increase sufficiently quickly to dispose of this ever-growing surplus.

The result is a competition for markets and a constant effort to cheapen the costs of production and undersell competitors. This constant effort hits the workers when it takes the form of an all-round intensification of working conditions aimed at increasing the output of the worker, and in another direction it leads capitalist interests and the governments behind them to seek to monopolise supplies of raw material in different quarters of the globe. This in turn leads, through the clash of national policies, to the extension of navies and air forces in order to “protect” trade routes, monopolised markets, and sources of raw material. When the tension becomes too great, and when the bluff of diplomats and governments has reached its limits and they have no alternative but to translate their threats into action, we have war? For some 20 years before 1914 such a struggle had been going on between the British capitalists who had been dominant, and the German capitalists, who had to choose either to challenge that, dominance or consent to yield up the glittering prizes which are to be won by the victorious group of exploiters of the working class. German goods and British goods competed in every market. German aims clashed with British aims in Africa, Turkey, Persia, and China. The German Navy was built by the German exploiters to challenge the position of the British members of their class. The pre-war conflict was fought with many weapons and under many guises before it came to open warfare, but capitalist trade was at the back of it all. As Tirptiz always maintained, “it was the competition not of ships but of goods which changed the political face of Europe.” (Gooch. History of Modern Europe, page 227.)

The competition of goods may again change, is already changing the political face not only of Europe but of the world ; and again it will not fail to produce war. The formation of the United States of Europe may link together lately hostile capitalist interests, but only for purposes of commercial conflict, and with the greater certainty of an eventual appeal to arms against Pan-America, the British Empire or some other great federation of capitalist powers. Japan is already actively invading the markets of the European states, India, China, Russia, are all on the way to becoming new and aggressive participants in this mad scramble. Where will Pan-Europe sell her goods and what will she do when the world again becomes too small to hold all the first class powers? Our labour supporters of these various rival schemes are silent on these points. What will happen at the not far distant date when the U.S.A. feels the really urgent pressure to dispose of her surplus abroad? That date has been delayed by various accidental conditions, and by devices such as the present extravagant development of instalment selling, which cannot solve the ultimate problem. It is in effect nothing but the anticipation of next year’s home demand for goods. When it breaks, as Mr. Ford is already confident that it soon will, the need to find markets for greatly extended production will be only the more acute because of the postponement. According to Alvin E. Dodd, of the U.S.A. Chamber of Commerce already the “absorption of surplus production presents one of the outstanding difficulties of the American manufacturer.” Production since 1913 has, he says, grown by 30 per cent., while population has grown by only 16 per cent. The problem now arises as to how to find a “Demand for the oversupply.” (Christian Science Monitor, 18th June.)

War is not caused by the wickedness or the greed of capitalists. It is the outcome of policies they are compelled to adopt by the forces at work in the capitalist system. Federating capitalist States into even larger groups can only extend the area of war, it cannot abolish it.

The interests of the workers require that they should resolutely refuse to be drawn into any one of these schemes. It follows no less plainly that they should oppose, as does the Socialist Party, all persons and organisations which advocate the contrary anti-working class policy, even though they masquerade as “labour” parties.

These organisations are urging policies which suit the interests of some section of the capitalist class in their respective countries. The American Federation of Labour, acting behind the convenient screen of the Pan-American Federation, is helping U.S.A. capitalist trade and capitalist finance to extend their hold over Central and South America. Our own Labour Party, with its tender regard for the needs of the Empire, is the tool in effect of one British capitalist group, as the I.L.P. is of another. The communists are in matters of foreign policy the unconscious (and it must be added the very inefficient) tools of Russia. The Australian Labour Party with its passion for the exclusion of Japs and other non-white races and its general advocacy of navalism and militarism, and the Labour Party of South Africa with its futile anti-native attitude are tarred with the same capitalist brush. That these parties act in the way they do has little or no connection with the merits or demerits of their respective leaders. As these, like their members, are not socialist, but have rejected the socialist contention that the prime, almost the only present aim worth consideration by the workers, is the abolition of private property in the means of wealth production, they must cling to their present policies or give way to blank despair. As we have so often insisted there is only one way of administering capitalism—the capitalist way. This remains just as true even although the capitalists or the Labour Parties may change the form of the system and retain the exploitation which is its essence under the name of state capitalism or nationalisation. Whatever the views and wishes and beliefs of those who administer capitalism, even if as in Russia they happen to be communists, the pressure of economic forces will compel certain policies to be followed, capitalist policies which presuppose working class poverty and lead to war.

Just as Czarist Russia was in repeated conflict with Austria over the control of Balkan territory and ways of communication, and with Great Britain over the Near and Middle East, so Russia to-day is “claiming” Bessarabia from Rumania and trying, through the clash of Rumanian and Italian capitalist interests, to bring Mussolini’s government into the scale against Rumania. Mr. W. N. Ewer, Foreign Editor of the Daily Herald, summed the position up well in a lecture on “Continuity in Foreign Policy,” reported in Foreign Affairs (July 1926).. He mentions this ancient Russo-British conflict of interests and adds :—

“The struggle was inevitable. If we obeyed those laws which had moulded our policy in the past we were bound to oppose Russia, or anybody else who hindered us in our gentle work of colonial expansion and exploitation. This was the fundamental continuity in our policy, and the only way to discontinue that policy was by a complete break with our previous economic policy. In 1924 the Labour Government had been bound to take the same course as any other government, as had been evinced by our attitude then to Russia, Egypt and Irak. No blame could be attached to anyone for this, so long as we intended to go on being an economic imperialist power. Reformism in diplomacy was impossible for it simply meant the acceptance of the other side’s principles. The only way out was by the abandonment of empire and exploitation. We could not have the best of both worlds.”

We would only correct that last sentence by pointing out that Mr. Ewer, who condemns exploitation and “continuity” and at the same time supports the Labour Party, has apparently found out how to make the best of both worlds. But those who really wish to avoid those policies must join us in fighting for Socialism and against all the defenders of capitalism, including Mr. Ewer’s party.

Edgar Hardcastle