"Some are more equal than others" (1951)

From the September 1951 issue of the Socialist Standard

"Some are more equal than others"

("Animal Farm," by George Orwell)

The country is in trouble again. The Chancellor of the Exchequer has announced that the Government has decided to freeze dividends for the next three years, the duration of the Rearmament programme. Imports are to be limited, Prices controlled and Capital issues discouraged. Dividends are increasing too much and too quickly, says Mr. Gaitskell (about 10 per cent.); and are to be limited to the average of the last two years, or 5 per cent., whichever is greater.

Mr. Gaitskell does not exaggerate when he says that dividends have increased. Almost without exception, the Chairmen of the great companies, Dunlop, I.C.I., Aircraft Companies, Department Stores have congratulated the shareholders on an extremely successful year, and thanked the staff for their achievements.

Labour politicians profess that by this legislation limiting the amount of dividend payable they are limiting profits, and seeing “fair play” between the workers and the employers.

The General Council of the T.U.C. has made it a demand upon the Government, to ensure that if workers have “frozen” wages, capitalists should get “frozen” profits.

The first thing which Mr. Gaitskell has shown is that Labour Government is very good indeed for capitalist shareholders. They are drawing so much profit that steps are to be taken to limit it temporarily.

Many workers see in this a step in their interests. They are not clear that the wealthy investor loses absolutely nothing by this step. His shares still belong to him exclusively, their value eventually will probably increase because the sums which might have been paid in excess of the restricted amount for the next three years will automatically pass to reserve; to be ploughed back to make the company more wealthy. The capitalist is merely being compelled by law to be prudent.

In addition the Labour leaders claim that they are heavily taxing the capitalists to pay for social services and keep down the prices of necessities on which workers spend wages.

It is impossible to help the working class by taxing capitalists. Taxation, with the exception of Death Duties, is levied on income, and according to the economists it is an unsound principle of taxation to invade the taxpayer's actual property.

All monies levied by taxes are used to support the efficient running of capitalist production. Sound taxation requires large prosperous incomes for wealthy people to ensure a regular flow of satisfactory tax.

A moment's elementary arithmetic will show how absurd is the idea of the General Council of the T.U.C. that freezing wages in the same degree as dividends is of value to Trades Unionists.

Let us take a typical capitalist with an investment of £100,000. Mr. Gaitskell says he has been drawing 10 per cent. last year. That is, for every £100 worth of shares he draws £10 dividend. There are 1,000 (one thousand) £100's in £100,000, that is, £10,000 dividend. Income tax can reduce it by half—leaving £5,000. That is practically £100 a week. He may now be compelled to accept half of this for three years, £50 a week, the other £50 or more in excess of 5 per cent., is to remain in the company or be invested in Government funds.

How can this possibly be compared to a worker who found last year that, due to the Government's devaluation of the pound, and the shortages caused by war stockpiling, his £5 was worth, in real value, far less.

He then started frantically demanding that his Trade Union table a wage increase demand. In some cases, he took the serious step off unofficial strike action which usually, in the favourable conditions, produced the desired result in the shape of a 10 per cent. increase, with a homily on the necessity of tight belts, because of the country’s difficulties.

The fallacy consists in treating workers and capitalists as equals. In the one case, the working class is already at the border-line of the minimum of existence.

An increase of prices of workers' goods to, say, 40 per cent., means a corresponding reduction in wages, 28/6d. reduction in £5.

A limitation of dividends for the capitalist means drawing £50 a week less for the time being, but he starts with £100 a week and has at his disposal £100,000 worth of property, or shares which he can still spend as he pleases. It compares to putting a motor-car and a donkey-cart on the starting line, and "limiting" both equally by making them carry the same weight. The motor-car has fourteen horse-power, the cart one donkey.

In addition to this, the investor does not even have to drive his own car, this is done for him by the efficient staff of his factories. He has complete leisure, and no responsibility.

The worker still believes that it is to his interest that the Government of “his” country should be prosperous. He believes, though he cannot explain it, that its foreign trade benefits him. He shudders at the thought of being broke or down.

The confusion in many workers’ minds, especially Trade Unionists, has been increased by the Financial Policy of the Labour Party—its so-called “Socialist Finance." “Socialist Finance" is a complicated series of nonsense entitled Nationalisation of the Bank of England, Currency Management, Control of Bank Credit, Stable Price Level, Planned Development, the Capital Issues Committee, etc. Even delegates to the Labour Party Conference, before the war, protested that not one nor all of these financial reforms has the slightest connection with Socialism.

No member of the present administration has written about the “Control of Investment" and “Capital Issues Control" more trenchantly than Mr. John Strachey, who called Mr. Gaitskell (in his “Plan for Power”) “a capitalist economist" in 1939. He wrote:

“Some observers have identified Capitalism with free competition and Socialism with Governmental intervention in economic life . . . no matter on whose behalf it is undertaken. They suppose that because . . . the individual German capitalist employer or group of employers united in a joint stock company cannot now sell their product at whatever price they like, hire labour at a wage higher than the current one . . . refuse to re-invest the rent, interest and profit which they have made, or invest it in directions which would hamper the rearmament programme, they have been brought under a more or less socialistic regime. Such profound errors spring from equally profound misapprehensions. The essential basic characteristic of Capitalism is not competition, but the ownership of the means of production by a small class, so that the mass of the population must live by selling their ability to that class."

(John Strachey, “A Plan for Power,” p. 277.)

Finally, the testimony of a non-party economist regarding Labour Party financial reform should prove enlightening:

"The policies of the Labour and Social Democratic parties are largely influenced by monetary expansionist views.

"The essence of these views, which are sometimes described as socialist economic policy, is that they are not really socialist at all, since they do not involve the abolition of private property and capitalist enterprise.

". . . The real difficulty about these proposals (socialisation of banking, economic planning, controlled investment).... is that their ultimate scope is not clear.

"They do not appear to involve the abolition of private property and they must therefore be taken as proposals which are to be carried out within the framework of our economic system. They are, in principle, not different from the schemes which are at the moment being undertaken in the United States. And in their technique they are very similar to the system of control which was applied in all belligerent countries during the war. As such they suffer from a fundamental inconsistency. . . . So long as freedom of choice is allowed, so long as a free exchange exists, private property and a medium of exchange, as we know it, are essential.

“A really radical change in the monetary management such as is proposed is only possible if money ceases to be the economic instrument we know, because free exchange and private property are no longer possible. The fate of all past experiments at elaborate control has been the same, they cannot be confined to a particular sphere; they lead to a progressive restriction of the market until they finally come up against the fundamental institutions of private property and individual freedom.

"Liberal economic theory recognises this; so also does Marxism. Marxism considers money as the instrument of the market, the means by which individual labour is transformed into socially necessary labour. Where private property and production for the market exist, such an instrument is an essential corollary of it. It is only through it that the separation of consumption and production, or of individual labour and socially necessary labour can be overcome.

“Socialism, by abolishing private property, also abolishes the need for such an instrument. In the ultimate communist society of which Marx spoke, all labour would be directly socially-necessary labour, since private property and class distinction would have been abolished. There would be collective ownership of the means of production and this would have led to so great an increase of the available wealth that distribution would be on the basis of 'from everyone according to his ability, to everyone according to his needs.' ”

("About Money,” by Dr. Erich Roll.)

Horatio.