Business experts and their bubbles. (1927)

From the September 1927 issue of the Socialist Standard

In the Socialist Standard (July) we criticised some statements made in “Business Organisation” (April). We said that the coming of Socialism would dispense with the need for coercive State institutions, as there would be no subject class to govern and repress. To this and other criticisms “Business Organisation” (August) now takes exception. They offer no evidence to show our statement unsound. Their retort is to call it “a farrago of nonsense.”

As every student of social science knows, the State did not always exist; it is a product of society at a stage of evolution. Through different forms, its essential character has been a power of coercion apart from the mass of the people. To-day we know it as the Parliamentary State, in which the subject class, the workers, are enfranchised. The State is the executive of the present ruling class (the Capitalists), and it protects and maintains their ownership of property because the slave class politically permit it. Even a Capitalist authority could inform our critics. The Britannica Encyclopaedia (llth ed.) says :—

“The word state expresses the abstract idea of government in general, or the governing authority, as opposed to the governed.”

“Business Organisation” asks :— 

In whom would the ownership of the means of Production, Distribution and Exchange be vested under Socialism if not in the State ?

If they had troubled to read our object and Principles, they would have seen that Production and Distribution (no Exchange) could only be vested in Society, the whole people, as distinct from the Capitalist few, any other method (State Capitalism, for instance) would still retain private ownership, and therefore class society. Who, they ask, “would organise the maintenance of supplies in this classless society” ? These are the business experts who accuse us of talking nonsense ! Who organises supplies to-day? The Landlords, the Shareholders, and the Dummy Directors or the Working Class? What the workers now do for idlers, surely with growing intelligence they can do for themselves. It is in politics they are ignorant, not in production. When wealth is no longer produced for profit, i.e., when the workers cease to be exploited, Exchange as a means to realise that profit or unpaid labour will be as unnecessary as the State. Our opponents do not deny the continued growth of trusts, and amalgamations, but they claim that these ensure a wider distribution of wealth, which benefits the wage-earning class. To explain the growth of the large concern, we evidenced the fierce competitive pace of to-day, the recurring bankruptcies, and the elimination of the small independent Capitalist by the cheaper and more economical methods of large scale production. The way our opponents attempt to refute fundamental tendencies is to charge us with suppressing certain figures which, they say, prove the growth of these embryonic wage-earning “Capitalists.” We also confuse “proprietorship of wealth with its organisation.” The figures “Business Organisation” quoted in their April issue were those given by Walter Runciman in a speech made on March 18th, 1925, upon “The Distribution of Wealth.” Here are their own words and the figures :—

“The Socialists, chief among the propagandists of ill-will in our modern states may be invited to draw what comfort they can from Mr. Walter Runciman’s arresting figures of the growth of small investors. . . . There are to-day, he added, over 15 million small investors, chiefly members of wage-earning households, whose total holdings in the Post Office, in Trustee and Railway Savings Banks, National Saving Certificates, Life and Annuity Funds, Building Societies and other Approved Societies, amount to the colossal figures of £1,776,247,000.”

There isn’t any evidence given that, in the main, these are workers’ savings. An individual would appear as a separate “Capitalist” as many times as the number of concerns in which he could have investment. As evidence of working class prosperity, they are, to say the least, unreliable; even a Liberal Economist recognised this, for Professor Clay, of Manchester University, wrote to the “Times” (24/3/25) regarding them. We ourselves criticised them, and quoted Professor Clay’s letter in the Socialist Standard over two years ago (April 1925). Part of that quotation will be sufficient here. It says :—

“Whether the tendency is in the direction of greater equality of distribution or not, progress in that direction has not been great, and what Mr. Runciman calls the stupendous total of £777,834,000 is not more than 5 per cent. of the national capital—not a large proportion to be held by “15 million capitalists.” On the other hand, allowing a considerable margin for error, it is probably safe to say that over two-thirds of the national capital is held by less than 2 per cent, of the people. (“Times,” 24/3/25.)

In any case, income does not determine a man’s social position when we have to deal with class interests. One individual may be independent on an income of £500 a year derived from investment, another may draw a salary, equal in amount, for the sale of services which economic necessity compels him to sell in order to live : the latter is a member of the working class, whether he likes the classification or not. Again, a Capitalist may, and often does, retain part of his former wealth after the weeding out process has deprived him of his former independent Capitalist status, but his troubles are by no means ended. In large concerns a few generally own the bulk of the stock, and the existence of the small investor is an uncertain one, to say nothing of the organised methods of relieving him of his “all.” International competition, with quickly glutted markets, litters the industrial battlefield with casualties, otherwise the bankruptcy courts would cease to function.

True, Capitalism has brought into existence a small section of higher paid workers, managers, supervisors, specialists, etc., but they, too, find their struggle and existence as keen and precarious as the great body of their class. The march of time compels the recognition of facts once strenuously denied. Ramsay Muir, a prominent Liberal, speaking at the Liberal summer school on the “Distribution of the Ownership of Capital,” drew attention to the fact, “not commonly realised, namely, that in this country there is a larger true proletariat or propertyless mass than in any other country in the world” (“Daily News,” 2/8/27). Another defender of Capitalism, Harold Cox, in the “Daily Mail” (26/7/27), commenting on the fact that there are only 2,300,000 persons chargeable with income tax, says :—

“That minority is even smaller than the figures of 2,300,000 suggests, for a very large number of income tax payers are paying quite rightly a comparatively small tax. The main burden falls on persons with fairly large incomes who are numerically a minute fraction of the population. . . . More than half of the direct taxes in Great Britain and Northern Ireland is provided by 100,000 people, whereas there are over 21 million electors.”

This makes our 15 million Capitalists look “small,” about 13 million do not receive enough wealth on which to pay income tax. An analysis of the distribution of wealth, therefore, gives us enormous wealth in the hands of the few, while the great majority own between them only a fraction of the total wealth, and are consequently compelled to work in some capacity or other to live. The writer of the above (H. Cox) also gives us some evidence of the effects of the worsening of the workers’ position. He says :—

“In round figures pauperism in 1914 represented 21 per 1,000 of the population, and in 1927, as above stated, just under 40 per 1,000. It is, therefore, not far from the truth to state that the proportion of paupers to self-dependent citizens has doubled since 1914.” (“Sunday Times,” 31/7/27.)

Certainly a wider distribution — of pauperism. From Gladstone to Lloyd George, from Malthus to Chiozza Money, all have had to confess to the growing contrasts of wealth and poverty. Marx and Engels scientifically explained the cause. Marx did not expect the workers to win Emancipation as a result of poverty itself. He specifically refuted that view. What he emphasised was the relative worsening of the workers’ position as a class, and with the consequent growth of class consciousness, the struggle for Emancipation. Capitalism, in its development, is carrying out Marx’s predictions. It has swelled the ranks of the workers in proportion to the other section of society. Machinery and modern methods render more and more workers redundant. Wage slavery, high or low paid, cannot prevent these worsening conditions, because the workers’ opportunity to enjoy the results of their increasing productivity is denied them by the present outworn system of production for profit. Private property in the means of life allows an idle class to monopolise the benefits, the privileges, the comforts. Disciplined, united, and organised by the very system that enslaves them, the workers will acquire the knowledge that will set society free from the last phase of class exploitation.

W. E. MacHaffie