Cooking the Books: Feudal Relic (2005)

The Cooking the Books column from the October 2005 issue of the Socialist Standard

In July the House of Commons Public Accounts Committee issued a report on the finances of the Duchy of Cornwall which, since feudal times, has provided a private income for the heir to the throne. A reminder that the “royal family” not only supply heads of state for UK Capitalism Inc but are also aristocrats in their own right, with their own landed estates.

The thrust of the committee’s report – dominated as the committee is by New Labour MPs who favour a “modernised” capitalism – was that Prince Charles was not running the Duchy as a proper capitalist enterprise. But the Duchy is a landed estate rather than a capitalist corporation. The aim is still of course to end up with a surplus, but Charles’ income comes mainly from the rents paid to his estate by tenant farmers and, increasingly it seems, commercial firms for the use of the land he has inherited from previous heirs to the throne. According to the report, the Duchy’s assets at the end of 2004 were valued at £428 million, most of it land.

England was the classic country of a landowning class of this type, and Marx’s mid-19th century analysis of the operation of capitalism which then still had a large agricultural sector, like that of Adam Smith and David Ricardo before him, was based on a three class system: a landowning class renting out its land to capitalist tenant farmers who employ wage workers. These latter produce surplus value which is then shared between the capitalist employer as profit and the landowner as rent.

Ground-rent is a pure monopoly income which accrues to people who, for accidental historical reasons, happen to be owners of a portion of the globe; which allows them to say, even to capitalists, “you can’t use my land for your farm or your factory or whatever unless you hand over to me a share of the proceeds”. So landowners are parasites on parasites. In the 19th century this was a big issue with capitalist politicians continually raising the “land question”, but it eventually ended in compromise and intermarriage between members of the two classes. We can now talk of an essentially two class system – capitalists and workers – even though ground-rent remains money for nothing.

Actually, Charles is also a bit of a capitalist in his own right. He markets organic food under the label “Duchy Originals” but which, according to the Times (22 July), “made a profit of £1 million on a turnover of £40 million, which most commercial enterprises would regard as an inefficient return”. But then, if you’ve got an income from your private estate of £11.9 million in the tax year 2003-4 (Committee Report) you don’t have to be so ruthless in your pursuit of any commercial profit as you would be if this was your only source of income.

But the New Labour MPs are right. If all capitalist firms took the same aristocratic attitude to profit-making as Charles, then British capitalism would be in trouble on world markets. The typical capitalist firm has to try to maximise its profits, not just to please its shareholders, but to keep in a fit state to continue to compete by having funds to invest in means to reduce its costs.

In the 1860s when Marx was writing Capital the typical capitalist was still an individual owner who ran his own business or a partnership of such owners, though this was beginning to change with the coming of the limited liability company. Marx described the individual capitalist as “capital personified and endowed with consciousness and a will” (Volume I, chapter 4). Thus, the individual capitalist’s greed was not a personal failing but a reflection of the fact that he personified capital’s need to expand continuously.

Limited companies (which Marx did discuss in Volume III of Capital) are now the dominant form and maximising profits is no longer a mere personal motivation; it is a legal obligation on those who run companies. The same applies to pension funds and other so-called “institutional investors”; the managers and trustees of such funds are under a legal obligation to maximise the fund’s income or face a breach of trust charge. Which makes them as ruthless profit-seekers as any capitalist corporation or 19th century Gradgrind.

Prince Charles is just not in this league, but then he’s more of a personification of landed property.

While Capitalism Fiddles (2005)

From the October 2005 issue of the Socialist Standard

I am a difficult person to please when it comes to weather. Having lived all my life in Britain, I find the climate too cold in the winter and too hot in the summer.

Imagine my dismay then, when, among the dross and the drivel that passes for television in this country, a recent edition of the BBC ‘Horizon’ programme forecast that within twenty years, Britain’s climate could be similar to Alaska’s, with 1963-type winters every year, pack ice around the British coast and ice storms regularly bringing down electricity and telephone lines. The effects of global warming are melting the Greenland icecap, and increased rainfall is pouring more water into the great rivers of Siberia, which drain huge areas of Asia and flow northwards into the Arctic Ocean.

The effect of all this extra fresh water at high northern latitudes is to interfere with the circulation of the Gulf Stream, or the ‘Conveyor’ as it is now known. The Conveyor prevents Britain, which is in the same latitude as Labrador, having a harsh Labrador type climate. Warm water from the Gulf of Mexico crosses the Atlantic, and after warming up Britain and Ireland, continues northwards and ensures that Norway’s ports are ice free. The contrast with Sweden could not be starker. Sweden exports much of its iron ore through Norwegian ports, because Swedish ports have a tendency to ice up in the winter, as the Baltic does not get the benefit of the Gulf Stream.

The circulation of the Conveyor is dependent on the water maintaining its salinity. Fresh water does not convey the heat as efficiently. Observations off the Faeroe Islands have revealed that the cold water returning southwards on its way back to the Caribbean is 20 percent less saline than it should be. Based on these observations, climatologists are forecasting that sometime in the next twenty years, the Gulf Stream could shut off. The results would be catastrophic for the whole of North Western Europe. And this is not merely a scientific theory. The Faeroe Islands studies demonstrate that the process could well have already started.

Nobody can be 100 percent certain that the phenomenon of global warming is due to human activity. What can be said with certainty is that if it is a natural process which would have occurred anyway, capitalism’s indifference to the future of the planet is exacerbating a problem which has the potential to end life on Earth. Earth Summit after Earth Summit have achieved little or nothing. While capitalism fiddles, Rome burns; huge holes m the ozone layer, the retreat of the glaciers and rising sea levels are problems that are beyond the ability of capitalism to solve, with its concern for profits, and its competing network of two hundred mini-capitalisms, the nation states.

We may be facing a stark choice: a socialist world community or no world at all. It has long been the view of the Socialist Party that capitalism will not collapse of its own accord; it will have to be abolished. So the victory of the case for socialism depends on a change of climate in political thinking. It would be as well, in terms of our own future, that this should be the only serious climatic change we have to face.

Greenie.

Human Welfare No, Profits Yes (2005)

From the October 2005 issue of the Socialist Standard

It hit the country like a bomb. It was unexpected, unusual and more so coming from what is considered as less endowed members of the community. 27 people had died after consuming illicit brew, brewed, distributed and consumed in the full knowledge of the administration and other leaders. Yes. Just like that. The distributor of the brew, Beatrice Kuvia, was arrested and charged with selling beer without a valid licence. But not with the deaths of 27 souls.

The beer was brewed and laced with chemicals not for the good of the consumers but for profit. And that’s where the whole story lies.

The vehicle carrying the otherwise referred to as illicit drink passed through 8 police roadblocks and 10 senior police officers had their palms greased to allow the safe passage to the drink to its consumers. The provincial administration knew the woman distributor had been in the business for as long as the existence of the world. She had been taken to court on numerous occasions but in all these had been let off the hook by being fined and, having the money, was able to pay. At other times, she was released to do communal work. So the judiciary is culpable. Who knows, maybe the judges were corrupted.

This inhuman behaviour is prevalent not only in Machakos where the incident occurred but other parts of Kenya as well. It has been happening because there has been no political or otherwise will to stamp out the behaviour. People are ready to be bribed to do things they’d normally not have done. Poor Kenyans are ready to partake any brew just by looking at the price tag. The said brews cost 10 shillings per 300ml bottle.

But in a capitalist world such things are bound to occur. What is paramount is the money coming out of such transactions, but not the morality of the trade. And unless we come to our senses and know what is the real cause of incidents such as the above, we’ll continue to die, be deprived of our rights and remain docile in social situations.

It’s time socialism tried to rear its head and dare capitalism and capitalists.

Patrick Ndege, 

Nairobi, Kenya

Islam and Socialism (2005)

From the October 2005 issue of the Socialist Standard

“Socialism and Islam are very close, other than on the existence of God” (George Galloway, Sunday Times, 14 August).

We’ve heard of Jesus the Socialist. Now it’s Mohammed the Socialist. What next? As the MP for Bethnal Green, elected by Muslim votes and with the help of the SWP, Galloway would say this. Even so, it is a curious statement for him, as a Catholic who claims to be a socialist, to have made, acknowledging as it does that socialists don’t accept “the existence of God”.

Since, like all religions, islam lays down precepts for organising life on Earth as well as on what to do to get to heaven (and avoid hell), is there any basis for Galloway’s claim that islam is very close to socialism if its religious side is overlooked?

The French historian and orientalist, Maxime Rodinson, who died last year and who adopted a generally Marxist-materialist approach (even though, like Galloway, entertaining some illusions about Russia), certainly didn’t think so. In his Islam and Capitalism (1966) (written to refute the view that islam was an impediment to the economic development of Muslim countries), he wrote:

“Economic activity, the search for profit, trade, and, consequently, production for the market, are looked upon with no less favour by Muslim tradition than by the Koran itself” (p. 16).

“[T]he justice advocated by the ideology of the Koran is not that which socialist thought has established as the ideal of a large section of modern society. Muhammad was not a socialist” (p. 23).

“The alleged fundamental opposition of Islam to capitalism is a myth, whether this view be put forward with good intentions or bad” (p. 155).

“[T]he notion that it is possible to use the traditional concept of property found in the Sunnah, and the relative restrictions it imposes, in order to advocate and promote a move by Muslim societies towards socialist structures . . . is utterly fantastic” (p. 175).

In a previous book (1961), Mohammed, Rodinson had provided a materialist explanation of the origins of islam. In Mohammed’s time (he was born about 571 of the present era and died in 632), the Arabian peninsula was, we can see now, in a process of transition from tribal society, which was breaking down, to a state, for which Mohammed was to be instrumental in laying the foundations.

As Rodinson described it:

“A mercantile economy was growing up in the chinks of the nomadic world. As well as barter, money transactions using dinars (gold derniers) and dirhams (silver drachmae) were becoming commonplace. The Bedouin borrowed from the rich merchants of the towns, got into debt and were sold into slavery or at any rate reduced to dependent status. The disintegration of tribal society had begun. Large and prosperous markets grew up, like the one at Ukaz, attracting foreigners as well as Arabs from every tribe. The tribal limits had been overstepped”.

Mohammed himself, although from a modest background, had become one of the wealthy merchants that had emerged, but he realised that something needed to be done to keep Arab society from completely disintegrating under the impact of the unbridled spread of money-commodity relations. His solution was to create a new Arab community welded together by a new religion that would regulate the emerging money/trading economy by imposing some obligations on the rich and some relief for the poor.

Of course as a mystic, Mohammed was not as rationally calculating as this but expressed himself in religious terms. Thus, in the koran (which he believed was dictated to him by the archangel Gabriel, but which in fact, whether he realised it or not, expressed his own thoughts), the greedy and selfish rich are denounced (it is Allah, the Zeus of the pre-islam Arabian pantheon who Mohammed makes dismiss his fellow gods as fakes, who is purportedly speaking):

“Whoso is mean and bumptious on account of his wealth,

Who denies the most excellent reward,

We shall smooth his way to ultimate misery.

His fortune shall not profit him when he falls into the abyss”

(Koran xcii, 8-11)

Rodinson describes some of the regulations that Mohammed brought in when in 627, after slaughtering the previous rulers, he became the ruler of Medina:

“There are a number of articles laying down fairly strict rules about inheritances. This was apparently necessary in the unsettled situation which resulted from the disintegration of the tribal structure. The stronger must have found it easier to lay hands on the family or tribal possessions of the weaker. The rule of the Koran guaranteed everyone his share, which was worked out in a somewhat complicated fashion. Women were allowed a share in the property. (This seems to have been the custom in Mecca, although not in Medina.). Admittedly their share was only half that of the men . . . Slavery, naturally, persisted. People were urged to treat slaves well and encourage them to gain their freedom.. . . Loans at interest or, more probably, some form of them, were forbidden. This prescription seems in practice to have been aimed chiefly at those who, in the early days of the move to Medina, refused to make loans to the needy without interest . . . But there seems to have been no intention of prohibiting the normal practices of Meccan trade.”

So what does Mohammed’s “socialism” amount to? Only certain rules to prevent the excesses of the rich from leading to the decomposition of society in 7th century Arabia, but which still accepted the basis of the money/trading economy that had emerged and was spreading. The economic precepts of the koran laid down a framework for the less disruptive functioning of such an economy, placing some obligations on the rich to help the poor while still accepting the division of society into rich and poor.

No doubt it is these limits on the unbridled and selfish accumulation and use of wealth by private individuals that is behind Galloway’s claim that “socialism and islam are very close”. But this reveals more about his conception of “socialism” than it does about islam. As a former Labour MP, he still thinks in terms of socialism being the control or regulation of capitalism in the interest of the non-rich. But that’s not socialism, but reformism. Islam is no more incompatible with this than it is with capitalism. In fact, it is very close to it, except when the religious element which gives its clerics an undue say is brought back. Socialism, properly understood as a non-monetary, non-market society based on the common ownership and democratic control of the means of production, and islam have nothing in common.

Adam Buick

Marx on Globalisation. (2005)

Book Review from the October 2005 issue of the Socialist Standard

Marx on Globalisation. Edited by David Renton. Lawrence and Wishart. £13.99.

This is a selection from the writings of Marx and Engels relevant to the global capitalism we are experiencing today, edited and selected by Dave Renton, who provides a short introduction to the whole work and one-page introductions to each of the sections. Renton doesn’t really put any of his own (Leninist) politics in his contributions to the book, which are kept to a minimum. The vast bulk is taken up with selections from works by Marx and Engels. There are extracts from the Communist Manifesto, The Economic and Philosophical Manuscripts of 1844, The Poverty of Philosophy and Capital, as well as a few letters, unpublished drafts and pieces of journalism.

For the first section, on the world economy, Renton uses the ‘Bourgeois and Proletarians’ chapter of the Communist Manifesto. That Marx understood the long-term trends within capitalism to be global in nature can be illustrated by this well known excerpt: “All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they ossify. All that is solid melts into air, all that is holy is profaned . . . the need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere”. Marx and Engels were the first writers to understand that the capitalist society would spread and expand.

Marx and Engels didn’t use the word ‘globalisation’, as the term is a recent invention. Though many globalisation theorists argue that the world has now entered into a new economic era, Renton points out that “most commentators would agree that many of the processes being analysed today go back to the old international economy, which has been with us for some time. Such processes as world capitalism, market trade between regions, the growth of finance and new patterns of work, have been part of our life since 1840s, when Marx and Engels began to write”. Despite changes and developments, from the nineteenth century to the 21st century, capitalism is still capitalism. In the introduction Renton uses the following quote from Eric Hobsbawm: “Marx and Engels did not describe the world as it had already been transformed by capitalism in 1848; they predicted how it was logically destined to be transformed by it”.

The second section, on progress, includes a passage from Marx’s Capital that describes the origins of the industrial capitalist. This is a good selection, as this is the part of this work that is the most accessible and in many ways the best starting point for anyone reading Capital (it has been said that it is best not to read Capital starting from the first chapter). This section also includes a speech by Marx from 1848 in which he expresses contempt for both backward-looking protectionism and supposedly progressive free trade (even though in the end he favours free trade but only because he sees it as hastening the contradictions of capital and so the social revolution). Pro-globalisation folk praise free trade and unfortunately many so-called anti-capitalists make the error of advocating some form of protectionism.

In the third section Renton asks whether Marx and Engels did actually believe in the inevitability of one pattern of economic development. In the 1840s they took their examples from Britain and it is often said that they believed the whole world would have follow that lead. But in a letter to Russian socialists Marx wrote that he did not believe that Russia had to follow the English model in forcing the peasants off the land as the first step towards industrialisation, as long as the social revolution had taken place in Europe. In that case, Marx mentioned the possibility of Russia bypassing capitalism and passing to socialism on the basis of the communistic peasant mir.

The section on Imperialism counters the argument of some modern globalisation theorists who argue that world capitalism will bring the third world up to the same level of development as the richest western countries.

Renton’s book is a good selection of Marx and Engels work relating to the global capitalism of today and it serves well as an introduction to their thought. It would make a good read for someone new to Marx.

Gabriel

50 Years Ago: 4½ per cent (2005)

The 50 Years Ago column from the October 2005 issue of the Socialist Standard

No, this is not an article about the 4½ per cent. Bank Rate but about another item of 4½ per cent. that received almost no attention in the newspapers. It had to do with the Government’s annual Blue Book on National Income and Expenditure, the latest issue, covering the years 1938-1954, being published the first week in September.

For readers who are unfamiliar with the subject matter the Blue Book is not easy to understand; and when not understood its tables of figures can be very misleading as is shown from time to time by Press comments on it. But some of the tables tell us in precise terms and on official authority things that otherwise can only be conjectured on the basis of part information.

Our present comment is concerned only with the extent to which the “National Income” has increased and the way in which that increase has shown itself in every-day articles of consumption, the food, clothing, entertainment, etc., that concern us from day to day. […]

It shows that, after allowing for price increase, the purchase of consumption goods (food, clothing, tobacco, rent, entertainment, travel, etc.), was in 1954 only 11 per cent. higher than in 1938. But as the Financial Times (6 September) pointed out, the population had grown by 6½ per cent., so that “real expenditure per head was 4½ per cent up.” This, then, is the measure of what capitalism actually performs. When, therefore, the Tory Government, as an election manoeuvre, held out the promise of doubling the standard of living in the next 25 years they are counting on something happening in the future for which there is no support in the past.

(From editorial, Socialist Standard, October 1955)

Voice From The Back: Happy days? (2005)

The Voice From The Back Column from the January 2005 issue of the Socialist Standard

Happy days?

‘Schooldays are the happiest days of your life’, according to the old saw. Like most old saws it is a load of nonsense. Here are two reports from the same newspaper that paint a far from idyllic picture of the schoolroom. “The number of children prescribed antidepressant drugs is rising faster in the UK than anywhere else in the world. Prescriptions rose by almost 70 per cent between 1992 and 2001, according to studies published in Archives of Diseases in Childhood.” “Schools will be given the power to search pupils for knives and other weapons in plans to combat disruptive students announced by the Education Secretary, Charles Clarke. Head teachers could also invite police into schools unannounced” (Times, 23 November). Inside capitalism the nasty, aggressive nature of competition mars even the so-called golden days of youth.     

The wasteful society

“Companies around the world invested $334 billion in advertising last year – more than the gross domestic product of Switzerland. Advertisers in the UK spent £10.8 billion for the year ending 30 September” (Observer, 28 November). This $334 billion represents an immense amount of human labour and material. Just imagine what this could accomplish in the fields of human welfare such as medical research, food production  and sanitation inside a socialist society, where advertising no longer existed.     

Home alone

In Charles Dickens novels the old workers were condemned to eke out a miserable existence in a workhouse. Today things are much better, the old are allowed to freeze to death at home.” Pensioners in the UK are more likely to die from cold this winter than older people in any other Northern European country, campaigners warned today. Age Concern said that 22,000 pensioners were likely to die from cold-related illness this winter in the UK” (manchester online, manchester news, 2 December)

Infanticide

“Lack of food and education still afflict millions of children around the world, with nearly 10 million youngsters under the age of 5 dying each year from preventable diseases, the UN children’s agency said Sunday. UNICEF chief Carol Bellamy underlined the challenges of improving primary health care for children on a global basis as she opened an international conference in the Pakistani capital to encourage volunteers to help at aid agencies and in government programs. ‘Children under the age of 5 are still dying at a rate of nearly 10 million a year from preventable causes like diarrhoea, measles and acute respiratory infections,’ said Bellamy, who arrived in Islamabad on Sunday for a three day visit” (Yahoo News, 5 December)

All right for some

“The wealth of the super-rich has doubled since Tony Blair came to power, the Office of National Statistics said yesterday in a report on social inequality in Britain. Nearly 600,000 individuals in the top 1% of the UK wealth league owned assets worth £355 billion in 1996, the last full year of Conservative rule. By 2002 that increased to £797 billion, the ONS said” (Guardian, 8 December) We can safely assume that none of these super-rich will be among the 22,000 that freeze to death this winter.     

Contrasts

Two recent newspaper reports illustrate what a mad society capitalism has become. “The world’s most expensive weekend getaway is to be launched by an exclusive resort in Baja California, Mexico. The three-day package will cost $8.4 million (ú4.5 million) and promises a “bedside performance” by Sir Elton John and a private jet for whale watching” (Times, 1 December) “A record number of people are working in the global economy but half of them make $2 a day, or less, according to a report published yesterday. The International Labour Organisation’s World Employment report said that about 2.8 billion people were employed globally in 2003. But nearly 1.4 billion, the highest number ever, are living on less than $2 a day, while 550 million are living under the $1 poverty line” (Guardian, 8 December)

Cooking the Books: Who needs a financial structure? (2005)

The Cooking the Books column from the January 2005 issue of the Socialist Standard

Building a land route – whether a tunnel or a bridge or a combination of both – between Britain and the Continent was long an obvious thing to do. Eventually a rail tunnel was constructed, and opened in 1994. But under capitalism things are never that simple.

In socialism, after an initial assessment of the need and impact of such a project and after democratic debate and approval, it would go ahead. The physical resources (digging machines, steel supports, etc.) and the skilled labour would be brought together and the bridge or tunnel built. After that, it would be used, the only additional resources needed being those to operate and maintain it.

Under capitalism it was quite different as it was not just a question of deciding to do something, then organising the physical and labour resources, and then doing it. Finance and profit came into the equation. The resources had to bought, and the money for this had to be borrowed, and the lenders had to be paid interest.

So, to build the tunnel under the channel, in the first instance money capital had to be mobilised, and was from private investors, banks and governments. The tunnel was built and trains began to run through it carrying passengers, cars and freight. A profit was made. So everything was alright? No, since not enough profit was made. Although operating costs were more than covered, not enough profit was made to pay the interest on the capital borrowed to construct the tunnel. As a result the company – Eurotunnel – has been in financial difficulties since the start. Its debt is now estimated at £6 billion and rising. A shareholders revolt last April threw out of the previous board of directors, but the new chief executive, Jean-Louis Raymond recently stated that “the financial structure of the group remains fragile and the high interest charges continue to impact on operating results“ (Guardian, 30 October).

But the tunnel would still be useful and could still operate without any “financial structure”. In fact, such a structure is just an unnecessary complication. Unnecessary, that is, from a rational social point of view but of course vitally necessary under capitalism where the general rule is that every productive activity has to aim to yield a financial profit and is in trouble if it doesn’t.