Party News Briefs (1954)

Party News from the July 1954 issue of the Socialist Standard

Ealing Branch. In spite of the bad weather, Ealing Branch's special May canvassing drive was extremely successful. Thirty-four dozen Socialist Standards were sold in all, a record for the Branch. Members taking part were only sorry that two wet Sundays at the beginning of the month prevented more from being sold.

It is interesting to note that on the first follow-up, i.e., on the canvass following the first excursion into a new area, the percentage of people taking a second copy works out at about 50%. This proportion shows a slight tendency to fall in later months, but the number of “ regular” readers usually evens itself out at about 2 in 5 of those first taking the “S.S.” Most encouraging of all is the interest and eagerness shown by those taking the second and subsequent copies. Whether they agree with our case or not, it is quite obvious that they are politically interested and are prepared to consider our point of view. As one member of the i canvassing team put it—“It seems to show that the apathy is not in the public, but in the members.” 

Preparations are now being made for another special drive to sell the “celebration issue” of the Standard in September. Will all members please note and contact the Branch Literary Secretary. Further members are also required, not to do the “preliminary spadework,” which many of them for some reason think is hard and intimidating work, but to deliver the “S.S.” to regular readers already established Again, will they please contact the Branch Literature Secretary.

West Ham Branch are also carrying on a canvassing campaign. Thirty-four copies of the May “S.S.” Figures are not yet complete for the June sales, but up to date results indicate that the figure should exceed that of May. These figures are an encouraging start to our campaign but compared with the splendid achievement of Ealing Branch canvassing, the Branch's effort seems modest. However, it is not so long ago that West Ham Branch topped the thirty-two dozen mark and what has been done before can be done again. The Branch appeals to members to join with Ealing Branch and show the Party that canvassing is not only an extremely useful method of propaganda, but also a medium to which every member can apply time and energy.

Outdoor propaganda meetings at Station Road, Ilford, have met with great success. This is partly due to the attendance of several Branch members assisting with literature and general support. The same story cannot be told about the new station in East Ham, South. If members make every effort to support this new venture, good results will surely be the outcome.

Attempts are being made to secure a debate with the Peace Pledge Union and the prospects seem likely.

Any Branch member who is out of contact with the Branch and requires any information regarding Branch activity is invited to telephone ILF 2884. He (or she) is bound to be talked into doing something useful for the Party!

Fiftieth Anniversary Meeting.—An audience of about three hundred and fifty members and sympathisers attended St. Pancras Town Hall on Sunday, June 13th, when speakers told of the Party’s activity over the years.

News Items from Abroad.—The Literature Committee report that a request for a copy of “Questions of the Day” has been made from Singapore.

Our Irish Comrades report that during the recent elections in Dublin, a newspaper reported the fact that “one voter in the constituency drew a pencil through all the candidates names and wrote—‘Socialism is the only hope of the world* at the bottom of the paper.” This same item of news was broadcast from Radio Eirean.

Central Branch Secretary would be pleased to have news of Comrades E. Clarke and O. Gelder (both of Hornsey Rise) and Comrade A. H. Marquis. These members have apparently changed their addresses without forwarding their new ones.

Dartford Branch, in spite of local conditions which, at present, make outdoor propaganda impossible, is nevertheless making solid progress in other directions.

A fresh attempt is being made to arouse interest in local T.U. Branches, and the Branch Organiser is making every effort to arrange debates with other political parties.

To stimulate interest among Branch members a programme of monthly discussions has been drawn up with both Branch members and those of other Branches leading the discussions. A start was made to this programme in May when Com. A. Botterill of Dartford Branch opened a discussion on “Production, Past, Present and Future.” This aroused considerable interest among Branch members and augurs well for the future discussions. These discussions will all be advertised in the Socialist Standard. Party members and sympathisers, living in the North West Kent area, are cordially invited to attend the discussions which arc held on the second Friday of each month at Dartford Labour Club, Lowfield Street, Dartford. The club is seven minutes walk from Dartford Station and two minutes walk from the Green Line coaches, alighting point Dartford Market Place.

On June 11th, Com. A. Turner addressed the Branch, taking as his subject “The Declaration of Principles.” There was a lively discussion until well after the normal branch closing time.

Dartford members are urged to support the Beresford Square. Woolwich, meetings, held Thursdays at 8 p.m.

Phyllis Howard

No Alternative to Socialism (1954)

From the July 1954 issue of the Socialist Standard

It is often stated by opponents of the S.P.G.B. that, after 50 years of propaganda, we have been unable to obtain the support of more than a few thousand members of the working class; that none of the social conditions which the present system has produced so far has led to anything remotely approaching the big change in the majority’s outlook. They therefore argue that we must be expecting some new circumstances which we think will lead to this big change of outlook, or that we have no reasons for hoping for it. It is pertinent criticism which can be answered.

Firstly what the S.P.G.B. does claim is that the material conditions, that is the development of the productive forces and the knowledge of how to produce enough to satisfy men’s needs, have been established with the development of capitalism. That there are certain countries which have yet to become industrialised on a large scale is true, but the industrial revolution is going on at a rapid pace in most of these countries. What is lacking is not the objective conditions but the subjective, that is the mass understanding and desire to establish Socialism. It is to propagate the idea of Socialism and to organise to establish it that is the task of the S.P.G.B. and of other Socialist Parties in the world.

The Class Struggle

The importance of the class struggle to Socialists is that it is the mechanism through the operation of which social changes are produced. The class struggle under capitalism arises from the relations of production, that is between the workers who have no means of living except by the sale of their labour power and the capitalist class who own either as individuals or collectively the means of production and distribution.

While capitalism continues, this struggle between the two classes will continue: there is no alternative: it is a struggle for existence. The largest organisations of the working class are the trade unions which attempt to maintain and improve the social conditions of their members, but they are limited by the economic laws of the capitalist system. Struggle as they may their members remain wage workers, they remain an exploited class and suffer the effects of the continuance of capitalism.

There is no way out except Socialism. Now as in 1904, when the S.P.G.B. was formed Socialism is the only answer. No developments have occurred, no tendencies have been produced to show that there can possibly be any other alternative. Until Socialism has been established capitalism will continue and with it the effects of the capitalist system—world wars, slumps, booms, poverty, riches, frustration and social antagonisms, rivalry between national capitalist states. No-one, no organisation, has shown any way of maintaining capitalism without the conditions which arise out of the social system of to-day. The reason is simple: if the conditions arise out of the social system of society, only the abolition of that system will remove the conditions.

To maintain that Socialism is not inevitable means to maintain that the working class do not learn from their experiences of the effects of capitalism. It can be agreed that some people learn more quickly than others, that some have been more fortunate in that they have made contact with Socialist ideas and have obtained a knowledge of Socialism earlier than others. The S.P.G.B. never stated in 1904 that Socialism would be established in 50 years; the foundation members stated that Socialism would come when the majority understood and desired it. We in 1954 state the same thing.

Events have not stood still, the productive forces have developed still further, capitalism has spread throughout the world and its effects on countries like Russia and China have been tremendous. Two world wars in 50 years have shaken the system to its foundations. No one can maintain that these events have not produced an effect on the working class. Likewise the experience of nationalisation. For years we had to explain that nationalisation would not make any real difference to the working class; in a few years practical experience of the effects of nationalisation has proved our case. The political party which advocated nationalisation as the cure has now no. other solution. It has been tried and found wanting.

Admittedly the growth of Socialist knowledge has been slow, but once again we ask what other alternative is there? The fact that there is no other alternative makes the situation clear; either we have Socialism or Capitalism will continue and we the working class will continue to suffer the effects of capitalism. Since we don’t like things as they are we work to propagate and organise for Socialism. Those outside our ranks who are dissatisfied with the conditions of capitalism have yet to learn that Socialism is the only alternative and the only remedy; but the fact that they are dissatisfied, the fact that the class struggle exists due to the property relations of production, means that they are for ever seeking a way out.

Only those who consider that the working class is incapable of understanding Socialism and will never learn can deny that Socialism is inevitable. To such people we state that a class who produce all and provide for the needs and desires of the capitalist class are quite capable of changing the property relations and, by expropriating the parasite class, abolishing class society. The working class are not only capable but will be compelled to take this step in due course: there is no other alternative

D. W. Lock

The End of Bangla Desh (1971)

From the July 1971 issue of the Socialist Standard

"Reddened with blood, bathed in tears, the crazy world was marking its course through splice with the groans of the sick, the hungry and injured.” (Andreyev)

East Pakistan, so recently shuddering from a gigantic cyclone, was then the scene of an appalling blood-bath. The government used tanks and air-power to massacre its own people. The official story is that the Bengali autonomists had been preparing a revolt for 26 March, a revolt which was wisely and firmly put down by the loyal armed forces.

But what is really behind it all? Why should a state — already $5,000m in the red — engage in a ruinous internal war? Why is it so vitally important for Yahya Khan to “preserve the unity and integrity” of Pakistan, when 98 per cent of the East Wing supports the Awami League autonomists? And why have the Bengalis of East Pakistan been so bitter and persistent in their opposition, for at least a decade, to the existing political set-up and so vehement in their demand for autonomy? And would autonomy do them any good if they got it?

To attempt an answer to these questions, we must first go back a bit in history. At the end of the independence struggle, the Muslims of India were demanding a separate homeland to be sited in areas where they formed a majority of the population. Hence, partition: a partition which resulted in a secular India, led by Nehru and the Congress Party, confronting a Muslim Pakistan made hostile by the savage inter-communal riots and massacres all over the sub-continent, which took place at the time of Independence.

Pakistan is in the North of India. East Pakistan, with about 56 per cent of the population, is in the northeast and is part of the old province of Bengal. Its language is Bengali, its main cereal crop rice, its main exports jute and tea; it has a predominantly agricultural economy with per capita income about 200 rupees, as compared with the average for Pakistan as a whole which is 418 rupees (about £30). The land is low-lying and subject to floods, tornadoes and cyclones. In the nine years from 1960-69, there were 15 “major natural calamities”—6 floods, 7 cyclones and 2 tornadoes; in only one of these years “no major calamity occurred” but in 1968 "all the 17 districts were affected” in a single flood. In this period more than 50,000 people died in these various calamities and in 1 cyclone alone in 1965 more than 20,000 died. (Pakistan Observer, 22 November 1970).

The West Wing of Pakistan comprises four provinces: Sind, Punjab, Baluchistan and the North-West Frontier Province. They speak Sindi, Punjabi and Pushtu, and together make up the remaining 44 per cent of the population. Its main cereal crop is wheat, it exports cotton and other manufactured goods— mainly to East Pakistan which is a protected market due to a tariff wall. Whilst the East Wing is adjacent to Burma and the sweaty jungles of the Far East, the West Wing is closer in character to the desert countries of the Middle East. The widely separated halves of Pakistan have nothing in common but their religion.

After Independence, the economy was deteriorating under a succession of incompetent and corrupt governments, until in 1958 General Ayub Khan, backed by the Army, seized power. By 1968, when threatened with civil war over his trial of the East Wing leader (Sheikh Mujibur Rahman) he was forced to hand over power to General Yahya Kahn, corruption and graft had increased to remarkable proportions. Ayub’s own family had become one of the richest in the country and most of the economy was controlled and owned by a clique notorious as the "twenty families”—all closely connected with Ayub and his Punjabi generals.

It was during the ten years of Ayub’s rule that the nationalist Bengali movement for autonomy grew up. It fed greedily on such appalling statistics as the fact that defence expenditure rose in ten years from 30 per cent to about 60 per cent of total government spending; that in 1961 the East was receiving less than 15 per cent of the government’s revenue budget expenditure; that in 1959-60 the Capital Budget allocated the East Wing a little over naif what it allocated the West Wing; that more schools, hospitals, university institutions, irrigation works, plush government jobs and lush government contracts went to the Punjabis, who thanks to their control of the armed forces had got complete control of the whole administration.

Further, although East Pakistan every year had a good balance of payments—thanks to its jute and tea exports—most of the foreign exchange earned was used to finance the growing industries of the West, not to mention its soaring demand for imported cars, washing machines and fridges. The country now spends well over 50 per cent of the GNP on defence and has incurred foreign debts of over $5,000m., which use up 20 per cent of all Pakistan’s foreign exchange earnings for debt repayments. Add to all this the fact that there is an annual transfer of resources from East to West of around Rs.250m. and you can understand why the growing movement for autonomy so closely resembles that of a colony bidding for independence.

East Pakistan has 84 per cent illiteracy, 28 per cent unemployment, a population density of about 800 per sq. mile, and average peasant holdings of 3 acres with 3 head of cattle/buffaloes, 1 sheep/goat, 4 fowls and about 2.5 acres growing rice (Pakistan Observer, 25 November 1970). Its population is 40 per cent aged under 14 and has an infant and child mortality rate as high as its life expectancy is low.

When Yahya Khan came into power in 1968, there was a possibility of civil war due partly to the unrest in the East Wing which centred on the trial for “treason” of Mujibur Rahman and his associates. Yahya bowed to the storm, dropped the trials and made speeches about restoring a democratic framework, holding elections and establishing a Constitution. Political parties were allowed to form. In the West, Z. A. Bhutto—a former Cabinet Minister under Ayub—emerged as a front-runner with his People’s Democratic Party, while in the East Wing Mujibur Rahman’s nationalist Awami League (a city-based organisation with support from most moderate business and professional people) and Maulana Bashani’s (Maoist) Awami Party (supported by students and having a strong village grassroots-level support); both demanded autonomy. In the end the Awami Party much splintered by dissenting groups, decided to boycott the elections.

The first one-man, one-vote elections ever to be held in Pakistan were postponed last year from September to December, due to floods in the East Wing in the summer. Then, three weeks before the December date, the cyclone struck. No very accurate figure has emerged (or ever will now) of just how many lost their lives in and after that appalling night of 12 November. Probably more than 900,000 men, women and, above all, children will have died in the disaster area of only about 4 million people: this amounts to a casualty rate of nearly 23 per cent. (The worst ever recorded cyclones in Bengal, those of 1737 and 1876, only caused casualties of about 300,000 each).

After the cyclone, it became obvious, as miserable days and weeks dragged by, that the administration was not exactly exerting itself to get aid to the survivors. Even a fortnight after the disaster only one cargo aircraft and one helicopter were in action to drop supplies over a total land area of 9,300 square miles.

There is also considerable evidence that the Administration could have prevented many of the casualties by broadcasting an evacuation warning and by not concealing what it knew of. the size, speed and proximity of the impending cyclone. A fortnight before the disaster, meteorological warnings were reaching the (Punjabi) Governor of East Pakistan and continued in a crescendo until, 8 hours before the cyclone struck, the new radar station at Cox’s Bazar announced that the unprecedented pressure had burst its instruments. Yet no warning to evacuate went out on the radio and still the Governor did not take any steps to prepare for relief work. Probably only a quarter of the casualties were unavoidable, another quarter died as a result of the tardiness and ineffectiveness of the relief operation and 50 per cent of those who died perished within reach of shelters and safe places which would have protected them in the cyclone had they received a radio evacuation signal. The Met officers and Radio Pakistan could not broadcast a general evacuation order without sanction from the Govemor.

Yet the election was not postponed. Bengalis seething with bitterness backed the Awami League 98 per cent and thereby gave Mujib’s party a clear majority in the National Assembly to be held to create a constitution. The Assembly was not held. Yahya Kahn talked to Mujib, privately, for weeks while the Army prepared its plan and brought from the West Wing immense reinforcements, especially of tanks trucks and aircraft. Yahya also brought over Bhutto—a man much detested in the East—possibly in the hope of provoking riots, which the Army would then have to quell. Finally having completed his preparations, he broke off his talks with Mujib and flew back to Rawalpindi. The Army then moved in, massacring students, Awami Leaguers, Hindus, men, women and children—anything that moved. Bengalis in panic fled the city and with primitive Second War rifles and bamboo sticks fought the Army in pathetic local stands. Millions of refugees have crossed the border to the refugee camps of India. Paddy fields are not being planted out, the jute crop is a write-off, and jute-mills and tea-plantations have suffered badly. There is at present no prospect of things getting really back to normal and the armed forces are still being reinforced. For the Bengalis the prospect is one of a quick death by napalm or a slow one by starvation.

This war, if any, is one that is being fought over plunder. The power to grab the profits of the jute and tea trades, the power to use East Bengal as a captive market for the industries of West Pakistan, the power to import cheaply the agricultural produce of the East: these are the reasons why Yahya Kahn is determined to “preserve the unity and integrity of Pakistan”.

And for what would the Bengalis be fighting, if they are fighting indeed and not just dying? Why, for the ineffable right to be exploited by Mr. Big Business Bhuiya or Choudhury or Haque, instead of by General Khan or one of General Khan's many friends and relatives.

Charmian Skelton

What about the Common Market: A socialist guide (1971)

From the July 1971 issue of the Socialist Standard

What is the Common Market?

The European Economic Community (EEC), to give it its proper name, is a customs and economic union between France, West Germany, Italy, Belgium, Holland and Luxemburg set up in 1957 under the Treaty of Rome. The aims were to create one huge market by abolishing all customs barriers between the Six  and by erecting a uniform tariff against goods from outside and to establish common agriculture, indirect tax, transport and energy policies. These have largely been achieved. The next stage, to which tentative steps have been taken, would be full economic union with a common currency and after that maybe military and political union.

Why was the Common Market set up?

Basically because big industry needs a big market. After the war the rulers of the industrial countries of western Europe, whose economic rivalries had twice plunged the world into war, realised somewhat late that the traditional European nation-State was not large enough either as a market or as an outlet for investment. In this sense the Common Market is an example of the continuous centralization of capital into bigger and bigger units and it was no accident that it grew out of the free trade in coal and steel the Six had introduced in 1953. Also, Germany wanted free access for its industrial goods to France and France free access for its grain to Germany.

Why didn’t Britain join at the start?

Britain’s pattern of trade was different. The Commonwealth was not only a market for British industrial goods and an outlet for investment but was also a source of cheap food and raw materials. To have joined would have meant giving this up for something whose success was uncertain.

Why does Britain want to join now?

Growing industrialisation in the Commonwealth changed Britain’s pattern of trade. Towards the end of the 1950’s Europe emerged as the best alternative market for Britain’s industrial goods. After failing to stop the Common Market by organising a wider European industrial free trade area, Britain under a Conservative government applied to join in 1961 only to be rejected. The present negotiations arise out of a second application to join made in 1967 under a Labour government.

So, this is all a question of markets?

More or less, and so is essentially a capitalist problem. Joining the Common Market is an attempted solution to the problem of finding new markets for British capitalism whose goods have not been selling so well in recent years. It is not a problem that concerns wage and salary earners, either here or in the Six.

But aren’t some British industrialists opposed to entry?

Yes, those with investments and trade interests in the Commonwealth. They are in a minority but do have some influence on sections of the Conservative Party. The argument for and against the Common Market is basically between those firms who think they will gain and those who think they will lose from entry. Russia, too, is opposed to the Common Market as a rival capitalist power and so therefore is the British Communist Party and the pro-Russia section of the Labour Party who have concocted various allegedly socialist reasons why workers should take the side of those against entry.

What will happen if Britain joins?

After a transitional period Britain will have to bring down its tariffs against the Six (and any others like Ireland, Denmark and Norway who might join at the same time) and to put up tariffs against outsiders, including the Commonwealth. British agricultural policy will have to fall in line with that of the Six.

Won’t that mean an increase in food prices?

Yes. For historical reasons continental Europe has protected agriculture through high prices while Britain has pursued a "cheap food’’ policy. The British industrial capitalists were strong enough in the 19th century to abolish the Corn Laws which kept food prices — and wages — high. The continental capitalists were weak and, to get protection for their industry, had to ally themselves with the big landowners and to agree to protection for agriculture too.

But won’t this make wage and salary earners worse off?

Not necessarily, since the level of wages is largely determined by the cost of living. Lower prices mean lower wages, as the workers of Britain found after the Corn Laws were repealed in 1846 and as the Six recognise when they say that for Britain to keep its "cheap food” policy would be unfair competition. Similarly, higher prices mean higher money wages. This is not an automatic process of course. Workers have to fight through trade unions and strikes to keep money wages rising along with prices. But this is what they’ve got to do all the time in all countries, and what workers in Britain must do whether Britain is in or out of the Common Market.

What will happen to wages if Britain joins?

They say money wages are higher in all the countries of the Six except Italy, but this is what you would expect if food prices are higher. And these wage levels were not achieved without struggle. There was a General Strike in Belgium in 1960 and in France in 1968 and a wage explosion in Holland after the failure of job evaluation; in recent years strikes have become more frequent in Italy and have even broken out in Germany.

Won’t there be an influx of cheap Italian labour?

Maybe, but the answer would not be co-operation with the anti-Common Market section of British industry. The important point is that workers in all countries face the same problems and so have a common interest in uniting to solve them.

What about taxes?

The governments of the Six raise their money more by indirect than by direct taxes. Critics say that indirect taxes fall more on the poor and give this as a reason why workers should support those against entry. That indirect taxes — such as the value added tax — fall on the poor is only an illusion. All taxes in the end fall on rent, interest and profit as only the rich can afford to pay them. The tax system is irrelevant as far as the overall standard of living of wage and salary earners is concerned. Insofar as taxes raise the cost of living they can, if the workers are strong enough, be passed on to employers as higher money wages.

What about social benefits?

Supporters of entry say they are better, but as you would expect some are and some are not. Family allowances, which generally are higher in the Six, were long looked upon with suspicion by trade unions in this country as a wage subsidy for employers, which is what they are. The higher the family allowance paid by the State the less the employer need pay the family man. In any event, “social benefits” along with contributions and income tax are a means of evening out the income of workers so as to ensure that nobody is paid either too much or too little to keep fit to work, and leave the overall standard of living unchanged.

Will we lose our sovereignty?

What do you mean our sovereignty? Not having a stake in the country we have nothing to lose. Our rulers may have to hand over part of their law-making powers to the Common Market, but that’s not our worry. It makes no real difference whether we are ruled from Brussels or London.

But won’t we be ruled by bureaucrats from Brussels?

That’s a bit of an exaggeration. The powers of the EEC Commission in Brussels were granted by the governments of the Six which (like those of the four who are applying to join) depend on popular election and majority acceptance. Governments and bureaucrats can only get away with what people let them.

Isn’t a United States of Europe a good idea?

No, it would just be another capitalist super-power armed with nuclear weapons. Some nationalist delusions might disappear, but this would be no advance if they were replaced by another, different one.

What is the attitude of The Socialist Party of Great Britain and The World Socialist Party of Ireland to the Common Market?

First, that whether or not Britain joins is a capitalist, not a working classe issue. Second, that Britain’s joining would not solve, and is not meant to solve, working class problems; it may not even solve British capitalism’s problem of markets. Third, that, equally, working class problems will remain if Britain stays out. We are neither for nor against entry and regard this as an irrelevant issue. We advocate instead the establishment of a world community without frontiers based on common ownership with production solely for use.

How would you suggest we vote in any referendum on the Common Market?

The government don’t want to risk one in Britain for fear that the anti-German and imperialist prejudices stirred up in the past might result in a vote for “no”. But in Ireland there’s got to be one. We suggest abstention, or rather rejection of the false choice by writing “World Socialism” across the ballot paper.

Aspect: Can Banks Create Credit? (1971)

The Aspect column from the July 1971 issue of the Socialist Standard

Confusion about banking operations and the power of bankers has been in evidence for a long time. It was known before 1848, and that year saw the publication of two works putting opposite points of view. One was Lectures on the Nature and Use of Money in which John Gray outlined a scheme which was the forerunner of the Social Credit Movement founded by Major Douglas in the nineteen twenties. The other was John Stuart Mill’s Principles of Political Economy which contained the following:

“Credit has a great but not, as many people seem to suppose, a magical power; it cannot make something out of nothing … It seems strange that there should be any need to point out that credit, being only permission to use the capital of another person, the means of production cannot be increased by it, but only transferred … The same sum cannot be used as capital both by the owner and also by the person to whom it is lent . . .”

Part of the confusion arose out of the loose use of the term “credit creation”; by some writers to mean merely the grant of a loan by a bank, but by others to mean what Mill had in mind as making something out of nothing.

Marx on occasion wrote of the “creation of credit and capital” by the banks but not meaning anything more than the act of lending or investing. Elsewhere he described banks as merely institutions for bringing together and relending sums deposited by depositors. He ridiculed the “illusions concerning the miraculous power of the credit and banking system”, which he said, were held by those who failed to understand the nature of capitalist production and the credit system (Capital, Vol. III p. 713).

Sir Ralph Hawtrey in his Currency and Credit dealt with another confusion of terms:

“It is true that we are accustomed to think of bank credit as money. But this is only because for the practical purposes of every day the distinction between bank credits and money is rarely of any importance. And for all that a bank credit is merely a debt, differing from other debts only in the facilities allowed by the banker for transferring it to another creditor. No one imagines that a trade debt is money, though it may be as good an asset as a bank credit” (2nd Edition, p. 5).

Major Douglas, like John Gray, would have rejected outright the views of Mill, Marx and Hawtrey on credit. He claimed that bank loans are the issue of money just like the issue of notes by the Bank of England and that, by making loans, “a bank acquires securities for nothing”, and that “it is absolutely correct to say that . . . new money has been created by a stroke of the banker’s pen.” (The Monopoly of Credit, 1931 pp. 15 and 17). In the words of one of his supporters, banks can create “untold wealth at the cost of a few drops of ink and the fraction of a clerk’s wages”.

Basically the dispute is between those who hold that banks are merely intermediaries to whom depositors make purchasing power available by depositing with them, and which then make that purchasing power, or most of it, available to others by transferring it to them as loans or using it to purchase securities etc; or whether the banks themselves, by making loans create the largest part of the deposits.

Starting from the production of value by the application of human labour to nature-given materials and its conversion into money, is it that some part is lent to the banks in the form of deposits, for the banks to relend or invest, or is it the banks which create large amounts over and above the amounts deposited?

G. D. H. Cole accepted the “creationist” view. He wrote that bank loans “represent a real creation of additional money — additional purchasing power”. (What Everybody Wants to know about Money, p.39).

Among those who have held the “intermediary” view, along with Mill and Marx were many bankers and, notably Professor Edwin Cannan in his An Economist’s Protest.

Of particular interest were Reginald McKenna, politician turned banker, who was Chairman of the Midland Bank, and J. M. Keynes, both of whom at first supported creationist theory and later changed their attitudes.

One of many anti-creationist statements made by bankers, was that by Walter Leaf, Chairman of the Westminster Bank:

“The banks can lend no more than they can borrow — in fact not nearly so much. If anyone in the deposit banking system can be called a ‘creator of credit’ it is the depositors; for the banks are strictly limited in their lending operations by the amount which the depositors think fit to leave with them” (Banking. Home University Library, 1926, p. 102).

Hartley Withers, sometime editor of the Economist popularised creationist theory in his The Manufacture of Money and used the phrase “every bank loan makes a deposit”, later expanded to “every bank loan or purchase of securities creates a deposit”; and its converse that every withdrawal of a loan or sale of a security destroys a deposit.

McKenna repeated this and provided Major Douglas with weighty support.

The theory was given official endorsement in the Report of the MacMillan Committee 1931, (Committee on Finance and Industry) and found its way into the textbooks. Though McKenna was a member of the Committee he then denied that he agreed with Major Douglas about the creation of credit; which was really rather hard on Douglas who had, after all, only taken McKenna’s words at their face value. Another signatory of the Report was Professor T. E. Gregory who held the Chair of Banking and Currency at the London School of Economics and who in that capacity took Cannan’s line.

The Macmillan Committee’s support for creationist theory is still widely accepted. It turned up recently in Ernest Mandel’s Marxist Economic Theory where Mandel quotes it with approval.

One argument used by creationists to support their case was that, without creationist theory, it was not possible to explain how the deposits of the commercial banks could exceed the total amount of notes and coin in circulation. This is easily disposed of. If a bank receives deposits of £5 million a week and has £4 million a week withdrawn by depositors, deposits will increase by £1 million a week and the eventual total is in no way limited by the amount of currency in circulation. In 1937 the Post Office Savings Bank had no cheque facilities and made no loans to businesses or private borrowers, but its total deposits did in fact exceed the total amount of notes and coin in circulation with the public. The deposits were invested in government securities.

The statement of the “creationist” case in the MacMillan Report started with the following:

“It is not unnatural to think of the deposits of a bank as being created by the public through the deposit of cash representing either savings or amounts which are not for the time being required to meet expenditure. But the bulk of the deposits arise out of the action of the banks themselves, for by granting loans, allowing money to be drawn on an overdraft or purchasing securities, a bank creates a credit in its books which is the equivalent of a deposit. A simple illustration, in which it will be convenient to assume that all banking is concentrated in one bank will make this clear”.

The illustration assumed that a depositor deposited £1,000 in cash. The bank then lent £900 which was withdrawn by cheque and came back as new deposits. At this stage the deposits in the bank totalled £1,900 made up of the original £1,000 and the later deposits of £900. Against this liability the bank would show, on the assets side of its balance, cash £1,000 and loans to customers £900.

This lending process was repeated with nine more loans of £900, so that the bank’s books would then show £10,000 deposits, balanced by £1,000 cash and £9,000 loans owed to it by borrowers. The bank had thus “created” deposits of £9,000 by making loans, and the creationist case was proved. Or was it?

Certainly the Committee got the answer they wanted but in view of the way the conditions were rigged that was not surprising; little in the example had any resemblance to real banking conditions.

Not only did the Report make the thoroughly artificial assumption of only one bank in existence but it also assumed that none of the borrowers made withdrawals except by cheque, never by cash to hold and not to be returned to the bank. This enabled them to proceed on the basis that all the cheques drawn (or all the cash withdrawn) come back to the one bank — there was no other bank to which they could go. Actually the Report did not allow for any withdrawal in cash at all but treated the £1,000 cash deposit as remaining unchanged throughout the operations; which meant that the Committee was assuming, but without saying so, that a change had occurred in the world outside the bank which led to a permanent increase by £1,000 in the amount of cash left in the bank.

This line of reasoning, which isolates from a continuous in-and-out flow of deposits and withdrawals of cheques and cash, one single deposit of cash, is fallacious. If it were valid it could be applied in reverse; that is the Committee could have isolated a single withdrawal of £1,000 cash and treated it is a permanent reduction by £1,000 of the amount of cash left in the bank. It only needed one of the ten borrowers of £900 to take it out in cash or destroy the whole of the Committee’s case.

It appears to have been a belated recognition of this fallacy that later led J. M. Keynes to put a view contrary to that of the Report he had signed.

In his General Theory of Employment, Interest and Money (1936) he wrote:

“It is supposed . . . that the banking system can make it possible for investment to occur to which no saving corresponds. But no one can save without acquiring an asset, whether it be cash or a debt or capital goods, and no one can acquire an asset which he did not previously possess, unless either an asset of equal value is newly produced or someone else parts with an asset of that value which he previously had . . . The notion that the creation of credit by the banking system allows investment to take place to which ‘no genuine saving’ corresponds can only be the result of isolating one of the consequences of the increased bank-credit to the exclusion of others” (p. 80-1).

Actually, under the conditions assumed in the Report the bank was needlessly modest in making loans of only £9,000. They could have made it £90,000, or any figure they had cared to name, because every cheque had to come back to the one bank and they had in practice, but without saying so, prescribed that nobody was to draw and hold any of the £1,000 cash.

They also claimed that the result would be the same if there were many banks, i.e. that all withdrawals would automatically come back into the banking system, but this, as already mentioned, was based on the fallacy of supposing that the £1,000 deposit of cash was a permanent increase of cash in the banking system but without going into the change of outside conditions which would make it possible.

In practice there is nothing automatic about deposits. Banks have to attract money on deposit account by paying interest of millions of pounds on it and they spend tens of thousands of pounds on advertisements to attract new depositors.

The Committee also overlooked the fact that banking figures vary according to the method of investing. If a depositor with £1,000 in the bank draws a cheque to lend that amount to a business, bank balance sheet figures are completely unaffected since the £1,000 deposit has merely been transferred from the depositor’s account to the account of the business; but if the depositor leaves the £1,000 on deposit and the bank lends £1,000 to the business, bank deposits and loans both increase by £1,000.

The absurdity of creationist theory can be seen in practical terms if we consider what happens if the owner of £1,000 lends it direct to a business firm, and the effect if he deposits it in a bank and the bank then lends to the same firm. The MacMillan Committee’s example would have it that though the original owner had only £1,000 to dispose of the bank can lend £9,000 to the firm if it receives the £1,000 on deposit.

The Committee’s example also took it for granted that banks with money to lend can always find “creditworthy” clients who want to borrow all the banks have available. When trade is slack, as in recent months, they cannot.

If creationist theory had been correct banks would make profit at a rate far above that of industry — “fabulous profits” and “hundreds per cent” were the claims. It does not happen.

There is one company with wide interests in publishing, oil, engineering and other manufacturing activities, S. Pearson and Son Ltd. which also has a controlling interest in a bank, Lazards. Yet only about a sixth of Pearson’s profits come from Lazards. Lazards had a director on the MacMillan Committee who was also on the board of Lloyds Bank. It seems that he failed to convince Lazards — assuming that he even tried — that they really have the creationist powers set out in the Report he signed.

The MacMillan Report worked out its figures on the basis that banks need to keep ten per cent of their deposits in cash “to meet the demands of customers”. This ten per cent ratio enabled them to suppose that banks can lend nine times the amount of the £1,000 deposit. The conventional cash ratio is now down to 8 per cent, which would increase the creationist power to eleven and a half times the deposit. But the cash ratio is largely window dressing. If there were a mass withdrawal by depositors of the London Clearing Banks, £700 million of notes and cash would be quite ineffective if the depositors wanted to withdraw their £11,000 million of deposits. What banks endeavour to do is to anticipate events and match outgoing withdrawals and loans with incoming deposits and repayments of loans. If they could match these outgoing and incomings completely day by day they would need no cash in their tills, without the banks thereby being any less safe. If they could get it down to one per cent the assumed creationist powers would then be 99 times the £1,000 deposit. The cash ratio of the Savings Bank in 1937 was a quarter of one per cent.

Another consequence of creationist theory, accepted by its supporters, is that bank loans by increasing purchasing power have a determining influence on the price level. The facts show this to be baseless. Between the first quarter of 1921 and the first quarter of 1933 prices were falling continuously, by a total of forty four per cent. They fell when the deposits and loans of the London Clearing Banks were falling, when they were stationary and when they were rising. At the beginning of 1931 deposits and loans were at the same level as in 1921 but prices had fallen by forty per cent. Between 1926 and 1933 deposits and loans went up by seventeen per cent while prices went down by nineteen per cent. (Incidentally the MacMillan Committee wanted prices to rise in order to cure the depression). Bank deficits went down slightly between 1968 and 1970 while prices went up by twelve per cent.

Mention has been made of Marx having a view on the specific question of credit creation which was in line with that of some other economists, but he did not share their views on wider aspects. He wrote:

“The superficiality of Political Economy shows itself in the fact that it looks upon the expansion and contraction of credit which is a mere symptom of the periodic changes of the industrial cycle, as their cause” (Capital Vol. I. p. 695)

Against logic and all the weight of evidence, credit creationism still has its believers. Professor Cannan hit the nail on the head when he called them “the mystical school of banking theorists”.

Edgar Hardcastle

At Home and Abroad . . . (1971)

The Home and Abroad Column from the July 1971 issue of the Socialist Standard

At Home

The crisis in the shipyards of the Upper Clyde group showed capitalism, and its apologists, at their most typical. The crisis came not for any lack of skill or materials or need; it came simply because the yards cannot fulfill the basic capitalist requirement that they operate at a profit. In that situation UCS may well have to shut down, no matter how many ships may be sailing which for one reason or another should be replaced—and no matter how much waste of resources a closure might represent. The Labour Party may howl with rage at the shut down, as they often do when the principles of capitalism which they uphold when in office come into operation when they are in opposition. The Tories say they are applying their policy of making all undertakings stand on their own feet. But if this were to be generally applied, what panic there would be among the parasites of the ruling class !

Among, for example, the royal family who, if required to stand alone on their own feet would quickly collapse into a heap. They have just decided that they can no longer stagger along on the pittance of the few hundred thousands they get each year, even if this does supplement the income from their massive private wealth. Workers whose lives are given up to the toil which produces all this opulence by the side of indescribable misery should not be deceived into thinking that what the press called the royal “wage” claim makes the queen and her hangers-on anything other than the highest, the most publicised and among the richest, of the capitalist class.

To the members of that class, problems like rising prices, for example, are seen as if through the other end of the telescope from the one to which workers’ eyes are glued. We do not need the Labour Party to remind us that the Tories promised to end this problem, as Labour themselves promised. Now, the election pledges are as usual being forgotten, if sometimes they are remembered when something happens like Minister of Agriculture Prior’s gaffe. Perhaps he was trying the unusual course of trying to be honest; or perhaps he is just a fool; or are the Tories playing the excessively simple game of admitting, quickly and in words which all can understand, that they cannot control capitalism? Whichever it is, the working class could do themselves a good turn by undestanding.

Politics

It seems that the government will not have an easy ride into the Common Market, whatever happens at the negotiations. In this country there is a strengthening lobby which is pledged to fight the British entry. One theme which this lobby is playing is the fact that the people have not been consulted on the issue. This is not, of course, entirely true; anyone who voted for either Labour or Tory in the last election thinking that he was opposing Britain joining the EEC must have a serious mental blockage. More to the point, when were the people ever consulted on this kind of issue? When was there a referendum on a declaration of war? When did we have the chance to vote on issues like racist immigration Bills? Anti-trade union laws? So why make an exception over the Common Market? Could it be that the Labour Party are seeing in the issue the chance to grab quite a few votes and know that a middle line policy will grab them all the more and all the quicker? It is not unknown for issues like the Common Market to be obscured by a propaganda smokescreen behind which a capitalist party makes its attack. And the talk about a referendum is no more than a smokescreen put out to hide the essential fact that worker have no interests in the issue; whether Britain goes in or not will have no fundamental effect on our standing as workers.

Abroad

How romantic, how thrilling, that the Russians have an orbiting space station where they can grow things and watch the weather and the vegetation and so on down on earth! What brave men are their astronauts, to whizz up into space and start crawling about from one ship to another just so that they can grow those things and watch all the others! What clever scientists, to think it all up and then design all the ships and the equipment! Perhaps there will still be some of the thrills and the romance left, when it becomes obvious that the stations (there will assuredly be more of them) are also being used, probably primarily, for purposes connected with the war machines of the space powers. The world was similarly thrilled when man first flew and we all know where that landed us. Space travel, and the courage and ability which goes into it, shows again what human beings could do to improve our environment —and how capitalism corrupts it all. 

What capitalism does is being witnessed in India and East Pakistan, where disease follows war follows flood and will probably be followed by yet more horrible disaster. It is now coming out, that places like East Pakistan have for a long time been in a turmoil of bloodshed, with political murders so frequent that they hardly make the news. Other murders, of course, are even less like to be noticed. Across the border in Calcutta there is a similar story. It is likely now that this already desperate situation will explode into something even more horrifying. The answer which capitalism has to this is to appeal for charity and to represent the affair as a regrettable accident. We should remember the original motives for conquering the Indian continent, and for keeping it in the economic state it was kept in for so long, and then for giving it its “independence” in the way it was. In this perspective the horror of East Pakistan becomes more logical—and even more horrible.

The Psychology of Capital. (1928)

From the January 1928 issue of the Socialist Standard

Dr. F. Aveling, M.C., Ph.D., D.Sc., is a Reader in Psychology of London University, King’s College. In the course of an article in the “Daily Chronicle” of December 6th he discusses the question, “How can we make the most of Life?”

Quite correctly he points out the lack of scientific education in the art of living—the fact that “each one of us begins where his father began instead of where he left off” —and that as a consequence we are the embodiment of inconstancy, “square pegs in round holes and round pegs in square.”

As instances of the maladjustment prevalent in modern society he remarks that “no one has troubled till recently to find out what mental equipment is required to fit a boy or girl, say, leaving school, for the life-work he is taking up, or to see that he is found an employment in keeping with his powers.”

He laments the fact that “while science has been busy conquering time, annihilating space, and harnessing the forces of external nature to our service … it has left the most vital of all human problems to the speculations of the moralists.”

Nevertheless he informs us that “it has been found possible by motion and fatigue study to shorten the hours of work in many employments with great saving in output of human energy and great increase in actual production.”

This means “the advantage of rhe employer and the employees alike, a better understanding between them, less friction and discontent in industry, a greater enjoyment of life.” Thus does our psychologist answer his question.

Let us see where he stands. Production to-day is carried on for profit. When no profit is made industry comes to a standstill. Increased production usually means increased profit. Economy in the output of human encrgy means that fewer workers are needed in order to produce a given amount of wealth, in other words, increasing unemployment.

The larger capitalist concerns with their command of the most up-to-date machinery, their scientific staffs (including the psychologists), get more out of their workers in a given time and can thus undersell their competitors. In order to remain in business at all the smaller concerns must wring more than the normal amount of energy from their particular groups of slaves, by overtime. The efficiency of some of the workers thus leads to the worsening of conditions for the rest. Particular firms may rid themselves of the more obvious expressions of friction and discontent, by these means, but so far as society at large is concerned, these accompaniments of capitalism are on the increase.

There does not appear, therefore, to be any considerable ground for the optimism of the “Chronicler,” while a little further examination will show how entirely superficial his view of life is.

The discontent of the miner is not due to the fact that he is not a railwayman or a doctor or some other form of wage-slave. Whatever form of employment the individual may prove most efficient in, he or she has to be exploited. The wage-workers have to enable their employers to annexe a surplus from their efforts. They have to produce more than their keep. That is the fundamental condition of their employment and the rock bottom cause of discontent. Other sources of trouble are incidental and supplementary. They may to a large extent be minimised by the improved organisation of capitalism without abolishing or diminishing to the slightest degree the antagonism of interests between the classes.

Does the Doctor of Philosophy suggest that the mal-adjusted capitalist might become a wage-slave? Does he propose that a bank director suffering, let us imagine, from an OEdipus complex should find surcease from his cares in the packing department of a jam factory? “Put me among the girls” may be a cure for some mental complaints, but it is doubtful if any afflicted bourgeois is likely to take up work as his calling in life in order to get there.

Again, it is readily conceivable that an investor who has burnt his fingers over, say, oil, might arrive at the conclusion that his neglectful parents were to blame in not giving him sounder advice when young. Had more attention been paid to his mental equipment he might have made a fortune in rubber shares.

That, of course, is mere speculation, but one thing is certain. He would never think of blaming his old man for leaving him the wherewithal to invest. All the King’s College psychologists in the world would not convince him that shareholding was an undesirable career in his particular case.

However mal-adjusted he might be in other respects he would cling most tenaciously to that indispensable connection with his social environment.

Dr. Aveling, of course, does not deal with these facts. He is studious of the interests of the class which pays him, and so he presents the psychological problem as an abstract question affecting all equally and in the same direction irrespective of their class position.

He betrays no inkling of a suspicion that it is the needs of his employers which give his pretended science its present-day importance.

When the capitalist class was young and still engaged in the struggle to overthrow their feudal oppressors the physical sciences met their requirements. The development of the processes of production in order to meet the growing demands of the world market, coupled with the improvement in weapons of warfare, were their chief immediate needs.

Now, having definitely established themselves as the rulers in society, they must turn their attention to the task of preserving their system and increasing the benefits which they derive from it. In this pursuit they find a constant menace in the unrest of their slaves. They can employ force when dealing with particular sections, but in order to control the working class as a whole .they must use cunning. They must employ knowledge of the minds of those whom they would control.

Hence psychology comes to the rescue of priest and politician, journalist and factory, manager. Dr. Aveling refers to the need for “regulating the emotions.” How well the prostituted intelligentsia understand that art was exemplified in the recent war. Animal passions were unleashed and fed in order that markets might be kept, trade routes protected and raw materials supplies acquired.

Actions, which would have hung or imprisoned those responsible if done in the factory, became magnified into feats of valour when performed on the battlefield. To smash a bullying foreman’s nose was a crime. To bayonet a German fellow-slave (up till then unheard of) was a duty.

Oh ! Psychology ! What wonders are committed with thine aid ! Vegetarians and beefeaters, Atheists and Christians, discovered an instinctive harmony with one another when the interests of capital were threatened.

Self-knowledge and self-control are desirable enough, no doubt, to any individual in his endeavour to adapt himself to the conditions of his existence; but to be of any value they must be subordinate to an understanding of the environment itself.

It is by their interaction with the forces of nature that men have developed their powers as a race, and it is by contact with his fellows in the daily struggle with economic forces that the individual is moulded. At present that struggle takes the form of a class antagonism. The knowledge necessary to-day is, therefore, a class knowledge. It is a class-consciousness, or if you will, a class-psychology, which results from the very conditions of social existence so long as the means of life are owned by a class.

No metaphysical trick can get over that fact or rid us of the necessity for struggling for the emancipation of our class. That is the only road to social harmony.

Eric Boden

An Individualist’s Defence of Capital. (1928)

From the January 1928 issue of the Socialist Standard

The Daily Mirror (28/10/27) introduces an article by Sir Ernest Benn with the following-headlines :—

“Why Capitalism is “Ruthless.”  

Economic law as old as Adam—not a system but a great natural force.

There are a few socialists who still imagine that capitalism is a system invented by the rich to exploit the poor.”

No man can truthfully call himself a Socialist who says, or thinks, that the Capitalist system was invented. Whatever he may call himself, or whatever the Daily Mirror may call him, however, it is plain from a perusal of Sir Ernest Benn’s article that the charge against Capitalism of exploitation is unanswerable.

Had it been possible to show that the working class is not exploited by the capitalist class, Sir Ernest would have done so, instead of stringing together a number of statements that can only be described as what he and other Capitalists wish or would like to think. He says :—

“The future of capitalism will be exactly like its past. Capitalism is not something which alters or varies or changes.

A great deal of confused thinking is caused by people who imagine that capitalism is something to do with the industrial revolution; something which can be altered by Act of Parliament ; or something which we can put off or put on or adopt or reject at our pleasure.”

For the Capitalist, of course, Capitalism is perfect. The Capitalist hates to hear his system attacked. It suits him admirably. He hates to think of the possibility of change. The snag in evolution, for him, is that he cannot apply it to the universe at large, and rule it out where his material interests are concerned. His particular method of exploitation, wage slavery, is quite recent in its general application, when compared with the system of exploitation that preceded it. Feudalism and chattel slavery, other forms of exploitation, though more enduring than Capitalism has shown itself up to the present, were short periods compared with the early Communism that preceded it.

To speak to a Capitalist of the industrial revolution is like reminding a decrepit octagenarian of his youth. That period of Capitalist history when the means of wealth production changed from tools operated by muscular energy, plus wind and water, to machines driven by steam, is generally spoken of as the industrial revolution. That period was the youth of Capitalism. Its childhood was passed side by side with Feudalism in the Middle Ages. The change —termed progress by the Capitalist—that has taken place since the industrial revolution even, is so great, so important, that it forms part of every child’s education. Sir Ernest must eradicate this teaching from the minds of the workers before he can frighten them away from Socialism by flatly asserting that Capitalism is something which does not change.

“A great deal of confused thinking is caused by people who imagine that Capitalism is something to do with the industrial revolution,” says Sir Ernest; but is it merely confused thinking on his part to say that Capitalism is the same now as then, or is it merely lying?

“Capitalism is the unhappy word invented, I think, by the Socialists to express the way we live and the economic forces that govern our lives.

The two predominant features of Capitalism are work and saving, and we cannot live without both.”

In this last sentence Sir Ernest acknowledges the debt owed by the capitalist class to the working class ; the latter being the only class that works and the only class that denies itself the satisfaction of its desires, with the result that wealth is accumulated in the hands of the capitalist class.

The working class does, in fact, deny itself the satisfaction of its desires. The workers are in a huge majority over the Capitalists. When they understand Socialism, they can, in spite of everything Sir Ernest says to the contrary, change the system. They can take over the means of wealth production, making them common property. They can arrange for the continued production of all necessary wealth and the manner of its individual appropriation and consumption.

The predominant features of Capitalism are not “work and saving,” but class ownership of the means of life and wage-slavery. Even the “Socialists” put up by Sir Ernest Benn know that the system means exploitation of the working class. Whether they think the system was invented or whether they think it merely grew, matters little. They have grasped the essential fact—exploitation. It is but a short step to discover the manner of this exploitation : the class ownership of the means of life and the merchandise character of human labour-power.

F. Foan

Answers to Correspondents. (1928)

From the January 1928 issue of the Socialist Standard

F. R. Rimington (Leicester).—Your further reply to article by Jacomb will be dealt with in next issue.

F. S. Harvey (Wandsworth).—Your letter re “The Slave of the Farm” does not deal with the conditions in Canada, and is therefore hardly a criticism of the pamphlet. We note your reference to the hard conditions under which the “Australian serf” works for the farmer there, which is, however, in its main features, inevitable under private and class ownership.

Voice From The Back: The Third Way (2000)

The Voice From The Back Column from the March 2000 issue of the Socialist Standard

The Third Way 

The government deplores the forces of conservatism. It detests Old Labour. And now the Home Secretary Jack Straw is a ferocious critic of “woolly-minded” liberals. The only constituency and philosophy that draws its uncritical admiration is business. It was the fact that businesses in Manchester might make losses with the cancellation of the Tyson fight, explained Mr Straw last week, that had decisively influenced his decision to alter the law of the land and admit a convicted rapist. Thus the Labour Party enters its centennial year: as the declared enemy of liberalism and of the use of the state to redistribute wealth; an uncertain custodian of public services, and the firm friend in every circumstance of business, entrepreneurship and profit. Observer, 16 January.

Cause and effect 

The rich got richer last week. City bonuses went through the roof, with 2,500 staff at investment bankers, Goldman Sachs sharing £100m in salary top-ups . . . Elsewhere in Britain, 2 million children are living in homes where no one has a job. According to a Joseph Rowntree Foundation study published last Thursday, the first years of a Labour government have done little to close the gap between rich and poor. There are 14 million people living below the poverty line—a line which defines “poor” as having an income of £132 a week. That’s half the national average income. Independent on Sunday, 12 December.

African capitalism 

Close to 60 families were left homeless yesterday at Farm No. 1270, Malkerns, owned by Matsapha businessman, Tom Kirk , after their homes were demolished in their presence . . . A strong force of 85 fully armed police officers from Hhohho, Manzini and Operational Support (OSSU) was in full guard to make sure the squatters’ houses were brought down and to counter any resistance . . . A number of grieving families interviewed were very angry with the exercise as they had thought the king was going to save them, after his speech over the weekend when he arrived from the trip to Malaysia and Singapore. The king made a general statement that the evictions of squatters in farms should not be encouraged. From a Swaziland newspaper, 5 August 1999.

The childhood of capitalism 

Last week the national security adviser to India’s Prime Minister, Atal Bihari Vajpayee, on a goodwill visit to London met Trade and Industry Secretary Stephen Byers and Foreign Secretary Robin Cook. He warned them privately of India’s fear of being locked out of vital Western markets because of the country’s heavy dependence on child workers. India is likely to raise the issue with Tony Blair during next weekend’s gathering of heads of Commonwealth governments in South Africa. A few years ago, India’s fireworks industry calculated that employing children saved around 32 million rupees a year in labour costs. A survey of children employed to stitch footballs in Sialkot, Pakistan, revealed that they provided nearly a quarter of their families’ annual earnings. Almost all worked to pay for basic items such as food and clothing. Observer, 7 November.

Giving up 

The Samaritans, the organisation which has helped save the lives of thousands of desperate people, has seen an alarming slump in its number of volunteers . . . While fewer people are willing to listen and assist, suicides among young males have increased sharply during the Nineties, claiming the lives of 17 out of every 100,000 young men in 1997. Independent on Sunday, 12 December.

The Utopians 

[Amory] Lovins is visiting England to promote his new book, Natural Capitalism: The Next Industrial Revolution. The product of an intense two-year collaboration with his wife, Hunter, and US green business guru Paul Hawken, it attempts to set an agenda for “the next industrial revolution”, based on “capitalism as if living systems mattered”. Earth Matters, Winter 99.

Bleak Christmas 

An estimated 4500 children without a permanent roof over their heads face a bleak Christmas, Shelter Scotland claimed yesterday . . . The study reveals between 16,000 and 24,000 children become homeless in Scotland every year, with between 4000 and 4500 living in temporary accommodation at any one time. Domestic violence is the root cause of homelessness for nearly 4000 families every year. The Herald, 16 December.

Religion still pays 

He was the mastermind behind the cynical marketing ploy that gave the world Death brand cigarettes. Now BJ Cunningtham is lighting up the soul of business. He is among the young entrepreneurs bringing back religion to the boardrooms, with executives keen to prove that profit and principle can mix. The trend has taken root in the US and there are signs that a wave of spirituality is spreading to the UK . . . Californian hippie Walter Cruttenden, who runs E*Offering, an internet business that brings ethical companies to the stock market is one example of the new spiritual entrepreneur. A follower of mystic Paramahansa Yogananda, he gets up at 4.30am each day for meditational yoga . . .”I come out of meditation with a clear idea of how to solve a business problem.” Financial Mail on Sunday, 9 January.

National nonsense (2000)

From the March 2000 issue of the Socialist Standard 

Nationalism is utterly opposed to socialism. Socialists therefore oppose nationalism in all its forms.

It might be supposed that people who profess an interest in the doings of human beings—such as, say, journalists—might well consider a solid and determined strike by nurses over pay to be a worthwhile subject for their notice. This should be especially so when such a strike is going on within but a few hundred miles of their offices, as happened when in October the nurses of Ireland voted by an overwhelming majority (90 percent for) to go on indefinite strike over their shoddy pay. Devoted consumers of the British media, however, would have found nary a whisper on the subject. Clearly, a story of dedicated health care professionals—usually referred to as “angels” by our sharp-eyed reporters—feeling so ill-used and battered by the system that they decided to take action for themselves, is not of interest to human beings on the other side of a small stretch of water. Instead we were treated to facile dissertations upon the constitutional significance of Prince Charles skipping dinner with the Chinese president.

The story is ever the same. Events that occur outside of Britain’s boundaries are of no concern to our intrepid observers of humanity, unless they somehow have a “British interest”. We are not meant to be interested in the affairs of humans generally, but instead to be concerned with “the British” first and foremost. Indeed, when BBC journalist Kate Adie reported on the Dunblane massacre, using exactly the same style and technique as she would have reported a massacre in some far-flung war-torn region, she was execrated for her insensitivity. The deaths of British children are clearly more important than children dead in war.

Tool of rising capitalist class

Historically, nationalism and national feeling have been the tool of the capitalist class for both winning and retaining power. England, for example, can be seen as having developed through the growth of the economic power and influence of London. As London grew, and began to dictate the economic priorities of the surrounding regions, so to it began to need to control them politically, and socially, in order to protect its own interests. Up until the reign of Henry VIII the feudal barons had lived in almost total autonomy, specifically the far-flung magnates like the Percies of Northumbria. Most regions, villages even, maintained a distinctive identity, set of values and traditions. As their influence grew, it became incumbent upon the London capitalists to try and tailor these values and traditions to win over more support for themselves, or at least to ensure an absence of conflict.

In order to achieve this they adapted the traditions they found among the subjected communities, or even made them up when none suitable existed. A classic example was the myth of the Norman Yoke—that Saxon England had been a bastion of Freedom and Democracy, but that William the Conqueror had imported the tyrannical monarchy and feudalism with him. The historical record shows that the Saxons had extensive feudal structures of their own. Of course, that was irrelevant to the myth-makers. They had a tradition to invent, specifically, one which would unite people behind them against their feudal opponents.

The aristocracy itself maintained a preference of looking towards the complex familial power structures across Europe, rather than to a feeling of community with people of their own domain. Title, land and religion were the factors that mattered to them, not nation. They were more concerned with status among their peers. It didn’t matter what language the people who lived on their lands spoke. Further, avowal of the doctrine of the nation was seen as placing an ideological category above the monarch; where before the monarch was the state, now the monarch was to be subordinated to the state.

Making (up) a nation

As the power of the proponents of these ideas grew, so pronouncing an adherence to their ideas became a swift and secure way to win preferment. Hence the power of their ideas grew too, to become the dominant, ruling ideas. There was a further practical impetus for cultural standardisation: the extension of state and bureaucratic power further into life, in order to more efficiently control the economy and delineate property. Coupled with the increased capacity and need for rapid communication, this meant that standardised linguistic practices were needed. Language became a factor in establishing state power, and thus it became a factor in determining a “nation”. It’s no coincidence that the rise of the nation-state coincides with the invention of the dictionary and the encyclopaedia. It’s no coincidence that nationalism is accompanied by a mania for classifying, delineating and defining people into categories. These practical considerations were made explicit by the Polish nationalist Pilsudski, who observed that “It is the state that makes the nation, not the nation the state.”

Nations have taken a great deal of building. There is almost no nation-state that has not had its boundaries drawn in blood, its foundations dug out of human flesh. England was nationalised by Cromwell with the deaths of the Cornish and the Irish. France was nationalised by bloody wars between the monarchy and local lords and interests (not to mention the interminable wars with the Germanic states to set the exact boundary between the two “nations”). America was built on the bodies of the native population. It is a process that continues today in the form nation-building, which has taken in Yugoslavia and Central Africa.

The effort, though, has to be ongoing. States have required the use of an education system, to standardise learning, spread a national history and a sense of shared culture. An example of this can be seen in the Thatcher government’s enforcement of the intellectually bankrupt notion of a Literary Canon in the National Curriculum: a gallery of literary luminaries, led by Shakespeare, that bored, uninterested children are told are great and something for them to be proud of. On the continent, it was the task of “turning peasants into Frenchmen” that the Republic set itself. Nations are made, not born.

In order to enforce the new system of property over the whole range of its influence, the capitalist class needed the state, and its legitimising idea of nationalism and the nation. Culture resides in sets of ideas, values and practises that set out a sense of precedent, self and future possibility. By imposing the idea of the nation upon a culture, complete with its inherent notions of territorial ownership and property, the ruling class impose their notions of property on the very self-image of the people within that culture.

All possibilities and plans are circumscribed by, or at least must be made in relation to, this logic. So long as people think in terms of the “common good” of the “national economy”, in terms of the overall performance of one unit in the world-wide division of peoples, they are, whether consciously or not, serving the interests of the capitalist class. All evaluations, priorities and hierarchies of value within a “national culture” are made from the point of view, from the self-interest, and, indeed, the apprehended self-hood, of the members of the capitalist class. When the economy is “doing well” it is doing so for the capitalists, when the economy is ailing, it is ailing for the capitalists. Their interest and feeling is the condition for action and evaluation of a national culture.

The idea of “the nation”, then, functions as a supreme good, beyond the physical and mechanical functionings of the state, to which any cause may appeal. Thus, both Blair and Hague are claiming that their position on the Euro is the true “patriotic cause”. Put another way, it is a fantasy, a dream, which can be used to cover up for problems and contradictions in the practice of the state’s daily life. Its function is to legitimise both the state and class rule, and sustain a large quantity of support, through workers who identify with the ideals of nationhood and believe themselves to be the same as, and have the same interests as, their masters.

No common interest 

Workers, of course, do not share a common interest with their masters. It does not follow that if the “national wealth” increases, or if trade increases, or even if profit increases, that higher wages will be gained by workers. In fact capitalists can only make a profit by appropriating the wealth produced by the workers to themselves; but in the topsy-turvy world of ideology, it seems that workers will only have good pay and wealth when the capitalists are doing well. So it appears that workers and capitalists share a common interest. In fact, the interest of workers is conditioned by the interest of the capitalist, in exactly the same manner as hostages held by a kidnapper: unless the kidnapper-capitalists’s demands are met, they will not allow the hostage-workers to have what they need to live.

There is a well-documented effect of hostage situations, called “The Stockholm Syndrome” in which hostages under duress began to identify with their kidnappers, and believe in their cause. Nationalism works in much the same way. It is the Stockholm Syndrome on a grand scale. The working class who are dependent (under the current system) on the capitalists, to whom they are bonded by state-boundaries across which they are not permitted to escape, begin to believe that they share an identity with them. Hence the ridiculous comments we’ve all heard from people flipping burgers in McDonalds, insisting blindly that they don’t like socialism because they’re capitalists. Hence further, the ridiculous spectacle of people wittering on about the Union Flag being on British Airways’ planes, as if BA were anything more than a vehicle for enriching share-holders.

Workers have no country

The only way to define such national identity is to define it in terms of what (who) it is not, i.e. negatively. Thus nationalism sets itself as being against other countries, striving to define a uniqueness of national culture so as to once and for all set its country apart from others, to know itself by what is un-like it. At one extreme this can include myths about race and blood, trying to attach the national abstraction to some trait of genetics or similar such nonsense. Since people have a strong desire to retain their own perceived identity, and to have a good opinion of themselves, often the creeds based on such identities function in a highly irrational, and ultimately, defensive way. Thus it is usually a sign of desperation and of an incapacity to formulate a coherent argument when our masters resort to playing the nationalist card.

It is clear, then, that socialists must oppose nationalism in all its forms: not just refusing to espouse their creed, but defying the rituals, the anthem signing, flag saluting and other expressions of craven loyalty to the nation-state, that help enforce the idea of nation in our minds. There is no national interest for workers, and any attempt to reform capitalism must be based on a national interest and thus be opposed to socialism. Self-determination for “nations” just equates with freedom and self-determination for a ruling class. It must be opposed in favour of self determination for people, concretely and actually in their own lives. It must be opposed with socialism.

Pik Smeet

Letters: Making Socialism happen (2000)

Letters to the Editors from the March 2000 issue of the Socialist Standard

Making Socialism happen

Dear Editors,

JIMBOB hit it in one (letters January). If we really do want socialism to happen but are waiting for the rest of the world to understand it, then we’ll wait for ever! To combat capitalism we regrettably need to use the tools of capitalism, i.e. marketing—tell the people. Any business consultant will tell you that sales and marketing are the most important aspect of any business for profit (I do understand that the “profit” of Socialism is a better life for all).

In years gone by, at least we used to have “SPGB” painted on railway bridges, walls etc. That was before I had heard of the Socialist Party but at least, it made people curious as to its meaning and many must have followed it through and discovered the truth. I found socialism through a small advert in the Big Issue. After taking the Socialist Standard for 3 years now, together with other research, I realised that I have been a Socialist all my life!

There are billions of Socialists out there but we are not doing a very good job of educating them. Poorly-attended meetings in dingy pubs involving philosophical discussions are going nowhere—at least we had some News out of William Morris! Resources and Internet are possibly the most used words of these times. Resources are well understood—you can’t do ‘owt ‘bowt brass, but surely starting in a small way—car stickers, ties, T-shirts, sweatshirts, fly-postering etc—would be better than nothing. Internet—forget it—topics on the Internet need to be accessed—they don’t jump out and hit you in the face.

People are basically lazy and need to have information placed before them at all times—billboards, TV, newspapers, magazines—the Internet has a long way to go to using these marketing tools and I, for one, am not sure that it will ever do it. Encyclopaedias never became best sellers, did they?

Trevor Smith, 

Bury, Lancs

Disillusioned

Dear Editors,

Nature abhors a vacuum. So, Labour were lucky to have government handed to them on a plate by that blank space we remember as the Major years. But now we are grown up. A pity, then, that we should be considered witless enough to need governing by a political celeb called Tony Blair. Worse still, as a mirror image of the Tory industrial-strength hypocrisy of old, this major-Domo leads a band of recycled Trotskyists, turn-again Socialists and ambitious but ideological blank pages to do his bidding. Time and again, we see lesser ministers fall by the wayside, soon outliving their usefulness but forever hamstrung by the Downing Street Policy Unit, and certain sure that Mr Blair will come up smelling of New Labour roses. Inferior brands of minister are mortal, and if he could only find a better electorate, I fancy his problems would disappear entirely. We must strive to be as new as today’s version of events. But being too old—and sceptical—so putting me outside Tony Blair’s remit, I remain staggered by a mentality that says it’s OK to be seen as a famous face on the glossy pages of lifestyle magazines, while presiding over quite objectionable policies such as confiscation of disabled voters’ income, and glossing over a banana-republic pauperisation of public services. When I canvassed for Labour—but mainly to get rid of the Tories—I imagined, foolishly, we’d been promised something a touch closer to Marx, than Imelda Marcos.

Jeffrey Wheeler, 

Nuneaton, Warwicks

Reclaim the streets

Dear Editors,

I liked the tone of the Open Letter to Reclaim The Streets (January) but then when I saw the recent thing on it all on TV late last week I tend to think that we should be pushing the fact that theirs is a futile method of social and political change as it completely ignores the power of the state. This is one of the reasons that I’m a keen supporter of the party, due to the fact that it does not ignore vital questions that “radicals/anarchists” should be asking about methods. Wishy-washy do-goodism on their part only ends up being self-seeking and self-repressive.

There are many cross-sections of people at the RTS-type events and, yes, “J18 Carnival Against Capitalism” was a breakthrough. I still got the feeling that some of the people are there because it’s this year’s thing, some because it’s a lifestyle-type thing, some because they have reformist agendas to push and a section of people who are influenced by the ideals of Anarchism. It’s these last people who I think we are more likely to persuade to the Socialist case because they are actually looking for answers as to why the world is in a mess. In my opinion it’s only because the “Anarchists” are out there and visible that we had people pointing but vaguely and incoherently in that direction (which in a way is fine) but there is no coherent method that Socialism has to offer. That’s why I think we need to be there and at these events with truck loads of leaflets and having a dialogue with anyone prepared to listen. It’s also why I think it’s important for us to attend the Mayday 2000 thing this year also, on a similar level.

‘Stair, 

Norwich