Profit motive in Russia
Dear Sirs,
I am writing as one who is anxious for Socialism to be established and therefore agree with your basic principles. However I am extremely puzzled at your antagonism to the Communist countries and the Daily Worker.
Surely it is obvious that these are working for the same principles as the SPGB, so why knock them? Your behaviour is almost as bad as that of our government, which claims to be Socialist but supports the USA in its Colonialist adventures.
This blind spot of yours makes you fail to understand the difference between Russia’s profit motive and that of the Capitalists. The argument in the August Socialist Standard is nonsense. You say quite correctly “. . . the surplus that arises from the labour of all will be used for the benefit of all.” Is not this what occurs in Russia? Their profits do not go into private pockets, but are collected by the State for the benefit of all the Russians.
You sneer at the word “State”. Who would administer the profits in this country if it became Socialist according to your ideas? It could only be the State. What happens now to the profits of the Nationalised industries here? It ceases to go to shareholders pockets but is used for the benefit of all consumers. That is Socialism.
By ignorantly knocking the countries which have become Socialist, you are making your party quite ineffective. This is a great pity, because we can ill afford to waste such a potential.
Are any of the Labour Party M.P.s also members of the SPGB? If not why not?
Yours faithfully,
H. Horwood.
Reply:
The aim of the article under discussion was to show that the origin of Profit was not efficiency or price-raising but the unpaid labour of the working class. Profit is the form under which the surplus above the consumption needs of the producers is taken by the owning class in capitalist society. This is so in Russia as here.
H. Horwood denies this. He argues that, profits made in State industries are not the same as profits made in private industries as they are used to benefit everybody instead of going into the pockets of a few shareholders. “That”, he says, “is Socialism”. We would call it State capitalism. State profit-making is not Socialism. In socialist society there will be no State and no profits. The whole social product (including the “surplus”) will belong to society as soon as it is made. Buying and selling and all that goes with it like profit-making and working for wages won’t exist. It will just be a question of alloting what is made to various social uses and to individual consumption. This is production for use.
We are asked about the State. As Gabriel Deville, once put it: “The State is the public power of coercion created and maintained in human societies by their division into classes, a power which, being clothed with force, makes laws and levies taxes”. The State is not just an administrative machine; its central feature is force. In socialist society, with the end of classes there will be no need for a public power of coercion; the centre will simply be a clearing house for settling social affairs. In class societies the State is used by the ruling class to serve its ends. Today the capitalists are the ruling class so the State serves their ends. The duties they give it are many: from looking after their general interests at home and abroad to the running of industries. Such State-run or nationalised industries have nothing to do with Socialism. The basic features of capitalism, profit-making and working for wages, remain.
What happens to the profits of nationalised industries? In Britain, despite the popular myth, most of them make a “trading surplus”. Some of this is paid out as interest on loans; some is ’taken as taxes; the rest is used again to exploit wage-labour or kept as a reserve. How much goes in interest payments can be got from the blue-books on National Income and Expenditure. Woiswick and Ady in The British Economy in the 1950's give a table based on this information. For most of the period interest payments amounted to about 40 per cent of “gross income (before depreciation)”. In 1960, for instance, this was £590m. Of this £286m. went as interest and £12m. as taxes, leaving a net income of £292m. Let’s see where this interest goes. Before 1956 all the nationalised industries except coal could borrow directly from the capital market. They used to offer interest-bearing stock for sale. The 1956 Finance Act made them borrow from the Treasury. So the interest goes to the Treasury and in the end into the pockets of those who lend to the government (including, ironically enough, the Moscow. Narodny Bank which holds British Treasury bills!). Most of the profits are of course re-invested as in private industries. But capitalists can still enjoy the proceeds of exploitation in the State industries—as bill and bond holders instead of as shareholders.
In Russia the arrangements are a little different and more complicated to unravel. The State industries are controlled from the centre as to output, prices and surplus. Most of the surplus which the State industries make is taken by the centre as taxes and is used to pay for the upkeep of the State as well as for sharing out amongst the State industries for re-investment. Until recently the State used to raise extra money for investment by means of loans, often compulsory. The rich were given a chance to invest in government bonds. The fact that this has stopped doesn't mean that the wealthy class who rule Russia don't get a share in the proceeds of the Slate exploitation of wage-labour. They do. but not in the obvious forms of dividends on shares or interest on bonds. They get it as prizes, bonuses, bloated salaries and the like (all devices used by private corporations in the West to share out profits and avoid profits taxes). Mr. Horwood's argument about the people's profits is wrong, but it would be more plausible if political democracy existed in Russia.
It also shows how, as Russian State capitalism gets more and more like the capitalism of the West, its supporters are driven to ever more fantastic arguments to keep up the pretence of Socialism. In the past no one would have dared to argue that Russia was socialist because State profit-making was Socialism.
Finally, no Labour M.P.s are members of the Socialist Party because by joining a capitalist party they have ranged themselves on the side of the opponents of Socialism and arc thus ineligible for membership.
Editorial Committee.
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