Saturday, June 1, 2024

Cooking the Books: Wages, prices and profits (2024)

The Cooking the Books column from the June 2024 issue of the Socialist Standard

‘Greggs faces profit margin pressure amid rising wage costs’ reported Business Matters (15 May). Roisin Currie, the company’s chief executive, was reported as saying she expected that the company’s costs would rise by between 4 and 5 percent this year and that ‘the majority of cost inflation pressure that we face this year is wages’. This, the magazine said, underscores ‘that labour costs remain the biggest financial burden on the company.’ Wages a burden on profits? We thought it was the other way round.

Politicians and the media often lecture us that inflation, as a rise in prices generally, is caused by wage increases. Workers get a wage increase which employers, to maintain profit margins, pass on to their customers by increasing the price of what they are selling. The logic of this position is that workers should not ask for a wage increase or strike to try to get one as this won’t make them any better off.

Marx met a similar argument in his day. He countered it by pointing out that, faced with a wage increase, capitalists might want to compensate by increasing the price of what they sell, but the point was whether they could:
‘The will of the capitalist is certainly to take as much as possible. What we have to do is not to talk about his will, but to enquire into his power, the limits of that power, and the character of those limits’ (Value, Price and Profit, section 1).
In theory Greggs could increase its prices by 4 to 5 percent to compensate for the ‘financial burden’ of having to pay out more wages but this would not necessarily have the effect of protecting its profit margins. It could well do the opposite since its sales might fall as its customers bought their sausage rolls from one of its competitors.

The board of Greggs has evidently reached the conclusion that this is in fact what would happen. As Business Matters put it:
‘Greggs continues to navigate the challenges posed by rising wages while leveraging its expansion plans and affordable pricing to maintain its market position and drive growth’ (emphasis added).
Currie was reported as saying:
‘Greggs would continue to monitor and review price increases regularly. While the company does not have a fixed plan for pricing, she emphasized the need to remain flexible and responsive to ongoing economic conditions, reviewing their stance on a week-to-week and month-to-month basis’.
In other words, to keep testing to find out what price the market will bear without losing sales.

Greggs is in competition with others to sell take-away breakfasts and lunches. It claims to have overtaken McDonalds in the market for breakfasts and is planning to increase the number of its shops this year. In this competitive situation it would be counter-productive to try to pass on increased wage costs to customers. So Greggs has to accept the reduction in profits that follows from not raising prices. It might have the will but it doesn’t have the power to protect its profits.

Capitalist enterprises have to submit to the economic laws of capitalism just as much as workers and governments do.

Proper Gander: United by music, non-politically? (2024)

The Proper Gander TV column from the June 2024 issue of the Socialist Standard

Even more than in previous years, 2024’s Eurovision Song Contest was less about the songs than the political arena in which the show took place. The war in Ukraine has been the backdrop for the last couple of competitions, with the country’s win in 2022 reflecting the sympathy for its plight. But this year’s event barely acknowledged the ongoing conflict in Ukraine, instead being shaped and overshadowed by the Israeli state’s war with Hamas. Unlike Russia, which was excluded from the contest in 2022, Israel hasn’t broken any of Eurovision’s rules by being at war, and so was allowed to compete. Consequently, its participation became a focus of anger and criticism from the pro-Palestinian movement, online and around the venue. Eurovision’s slogan is ‘United By Music’, but this sentiment ended up sounding either naïvely optimistic or sarcastically hollow.

Protests leading up to the final on 11 May were expected, and so security in the host city of Malmö in Sweden was tightened. The area was designated a ‘no fly zone’ to deter any drone attacks, additional police were drafted in from Denmark and Norway, and Israel’s contestant Eden Golan was closely guarded due to death threats. Thousands of pro-Palestinian and anti-war demonstrators gathered in Malmö, not that this was featured in the polished official coverage. The broadcasters also downplayed the booing in the auditorium which accompanied Golan’s performance by disguising it with amplified cheering. It could be argued that this censorship is to keep the event as a celebration of kitsch, an escape from the depressingly real tragedies happening daily. But because the political situation in and around Europe is so volatile, Eurovision can’t exist in its own glitzy bubble. The stated aim of the event’s organisers at the European Broadcasting Union is that Eurovision is ‘non-political’, even though censoring coverage does suggest political motives. The audience members who booed EBU Executive Supervisor Martin Österdahl during the final were making a political point about his perceived politics. To put the EBU’s stance into practice, officials requested Israel change its song, originally called October Rain, to cut out references to the 7th October attacks. Ireland’s singer was asked to remove the word ‘ceasefire’ in body paint, and Portugal’s performance wasn’t initially uploaded after broadcast, apparently because its contestant wore nail art featuring Palestinian symbols. How the death and destruction in the Middle East gets filtered through the spectacle of Eurovision goes beyond disorientating to trivialising the slaughter.

The results of the ‘non-political’ contest were also politically charged. The final score awarded to each competitor is derived from the number of votes from juries of ‘music professionals’ in each country and phone-in votes from viewers, with countries unable to vote for themselves. Jurors are supposed to vote for a song without considering the identity of its singer, a stipulation which the viewers at home have no need to follow. The UK’s effort scored nul points from the public vote and ended up in 18th place, while the winning entry from Switzerland was one of the better songs, most of which were interchangeable power ballads or dance bangers, slickly performed. Israel’s mid-table scoring from the juries was boosted considerably by having the second largest number of public votes, meaning that the country finished in fifth place. Israel’s surprise high ranking suggests that the pro-Palestinian or pro-peace protests and online campaigns had little impact on voters’ views, and leftist activists are presumably wondering where they went wrong. Given the unavoidable political climate around the competition, it’s probable that more people voted for Israel as some kind of statement than because they favoured the song regardless. Whether the result could be called ‘democratic’ depends on how far its definition can be stretched. Still, as a framework to gather votes across a wide area, this is about as good as global democracy in capitalism gets. So, without having the ability to directly influence the war, some people have felt that Eurovision can be an outlet for views they hold passionately, whether by voting for Israel (for some reason) or protesting against its inclusion. The relevance of a song competition as a barometer of international politics highlights the lack of other ways people can collectively voice an opinion or act upon it in capitalist society. The result wouldn’t have been affected by anyone joining the boycott of the event promoted by the pro-Palestinian Boycott, Divestment, Sanctions movement. It would be hard to determine whether this campaign, apathy about the overblown circus or sunny weather contributed most to the BBC’s coverage having around two million fewer viewers than last year. But the numbers and scores don’t have any influence on the war. How and how much the event reflects public opinion in Europe is likely to be of little concern to the families struggling to survive the horrors of the war-torn Middle East.
Mike Foster

Class matters (2024)

Book Review from the June 2024 issue of the Socialist Standard

Radical Chains. Why Class Matters. By Chris Nineham. Zero Books, 2023.197pp.

Recent times have seen much talk of identity politics and sectionalism. Gender, race, and ethnicity among other ‘sectional’ interests create what the author of this book sees as divisions and diversions from the common interest we have in establishing a different kind of society from the existing one. The view he forcefully expresses is that to regard these as groups with different interests has the effect of diverting attention from the shared working-class issue of wage and salary work and the insecurity it brings.

The book’s sub-title, ‘Why Class Matters’ is an uncompromising expression of the Marxist view that there are two main classes in capitalist society, the tiny minority class that owns and controls the Earth’s resources (the capitalist class) and the vast majority (the working class) who, in order to survive, need to sell their labour-power for a wage or salary to that minority. It argues this proposition with informed and incontrovertible clarity and powerfully insists that the effect of ‘identity politics’ is to cause muddle and confusion, nor does it make any sense to split wage and salary earners into a series of different sub-classes (eg, ‘middle class’, ‘upper class, ‘professional class’) with somehow different interests from one another. He dismisses ‘the various attempts to downplay class’ as ‘completely misleading’ and illustrates effectively that, whatever their line of work, all those who live on a wage or salary are fundamentally in the same subordinate position with regard to the system and the class that owns it (ie, the capitalist class).

This message is then connected, in a wide-ranging survey, to the various conflicts, large and small, that have arisen across the globe between subjects and their masters over the last two centuries. Yet here it somewhat loses its way and focus in seeking to see in these conflicts conscious attempts to establish new forms of society rather than largely desperate reactions by downtrodden people against oppression or powerlessness. It starts with the nineteenth-century movements for political change in France and Germany before going on to Russia’s 1905 revolution, and then the taking of power by the Bolsheviks in 1917 and the civil war that followed, with reflection on these events as analysed mainly by Trotsky, Gramsci and Lukacs.

The author then moves on to the Second World War and its aftermath, and later, in a section entitled ‘Dreams deferred’, he takes us through revolts and uprisings in China, Egypt, Algeria, Cuba, Vietnam, and Latin America as well as the ‘Arab Spring’ before moving back to Europe with the ‘events’ of May 1968 in France, the opposition to Thatcherism in Britain and the reactions to the ‘neoliberalism’ which it heralded. A broad sweep indeed in which historical development is often encapsulated with verve and economy (eg, the First World War defined as ‘the catastrophic climax of mounting international competition for markets and resources’) but which is tainted by an over-enthusiastic tendency to see events as more driven by class-conscious motives than they were in reality.

Having gone through this history of revolt and struggle, the author’s main message for today is that we must struggle against the current ‘neoliberalism’, which he sees as a new and increasingly exploitative form of capitalism causing ‘an epidemic of workplace insecurity’. He peppers his book with references to it, seeming to consider it as something qualitatively different from the capitalism that existed before over the past two centuries. But is it that much different from capitalism’s business as usual? It’s true that, in the post-Second World War years, free-market capitalism (previously called ‘laissez-faire’) gave way to a new variation widely practised by governments, whereby the state would intervene in the economy more readily than before to try and get the system back working in a less crisis-ridden way (often called ‘Keynesianism’).

But as capitalism went on its merry way creating, as the author himself quoting Marx says, ‘uninterrupted disturbance of all social conditions’, the state intervention method was found to be no more effective in ‘taming’ capitalism than what preceded it. It became discredited therefore and governments went back to favouring so-called ‘free markets’ and the relaxation of controls: an old way of running things in fact, even if its critics have attached to it the new label of ‘neoliberalism’. The fact is that governments do not – cannot – control the way the capitalist economy works. It’s the other way round. It’s the operation of capitalism that constrains governments. In fact they can do little more than react to what it throws at them. And the system remains fundamentally the same – something the writer himself, despite his focus on ‘neoliberalism’ seems also to accept when he writes ‘the production of commodities through exploitation remains …the driving force of the system’ and ‘it is still a system with the exploitation of workers at its heart’.

But what is the form of struggle he advocates that we engage in to transcend the capitalist system and establish socialism? At one point he quotes Marx’s view of socialism as being the ‘abolition of the wages system’, talks about ‘liberating society as a whole’ and ‘dissolving classes altogether’ and seems to agree that this should be the ambition of those who oppose capitalism and have a clear view of the class system that characterises it regardless of attempts at obfuscation. And that is very much to his credit.

But the main thing he seems to offer in terms of action is support for ‘struggles over pay and conditions by trade unions’, which, it is claimed ‘have a capacity to generalise into a political conflict between different class organisations’ and ‘at the same time developing the revolutionary consciousness and combativity of all those involved’. We have of course heard this kind of thing many times before from the Trotskyist left and we continue to argue that it’s no substitute for a movement whose aim should be to develop majority consciousness among workers of the need to use democratic means to establish a classless, stateless, marketless, free-access society of democratic cooperation, mutual aid and economic equality based on the principle of from each according to ability to each according to need.
Howard Moss

Action Replay: Fair play and profits (2024)

The Action Replay column from the June 2024 issue of the Socialist Standard

Over the decades a number of professional football teams have been referred to as ‘the Bank of England club’, meaning they had masses of money to spend on transfers. This applied, for instance, to Sunderland in the 1950s.

But with the enormous rise in income from TV coverage, shirt sponsors, kit sales and season tickets, and the ownership of a number of clubs by wealthy individuals and multinational companies, it is recent years that have seen the rise of barely-credible transfer fees (£100m and more) and wages. The wealthier a club is, the more it can spend and, they hope, the more success and trophies they can achieve (or buy).

The football authorities, in both the UK and Europe, have felt obliged to regulate what happens, in order to prevent it just being a matter of the richest clubs winning more or less everything and a self-perpetuating elite emerging (money leads to success leads to money). Hence were developed the Financial Fair Play regulations (FFP), now in the Premier League termed Profitability and Sustainability Rules. A club can lose a maximum of £105m over a three-year period, and infringing this can lead to a points deduction, though special consideration was given to losses incurred during the Covid lockdown, and also investment in women’s football and community work. UEFA has a rather different system, whereby expenditure on transfer and wages cannot exceed 70 percent of revenue. This may be adopted in England, but not yet, and a different kind of spending cap has now been provisionally agreed by Premier League clubs.

Details aside, it is the less successful clubs that have suffered so far. Both Everton and Nottingham Forest, in the lower reaches of the Premier League, have had points deducted, though neither will be relegated as a result. Chelsea, on the other hand, have spent £1bn on transfers under their new owners (after Roman Abramovich was removed because of his Kremlin links). In the last financial year their losses would have been a cool £166m, but they avoided a penalty by selling two hotels for £76m to a firm owned by the same holding company.

As for the current top club, Manchester City, they have won the Premier League for the last four seasons, and in six of the last seven, plus other trophies too. But they have been handed no fewer than 115 charges for breaching FFP rules, going back to 2009. The case against them may not be heard until October and could even then take months to be resolved. In the meantime, City can carry on spending the money of their fabulously-wealthy owner, Sheikh Mansour of the UAE.

So the restrictions have not been all that effective, and as so often, capitalist concerns get round rules relating to taxes and profits by exploiting loopholes and playing (!) for time.
Paul Bennett

50 Years Ago: Bishop who made our pamphlet his Bible (2024)

The 50 Years Ago column from the June 2024 issue of the Socialist Standard

In 1920 William Montgomery Brown, Bishop of Arkansas, published a book called Communism and Christianism. It was caused by his reading the Socialist Party of Great Britain pamphlet Socialism and Religion; not only did it quote our pamphlet extensively, but offered prizes for essays based upon it.

As Socialism and Religion “took apart” Christianity, what happened to Bishop Brown? He was tried by a court of the Protestant Episcopal Church to which he belonged, and expelled for heresy. He described himself thereafter as “Episcopus in partibus Bolshevikium et Infidelium”, and published more books — My Heresy and The Bankruptcy of Christian Supernaturalism.

Promising as his case might sound, unfortunately the Bishop understood little of what he had read. He was carried away by the Russian Revolution; though his book was largely about “Marxism and Darwinism”, he had no idea of either. He joined the Rationalist Press Association, but fought against his expulsion from the Church. In fact he never gave up Christianity. His claim was that Jesus (for whom he continued to use a capital H: “Him”, etc.) was dedicated “to the truth and to the proletariat”.

The Labour and Communist press in America was bitter towards the Church over Bishop Brown’s expulsion. That is in character: they supported religion, or said it was ‘‘a private affair”. The Socialist Party’s only regret was at its work being borrowed for a muddled and sterile non-purpose. We thought the Bishop was a blithering idiot.

(From the 70th anniversary issue of Socialist Standard, June 1974)

Editorial: Ends and means (2024)

Editorial from the June 2024 issue of the Socialist Standard

When the Socialist Party of Great Britain was founded 120 years ago this month there was widespread agreement amongst those who were against capitalism as to what the alternative would be. Socialism was seen as a society based on the common ownership and democratic control of the means for producing wealth, with production for use not profit. For instance, a Manifesto of English Socialists issued in 1893 stated:
‘On this point all Socialists agree. Our aim, one and all, is to obtain for the whole community complete ownership and control of the means of transport, the means of manufacture, the mines and the land. Thus we look to put an end for ever to the wage system, to sweep away all distinctions of class, and eventually to establish national and international communism on a sound basis’ ( ).
This was signed not only by Marxian socialists such as H. M. Hyndman of the Social Democratic Federation (from which we broke away eleven years later) and William Morris, but also by Fabians such as George Bernard Shaw and Sidney Webb.

There were of course disagreements over how to get there. Some favoured parliamentary action, others were anti-parliamentarians; some favoured an insurrection or a general strike, others a policy of gradual reform, but there was agreement on the nature of the society to replace capitalism.

After the Bolsheviks came to power in Russia this gradually changed. They claimed – although we disputed this even in 1918 – to be constructing socialism in Russia and in 1936 proclaimed that socialism had actually been established there. However, what existed there bore no relation to what had previously been regarded as socialism. The means of living did not belong to the whole community under their democratic control. They belonged to the state controlled by a single, dictatorial party. The wages system continued to exist. Society there was a form of state capitalism.

This re-definition of socialism as state capitalism, propagated by the Russian government and Communist parties, meant that the disagreements in the working class movement came to be about the objective to be achieved — what socialism meant — and not just about the means of achieving it. A step backwards as it obliged us to spend time explaining what socialism was not at the expense of explaining what it was.

Although the Russian rulers had changed the definition of socialism they still claimed that their eventual aim was a classless, stateless society of common ownership without money or wages, only they called it ‘communism’. A small but growing number of those who want to get rid of capitalism are coming to define post-capitalist society in these terms. We can only welcome this as it is shifting the arguments back from being about the goal to being about the means to achieve it.

Disagreements still exist on how to get there — the same ones as before — and here we still defend, as we did in 1904, democratic revolutionary political action, including the use of the ballot box, by a socialist-minded working class.