Marx and a Professor. (1932)

Book Review from the April 1932 issue of the Socialist Standard

The critics of Marx are many and varied. Chiefly they belong to two camps: those who are completely ignorant of his life and writings, and those who, though acquainted with both, misrepresent them deliberately, or do not understand them.

Of this latter kind of critic a correspondent drawn our attention to an effort to dispose of Marx by Professor Hearnshaw of the London University, in a book called “A Survey of Socialism.”

The professor’s criticism is levelled chiefly at the Materialist Conception of History and the Labour Theory of Value. The crux of his criticism of the latter is the so-called contradiction between the theory of value as outlined in Vol. I of “Das Capital,” and the theory of the price of production in Vol III. As this was dealt with in the March S.S., this article will be mainly confined to the Materialist Conception of History.

Concerning this, the professor cannot discover any contradictions from Marx’s own writings. Instead, he finds that it has been “exploded,” “abandoned,” and “explained away” by its adherents, among them the “faithful Engels.”

Engels is quoted on page 238 as follows : 

"Marx and I are partially responsible for the fact that the younger men have sometimes laid more stress on the economic side than it deserves.”

This is described as a recantation from Marx. But why? Engels says, “The younger men laid more stress on the economic side than it deserves.” He did not say, as Mr. Hearnshaw would have his readers believe, that the economic side deserves no stress.

Mr Hearnshaw displays great ability in quoting extracts from the writings of Marxists, most of them dragged from their context, to show that Marx has been abandoned. One example is the following extract from page 282 of Mr. Hearnshav/’s book. He says :

“In particular, the Marxian eschatology is as completely discredited and derelict as is the mediaeval hell. “History,” confessed Engels in 1895, “proved us wrong and showed the views which we then held to be illusions.” O shade of Marx ! What will not the injudicious Engels confess now you are no longer-near him to impose discretion ?”

The quotation from Engels, ” History proved us wrong” . . .,” is from his introduction to Marx’s “Class Struggles in France,” and is trickily used to imply that the illusions were the Materialist Conception of History and the Labour Theory of Value. Whereas, students of Marx know that Engels was writing of the tactics to be pursued by the workers, the question of constitutional methods versus the barricades. The illusions referred to were the barricades !

And, be it remembered, Mr. Hearnshaw is not a political peddler, but a professor of the London University.

Two extracts are taken from E. Belfort Bax’s book, “Outlooks from the New Standpoint,” and quoted on p. 239 of Hearnshaw’s book.

The first is : —

“Although economics are the basis of human existence, they are the basis merely and not the complete whole.”

The use made of this by Mr. Hearnshaw is such as to convey to the superficial reader that Marx’s case is that economics are the whole of existence. In reality, however, this particular quotation, though weakly stated, says nothing that Marx did not say. It is a Marxist truism. The second quotation is :

“There are certain human interests whose development cannot be interpreted economically.”

With regard to this quotation we do not attempt to defend Belfort Bax’s position.

It would be as well, before proceeding further, to state what is the working basis of the Materialist Conception of History. It is, as stated by Engels in the preface to the Communist Manifesto :

“That in every historical epoch, the prevailing mode of production and exchange, and the social organisation necessarily following from it, form the basis upon which is built up, and from which alone can be explained, the political and intellectual history of that epoch.”

In much of his writing on the Materialist Conception of History Bax diverged from the Marxian view. He says, for example, in the book from which Mr Hearnshaw quotes, “Outlooks from the New Standpoint” (p. 132).

“It would be difficult to deduce the Cruades from the conditions of the mediaeval manor of the eleventh century.”

Again :

“There is much in the history of the first two centuries of the Christian era which cannot be directly referred to economical courses.”

It will be noticed that Belfort Bax does not say that the underlying causes of events are not economic, but merely that he finds certain events “difficult to deduce'” and others which “cannot be directly referred to economical causes.” This does not dispute the fundamental Marxian proposition that the intellectual and political history of an epoch are to be explained in the mode of production then prevailing; a proposition |which Belfort Bax emphasises repeatedly. It is, however, his obscure and ambiguous use of English (unusual with Bax) that gives Mr. Hearnshaw the opportunity to accuse him of making a “tolerably complete evacuation from Marx.”

Mr. Hearnshaw gives a typical illustration of his inability to understand the Materialist Conception of History or of his deliberate misrepresentation of it on page 105. He says that it does not take into iaccount “sex attraction and religious aspiration . . . they cannot be interpreted as consequences of economic antecedents.” It might surprise Mr. Hearnshaw and Marx’s critics to know that it does take these into account; that it does not interpret them as “consequences of economic antecedents.” What the Materialist Conception of History does say is that the forms which “sex attraction and religious aspiration” take change from age to age; and that these forms can only be explained and understood in the light of the mode of production and consequent social organisation of the age in which they exist.

Mr. Hearnshaw summarises his arguments on page 241:

“The Materialist Conception of History may partially explain the evolution of primitive barbaric society which was wholly engrossed in the struggle for the means of existence, but it does not explain the evolution of civilised society in which other and higher interests prevail ; it leaves out of account—unexplained and wholly inexplicable—religion, patriotism, devotion to ideal causes, martyrdoms, spiritualities; it does not explain Buddha, Christ, Mohammed, Luther, Tolstoi; nay, it does not explain Marx himself. For Marx, assuredly, was not moved by economic considerations.”

It will only be possible to deal with a few of the points raised here.

That primitive society was “wholly engrossed in the struggle for the means of existence” can only be wholly explained—not partially—by the fact that the means of production were primitive and had not developed to the point where it was possible to produce wealth easily, giving time for leisure, making it possible for any to live without working, or of living on the products of another class. In order to survive its struggle with nature the primitive social organisation demanded equal co-operation between its members. This equality was not an ethical creed, but a necessity which arose from the struggle. Class society emerged from primitive society when a mode of production had developed which destroyed this co-operative character of primitive society. It could not arise before. Nomadic tribes following their flocks and herds discovered a new method of production in agriculture, and laid the foundation of a new form of private property. The process was a gradual one, spread over a long period before society based on private property became clearly formed. The important point is that the change was determined by a change in the mode of production. The final result was class divided society, which gave leisure to, and made it possible for, certain classes to be other than “wholly engrossed in the struggles for the means of existence.”

Professor Hearnshaw refers also to patriotism. According to the dictionary patriotism means the “pride and love for one’s own country.” Not only does the Materialist Conception of History explain it, but nothing else can. In feudal society modern productive forces did not exist. Economically, the manorial village was almost a complete and self-sufficing unit in itself. It needed little or no intercourse with the outside world. When it did that intercourse was often “unfriendly.” Feudal history is one long record—so far as the nation is concerned—of internal conflicts. The conception of patriotism and nationalism did not come into existence until developments and changes in the methods of production were taking place, which gradually undermined the economic basis and social organisation of Feudalism. “Patriotism” and “England” grew simultaneously with the extension of the market. Mr. G. B. Shaw illustrates this point in his play, “St. Joan,” which was cast in the 15th century. He makes one of his characters, an English nobleman, say :

“A Frenchman ! Where did you pick up that expression? Are these Burgundians and Bretons and Picards and Gascons beginning to call themselves Englishmen? They actually talk of France and England as their countries. Theirs, if you please ! What is to become of me and you if that way of thinking comes into fashion ? Men cannot serve two masters. If this cant of serving their country takes hold of them, good-bye to the authority of their feudal lords, and good-bye to the authority of the church. That is, good-by to you and me.”

The rising capitalist class were a “patriotic” class at the same time that they were a revolutionary class. It was this patriotism which gave expression to the aspirations of the growing capitalist class that Dr. Johnson, the famous defender of waning feudal privileges, referred to when he said that “patriotism was the last refuge of the scoundrel.”

Changes in the mode of production have broken down the economic unity of the village, have made nations—and empires. Patriotism and Nationalism reflect this development and correspond to it.

Marx, Christ—and other matters.

When the learned professor speaks of explaining Christ and Marx he obviously means the ideas for which they stood in their time.

The basis of Christ’s teaching, i.e., the idea of the “One God,” reflected social forms that then existed. The ground for this conception had been prepared by the dissolution of tribal life, and the destruction of the tribal gods which synchronised with the growth of the Roman Empire. Christ came (or the Christian teaching arose) after the zenith of the Roman Empire had been passed and decay was setting in. The conditions of the slave-classes in the Empire were at their lowest. Appalling poverty, social disintegration and oppression. Christianity blessed the poor and cursed the rich; extolled poverty and promised riches—in heaven. It did not promise recompense on this earth. The economic conditions of the time did not make possible any proposal that would remedy their slavery on this earth. It was perfectly natural then that deliverance from these conditions should take the form of a belief that promised recompense in a “life to come.” This belief fostered—and taught—a tolerance of the conditions of this world, and submissiveness to slavery. The ruling class discovered this and adopted Christianity. Subsequent ruling-classes also recognised it and made use of it; at the same time adapting its theological aspects to suit changing conditions, and their class interests. Hence the changing form of Christianity, from Catholicism to Protestantism, and to the modern abstract forms which have abandoned some of the crudities that were originally attached to it.

There is some similarity in the misery and poverty of the slaves in Ancient Rome and those of the modern proletariat. There is this difference, however, capitalism suggests an alternative on this earth. The tendency which characterises the modern proletariat is not, therefore, like that of the slaves of Rome, to give expression to their discontent by embracing a creed which “despairs of this world,” but it is to express its discontent politically. This it does by supporting, and in withdrawing its support from one political party after another. Sooner or later, knowledge, and the lessons that come from experience, will lead to an understanding of the present order of society. When that point is reached the working class will fulfil its historic mission, gain political power, and establish Socialism. Thus the conditions of capitalism drive the workers to give expression to their discontent in material forms and away from religious forms. Hence, the growing irreligion of the workers.

One of the easiest (and very common) methods of argument is to state what it is thought an opponent’s views are, and then proceed to demolish them. Mr. Hearnshaw (wittingly or not) has used this method. Though Mr. Hearnshaw’s book has over four hundred pages and contains nearly five hundred quotations, there is not one quotation which clearly states Marx’s view on the Materialist Conception of History. Instead, there are hundreds of quotations from books written mostly by anti-Socialists which purport to state Marx’s view. And this, despite the fact that the fundamental principles of the Materialist Conception of History which are outlined in the preface to Marx’s “Critique of Political Economy” could be stated in a few pages. In view of this, the following from page 230 of Mr. Hearnshaw’s book is just cheek :

“The second thing to be considered is this : that the Marxian system, since its formulation in 1894, has been entirely shattered by criticism, so that it is now a moral and intellectual ruin which no impartial thinker professes to regard is an intact structure.”

And nearly forty years after 1894 the learned professor and “impartial thinker,” regardless of the fact that the “Marxian system has been shattered” finds that it is necessary to do so again. There is an endless procession of those who add their “mite” to the shattering of the “Marxian system”; though it might be thought that having once shattered it into a “moral and intellectual ruin” it would, be unnecessary to do so again. But, alas ! the problems of capitalism arouse ever fresh interest in the “Marxian system” and prove the logic of its analysis. Where capitalism appears, there translated into every language, appears the “Marxian system” also. And it will be so until capitalism is abolished.

Further points from our correspondent’s letter dealing with other aspects of socialist criticism will appear in a subsequent issue.

Harry Waite

The Socialist Forum: Can Russian Peasants be Industrialised? (1932)

Letter to the Editors from the April 1932 issue of the Socialist Standard

A correspondent writing from St. John (New Brunswick) asks some interesting: questions about the possibility of making efficient factory workers out of the Russian peasants:—

Isaac Don Levine, author of the “Life of Stalin,” … in a recent article in the New York Scribners’ Magazine, would have us believe that a Dictatorship such as the one in Russia can by no manner of means create a proletariat, capable of working in machine industry in anything less than several generations or centuries. He implies that the Slav is racially an inferior type, not amenable to factory discipline, and a clumsy animal in other respects.

If it is true that an agricultural population is not of a type that can readily be adapted to machine production, and it takes generations of workers coming originally from rural districts to make mechanics, how can we account for the remarkable rise of German industry in the space of forty or fifty years up till about 1914? The majority of Germans, prior to 1860 or 1870, were villagers and farmers, and in a very few years after coming to the cities, turned out lo be capable mechanics, and this same thing happened in other places. Any number of Polish, Hungarian and Balkan peasants who arrived in the United States prior to 1915, took their place in machine industry without any experience, and fitted right into the scheme of things, their children even more so, after them.

If the Soviet Government succeeds in obtaining the required number of capable technicians and foremen to manage the factories and shops built and building, in this five-year plan, what is there to prevent the transformation of millions of mujiks into machine tenders as has happened in other countries?

Yours, etc.,

M. Wasson.

Reply

Not having seen the article by Mr. Levine we do not know what evidence he adduces to show either that Russian peasants or Slavs generally are incapable of being trained as industrial workers.

It is true that some employers (e.g., Ford Motors) in their selection of workers give preference to American or Canadian born, or to immigrants from Great Britain, Germany, etc., and often reject applicants from the more backward European States. There is, however, no evidence to show that the latter are unsuitable because of racial characteristics. An explanation is that some countries, having reached a fairly high level of capitalist development, have framed their general and technical education in a way which produces workers suitable for up-to-date factory work. Workers from backward countries and rural areas are unlikely to possess the qualifications of training and education needed.

It is interesting to recall that in Great Britain, in the early days of the factory system, employers found the same difficulty in compelling handicraftsmen and peasants to fit themselves into the discipline of machine production.

The whole question of racial differences is discussed very thoroughly by Friedrich Hertz in his “Race and Civilization” (Published by Kegan Paul, London, 1928, and by the MacMillan Co., New York). He shows how old are the theories of racial superiority, and how completely they cancel each other out; for there is no race that at some period has not cherished the illusion of its own innate superiority. Hertz deals with the capacity for social progress and reached this conclusion :—

“The differences between distant groups of one and the same linguistic family or race are greater than those between any two ‘unrelated’ races as a whole. This assertion can be proved up to the hilt. Therefore it follows from this that it is not racial character which has prevented the backward from progressing, but environmental influences.” (P. 259.)

He gives a neat answer to the belief in the superior fitness for industrialism supposed to be possessed by non-Slav races by pointing out that early in the 19th century it was said that the Germans also were inherently a backward race. He quotes Genovesi as having written in 1820 that the Germans would never be able to develop a trade and commerce or produce a population like the French and English. A German writer when he first heard of railways being built was of the opinion that such things were of no good to Germany, because the German character was too easy-going (p. 59).

In Hertz’s book there are a large number of illustrations of stupid theories of racial superiority being encouraged by ruling classes for their own interests. He shows, for example, how these theories were used by the Governments during the war.

As regards the Russian Five-Year Plan, the Soviet Government have banked very heavily on early success of their industrialisation schemes. The slowness with which peasants can be trained to equal the efficiency of workers in advanced capitalist countries is likely to present a very difficult problem to the Government there, hardly less difficult than the problem would be if—as Mr. Levine suggests—the Slavs could for racial reasons never be industrialised. The Russians themselves claim, with what justification we do not know, that they have every reason to be optimistic about their ability to produce skilled workers. According to Mr. J. C. Crowther (an English scientist who visited Russia) :—

“The Russians have evolved their own system. They say a raw worker can become as skilled in six months by this training as he would in four years casual work as an artisan’s mate in the shops. They propose to put 700,000 workers through such courses in 1931” (“Industry and Education in Soviet Russia.” Pub. Heinemann, 1932).

Ed. Comm.

The Socialist Forum: Engels and Minority Action. (1932)

Letter to the Editors from the April 1932 issue of the Socialist Standard

Islington, London, N.1.

Editor, “The Socialist Standard.”

Dear Comrade,

On page 77, Engels’ “Socialism, Utopian and Scientific,” the writer, referring to the socialist revolution says: “Like every other social advance it becomes practicable, not by men understanding that the existence of classes is in contradiction to justice, equality, etc., not by the mere willingness to abolish these classes, but by virtue of certain new economic conditions.”

This statement clearly shows that Engels was of the opinion that, given the necessary conditions and an intelligent minority, the establishment of a socialist system could become an accomplished fact, and seems to refute your teaching that it is necessary to have a class-conscious majority before a successful revolution could be guaranteed.

I should be pleased to have your opinion on this question, and thank you in anticipation for same. Yours, etc.,

G. W. Jones (Junr.).

Reply

Our correspondent is completely mistaken about Engels’ views. Engels did not believe that “an intelligent Minority” could establish Socialism. It will be seen that the only evidence our correspondent quotes in support of his view about Engels is a passage in which Engels makes no reference whatever either to majority or to minority action. If we turn to page 60 of the same work (“Socialism, Utopian and Scientific.” Allen & Unwin edition) we find Engels writing this :—

“It is the compelling force of anarchy in the production of society at large that more and more completely turns the great majority of men into proletarians ; and it is the masses of the proletariat again who will finally put an end to anarchy in production.”

There is nothing here about minority action. Nor is there on page 86, where Engels says : —

“The proletariat seizes the public power. . . .”

In Engels’ introduction to Marx’s “The Class Struggles in France, 1848-1850 ” (the introduction being written in 1895), Engels said : —

“The day of surprise attacks has passed, the day when small but resolute minorities could achieve revolutions by leading the unwitting masses to the onslaught. Where the question is one of a complete transformation in the social organism, the masses must wittingly participate, must fully understand what they are about.”

What Engels had in mind in the passage that our correspondent quotes is to emphasise that social changes do not come about because of ideas that have miraculously appeared in men’s minds, out of nothing. The development of the economic forces makes possible certain social changes, and it is out of this material basis that the ideas of change arise. Marx put it clearly in his preface to the “Critique of Political Economy.”

“No social order ever disappears before all the productive forces, for which there is room in it, have been developed ; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society. Therefore, mankind always takes up only such problems as it can solve ; since, looking at the matter more closely, we will always find that the problem itself arises only when the material conditions necessary for its solution already exist or are at least in the process of formation.” (P. 12, Kerr Edition, 1911.)

Ed. Comm.

The Socialist Forum: The Programme of the Russian Mensheviks and Social Revolutionaries. (1932)

Letter to the Editors from the April 1932 issue of the Socialist Standard

A reader at St. John, New Brunswick, asks the following questions :—

What was the programme, or principles, in brief, of the Mensheviks and the Left Social Revolutionaries, now under a ban in Russia? Have these extinct organisations much in common with the S.P.G.B. ?

Yours, etc., M. Wasson.

Reply.

In order to make our comments on these Russian organisations understandable we must first give some facts about them. The “Russian Social Democratic Party,” which later split into two separate bodies, Bolsheviks and Mensheviks, was formed in 1898. Its aim was declared to be Socialism. Its energies were largely taken up with problems of organisation, with the struggle for immediate demands (such as the right to organise in trade unions, the shorter working day) and with resisting the efforts of the Czarist Government to suppress its propaganda. From the first there were two wings in the Party, and in 1903 at the Party Congress at Geneva a split developed. The following statement concerning the split is taken from “The Labour International Handbook,” published in May, 1921, by the Labour Publishing Co., Ltd., London. The Editor, R. Palme Dutt, is a well-known Communist.

“It is important to note that there was no disagreement on the programme, which was adopted unanimously. The difference was one of tactics, and concerned (1) the importance to be attached to illegal work; and as the difference developed (2) the question of co-operating with bourgeois parties of the left.” (P. 286.)

A Unity Congress was held in 1906, but the two sections continued to keep their separate organisations and journals. In 1912 they ran candidates against one another in the elections for the Fourth Duma (“Handbook,” p. 287).

Both Mensheviks and Bolsheviks claim (and still claim) to be Marxists.

The “Socialist Revolutionary Party, ” formed in 1901 did not claim to accept Marxist principles. They advocated and practised political association, which both Mensheviks and Bolsheviks condemned.

“In their social theory they looked above all to the peasants and the development of agricultural communes with a large local autonomy” (“Handbook,” p. 288.)

The “Socialist Revolutionary Party,” with a predominantly peasant membership, was much larger than the other parties, whose members were chiefly in the towns. The Mensheviks were less numerous than the Bolsheviks.

The “Left Socialist Revolutionaries” were a wing led by Spiridonova and Kamkov, who gave general support to the Bolsheviks in their seizure of power in 1917. They had seven seats on the Council of Commissaries until early in 1918, when they resigned as a protest against the Bolshevik policy of making peace with Germany.

The Mensheviks and Socialist Revolutionaries still have organisations and journals, with headquarters in Berlin.

In 1920 when a British Labour Delegation visited Russia the Mensheviks and Socialist Revolutionaries each issued a full statement of their position. These were included in the Report of the Delegation (Published by the Labour Party and Trades Union Congress, London).

If the Mensheviks could be judged solely on this declaration of Socialist principles there would be little to find fault with.

The S.R. declaration, on the other hand, contains little about principles, and is not in any real sense a Socialist declaration at all. It is merely a propaganda effort to justify the tactics of the S.R. Party and to blacken the Bolsheviks.

The important thing is that the Menshevik document referred to above, although issued by the Central Committee of the Party, does not give anything like a full and true picture. Rather it represents the views of certain individuals on Socialist principles, completely divorced from the actions of the Party. This characteristic of the Mensheviks is one often found in the Labour Parties of Western Europe and elsewhere.

Let us look at certain of their actions.

The Mensheviks permitted their members  to support the war—-in flat contradiction of’ the Socialist principles they were supposed to understand and accept.

The Mensheviks and the Socialist Revolutionaries (and the Bolsheviks) belonged to the Second International before the war. They accepted the absurd claim that that body and its affiliated parties were Socialist.

The Mensheviks and Socialist Revolutionaries are still affiliated to the “Labour and Socialist International ” and still push the reforms which make up the only stock-in-trade of that non-Socialist body.

It will be seen, therefore, that the Mensheviks and Socialist Revolutionaries have no more in common with the S.P.G.B. than any of the other reformist parties which find it convenient to cover over their reformist programmes with a gloss of Marxian phrases and ideas.  

Ed. Comm.

The Socialist Forum: Some Questions About Gold. (1932)

Letter to the Editors from the April 1932 issue of the Socialist Standard

Elvaston Place, S.W.

Editor of the Socialist Standard.

Sir,

In October, you wrote: “The illusion that lack of gold has anything to do with the main problems is easily dispelled.” Is trade depression not a main problem ? No doubt a large part of the world’s economic difficulties are due to the lack of any plan in laissez-faire production and to the inequitable distribution of purchasing power resulting from private exploitation of the sources of wealth. But the best chance of modifying these conditions lies in the trades unions’ membership being increased, and the number of their members varies inversely with the percentage unemployed.

If the supply of gold is inadequate for the alleged requirements of the central banks and their clients, then primary prices will be forced down ; such a fall in prices involves reduction in the demand for manufactures, and inadequate profit or prospective losses deter the entrepreneur class from operations which increase employment and wages. There is almost complete short-term correspondence between the relation of primary prices to costs and the numbers unemployed, while with the upward trend of prices from 1896 to 1915 there was only two-thirds the unemployment of the preceding twenty years when the trend of prices was downward. Thorp & Mitchell’s Business Annals shows seven times as many years of prosperity per year of depression for the upward periods, 1849-73 and 1896-1920 as for that from 1873 to 1896. Your reference to the “very great increase in the supply of gold from 1890 to 1914″ shows that you do not appreciate the meaning of the term, “relative gold supply,” i.e., the actual supply relative to an increasing demand. This rose but slowly from the year 1896, allowing for an average increase in prices of about 2 per cent. a year from the disastrously low level of 1894-98. Both employment and the standard of living, however, were much higher at the end of the period than at the beginning. In 1926, real wages in the United States, according to Professor P. H. Douglas, were one-quarter higher than in 1890-99, while for Great Britain the New Survey of London gives a figure one-third higher than in 1890.

With regard to the second part of the article, “The Gold Standard and the Crisis,” I should like to say that (1) a practical policy must adapt itself to changing conditions. At the beginning of 1931, Mr. Keynes—who was mainly responsible for the Macmillan Report—considered that Great Britain would be in a much stronger position for leading the world out of the depression if sterling remained tied to gold. In the summer he no longer held that view. (2) Mr. Norman’s opinion as to the efficacy of Bank Rate is of no importance. Under the circumstances, a 9 per cent. rate would have been ineffective, but would probably have caused a panic. It might have been better if we had abandoned gold without first borrowing and then being pushed off, but to contend that the Bank should have maintained payments in gold, come what might, is to imagine that gold parity is an end in itself. The essential—as opposed to the ostensible—reason for high money rates is a sharp rise in the level of prices. And prices were falling heavily.

Geoffrey Biddulph.

Reply

Mr. Biddulph’s remarks are only distantly related to the articles which he seeks to criticise. Further they reveal a complete lack of understanding of the Socialist view of the depression. Our contention is that the present crisis is merely a fresh manifestation of an ever-recurring phenomenon of capitalism. As such it does not create any new problem for the workers, whose political object should be the substitution of capitalist society by Socialism. Consequently the workers, as a class, have nothing to gain from any of the various measures—from tariffs and wheat quotas to currency reform—put forward to rescue capitalism from the mire in which its own inherent defects have landed it. By whatever means the depression is ended, capitalism, as a system, will remain intact. In other words the propertyless condition of the workers, the ending of which is, in our view, their sole concern, will persist. Reforms designed to make that condition less oppressive have no attractions for us. When we discussed the present trade depression it was with two objects in mind. In the first place we wished to show how the fundamental cause of this crisis—as of its predecessors—was the fact that goods are produced by wage-labour for profit and not for use. Secondly, we sought to refute certain of the explanations of the crisis that have been advanced, and to expose the incompetence in high places that it has revealed. As we carefully pointed out, we are not concerned to take sides on the question of gold versus managed standard; we merely gave an account of the events thai led up to the abandonment of the gold standard by this country.

Having made clear our position let us turn to Mr. Biddulph. Although he does not specifically say so, it would appear that his view is :—

(1) That the depression is attributable to a fall in the general price-level, itself the consequence of the fact that the rate of increase of the world’s gold has been less than the rate of increase in “the alleged requirements of Central Banks and their clients” for gold.

(2) That a rise in general prices is required to end the depression.

(3) That rising prices are desirable from the point of view of the workers.

The second and third points can be taken together. Even if it is conceded that the depression could be ended by a currency policy that would raise world prices, would the basic conditions of the workers be altered? For one thing would unemployment be eliminated? The most that Mr. Biddulph can claim for a period of rising prices is that unemployment (on the experience of 1896-1915) might be reduced to two-thirds of what it is at present. It is just because Capitalism cannot provide a full life for all, even given the most favourable business conditions, that we are Socialists. Unemployment is a symptom of a defective economic organisation and the defects it indicates remain when unemployment is relatively low as when it is relatively high. This is what reformers and those who talk of “years of prosperity” overlook when they urge their reforms and the taking of steps to restore “prosperity.”

So far as Mr. Biddulph’s first contention is concerned, that is open to two criticisms. Firstly, if it is correct, then Capitalism stands condemned on account of the incompetence of capitalists, for from his use of the word “alleged” in the phrase “alleged requirements of the Central Banks and their clients” for gold it is clear that these requirements were in his view capable of being reduced. In other words, the relative shortage of gold, which he believes to be at the root of the trouble, need not have manifested itself if the world’s leading bankers had possessed but an elementary knowledge of correct currency principles. This is to say that the crisis occurred because of the inability of those in charge ot the financial machine to run it properly. A system of production under which there is such scopes for incompetence to produce evil must stand condemned.

But in our view the crisis cannot be traced to monetary causes. Prices did not fall because of the decline in the relative gold supply but because, as periodically does and must happen under capitalism, goods were produced beyond the capacity of the market to absorb them.

The facts do not support the contrary view advanced by Mr. Biddulph.

The period from 1925 to 1929 was, for the world as a whole, one of increasing economic activity. Even here the national income was rising, and U.S.A. enjoyed the greatest boom in its history. The increase in the supply of gold during that period must have been sufficient to carry the increased volume of business, since economic expansion in fact occurred. In the face of this Mr. Biddulph’s theory requires that the rate of increase in the gold supply after 1929 was less than during the preceding 4 years. Unfortunately for the theory, however, the figures show exactly the opposite. According to the estimates of Mr. Kitchin (see “The Times,” February 18th, 1932), in the years from 1925 to 1928 the world’s gold production increased, as compared with the preceding year, by nil, 1.8 per cent., .04 per cent, and 1.3 per cent, respectively and in 1929 was 1.1 per cent, less than in 1928. On the other hand, in 1930 output rose by 3.5 per cent, above the 1929 level and in 1931 was even 4.4 per cent, more than in 1930.

But apart altogether from the question whether the relative supply of gold was or was not sufficient to maintain the 1929 price level, Mr. Biddulph has no justification for stating, without further evidence, that the crisis resulted from a fall in general prices. The price level was falling continuously up to 1929, yet the slump did not start until that year and indeed, as already stated, the period from 1925 to 1929 was one of economic expansion. This last fact destroys the whole of Mr. Biddulph’s case and completely disproves his implied assertion that periods of falling prices are periods of dwindling trade, reduced employment and declining “prosperity.” In this connection it is worth looking at some figures. Between 1924 and 1929 wholesale prices fell about 20 per cent. During the same period the Board of Trade index of industrial production rose about 14 per cent., and the numbers of insured workers in employment rose by nearly 9 per cent., although admittedly the percentage unemployed rose from 10.7 per cent, to 11.1 per cent.

Of those, such as Mr. Biddulph, who relate trade activity to rising prices, Mr. D. H. Robertson, the well-known economist, has well written that they speak “with the voice of the inflationist entrepreneur of all ages, claiming that the scales must always be weighed in (their) favour if (they) are to do (their) job properly” (The International Gold Problem, 1931, page 146).

So much for Mr. Biddulph’s main argument. The other points in his letter must, because of the lack of space, be dealt with only briefly.

(1) He implies that the standard of living rises with rising prices and vice versa. Sauerbeck’s index for 1873 was 111 and for 1896 was 61, a fall of about 45 per cent. Would Mr. Biddulph contend that the standard of living was lower in 1896 than in 1873?

(2) So far as the last paragraph of his letter is concerned, we regret that we cannot, without evidence, accept Mr. Biddulph’s view of the efficacy of the Bank Rate as being of greater value than the view of Mr. Montagu Norman.

(3) As we do not enjoy the personal confidence of Mr. Keynes we are interested to be informed of his changes of opinion by Mr. Biddulph. We had, however, thought that Mr. Keynes had been opposed to the gold standard for some years. As long ago as 1925, Mr. Keynes was opposing a return to the gold standard, and advocating a “managed” currency. (See “Nation,” March, 1925.) The “Nation” (supposed to echo the opinions of Mr. Keynes) were attacking the gold standard early in 1931.

4) Finally, we would assure Mr. Biddulph that we fully appreciate the meaning ol the term “relative gold supply.” In fact, we understood the phrase to have been introduced into economic discussion by Prof, Cassel, and that among economists it had the meaning given to it by him. For Mr. Biddulph’s guidance we quote from “Fundamental Thoughts in Economics,” where Prof. Cassel writes : “I have introduced the conception of a relative gold supply, which is for any given year the actual gold supply divided by the normal gold supply.” Mr. Biddulph might compare this definition with that given in his letter above.

B. S.