Another Labour Gimmick (1976)

From the November 1976 issue of the Socialist Standard

The Labour Party’s proposals to nationalize the four big banks and the seven largest insurance companies has predictably met with bitter opposition from banking interests. Banks are an integral part of the capitalist system and exist mainly for the purpose of holding idle capital pending its employment in industry, or any other project from which interest can be earned. The banker derives his profit from borrowing money at a lower rate of interest and loaning it at a higher rate. The rate of interest payable by banks has been approximately 8½ per cent., whilst the lending rate now varies between 16-19 per cent, dependent upon the type of risk the banker carries and when he expects to get his money back. The difference between the two rates less expenses represents the banker’s profit. All interest, like all rent, is derived from the surplus value created by workers at the point of production.

It is the constant wrangling between sections of the capitalist class over the division of this surplus value which shows the true character of class society. All sections of the employers are opposed as a class to the interests of the working class, but they are also in competition with one another. A high rate of interest for the banking section, or a higher level of rent for the landlords (mainly commercial and industrial) will diminish the profit of industrialists and manufacturers. Obviously, if the banker charges the manufacturer 18 per cent, on any borrowing, the manufacturer has to earn a rate of profit sufficiently high to be able to repay this rate of interest if he is to remain in business.

The capitalist naturally does not borrow all his capital from the banker, but the higher the rate of the interest the lower the industrial profit. Recently a speaker on the TV Money Programme (2nd September) estimated that the net return of investment for 1975 amounted to 2% when the borrowing rate for capital was between 13-14 per cent. In periods of declining business, the industrialist will be unable to earn even the cost of the interest on his loan, so he does not borrow or re-invest because there is nothing in it for him. His ability to meet foreign competition is impaired. He will lay off workers or introduce short-time working. This is how capitalism works.

Another futile reform

This is where the Labour Party comes in. Having over the period of the past 70 years gone in for every possible permutation of means to reform and control capitalism, they have resurrected the ancient corpse of bank nationalization. The Labour Party claimed at the time that the 1929-30 slump was due to bankers withholding credit from the industrialists — today they are making the same claim. They have forgotten that the 1945 Labour government nationalized the Bank of England in order to prevent this happening again, so they said. The Bank of England has power, under the Bank of England Act 1946, to direct any bank to loan money to any undertaking, industrial or commercial, without any public disclosures. It also has power, which it uses frequently, to require banks to make special deposits with it, and also determines the priority of bank lending and the rate of interest. In effect, it is in charge of the banking system.

The fact is that the nationalization of the Bank of England, bringing it under the direct control of the government, has made no difference to the boom and slump economy of capitalism, despite the arguments in favour of nationalization. Never at a loss to explain away its failure, the policy document issued on nationalization states “The Bank of England was nationalized 30 years ago. it has yet to be socialized”. Apart from giving a deliberate false meaning to the world socialize, in the context of the statement this means the diversion of bank and insurance company deposits from property and other commercial investments, including existing bank deposits and pension funds, into manufacturing industries. This is plain old-fashioned capitalism, and the Labour Party know this, but want their followers to believe it has something to do with Socialism.

Due to the circumstances of the War, West German and Japanese industry in particular were re-modernized. British manufacturing industry lags behind, with the result that foreign firms are obtaining an ever growing share of the markets, including the British market, at the expense of British capitalism. It is an economic necessity for British manufacturing industries to re-capitalize or reinvest by bringing in modern machinery. Maurice Green in the Daily Telegraph of 29th Sept. 1976 estimates that companies would need to raise between £2,250 million-£2,500 million from outside sources to help finance fixed capital expenditure of £11,000 million. Normally the City of London could raise this amount without difficulty, but taxation and other restrictions, including dividend control, have discouraged capitalists from investing. But before you can bring in new machinery, the old obsolete machinery has to be scrapped. This amounts to a writing off or wastage of capital, and the capitalist will leave it to the last possible moment because the market conditions are unpredictable at the present time.

The fact that successive governments have played the three-card trick by inflating the currency in attempts to solve their political problems complicates the matter, and tends to slow up re-investment pending clarification of government policy and T.U. reaction. In the meantime, the employers will play safe and not employ workers, thus continuing the social problem of unemployment.

Various spokesmen for the big four banks and insurance companies have repeatedly stated their willingness to lend money to industrialists and manufacturers under the standard bank conditions; i.e. that the interest charged shall be the normal business rate, that the period will be short to medium, and that the loans will be properly secured. The Labour Party wants low rates of interest, long-term loans with minimum security. In other words, it wants to finance the industrialists at the expense of the banker; by attacking the banker’s and depositor’s profit it hopes to provide more finance for industry. This they think will create more jobs or retain existing employment. Unfortunately, capitalism will not stand still whilst the Labour Party conducts its experiments in nationalization. State control of capital is no more effective than private control of capital as a means to secure full employment, because we are dealing with a system of international industrial anarchy which cannot be planned. The state is the instrument of the ruling class, and exists to protect their property incomes and assets — it cannot function in any other way, but it cannot guarantee property incomes.

Left Wing ignoramuses

The capitalist world outside Britain is not subject to the protestations or policies from the Left wing of the Labour Party. These ignoramuses envisage a “socialist Britain” (without socialism) as a haven from the economic pressures of external capitalism — they are blind men trying to lead other blind men. It is not the workers’ concern to referee contests between rival capitalist groups who are quarrelling over the division of surplus value, whether they be bankers, industrialists, or landlords. They should not take part in debates which put British working-class interests above that of their fellows overseas.

Here we are in the 20th century with practically the whole world at our feet, squabbling over the wealth this system allows to be produced, the bulk of which belongs to a small parasitic class; worrying ourselves sick about the present and the future — mystified as to our real rôle in this appalling environment. Are the working class to allow their individuality and creative powers to be prostituted in the interests of capital? And all this to maintain a system of production and exploitation which is a social anachronism and a blight on civilization. The domination of the world by capitalism has to be ended.

The political economists, and other servants of capital, have no desire for a complete social reconstruction. The Labour Party, and its industrial lap-dog the TUC, persistently burden the working class with capitalism’s problems when they should concentrate on their own. We must establish a Socialist economy where we can produce wealth without the fetters which are a condition of capitalist production. A Socialist economy does not require investments, capital, bank loans, or sterling balances — it simply requires the application of human labour-power to nature-given materials, and the direct consumption of the products without the nonsense of markets and competition.

Jim D'Arcy

Are Children Human? (1976)

From the November 1976 issue of the Socialist Standard

It is one of the perennial criticisms we Socialists have to face: A harmonious society like Socialism is bound to fail because human nature is against it. Humans are not harmonious and co-operative, we are told. On the contrary, they are born aggressive and warlike. An article dealing with one aspect of this subject in this paper a while back pointed out that the notion that humans arc like tigers falls down on one simple comparison. Whereas it is no doubt easy to point to apparently barbaric humans (among one’s neighbours maybe, let alone the Hitlers and Stalins of history), it is equally easy to instance many of one’s acquaintances who are clearly the reverse. Every tiger is tigerish. Every human is not. It is the different that is important. (It is interesting that mention of the tiger’s aggression being as inevitable as his stripes brought a note of dissent from the editor of our American paper, The Western Socialist, in a letter to the writer, on the grounds that even a tiger has to be taught aggression by Mummy tiger. If not so taught, it can’t catch and rend its prey when it grows up. True, of course. But it is equally true that every tiger must be taught aggression because if it can’t hunt it can’t live. So it comes to the same thing in the end.)

Now even if, for the sake of argument, we accept our opponents’ case that human adults are aggressive and are not fit for Socialism, is this a built-in mechanism from which there is no escape? Let us look at two little animals, the human child and the tiger cub. Both are delightful creatures and it is a pleasure to study them and play with them. (The writer is not claiming to have played with many tiger cubs, but the reader will take the point.) We know what happens with the little tiger, it has no way of getting its living when it grows up except by “taking on the aspect of a tiger” and so the cuddly animal becomes a snarling brute which can tear equally attractive creatures to pieces.

Now few people would seek to deny that the little human cub is as friendly and sweet as the tiger cub. Not long ago, I saw on a beach a kindergarten teacher with a couple of dozen human cubs of two or three years of age. They were sitting on the sand making gurgling noises to each other and laughing and giggling in the most delightful way. I said to the young lady that she was lucky to have such a sweet lot of kids to lock after. She replied that she had many such classes and without exception they were all little angels. Clearly the lady was speaking (to mix a metaphor) through rose-tinted spectacles. The smallest children can be bad-tempered and appear possessive and cunning. Yet not even the most rabid anti-Socialist would suggest the opposite of the teacher’s thesis, that all are potential monsters. So where does behaviour come from?

In The Brothers Karamazov Dostoyevsky proposes that all children are innocent dears till they are seven and after that they diverge: some become aggressive in greater or lesser degree, while others remain truly human all their lives. One can see what he means. Though the innocent humanity of the gurgling infants on the beach was self-evident, among them there may well have been a potential Jack the Ripper or Irma Grese: who knows? But I do not recall that Dostoyevsky offered any insight as to why the innocents, as they grew up in society, separated into goodies and baddies. And in fact the position is a false one. Children do not grow up to be one thing or the other, kindly and self-sacrificing or aggressive.

Social behaviour has to be learned. From where? — from society in the shape of parents and others, themselves the products of society. As we have seen, the young tigers are moulded by the inveterate laws of the jungle. They must learn to kill in order to eat. There is no question of morale involved; Mummy tiger does not teach her little ones anything about right and wrong. One may think tigers are lucky in the simplicity of it all. For humans in the capitalist world, behaviour is not a firm single strand but a mesh. The essential humanity which made the kindergarten teachers’ work a pleasure is there. So is the training to behave as a social being that she and others impart. Yet these are set to function in a divisive system of society: the capitalist jungle.

In that environment it may seem a minor miracle that all humans don’t grow up like tigers. Instead, they behave in different ways in reaction to different circumstances. The IRA bomber may be kindness itself to his old granny. When Adolf Eichmann, the notorious Nazi, was found he was living not a murderous life but a very ordinary one. So far from aggression asserting itself come what may — as opponents of Socialism allege — it is the social and co-operative aspects of human nature that insist on coming to the surface. Think of the children on the beach. Regardless of what else is in their destinies they will all, despite the pressures to “look after Number One” in the jungly world we live in, help lame dogs over stiles, rush to the rescue of people marooned in floods or buried by earthquakes. Or lying wounded in No-man’s Land in one of capitalism’s wars. Some will be nurses and accept rotten pay and dirty work because they want to help their suffering fellow-humans.

Now how can there be anything intrinsically bestial in human nature in the light of these instances (which we can all multiply from our own knowledge?) And are not the effects of a “fortunate” environment obvious, as against those of conditions where the laws of the capitalist jungle operate at their most savage level? The laws against stealing are much the same in Millionaires’ Row as in a shanty town in Bangladesh. We can take for granted that fewer people will steal loaves of bread in the former place than the latter. The same human nature will produce two quite different sets of human behaviour. Put Inshan Ali from Bangladesh into Millionaire’s Row in his cradle and he will not feel the need to steal the loaf. And obviously the converse applies equally well.

Indeed one of the troubles in writing an article like this is that the word “obviously” keeps forcing its way in. The human nature argument against Socialism is so obviously untenable that it becomes difficult to take it seriously once one has got down to dealing with it. And it is obvious too that most of the anti-Socialists who use the argument can see the wood for the trees themselves quite well enough. It merely shows the weakness of the case against us that they keep trotting out this derisory stuff.

It is doubtful if Dostoyevsky tried to envisage the alternative to his idea of two human natures. As a citizen of the Tsarist system he could hardly be expected to imagine what a truly human society could be like. But he must have wondered: if there were different paths for the innocent infant to take at the critical age of seven, what was the origin of the paths themselves? In the Socialist world, human nature will blossom in a way that is perhaps barely conceivable today. The people of the future will surely not understand how it was ever possible for human nature to have thought other than humane. And to think that we humans could have that sort of world right now!

L. E and A. R. Weidberg

The Russian Embassy attacks the Socialist Standard (1976)

From the November 1976 issue of the Socialist Standard

A reader sent a copy of the July Socialist Standard containing the article "USSR, Land of Privilege” to the Russian Embassy. The letter he received from them is is reproduced below, in shortened form, with our comments.

Dear Mr. Brinton,

I am certainly glad to answer your letter in which you say that you were disturbed, and understandably so, by the enclosed article in the Socialist Standard.

As regards the subject matter in question, the following should be said. Material wealth is distributed in the socialist society according to the principle of “from each according to his abilities, to each according to his work”. Different kinds of work, as regards both quantity and quality, bring different remuneration in the USSR. As a worker gains skill and experience his wages grow accordingly. An experienced teacher gets more than his younger colleague, fresh from a teacher’s training college. A captain of a ship gets more than the crew. Eminent scientists, writers and other creative workers are better paid than ordinary working people.

The principle of “from each according to his abilities, to each according to his needs” will be applied under communism, which is the highest stage of the development of socialism. But to achieve this an abundance of resources must first be secured, and this is what the Soviet people and their government are working at.

Objective laws governing the development of the society in the USSR prevent material inequality from becoming a social evil. First, there is no exploitation of man by man in our society which means that material benefits can only be obtained by working for them. Second, all citizens have access to public consumption funds: free education, free health service, pensions, etc. These funds grow from year to year alongside the development of the national economy. Third, the policy of reducing gaps in the wage levels of various groups of working people is being carried out consistently. The minimum wage has been steadily rising, pensions have also been increased.

As to shortcomings, their criticism is regarded in our society as an indispensable means of progress and is in fact, encouraged in every way. There is a difference, of course, between constructive criticism and slanderous distortion. Articles like the one in question only misinform the British public about the Soviet reality and thus stand in the way of better understanding and stronger confidence between the people of the Soviet Union and Great Britain.

(signed) Secretary

Our answer:

The thinness of the above reply is somewhat surprising. Our article maintained “that there is no essential difference in the class system in the Soviet Union from that elsewhere.” We went on to say: “The common features of western capitalism, exploitation of wage labour and production for profit are present — with the resulting social inequality.” These statements formed the basis of our article and it is these points which our opponent must answer. We note the glossy phrases such as “slanderous fabrications”, “gross distortion” and, to round off the vocabulary roundabout, “slanderous distortion”, but the attempt to refute our statements in fact does the opposite. We are told that in Russia there are laws to prevent material inequality from becoming a social evil; that material benefits can only be obtained by working for them; citizens have access to free education, health services and pensions; there is a policy to reduce gaps in wage levels and that the minimum wage is rising together with pensions. It hardly needs pointing out that this could be Mr. Callaghan or the President of the United States talking about their avowedly capitalist systems. The description certainly has nothing to do with Socialism where there will be no gaps in wage levels, minimum wages or pensions for the fundamental reason that the wage-labour and capital relation will not exist.

It is significant to note that the Russian Communist Party has moved away from its original position when Socialism was described as a society “in which there will not be the market, buying and selling, but consciously and systematically organised distribution.” [1] The secretary chooses to call Russian capitalism “socialism” — he is not the first, but mere repetition of a contradiction does not allow it to make any more sense.

To give, as our article gave (with sources), further instances of inequality in Russia would be superfluous as our opponent is prepared to dismiss them airily on the one hand as “slanderous fabrications”, while prepared to argue on the other that “Different kinds of work, as regards both quantity and quality, bring different remuneration in the USSR.” He makes our point for us. This piece of timid justification is advanced in all capitalist countries in defence of inequality. If our opponent did not mean to be evasive, no doubt he would be prepared to produce official statistics outlining the extent of inequality of income and wealth in Russia, as do all other industrialized capitalist countries. Then we may go into the matter in detail. We are, however, not unduly optimistic that such information will be forthcoming — our opponent does not appear to have much time for details.

On the question of "reducing gaps in wage levels” it is again worth noting the move in policy. Almost 60 years ago Lenin had declared that the introduction of “equal wages” was “a concrete task immediately practicable” although he had to retreat from this position in 1918 and acknowledge that the Russians had “to make use of the old bourgeois method and agreed to a very high remuneration for the service of the bourgeois specialists.” To Lenin this was a temporary measure however. He considered it “a step backward.” [2] Now, we learn from our opponent that this state of affairs is considered “just.”

He refers to “public consumption funds”. These appear to finance education, the health service and “pensions etc.” It is the “etc” which attracted our attention. For instance, is spending on armaments considered “public consumption”? If it is not, clearly the government must finance it from some other fund. The point being that any funds which the Russian government may control can only be the monetary expression of the surplus-value (unpaid labour) of the Russian workers. No amount of twisting and turning can remove that fact. This then puts a true light on his statement that “there is no exploitation of man by man”, which we take to refer to private capitalists exploiting workers in a private concern. Although this statement in itself can be refuted, its purpose is calculated to evade the crucial point that the Russian system is predominantly one of exploitation by the State.

In short, a system of state capitalism. It will be remembered that it was Lenin who said “Reality says that State Capitalism would be a step forward for us”. That step has been taken, but the Russian workers are no nearer Socialism, or Communism — the terms mean the same — than are the workers in the Post Office and other state-capitalist institutions in Britain or elsewhere. The ruling class, in this case the State, retains control and ownership of the means of production and distribution. To claim that the State is the people completely flies in the face of all the facts. Our opponent does not make this claim directly but refers to “what the Soviet people and their government are aiming at.” The distinction between the two is appropriate, they are opposing classes, but the statement also belies a fundamental misconception over the nature of Socialism. The implication is made that, given the right internal conditions, the Russians could establish a Socialist (or Communist) society within their national borders. To anyone who understands the concept of a system of society based upon common ownership and democratic control of the means of wealth production and distribution, it is evident that such a society can only be established on a world-wide basis. The writer clearly has no- such concept in mind.

In conclusion we draw attention to- one point made in our original article. We said: “At other times when there are differences of policy with western powers, anti-Russian propaganda will expose and exaggerate these shortcomings”. In short, we are aware that the Press in Britain (as elsewhere) has an axe to grind more or less severely, according to circumstances. This, of course, is not limited exclusively to Russian affairs, it is true of their dealings in all aspects of international capitalism. Our purpose is not to grind axes, or to single out the Russian system of capitalism for special treatment: indeed the point we have made is that from the view of the working class, the form of society in Russia is little different from that of other countries. Our opponent has ably confirmed this conclusion. Our purpose is to work for the democratic removal of private property society. In doing so we must necessarily reject the arguments, or more accurately the assertions, of those who claim that Socialism exists in certain countries today. The interests of the Russian people, and the interests of the working class outside Russia, are the same. The abolition of capitalism, state or private, and the establishment of Socialism.

[1] Bogdanov: Short Course of Economic Science.

[2] Lenin: The Soviets at Work.

Blogger's Note:

"Mr. Brinton" wasn't Maurice Brinton. Of course not. There was a Colin Brinton from Harwich who was writing to the Socialist Standard at this time. Maybe it was him.