SPGB Snippets: Today’s take-away (2026)

From the Socialist Party of Great Britain website

April 15, 2026

Most crude oil (88%) refined in the US comes from fields in the US, Canada and Mexico, all a long way from the chaos currently being wreaked by the latest Middle East war. Yet average retail petrol prices in the US have risen by over 30% since January.

The reason? Along with every other major raw material, crude oil is subject to a world market price, so a major disruption to supplies, be it caused by war or an economic bottleneck, will have a global effect.

The lesson? National governments (however big the country!) have little influence over the world market. In particular, any politician who promises to control prices is lying through their teeth.

Peaceful Preparations (1947)

From the March 1947 issue of the Socialist Standard

The American Government is going ahead with plans to build up stocks of raw materials required for war. In two years the expenditure on purchases at home and abroad will amount to well over £100 million. Is this good news? The Manchester Guardian rather thinks it is: “This plan will incidentally provide other countries — in particular British Empire countries — with dollars to supplement those earned from normal exports to America.” (February 14th, 1947).

“This,” says the Guardian, “is particularly welcome now that the world banks lending plans are hanging fire” ; not to mention the fact that the “purchases made inside the United States will also help to ward off the much talked-of ‘business recession’ there.”

Thus in one short news item two war-time hopes, of no more war and no more trade depression, are forgotten and here we are back in the pre-war atmosphere of being glad that war preparations keep trade going !

Finance and Industry: Controlling unemployment (1965)

The Finance and Industry column from the March 1965 issue of the Socialist Standard

Controlling unemployment

We have referred many times in these columns to the fact that American academic economists are seriously questioning the adequacy of traditional Keynesian policies to deal with unemployment. One leading American economist wrote in 1963: “Our problems of unemployment have seemingly become chronic.” But it is precisely chronic unemployment which Keynesian policies are supposed to prevent.

In his General Theory of Employment, Interest and Money which appeared in 1936, Keynes set out to show how it was that capitalist economies of the free enterprise variety did not automatically lead to full employment. He said that unemployment and stagnation were caused by a lack of “effective demand.” Keynes went on to suggest a number of ways of dealing with such “demand deficiency” unemployment: stricter control of investment, a redistribution of income in favour of the poor, budget deficits and various other fiscal and monetary measures to encourage effective demand and investment. This is the so-called Keynesian revolution, the application of deliberate fiscal and monetary policies by the government to try to affect the workings of free enterprise capitalism.

From 1958 on, unemployment in America has averaged 6 per cent despite the application of Keynesian policies. It is this that has started economists questioning. Consider the views of Robert Lekachman expressed in a book published last year. Of the advanced countries he writes,

“The original simplicities of keynesian policy prescriptions have been overtaken by the actual complexities and contradictions of applying monetary and fiscal techniques to situations simultaneously subject to inflation and unemployment, or high interest rates and gold outflows, or falling demand and rising prices. The dilemmas of recent American economic policy exemplify this point. President Kennedy’s major response to unsatisfactory rates of unemployment was the 1963 program of tax reduction and tax reform. Now if simple Keynesian fiscal policy were enough, such a program would dependably stimulate aggregate spending, diminish unemployment, and restore the economy to some approximation of full-capacity operation. Yet even Administration spokesmen hive made comparatively cautious claims for the spread and the adequacy of this policy, and few economists indeed believe that by itself tax policy is capable of reducing unemployment to tolerable levels. It is a sign of the times that this tolerable level has itself shown a secular tendency to rise from 2½-3 per cent to 4-5 per cent. For the sad, uncomfortable fact may be that just about the time that some version of the simplest Keynesian revelation has at last won the hearts of businessmen and politicians, the nature of the economic problem has sufficiently changed to require different remedies and different theoretical justifications to support them (Keynes’ General Theory: Report of Three Decades).

It is true that the American economy did show signs of increased activity in 1964 but unemployment was still around five per cent with four per cent as the “tolerable level” as Lekachman suggests.

Capitalism will not break down in depression and stagnation as a result of the inability of the working class to buy back what they produce, as has sometimes been suggested. If this were so, the Keynesians would have some justification for their claim to have found an alternative to socialism. In fact, the capitalist system will continue until the working class organise to end it. In the meantime its growth will be accompanied by a trade cycle involving periods of unemployment and prosperity. So the shoe is on the other foot. It is we Socialists who are in a position to point out that the Keynes theory on its own admission has proved incapable of dealing adequately with the problem of chronic unemployment in America.

African capitalists

The capitalist system is still spreading rapidly throughout the world turning peasants and tribesmen into wage-workers. In Asia, Africa and Latin America new capitalist states are emerging. Some of these, as in Cuba or Ghana, are totalitarian state-capitalist regimes in which the emerging working class is subjected to an industrialising elite. In others like India and Nigeria the emergence of capitalism is not forced and controlled to such an extent.

It is under such regimes that from the motley collection of shopkeepers, traders and contractors a more substantial group of big capitalists is allowed to evolve. A recent supplement to the international edition of the New York Times introduces some of the new capitalists of Africa to American businessmen. In Nigeria there are Sir Mobolaji Bank-Anthony and Chief Shafi Lawal Edu. Sir Mobolaji is, we are told, “either owner, chairman or director of 10 large corporations.” His compatriot is “chairman of the African Alliance Insurance Company, and serves on the boards of several companies.” In Somalia there is fish-processing magnate Abdullahi Omar who:

“… for several years operated his own general store in Hargeisa, and then moved to Mogadiscio, Somalia, in 1960 after independence. He established a wholesale import agency and interested himself in the fishing potential of his country. He recently established Somalia’s first steel and wood furniture factory and is negotiating with American interests for the opening in June of a pickled-skins plant.”

In Uganda there is Jayant Madhvani who is supposed to be the wealthiest man in East Africa. He:

“. . . heads the Madhvani group of companies based on Jinja. These include sugar, tea, coffee, textiles, steel, paper and more than a dozen other companies operating in Uganda, Kenya and Tanzania. In Uganda alone, Madhvani enterprises account for more than 10 per cent of total product.”

At present this group of “non-European” capitalists is only small in number but as capitalist development proceeds more can be expected to appear. The working class in Africa has the choice of being exploited by and subjected to such a group of wealthy magnates or to an industrialising elite of nationalist political leaders. Either way they suffer. Either way the fact is brought out that the important social division in these newly emergent capitalisms is that of class, not race or colour.

Adam Buick

An American looks at Capitalism and the British Labour Party (1939)

From the January 1939 issue of the Socialist Standard

A reader (I. R., Roxbury, Massachusetts) writes drawing attention to a book recently published in the United States called “Is Capitalism Doomed?” It is by Lawrence Dennis, a former member of the United States diplomatic service and of the well-known Wall Street firm of E. & W. Seligman. Our correspondent says that, in spite of the intellectual bankruptcy of Seligman’s solutions, the book is as intelligent a defence of capitalism as is possible. “Its great merit, however, is that he attempts to portray as objectively and as accurately as his class interests will permit him a picture of modern capitalism as distinct from the capitalism of yesterday.”

Dennis argues that, “in its old age, senile capitalism must be nurtured by the State . . . with an even diet of two per cent. gruel. Capitalism has run down for want of new worlds to conquer. . . . The State must supply the capitalist machine with markets which it is at present powerless to create for itself.”

He regards heavy taxation as a necessity, the important thing to him being the safeguarding of capitalism, even if this means cutting into the largest fortunes. He states (with approval) that “capitalism and nationalism are individualistic, competitive and non-co-operative, and therefore international co-operation is a misleading idea.” Consequently he regards plans for disarmament and international pacts as foredoomed to failure.

On page 300, Dennis complains that British Labour has been swayed for higher wages instead of for Socialism, and continues: —

“Socialism means work for everybody, even if it be creating things that capitalists do not approve of. The British Labour Party lacked the power to apply Socialism. English capitalism might have been saved from its present plight had the British Labour Party taken a few drastic measures against British capital just after the War.”

This last opinion is interesting, coming as it does from a man whose sole interest is to save capitalism from destruction.

Blogger's Note:

There's a strong chance that 'I. R.' of Roxbury, Massachusetts was Isaac Rab. It's worth checking out the wiki page for Lawrence Dennis. To say he was an interesting 'character' is to put it mildly.

Material World: Paycheck to paycheck (2026)

The Material World column from the January 2026 issue of the Socialist Standard

We’re used to hearing that the overall standard of living in the West is significantly higher than in the countries that make up what used to be known as the ‘Third World’ but are now commonly referred to as the ‘Global South’. For many of these, most sources indicate progress in expanding access to basic necessities such as water, sanitation and health facilities. Yet a recent joint report by the World Health Organization and the United Nations Children’s Fund estimates that approximately 1 in 4 people globally, or close to 2.1 billion, lack access to clean drinking water and that this contributes to roughly 3.5 million deaths per year, nearly 400,000 of these children under five.

More broadly, according to an Oxfam International report from June 2025, 3.7 billion of the world’s population, or around 45 percent, live in conditions of moderate or severe food insecurity with over 700 million living on less than 2.15 dollars per day and 3.4 billion living on less than 5.50 dollars per days. This means that many are unlikely to have the money to eat regularly and so will often skimp on food or skip meals. In addition, the business data website Statista has reported on a United Nations estimate that around 1.1 billion people worldwide, including around 50 percent of the urban population in sub-Saharan Africa and South Asia, are living in slums, described as ‘areas of self-built, unsanitary housing where extreme poverty is rife’.

How does all this compare to the standard of living in what is seen as ‘the richest country in the world’, the USA? We would expect it to be a lot higher overall, and indeed it is. But what are things actually like? Wildly differing figures on living standards, poverty and deprivation are to be found depending on the sources you consult. For example, the CNN Business website recently reported on a Bank of America analysis which estimated that around 1 in 4 (24 percent) of American households are barely getting by – living ‘paycheck to paycheck’, as they put it.

The bank’s statisticians combed through data on millions of customers to track how much they spent on basics such as housing, groceries, childcare and utilities and found it constituted over 95 percent of their income ‘leaving little to nothing left over for the “nice-to-have” things like going out to dinner or taking a vacation, let alone saving’. One of their interviewees who had a degree but was working in a construction business about to shut down is quoted as saying ‘to be 34 and living paycheck to paycheck with no savings, things are pretty crappy right now’.

However, a different survey came up with a quite different result, which was that the proportion of workers living paycheck to paycheck was not 24 percent but 67 percent. This figure emerged from the Financial Wellness in the Workplace Report by the PNC Bank, based on workers aged 21 to 69 working full time at companies with more than 100 employees. It painted a picture of workers struggling to cover everyday expenses, especially with cost of living currently outpacing wage growth. A Newsweek report on this survey quoted Taylor Nelms, vice-president of research and insights at the Financial Health Network, as saying: ‘The percentage of U.S. households that say they spend more or the same as they bring in has been remarkably consistent, hovering around 50 percent over the past several years but right now it’s compounded by high housing costs, insurance premiums, and the return of student loan payments. These are the areas where households feel most squeezed’.

There’s clearly a big difference between these survey results, but whichever figure you take as reliable, it’s clear that many millions of people in the world’s ‘richest country’ are not only not rich but are materially insecure and struggling to keep their heads above water, with some in particularly straightened circumstances. The CNN report highlights some of the typical symptoms of this – people falling behind on their bills, minimum credit card payments being made, an increased percentage of borrowers late on their car loans (referred to as ‘a clear sign of financial distress, especially since car loans are historically the last payments Americans are willing to miss’), and people filing for bankruptcy having incurred large medical debts while ill. Nor does any of this take into account the undoubtedly worse conditions of those who have no employment at all or are homeless or not registered to work. The current estimate of the number of unemployed people is 4.4 percent of the workforce, so 7.6 million people living in even worse circumstances than those ‘just getting by’.

What conclusions can we draw from this? First and foremost that, though wage and salary workers in what is usually considered the most advanced part of the Western world are undoubtedly better off on the whole than their counterparts elsewhere, this does not prevent many of them from suffering poverty and insecurity. And this in a world which, if it were organised rationally (ie, with a system aimed at catering for the needs of all and not the profits of a few), could provide abundantly for all of its 8.3 billion population. Already in fact the world possesses enough productive capacity to eliminate global poverty many times over. Yet this can never happen as long as we have a system – the market system – which ensures vast wealth inequality between the tiny minority of people who own most of the resources and the large majority who own little more than their skills and energies and their ability to sell these for a wage or salary.

It is no kind of aberration, therefore, that the USA has, according to Forbes Magazine, 905 billionaires with a combined wealth of 7.8 trillion dollars and that, according to Federal Reserve data, the top 1 percent of households in the United States hold 30.5 percent of the country’s wealth, while the bottom 50 percent hold 2.5 percent. Rather it is the inevitable consequence of a system (production for profit) that has no mechanism for meeting the basic needs of the whole of humanity and will always fail to do that. This being the case, it is as clear as it can possibly be that the majority of the world’s workers need to take collective and democratic political action to bring that system to an end and replace it by one that will be cooperative, moneyless, wageless and based on free access and production for use.

Howard Moss

Prosperity under “Protection”. (1909)

From the January 1909 issue of the Socialist Standard

Unemployment in New York State

	Idle Continuously for 3 months, Jan., Feb. & March.		Idle last day of March.
	Number	Per cent.	Number	Per cent.
1906	24,746	6.5	37,239	9.9
1907	65,642	13.8	77,270	19.1

1908  101,466                      26.3                    138,131                     35.7

Fortnightly Review, Dec., ’08.

Planlessness (2026)

Book Review from the January 2026 issue of the Socialist Standard

The Economic Consequences of Mr Trump: What the Trade War Means for the World. By Philip Coggan. Profile £7.99.

A first reaction to this book is that it was likely to be out of date by the time it was published. Given Trump’s tendency to change his mind, anything said would probably no longer apply after a month or two. The author does indeed record Trump’s decisions about tariffs and his repeated revisions of them, describing him as ‘a man without a plan’ who based the calculation of tariff rates on an absurd formula. But he also notes some ideas that underlie Trump’s policies.

The main reason seems to be the intention to return manufacturing industries (and jobs) to the US, but this is unlikely to be successful. In 2013, as an illustration, Motorola opened a smartphone factory in Texas, but it closed after a year because of high costs. Even when it does pay off, building new factories takes time and the US has a shortage of factory workers; they might come from abroad, but of course Trump is clamping down on immigration. The US will simply not re-enter ‘a golden age of manufacturing employment’.

On the whole Coggan adopts an orthodox economic perspective, arguing, for example, that tariffs interfere with market signals about the causes of rising and falling prices. Tariffs have varied over the centuries and protectionism was more widespread between the two world wars. But since the 1960s tariffs have generally been falling, from a global average of 14 percent then to 10.9 per cent in 2000 and 2.5 per cent in 2021. Free trade, he says, is good for an economy, though there has rarely been completely free trade.

One good point he makes is about the interconnectedness of global production, with long and complex supply chains. An iPhone is based on 187 suppliers across twenty-eight countries, while cars imported to the US from Mexico consist largely of components made in the US. Around eighty per cent of the toys sold in US shops are made in China, so the massive tariffs Trump wanted to impose on imports from China were a non-starter, and they have now been scaled back in a major way. American workers are already complaining about higher food prices as a result of the various tariffs, such as bread doubling in price (Guardian 19 October).

The whole world, Coggan suggests at the end of this short volume, ‘will suffer the adverse economic consequences of Mr Trump’. But really these are the consequences of the capitalist system, not the result of the idiosyncrasies of one man.

Paul Bennett

Cooking the Books: Has Trump gone state-capitalist? (2025)

The Cooking the Books column from the October 2025 issue of the Socialist Standard

‘Trump embraces state capitalism’ declared the US news site Foreign Policy in July: ‘the level of U.S. government economic intervention under Trump 2.0 is off the charts’. In August the Wall Street Journal took up the theme in an article by its chief economics commentator, Greg Ig: ‘The U.S. Marches Toward State Capitalism With American Characteristics’, he wrote, ‘President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy’.

Ig instanced ‘Trump’s demand that Intel’s chief executive resign; the 15% of certain chip sales to China that Nvidia and Advanced Micro Devices will share with Washington; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct’. He commented:

‘This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises. China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France. So call this variant “state capitalism with American characteristics.”’

This is one definition of state capitalism, but state ownership is not socialism; nor can there be any hybrid between socialism and capitalism. Capitalism exists whenever there is minority ownership of the means of production, wage-labour and production for sale and profit, irrespective of whether that ownership is via individual ownership, a limited company or a nationalised industry.

The term ‘state capitalism’ first came into use towards the end of the 19th century, to describe instances where the government performs the role of capitalist by employing wage-labour and selling the product or service to realise a profit, such as state-owned and run mines and railways. After the Bolsheviks seized power in 1917, Lenin extended the term to include the development of private capitalism under the direction and control of the state. Others later extended the meaning further to include a nationalised economy without private capitalists but still with wage-labour, production for the market and a privileged ruling class such as eventually developed in Russia.

It was a term used more by critics than by supporters of capitalism. Latterly, however, it has come to be used routinely in the media to describe the economic system in China where political control is firmly in the hands of a single party but where profit-seeking private enterprises are allowed to operate, where their shares are traded and where state-owned enterprises compete on the world market with the same aim and methods as private capitalist enterprises.

Politically motivated government intervention in the economy is not new — governments have always done this to one degree or another via taxes, subsidies, tariffs, and monetary policy — but calling this ‘state capitalism’ is new, at least in openly pro-capitalist circles. This could even be seen as a step forward in that, previously, they called it ‘socialism’, ‘communism’, ‘Marxism’, a travesty of these words. The more backward of them still do, as this from Fortune (12 August) magazine:

‘Many free-market economists and business leaders who have long worshipped the free-market ideals of Adam Smith, Friedrich Hayek, Ayn Rand, and Milton Friedman should be aware that their idols would be rolling in their graves right now, as rather than pursue standard laissez-faire conservative economic policies, MAGA has gone Marxist and even, increasingly, Maoist’).

Even though it is quite ludicrous to say that Trump has ‘gone Marxist’, there is a delicious irony in him being accused of undermining capitalism. Not that he is of course. He is using state power in what he considers to be the general interest of the US capitalist class.

Finance and Industry: U.S. bogy (1964)

The Finance and Industry Column from the July 1964 issue of the Socialist Standard

INVESTMENT

U.S. bogy

The recent Chrysler/Rootes deal, discussed elsewhere in these pages, has again revived the usual talk of American financial encroachment—not least among our Labour politicians. They raised a similar sort of fuss, it will be remembered, when American Ford increased its stake in U.K. Ford from 55 to 100 per cent, a few years ago.

Similar heartburnings were caused in France last year when Chrysler took over control of Simca, and the French government actually stepped in to put to stop to the deal when they heard that U.S. General Electric was after a stake in Machines Bull, the big electronics firm. But the significant thing to note about the last affair is that the French government eventually relaxed their opposition and allowed a modified arrangement to go through.

For the facts are simple enough. American capitalism is in search of outlets for its capita], and in many cases European firms have not sufficient resources of their own to finance their expansion. Yet expand they must if they are not to be left behind in the race for sales and profit. Bootes with Chrysler’s resources behind them are a far different proposition than they were on their own—for years, in fact, the speculation has been whether they could really survive for long against the bigger units of BMC, Vauxhall, and Ford. Similarly, Machines Bull plus General Electric is in a vastly stronger position to face up to IBM and Elliott than it was on its own. To see the facts as they really are, it is only necessary to observe that IBM’s turnover is twenty times that of Machines Bull; that National Dairy Products, an American milk firm, has a bigger turnover than I.C.I.; that United States Steel produces more steel than the whole of West Germany; that the turnover of General Motors is greater than the whole of the “gross national product” of Holland, and its profits bigger than the national product of Eire.

One way or another, American capital will keep coming into Britain and Europe. Capitalism hates a vacuum. As usual, it is bigness that counts, and bigness that will win the day. And, just as important for European capitalism, if one country refuses it—it will go elsewhere. Modernisation of the Moselle 

STEEL

The Moselle canal

The recent opening of the Moselle canal is a wonderful example of the hard economic facts behind politics.

Just as German capitalism always had envious eyes for the iron ore of French Lorraine, so did French industrialists seize every opportunity to lay their hands on the iron and coal of the Saar. In 1920, the Versailles treaty gave France control of the Saarland for 15 years—as well as handing back Lorraine. In 1945, again, the Saar was incorporated in the French zone of occupation; later, in 1947 it was set up as an independent state though linked economically to France. In 1950, France granted it complete self- government—but in return for its coal output (15 million tons) for fifty years.

Came the Common Market. In 1956, French capitalism was forced to play yet another hand. In return for the handing back of the Saar to Germany, the latter was to participate in the canalisation of the Moselle. By this hard bargain—for both sides—barges of 1,500 tons are now able to travel 170 miles from Thionville to the Rhine, and French steel will be selling more cheaply in South Germany than even Ruhr or Saar steel. The greatest opposition to the canalisation of the Moselle came from the Ruhr steelmakers—it is easy to see why.

So determined was France to get the project through, and so reluctant the Germans, that even with the Saar thrown in the French government had to pay £48 million towards the project, compared with Germany’s £22 million. But already they are planning to extend the canal southwards to Metz and Nancy. Eventually, the plan is to link the Rhine with the Rhone and form one great waterway between the Mediterranean and the North Sea. With huge barges plying along this thousand mile canal, transport costs will be cheapened for French industry in particular. Already German, Dutch and Belgian shippers are competing with their French counterparts for traffic, and the German and French railways threatening to cut their tariffs.

Under capitalism the big get bigger, and the small are forced more and more to the wall. At first sight, there seems little connection between Chrysler moving into Rootes and 5,000 ton barge convoys moving along the Moselle. But the connection’s there alright. Just call it size—plus the prospect of profit.

Stan Hampson

Chapter Four: Taxation— Dilemma & Deception (1984)

From Samuel Leight's book, The Futility of Reformism

Taxation is a dominating, reformist activity generating an inferred assumption that it possesses similar economic consequences for both the capitalist and working classes, varying only in degree. The socialist attitude contradicts this inference and asserts that the real burden of taxation is borne by the capitalist class, that the whole question has become a misleading, dangerous red herring diverting the working class away from their true interests. Our proposition may startle the uninitiated; however, we are dealing with a complex system of society, notorious for its deceptions, which invariably favor the rulers and not the ruled.

In order to properly evaluate the taxation process two essential factors must be properly understood: first, the value of labor power and how it is determined; second, the purpose of taxation and the related function of the state machine.

Wages represent the price of labor power and are determined by the cost of production of the worker. Members of the working class receive a sufficiency in the means of subsistence in order that mental and physical energies may be utilized during the working day. In addition, children must be raised, who will eventually become workers replacing those who have either died or gone into retirement, forced or otherwise. Wages attempt to cover the costs of food, clothing, shelter and the various amenities and necessities of life that are needed to maintain the worker and his family. The wages paid to the working class as a whole always approximate to a minimal amount related to their survival costs, adjusted on a continuous basis, through perpetual struggle, to a supposed cost of living figure. Labor power is therefore a commodity containing a use and exchange value, priced in the form of wages. Gross wages are subject to various deductions that result in a “take home pay.” This sum, however, does not indicate the true worth of the remuneration until the worker ventures into the market place to make purchases. “Real wages” are equal to the total sum of the various commodities that the worker is able to purchase with the net amount of money received. 

Under the taxation facade gross figures are stated from which tax deductions are made. The actual sum deducted as taxes also represents a portion of the gross wages—wages that in actuality the worker never receives except solely as a book-keeping item. This of course he “can’t eat,” but the euphoria created by the magical appearance of the figure and its swift demise is tantamount to a colossal deception and a cruel hoax. In reality, and most certainly over the longer term, it does not matter whether taxes are “high,” “low,” or even non-existent. The worker will eventually still only receive an amount equal to what is required for himself and his family’s maintenance. Laws, for example, could be enacted which at various times might eliminate taxes altogether; convey free rent, free transportation, and health and welfare subsidies. All these “benefits,” in the final show-down, would then be reflected in wages adjusted downwards in order to offset the illusory gains. This would not, of course, take place automatically, or immediately upon these measures being passed. The struggle over wages between the workers and their employers, through trade union action and by workers without organized representation, is a continuous one. Wage adjustments take into consideration allowances previously granted by an employing class well protected by efficient accountants and sophisticated managers. It should also be realized that any subsidies or services paid by governments out of taxes make the capitalist class a prime beneficiary, because without them the cost of living of the workers would increase and wages would consequently rise.

And so the paraphernalia of regular income tax deductions takes place together with an annual “settlement sheet” in the form of a Tax Return. The average worker gripes about “all the taxes” he has paid and fantasizes about how much better off he would be if he paid less taxes or if,perchance, he paid none at all. At this juncture, workers would do well to review past history where, for example, prior to World War II in the U.S., less than 5 million people paid federal income taxes. Similarly, large numbers of workers in England paid no taxes until after the war. All the multi-millions of these tax-free workers in by-gone eras endured a relentless poverty that was completely impervious to the tax-exempt status of the majority of the population. Poverty, both past and present, is basically unaffected by the taxation “levied” on the workers through a devious, intricate accounting system. The working class are not poverty- stricken because of taxation and their plight cannot be cured by tax adjustments. They are poor because they are property-less in the means of production and distribution—that is the crux of the problem!

The working class are led to believe that they are in fact making real, valid tax contributions which are going either directly or indirectly towards the support of “their country” and “their affairs” — a necessary evil, so to speak. The deception, instigated with superficial deductions and paper-work, has been impressively initiated, reality cunningly disguised. It matters little as to whether the ruling class and their representatives, either individually or collectively, are properly aware of the illusion created — this is beside the point. Obviously the majority of the capitalist class, like their dependent wage-slaves, are completely oblivious to the true nature of the system’s economics; possibly just a small minority are fully cognizant of all the ramifications of the tax scam.

From the aspect that all values produced in capitalist society are the result of the efforts of the working class alone, in this sense only workers produce all the wealth from which taxes are paid. Further, inasmuch as the tax forms legally designate the individual worker as the payer superficially, the workers nominally are paying taxes. But this is a graphic example of the deception of appearances. Taxes are payments which the capitalist class are forced to relinquish from the surplus values produced by the working class over and above the wages they receive, in order to pay for the various expenses needed to preserve the system’s survival and its administration. This is a necessary burden borne by the capitalist class and camouflaged by fancy form-filing and adroit misrepresentation.

Let us suppose that a worker earning a gross wage of $400.00 per week had taxes of $100.00 deducted, leaving him with a net take-home sum of $300.00 (for the purpose of this illustration, we are disregarding all other standard deductions). The capitalist is parting with $400.00 in an actual payment out of which $100.00 goes towards taxes under the name of the employee. Assume, hypothetically, that laws were changed so that the worker no longer was obligated to pay taxes but this item was shifted to the employer. Further, that at this particular time the total amount of taxes required by the Government in its effort to defray expenses remained the same and wage levels were unchanged. Both the monetary position of the capitalist and the worker would remain unaltered. The capitalist would still be paying out, over the long term, the $400.00 out of which a $100.00 would be allocated towards taxes at some future date; and the worker, you can rest assured, would still wind up receiving his $300.00. The only difference would be a transfer of the taxes credited to the employer’s name. Although wage levels and taxes do not operate with the rigidity that the foregoing example would imply, nevertheless the theory is sound based upon the determination of the value of wages and the formulation of surplus values produced by the working class over and above wages paid. From this surplus value the capitalist class derive their livelihood and are obligated to sacrifice a percentage, in the form of taxes, in order to protect their holdings.

The present arrangement is a clever camouflage, far superior to the example just given, that conveys an impression of higher wages being paid, with workers erroneously assuming that they are actively participating in affairs of state through their tax contributions. Incidentally, as an alternative to reducing wages it is far more subtle to “increase taxes.”

The working class are under the mistaken impression that they are joining with their employers on a somewhat comparable footing when they add their names and payments to the tax forms and - subsequently learn how the total national tax proceeds are allocated. Taxation is used for the upkeep of the state which covers a vast conglomeration of institutions, functions and services that exist to preserve and protect the capitalist system of society and the interests of the capitalist class—not those of the workers! The armed forces, police, judiciary, tax revenue departments, bureaucracies, welfare and social agencies, armaments, (euphemistically termed “defense”) are all part of the intricate state mechanism which is operating at all times for the protection of the status quo. The working class have had bestowed upon them, under the guise of taxation, the dubious honor of associating with their masters, on a superficial basis only, in the upkeep of a modern-day gargantuan monster—an instrument of economic oppression and an acknowledged legalized killer, with a potential for worldwide destruction.

For the capitalist class taxation is a never-ending dilemma, an irremovable thorn in their side, that demands national contributions of astronomical proportions to cover the overheads of the system. Although the burden is large, it nevertheless does not infringe upon their ownership rights, still allowing them to live in riches as compared to the poverty of the majority. The capitalist class, through their representatives, wage a constant battle amongst themselves as to which sections of their class should bear the various burdens of direct and indirect taxation. The merchants, real estate operators, manufacturers, bankers, for example, are lobbying continuously over tax matters, attempting to keep their own contributions as low as possible, and caring little should the costs fall upon their class compatriots. Truly a case of legalized robbers squabbling over the costs of the robbery! Much of the time and energies devoted by the main political parties revolve around tax issues; how collections should be accomplished, to what degree, in which areas, and a determination of expenditures.

Government spending receives its income via taxation or through the inflation of currency, which in its turn creates a general rise in prices. Governmental tax planners and reformists agonize over the theory that tax increases, which are obviously needed to defray budget deficits, will have a negative effect on business activity; that conversely a cut in taxes might act as a stimulant. The so-called policy, absurdly entitled Reaganomics, ironically put forward this approach which was previously espoused by their supposed political opposites,the Democratic Party during the late President Johnson’s administration. The U.S. national debt reached the mathematically incomprehensible figure of $1 Trillion in October, 1981 coupled with an ongoing Budget seemingly impossible to balance. Such facts are presented to the working class as if the problem was theirs and not their masters. Workers who spend the whole of their lives scrimping, saving, and as perennial debtors, who in most instances are unable to keep within their own paltry budget, are apparently expected to become concerned in the problems of the ruling class under the false premise that their interests are involved.

The national debt, significantly reported to be about 34 per cent of the Gross National Product, (i.e., the value of goods and services produced by American workers every year) is“underwritten” by the working class. Their physical and mental energies are the tangible resources that represents a labor force which makes feasible all the profits on the one hand while offering future “collateral” for the state’s indebtedness on the other.

The ramifications of taxation are so manifold that they provide a livelihood to armies of bureaucrats, accountants and tax attorneys. Each year new publications are printed which attempt to unravel and explain a veritable morass of tax laws. In fact, in order to strive for more simplification a U.S. Flat-Rate-Tax is now under consideration which, if adopted, would apply across the board the same percentage rate regardless of the amount of taxable income. The taxing of capital gains, short and long term, and estate taxes, are always being scrutinized and adjusted. The complexities are mind-boggling. The rich and super-rich establish protective trusts, use charities, plus a multitude of devices which, together with the nature — of the system itself, substantially protects their holdings both for themselves and their heirs. The tax payments never make the rich poor, nor the poor rich.

Members of the working class who own homes make property tax payments that go towards the upkeep of local governments, services and allied costs. However, a large proportion of this real estate is heavily mortgaged, with the consequence that in reality the Banks, Savings and Loan Associations and Insurance Companies own far greater equities in the properties than the actual tax payers. In effect, therefore, the workers’ payments in this instance is related to a creditor’s holding that is larger than their own. The funds are being used, just as they are with the Federal Government, to help maintain a system that exploits them. In any event, similar to the sales taxes that are added to commodity prices, in the overall picture these items are factors that are incorporated within the cost of production of the worker and the amount of wages received. This does not imply that wages can be expected at all times to satisfactorily and automatically cover all costs paid by the workers for their survival— far from it.We are dealing here with general economic positions that are subject to the effectiveness of the class struggle, from the working class standpoint, at any given period. Should taxes increase, or the cost of living goes up, without an immediate wage adjustment, then the worker’s situation is temporarily worsened. However, assuming that the workers continue their struggle to maintain and increase wages as conditions warrant and allow, it is the longer term outcome that becomes operative. Wages are adjusted on a continuing basis, related to the cost of living, the militancy of the workers, and the existing state of the capitalist economy.

The reformists will never cease in their efforts with tax matters. Taxation, however, is not a working class issue. Energies should be devoted to maintaining and increasing the net wages paid as general circumstances allow, with the understanding that this is in line with working class interests, while campaigning over taxation isa futile waste of time—a mythical non-issue. There is, in fact, only one issue—the establishment of socialism.

Recession in the United States and Canada (1958)

From the June 1958 issue of the Socialist Standard

The United States is at present in the throes of the worst period of industrial stagnation it has experienced since the 1930s. And Canada, as number one U.S. satellite, with an economy closely interwoven with that of the U.S., fares no better. The seriousness of the situation may be indicated by the figures for unemployment, which in March reached 5,198,000 in the U.S., and 590,000 in Canada.

Political, business and other leaders in both countries respond to the condition m the same shallow manner.

When the existence of the “recession” was officially recognised some months ago, U.S. President Eisenhower proposed to deal with it by substantial tax reductions, which, he said, would increase purchasing power deplete, surpluses and start the wheels of industry turning again. Mr. Pearson, Canada’s Liberal leader, also advanced this thought in the last election campaign. The proposal has not yet been put into operation, perhaps because Mr. Eisenhower forgot about it and Mr. Pearson failed to become Prime Minister.

At present Mr. Eisenhower is lending his support to “operation optimism." Lack of confidence is now blamed for the recession and this confidence must be restored. People must in some way be encouraged to buy goods, even to the point of extravagance, they must, in Mr. Eisenhower’s words, be urged to “buy anything.”

Following this line of reasoning, U.S. capitalists are doing their best to propagandise themselves back to prosperity. The Advertising Council, a top advertising group, has started a four-month “confidence in a growing America” campaign, intended to improve the “economic attitudes” of consumers. Auto dealers in 110 cities have started sales drives featuring the slogan, “You Auto Buy Now.” It is expected that this campaign will spread to 200 more cities. Cleveland has started a “Buy Now” campaign, with a “V for Values” theme and a “Miss Prosperity.” Boston is planning a POPS (“Power of Positive Selling ”) drive to “combat loose recession talk.” In New York a “National Sales Crusade” is being launched. Some business men are wearing embroidered pocket handkerchiefs proclaiming “Business is GREAT.” An appliance concern has issued large lapel buttons saying “Business is Good.” The Public Relations Society of America has asked its members to send all optimistic news they can about their companies to a central clearing house for national distribution.

If empty prattle is an effective weapon against hard times, there is enough of it circulating at present in the U.S. to take care of all eventualities.

Canadians are not able to chase banshees with the same vigour and versatility as their American cousins, but they do have the same tendency to deliver sledgehammer blows at everything except the nail. Prime Minister Diefenbaker thought a while ago that diverting trade from the U.S. to Britain would help. Now he insists that he was misunderstood. Throughout the winter a Government-sponsored campaign to “Do It Now” was carried on. Billboards, radio, television newspapers, all were used to urge those who needed jobs done to have them done at once. More recently the trade union movement has been taking up Mr. Eisenhower's proposal of lower taxes. Claude Jodoin, Canadian Labour Congress president, at the recent CLC Convention, dealt at some length on this theme, seeing in lower taxes a billion extra dollars being put into the pockets of the consumers, “particularly the poorer consumers.”

Meanwhile the employing class, despite their playfulness, are not passing up a favourable opportunity to look after themselves. The Dominion Bureau of Statistics reports that the income of Canadian labour in the one-month period from December to January had declined 4.5 per cent., and hourly wages in manufacturing declined from $1.65 on January 1st to $1.64 on February 1st. The decline between December and January can be attributed mainly to increasing unemployment, but that cannot be said of the later decline.

Mr. Jodoin and the trade unions should take a long look at these figures and then start grooming themselves for some independent working class activity.

What they ought not to be doing is looking to their masters for sensible or helpful suggestions.

Jim Milne,

(Socialist Party of Canada).

Cooking the Books: The King of Tariffs (2025)

The Cooking The Books column from the May 2025 issue of the Socialist Standard

‘Trump often cites the “gilded age” of William McKinley, the late 19th-century president, who imposed tariffs at an average rate of 50 percent to protect the domestic farming sector from foreign competition’ (Times, 4 April).

Actually, it was the manufacturing sector that McKinley wanted to protect. When he was a congressman for Ohio he drew up the Tariff Act of 1890 that came to be known as the McKinley Tariff. Trump calls him the ‘Tariff King’, a crown he himself clearly wants to wear.

In 1888, with the campaign for tariffs in America in full swing, Engels published an English translation, with his introduction, of a talk on free trade that Marx had given in French in Brussels in 1848. Engels quoted Marx as saying (in chapter 31 of Capital) that historically protectionism had been ‘an artificial means of manufacturing manufacturers’. In his talk Marx criticised free trade too but came out in favour of it because it would hasten the development of capitalism and so bring on the final confrontation between the working class and the capitalist class. As he put it:

‘The free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favour of free trade’.

Engels’s introduction provided a useful historical survey of protectionism — including which sections of the propertied classes in different countries had benefited from it and which had not at various times — and some background on what led to the McKinley Tariff, but also made some points about the effect of tariffs on different sectors of capitalist business which are still relevant today.

One difference he mentioned was between those sectors which relied on imported materials and those which didn’t. Manufacturers who obtained within the country the materials to transform into what they sold welcomed a tariff on imports of their product as protecting them from outside competition. On the other hand, those manufacturers who relied on imported materials did not want a tariff on them as this would increase the cost of producing their product. Nor did importers want tariffs generally.

This was seen today in the immediate reaction to Trump’s 2 April ‘Liberation Day’ on Wall Street, where share prices reflect traders’ views on the future profit prospects of the quoted firms. Shares in Apple whose smartphones are manufactured in Asia fell by 9 percent and ‘Big multinational consumer groups were heavily in the red, reeling from tariffs on Asian production hubs. Nike slumped 14 per cent’.

Exporters are not keen on tariffs either as their products are likely to be targets of any retaliatory action taken by other countries. America doesn’t export much manufactured stuff (except weapons of war and pharmaceuticals). Apart from oil and gas, its main exports are agricultural products. Sure enough, this is what China’s retaliatory tariffs, announced two days later, were aimed at. ‘The latest measures are likely to have the most impact on US agricultural exports, including soya beans, wheat and corn’ (Financial Times, 4 April).

In short, not all its business sectors benefit when a country imposes tariffs. America today is no exception. Some capitalist businesses are in favour of Trump’s policy but some will be lobbying for exemptions, even campaigning against him. Not that there is any guarantee that his protectionism will succeed in ‘manufacturing manufacturers’ in America, or, rather, in raising them from the dead.

In any event, as Engels noted:

‘The question of Free Trade or Protection moves entirely within the bounds of the present system of capitalist production, and has, therefore, no direct interest for us socialists who want to do away with that system.’

McKinley was elected president in 1896 but was assassinated by an anarchist in 1901.

Cooking the Books: Who benefits from tariffs? (2025)

The Cooking The Books column from the March 2025 issue of the Socialist Standard

‘Tariff’, Trump has repeated many times with typical exaggeration, ‘is the most beautiful word in the dictionary’. He seems to see it as a cure-all that will Make American capitalist manufacturing industry Great Again. This may just have been crude vote-catching but this illusion evidently caught the votes of quite a few workers.

A tariff is a tax on imported goods and is usually introduced to protect the profits of domestic producers of the same goods. These will have been complaining of being out-competed by ‘cheap imports’ and ‘unfair competition’ and will have lobbied politicians to do something about this. The tariff is paid by the businesses that import and sell the goods in question (it is not paid by the country from which the goods are imported, as Trump sometimes implies). In the first instance it is the importers who will be impacted. Because they will be making a smaller profit, they will import less and, in accordance with the law of supply and demand, the price of the good on which the tariff has been imposed will go up, whether imported or produced domestically. This will make domestic producers more competitive and so enable them to maintain or restore their profits.

This is obviously something that will appeal to the domestic producers concerned but what about other sections of the capitalist class? If the tariff-hit goods are sold to capitalist firms as materials or components for what they produce and sell, these firms will not be so happy as this will increase their costs. If they are consumer goods sold to workers this will increase the pressure on employers generally to pay higher wages (not to increase living standards, but simply to maintain them). If the consumer good is part of the basket of goods used to compile the consumer prices index, whose increase is regarded as a measure of ‘inflation’, then inflation in this sense will go up.

In terms of employment, the workers in the protected industry will keep their jobs for a little longer before automation catches up with them. On the other hand, some workers in other industries will lose theirs.

The overall effect of imposing a tariff will be to raise some prices and not just of the goods on which the tariff is levied. The main beneficiaries will be the domestic producers of the goods in question. Their profits will be ‘protected’.

However, there are other considerations. To be effective in protecting the profits of a particular sector, a tariff needs to be imposed not just on the good coming from one country but on it coming from any country; otherwise the importers of the good could still import it. Which will be why Trump has talked of imposing a tariff on some goods (steel and aluminium) wherever they come from. Another complication is that the country singled out will likely impose counter-tariffs which would harm sectors producing for export. The EU and China will be tougher nuts to crack than Canada or Mexico.

Although Trump gave the impression on the campaign trail that American manufacturing industry will expand and thrive behind protective tariff walls, his first use of tariffs has been as a bargaining tactic. To impose them and then open negotiations with the other capitalist state about what it needs to do to get them removed.

Tariff protection has unintended side-effects and, in any event, does not benefit all sections of capitalist business in the country imposing the tariffs. The working class of the country as a whole is not affected much either way, if only because their wages are tied to the cost of living and tend to go up or down as it does. It is not a working-class issue.

Cooking the Books: Harris in Blunderland (2024)

The Cooking the Books column from the October 2023 issue of the Socialist Standard

‘Believe me, as president, I will go after the bad actors and I will work to pass the first-ever federal ban on price gouging on food,’ Kamala Harris declared in a speech on 16 August, adding: ‘My plan will include new penalties for opportunistic companies that exploit crises and break the rules’ (tinyurl.com/7c373bda).

Price gouging is not a term employed this side of the Atlantic where the equivalent would be ‘profiteering’ or ‘rip-off’. Basically, it’s when a firm or individual selling something to the general public takes advantage of some temporary shortage to jack up the price and reap an extra profit beyond what they would get in normal times.

What Harris was promising appeared to be to bring in legislation to stop the price of food rising, a people-pleasing promise when there’s a cost-of-living crisis.

Actually, when you look at the small print, all she was promising was legislation at federal level to prevent this when a State of Emergency had been declared such as for a forest fire, a hurricane or some other disaster. It wouldn’t apply in the case of a supply chain problem or a temporary shortage arising from some other economic or industrial cause. In any event, many of the states of the US already have such legislation.

In her first interview after officially becoming the Democratic Party’s candidate, Harris went further and promised not simply to stop grocery prices rising but to actually bring them down:

‘Prices in particular for groceries are still too high. The American people know it. I know it. Which is why my agenda includes what we need to do to bring down the price of groceries’ (tinyurl.com/5eyfpf7m).

She didn’t explain how she was going to do this. A federal act to punish ‘opportunistic companies that exploit crises’ won’t do it. Nor will naming a raft of measures an ‘Inflation Reduction Act’ as the Biden administration has already done.

These days ‘inflation’ is defined as a rise in some index of the price of a basket of consumer goods, whatever the cause. This can be caused by a depreciation of the currency through over-issue (the main cause since the 1940s) or by an exceptional rise in the prices of some key products in the basket of consumer goods (which was the main cause from 2020 till this year due to supply chain problems as a result of the Covid epidemic). In neither case would price controls work to stop ‘inflation’ any more than a command by King Canute stopped the tide coming in.

‘Inflation’, then, is the difference between what the index was at one date compared with what it was at a previous date. What this measures is the rate of increase. So, ‘bringing inflation down’ is reducing the rate at which prices are rising, not bringing prices down. Doing the latter would be ‘deflation’, which is what Harris seemed to be promising.

This is theoretically possible, but it would require a change of policy on the part of America’s central bank, the Federal Reserve, which currently aims to keep the rate of increase in the general price level at 2 percent a year (even if not very successfully in the past few years). In other words, that prices, including the price of groceries, should rise at this rate every year.

Since it is unlikely that the Fed will abandon this policy or that she will pressure them to do so, we can confidently predict that a President Harris will not bring down the price of groceries. Anyone who votes for her because she has pledged this will find that they have been ripped off.

Cooking the Books: Trumponomics (2024)

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

‘On the campaign trail, Trump has floated a ten-per-cent tariff on all imported goods, and a sixty-per-cent levy on those from China’ (New Yorker, 15 July). He also wants to devalue the dollar vis-à-vis other currencies. In an interview with Bloomberg Business he ‘called the strong dollar “a big currency problem” and “a tremendous burden on our companies”’ (Times, 29 July). Tariffs and dollar devaluation, that seems to be what his plan to Make American Capitalism Great Again amounts to.

The capitalist class in any country is not a monolithic bloc when it comes to commercial matters. There are differences between those whose business is exports, those who face competition from imports, those who import raw materials and parts, those who neither export nor require imported materials. What Trump has in mind would affect these groups differently.

A 10 percent tariff on all imports would benefit some US manufacturing companies by protecting them from outside competition. But this would mean an increase (not necessarily proportionate but what the market will bear) in the price of their products. Insofar as these are consumed by workers this would exert an upward pressure on wages, which would affect all capitalist employers even those involved in neither exports nor imports. It would also risk, in fact provoke, retaliation by the other country or trading bloc, which would affect exporters, who in the US mainly produce food for humans and animals.

When in 2018 his administration put a 25 percent tariff on imported steel and 10 percent on aluminium, the EU retaliated with tariffs amounting to nearly $3 billion on US imports. China reacted too. As the New Yorker noted, ‘when Trump imposed tariffs on some Chinese goods in 2018, Beijing retaliated with levies on American imports which hurt American farmers and manufacturers’, adding:

‘If a new Trump Administration introduced universal tariffs, many other countries would face enormous domestic pressure to respond with similar measures. In the worst-case scenario, Trump’s policies could lead to an all-out trade war’.

A world-wide trade war in fact, since Japan, India, Brazil and others would join in as well as China and the EU.

A fall in the value of the dollar compared to other currencies would make US exports cheaper and so be welcomed by exporters. But it would also make imports more expensive and so be unpopular with companies that rely on them, whether to sell or to use to produce something else. Because the dollar is the world’s reserve currency, held by states and companies to settle their international transactions not only with the US but also with each other, a fall in its value would have worldwide repercussions.

It would reduce the value of the reserves held by other states and companies. These are mainly held in the form of US Treasury bills and bonds; in other words, is money lent to the US government and which allows the US to run a trade deficit but also to finance its huge military budget. Making the dollar weaker might benefit US exporters but could make borrowing from abroad more difficult. Some US capitalists disagree with Trump’s approach and the matter (in which workers have no interest) will be settled at the ballot box in November.

Trump may act the boor (and be one) but he is essentially a businessman and wants to use the same sort of tactics — involving bluffs and deals — against US capitalism’s economic rivals that competing capitalist companies apply against each other. States do this anyway but generally more diplomatically. A Trump administration would make it clear for everyone to see that economic rivalry between states is about supporting their companies in the competitive struggle for profits.

These Foolish Things: The system dictates (1996)

The Scavenger column from the June 1996 issue of the Socialist Standard

The system dictates

[PilkingtonJ is one of the few UK companies to have accepted that works councils, the elected consultative bodies beloved of the European Union, aree a good way to build consensus on key strategic issues. When it comes to sacking people, however, Pilkington found that the rules governing the release of price-sensitive information to the stock exchange, meant that the first that Pilkington’s workforce knew of this particular strategic decision [to axe 1,900 jobs] was on the radio rather than through any consultative mechanism. Guardian, 28 March.

Are jobs bad for prosperity?

Another healthy rise in American jobs yesterday sent the Treasury bond market into a bout of heavy selling again and appeared to rule out any further cuts in the US interest rates in the short term. The economy created 140,000 jobs in the non-farm sector in March, many more than Wall Street economists had been expecting, this followed a rise of 624,000 jobs in February', revised from last month’s initial estimate of 705,000, which had sent the Dow Jones industrial average into a 171-point plunge and wiped three full points off bond prices. Times, 6 April.

Smoking, poverty and profits

BAT unveiled record pre-tax profits of $2.4 billion for 1994, fuelled by the sales of 670 billion cigarettes worldwide . . . Among the countries where BAT cigarette sales have started to increase are: Poland, Romania, Russia, Uzbekistan, Hungary and Vietnam. Guardian, 7 March.

Capitalism’s iron fist

The International Monetary Fund, the Treasurers of world capitalism, has prescribed even more grinding poverty for the world’s working class. Its recently published World Economic Outlook stated that there would need to be further cuts in spending on health and pension benefits by the governments of industrialised nations in order to reduce the high interest rates which damage the profitability of capital. Tax increases, the report said, would not solve the problem because that would hit capitalists.

Telling figures

Car-makers spent a record £515 million on advertising last year. With 1,945,366 sold in Britain, that made the average spend per new car £265 . . . More than half [the cars] went to fleets, say industry sources, so the cost for every private sale was an incredible £1,800-plus. Financial Mail on Sunday. 14 April.

Both couples remain friends

Carlo Giambrone was “gobsmacked” [at being on the same divorce list as the Yorks). The unemployed mechanic arrived at court No. 1 in Somerset House yesterday in a bomber jacket and jeans to tell the judge he could not afford to pay the costs awarded him after his divorce . . . “I have my kids every' weekend. I shall carry on giving my wife what support I can, though at the moment I’m only getting £74 benefit every two weeks . . ." Few observers believe that the £2 million settlement, £500,000 of which has been set aside for the Duchess, will be sufficient to keep her in the lavish lifestyle she has become accustomed to. Guardian, 18 April.

The Scavenger

Finance and Industry: Rents and the Price Index (1961)

The Finance and Industry Column from the April 1961 issue of the Socialist Standard

Rents and the Price Index

As most rents have risen during the past three or four years, some of them by enormous amounts, it may be a matter for surprise that this does not seem to have shown itself in the Ministry of Labour’s Index of Retail Prices, which now stands at 12 per cent above the level of January 1956.

The fact is that the Ministry's separate Index figure for "housing" costs, which consist mostly of rent and rates but allows also for the cost of repairs etc., has risen continuously for 10 years and particularly since 1956. It is now a third higher than in January 1956 and two-thirds higher than it was in 1950.

This sharp rise has had comparatively little effect on the final Retail Price Index because people are assumed on average to spend over nine times as much on all other items of expenditure as they do on rent, rates, etc. So a rise of 66 per cent in the rent figure would raise the final Index by about 6 per cent only.

A movement of food prices would have four times as much effect on the Index because people are assumed to spend four times as much on food as on rent etc.

Of course many people will find that they spend far more than the assumed proportions on rent etc.; which would not of itself invalidate the Ministry's assumption because there are some rents etc. which represent a very much smaller percentage, and both extremes enter into the average. It was recently shown in an official publication that the average council house rent in Scotland is 9s 10d. a week (the lowest being Dumbarton, only 2s. 10d). Corresponding averages for say London would be about 35s. to 40s.

Nevertheless, with the rapid rise of housing costs in recent years it is probable that a larger proportion than the official 8.7 per cent of expenditure goes on rent, rates, water charges and repairs.

Yet despite the rapid rise in recent years the average increase of rents since 1938 has been far less than the percentage increase of food prices, clothing prices, or drink and tobacco.

American Depression

Politicians and Economists giving their views on the course of trade and business prospects are curiously like doctors telling the relatives how the patient is fairing—probably for the same reason, that they arc not sure.

If the doctor felt perfectly confident that his diagnosis is correct, and that he knows precisely what to do he would be able to say “ I have administered the remedy and by 9.30 a.m. exactly tomorrow morning the patient will start improving rapidly and will be out and about a week from today ".

And if the governments and their economic advisers could make exact diagnoses and prescribe specific and certain remedies, they could be equally confident. But as it is, they are never quite sure whether things are getting better or worse. If they fear the worst it is best not to say so because something may turn up, and in any event spreading gloom may itself help on a downward slide.

So it is not surprising that the reassuring statements of last autumn have slowly given place to admissions that American industry is in a rather bad way.

Last September Mr. Per Jacobson, Managing Director of the International Monetary Fund, at an interview in Washington was sure that the United States was not heading for a full-fledged recession, only a slackening in business activity, and on February 20, 1961 the Financial Times correspondent in New York could report, "U.S. business still optimistic. Belief that upturn is not far off". But only a week later the President's council of economic advisers was informing Congress that it would be unreasonable to expect recovery until after mid year and simultaneously the news of six million unemployed, the worst since before the war.

And the chairman of the council disclosed other reasons for not taking an optimistic view. He pointed out that even when the upturn in business docs lake place it will not be the solution to the longer term problem of a growing gap between production and productive capacity.

Since 1955 the economy’s "chronic slack"—a gap between what the country can produce and what it actually produces had shown a "distressing" upward trend. (Guardian, 7.3.61).

The Slum problem

The American President is going to do something about the slums, and the Times correspondent in Washington, writes, with unintended humour; "That something has to be done and done quickly has for years been evident to those driving through slum areas to the trim suburbs (Times 10/3/61).

What makes the Times correspondent think that because an evil has been obvious for years, that something has to be done about it quickly or at all? It is over a century since the British government and philanthropic agencies started to abolish the slums and they are still with us.

Anyway in America, according to President Kennedy there are "40 million families living in sub-standard houses". but at the same time “one out of every six construction workers is unemployed, and house building dropped by 18 per cent last year to the lowest level in the past decade".

Innocence of Journalists

If the Times correspondent in U.S.A. is naive in supposing that capitalism and slums are incompatible, his Daily Mail colleague Mr. Don Iddon is worse; he writes like a true innocent abroad. In the issue for 10 March he tells of having been stopped by beggars on Broadway. “shabby men asking not for 'a dime for a cup of cawfee’. but for a quarter (about 1s. 9d.) for food”. Because of this and other things Mr. Iddon says. “Kennedy's America is beginning to puzzle me". But why should he be puzzled because queues are lengthening at the employment exchanges, and the motor show rooms are almost deserted, or because 166.000 car workers are unemployed and there are a million brand-new unsold cars? Mr. Iddon has lived for quite a while and has had abundant opportunities to get around and see things in different parts of the world so why should he be puzzled because America shows the same kind of happenings as other countries and other times?

Mr. Iddon tells how stock exchange speculators can make fortunes with a few telephone calls (he himself made $1,500.) "Yet good men, not drifters or drunks, are panhandling in the streets and women and children are queuing up for food in the Bronx and Brooklyn at relief centres".

May we let Mr. Iddon into an open secret about this country? That about two million people a year, including unemployed and impoverished pensioners, go to the Assistance Board for help!

What Next ?

The big political parties and the Labour Party above all have long been stressing the need for more investment to expand and modernise factories, plant and equipment. The argument is that this will make production larger in the years ahead and that it is absolutely necessary in order to be able to sell at low prices and meet the competition of other countries, which are, they say going in for investment on a larger scale than does British industry.

When therefore the Treasury announced in February that investment in manufacture has been rising very fast and that the building of new factories this year is expected to be 40 per cent above last year, there was quite a lot of satisfaction, not to say pride among those who wanted this to happen.

Two elementary factors seem however, to have been overlooked. The first is that all countries are engaged in the same competitive rat race of hoping to be better off in the future but not now.

The second is that a sudden burst of 40 per cent more factories will be followed by a slackening off of factory building and by a burst of additional output when they are completed, and this in a situation in which the "sellers market” phase after the war has long since passed and been replaced by a phase of greater difficulty in selling, and keener competition.

Edgar Hardcastle

Summit's up (2005)

From the December 2005 issue of the Socialist Standard

At first there was NAFTA, then there was FTAA – or rather, there wasn’t, because talks to establish the Free Trade Area of the Americas have got bogged down in disagreements. The North American Free Trade Agreement, between the US, Canada and Mexico, came into force in 1994. Its declared aims were to eliminate trade barriers between the three countries involved and increase investment opportunities. In fact, it is far more about investment than trade, allowing US and Canadian factories to be moved to cheap-labour areas in Mexico and opening up further chances for privatisation. But it was always seen as a first step only, and the FTAA, which would extend to most of Central and South America and cover 34 countries, is the logical conclusion, originally intended to come into effect at the start of 2005.

The FTAA has many opponents. The nasty right-wing super-nationalists in the John Birch Society (see www.stoptheftaa.org) view it as part of the ongoing abolition of the United States, opening up borders to all sorts of criminals, terrorists and other undesirables, doing away with US sovereignty and creating a European Union-style integrated political unit. This isolationist conception does not fit in with that of the rulers of the US, however. There have also been opponents from the ‘left’, largely from the anti- globalisation or global justice movements (www.globalexchange.org/campaigns/ftaa/, for instance). They point to the effects of NAFTA in cutting wages in Mexico and increasing threats to the environment and public health. FTAA, they claim, will just be the same thing, writ larger. 

In early November the Summit of the Americas was held in Argentina, partly to see how FTAA could be put back on track after the rulers of  some countries objected to it. In the meantime, smaller groupings have been pushed forward, such as the Central America Free Trade Agreement (due to start in January 2006) and the Andean Free Trade Agreement (which is still under negotiation). The US is also particularly interested in expansion of the Panama Canal, which carries 14% of US foreign trade, so that it can handle more and bigger ships. But the Summit did not give the green light to FTAA, despite Bush’s threats and arm-twisting. A handful of countries stood out against it, including Venezuela, where oil resources give the rulers a bit of bargaining freedom (see the November Socialist Standard). So now things are being left to the meeting of the World Trade Organization in Hong Kong in the middle of this month.

The Argentinian Summit was marked by protests and police crackdowns, together with the usual populist anti-American pronouncements from Presidents Chavez of Venezuela and Lula of Brazil. Clearly, many workers are unconvinced that a policy is in their interests just because it suits Bush, his fat-cat backers and the American capitalist class in general. But nobody raised the real issues about the way society is run.

The truth is that arguments about ‘free trade’ or ‘fair trade’ or any other kind of trade completely miss the point. All variants on trade accept the idea that food, clothing, housing etc. should be bought and sold rather than freely available. They also accept that the earth should belong to a small class of owners rather than being the common property of all its people. They all accept the existence of capitalism rather than rejecting it entirely as Socialists do.