Answers to correspondents: Abolition of Capital ? (1939)

Letter to the Editors from the July 1939 issue of the Socialist Standard

Mr. D’Arcy Denny (Biggin Hill)

We have your letter asking us to explain what we mean by the phrase, “Abolition of Capital,” which, you say, appeared on page 35 of the Socialist Standard, dated November, 1933. On referring to the page in question we find that what we said was, “Abolition of Capitalism.” Under Socialism goods will be produced only for use. There will be no monetary system, and no capital.

Editorial Committee.

What is Capital? (1931)

From the March 1931 issue of the Socialist Standard

Capital is that part of wealth that is used to make a profit.

In order to produce commodities (that is, articles for sale) certain things are needed besides the worker’s labour-power. These are land, factory buildings, and machinery, motive power, in the form of steam, gas, or electricity, and raw materials. If the articles are chairs, then the raw materials required are wood and wire, canvas and cloth and many other things. Also the tools the workmen use, the motor lorries in which they deliver the goods, the typewriters and telephones and other office equipment. Now the money invested in all these things is capital, because they are used to make a profit for the owners. Even the money spent as wages paid to the workers, is capital, because it is paid with the idea of making profit for the employer.

Under Socialism, chairs and other useful articles will still be required. But as there will be no profit-making, no capital will be needed, either as wages or in any other way. The raw materials and machinery of production will be used by all who are able to work. There will be no propertied class of idlers. Society will produce goods for use, not for sale and profit-making.

J. E. Roe

Capital (1932)

From the November 1932 issue of the Socialist Standard

Capital is money invested for the purpose of profit. A glance at any of the company prospectuses that figure so often in the papers is convincing evidence of this. Whenever a new company commences business, or an old one proposes extending its business, an appeal is made for capital—money from investors. To obtain this money the company issues a prospectus in which figures are given with the object of proving to the prospective investor that dividends will be good and dependable.

An illustration may make the position plainer.

In the Evening News one day there appeared a notice on behalf of Parkinson & Cowan, Ltd. According to it the company offered for subscription 150,000 ordinary shares of £l each at 25s. per share. Underneath this came the statement: “The company has in every year since its incorporation in 1900 paid a dividend on its ordinary share capital; these dividends have averaged over 8¾ per cent. per annum for the whole period of thirty years.” Then followed a list of profits and dividends, showing that from 1927 to 1930 dividends of 10 per cent. were paid each year. The last paragraph gave the reason for the issue: —

“There is a continued and growing demand for gas and electricity for heating, lighting, cooking and other domestic purposes, and the directors anticipate further expansion of the company’s business.”

It will be seen that the company proposed extending its business, and for this purpose called for further capital, assuring the investing people that the company was making good and regular profits, and consequently regular dividends were assured. Dividends, of course, come out of, and depend upon, profits. What profits come out of, we will see in a moment.

The bulk of the production and distribution of wealth to-day in this country is carried on by companies that obtained their capital for starting operations, and later, for extending their operations, by the method illustrated above.

The capital obtained is spent on plant, machinery, raw materials and labour, and the business begins to take shape.The capitalist who invests may be in England, France, Germany or Africa. American capitalists invest in England; English capitalists invest in America. When it suits them, American groups cry that “Capital is going abroad”; and groups in Japan, Germany and England do likewise, because capital is international—it knows no country as its own. It is always going abroad and coming home.

The capitalist who invests in a company receives his voucher entitling him to dividends on his investments and then he has nothing more to do but sit down or roam while he waits for the dividends to roll in. And now let us see why they roll in.

Among the things the company buys with the fresh capital obtained is one that gives a greater return than it costs—the labour power of the worker. A worker produces in a day’s work goods of far more value than his wages—the price of his labour power—will purchase. Year by year the difference between what the worker produces and what he gets grows greater and greater, owing to improved organisation and labour-saving devices. The difference between the value of the labourer’s work and the value he gets is surplus value. From this surplus values comes the profits the company dangles alluringly before the investor, and provides the latter with his dividends. Capital, then, is based upon the exploitation of the worker.

Gilmac.

Pull up the blinds. (1930)

From the June 1930 issue of the Socialist Standard

The present system of producing wealth we define as the Capitalist system, and we do so because the button that sets all the machinery in motion is the investment of capital. Whenever a fresh company is about to commence operations a prospectus is issued asking for capital, and describing in glowing colours how profitable such an investment will be. It is true, as the recent columns of the papers show, many companies come to grief, but this is due to many things outside of the scope of the present article.

A society lives by the production of wealth of one kind or another, and as we look back through history we find that there have been certain definite and different forms of wealth production and that each form has brought into existence certain relationships between the people who have made up each Society.

At one time the bulk of the goods were produced by what were called chattel slaves, for example, in Ancient Rome. There was a privileged class who owned the land and tools and this class bought labourers to work for them in return for food, clothing and shelter. The chattel slave then was like a horse or other domestic animal.

In later times the bulk of the goods of society were produced by serfs or bond slaves. That is, people bound by custom, and paying tribute to a privileged class in the form of a certain number of days’ free labour each week—work for nothing.

But the growth of trading altered both these forms. In each of the above instances the goods produced were consumed mainly at home or in the local area. Only a tiny fraction of what was produced was sold and trade was looked upon with disfavour. But trading grew until it ultimately became, as it is to-day, practically the sole object of production. This has made a tremendous difference in the relationships of the groups within Society. The slave owner of old occupied a paternal position towards his slaves. The relationship was a personal one. The Feudal Lord likewise had a personal connection with his serfs and discharged certain duties in the local courts. In each of these cases privilege was based upon the ownership of land. It was territorial.

The coming of universal trading with capital as its main-spring destroyed the earlier systems based upon land with personal relations between employer and employed, and substituted a new system based upon the ownership of capital. The ownership of capital carries with it the ownership of the means of production, although the capitalist finally becomes merely the holder of titles to profits. The relation of the capitalists to their employees ceased to be personal long ago. In consequence the capitalist can go to Africa or the North Pole, but his capital still brings in dividends and he still remains the controller of his employees. This fact produces, at times, some curious situations. An instance of one was given in the columns of this periodical last month, where it was shown that money left to a woman who was insane still piled up dividends for her.

Wealth, in the economic sense, is food, clothes, houses, ships, and so on. This wealth is produced by the application of human energy, in one form or another, to material supplied by nature. For instance, for the building of a wooden hut trees are felled by workmen, transported by workmen, sawn up by workmen, and erected into a hut by workmen. In order that these workmen may fell, saw, transport and erect, other workmen must produce food, clothing, and so forth, so that the hut workers may live while doing their work. That is because to-day there is a division of labour and workers specialize in different industries. Under Feudalism this degree of specialization did not exist, for huts were made from the trees grown on the manor and the serfs on the manor produced enough food and other things to keep them selves while doing the hut-building. Now industries have grown up calling for specialization, and something else has occurred as well.

Under feudalism the worker used small tools, hand tools, which he owned himself, and in the case of the handicraftsman carried with him when he changed his place of living. When trading and the use of capital became general the small tool disappeared with the handworker, and the great factory and machine tool, served by machine minders, took his place. With the coming of the machine, goods were produced rapidly and in large quantities. The natural resources near at hand were not sufficient to feed the mouth of the huge machine, and the market close at hand was not sufficient to consume what was turned out. So there began to occur periods of time between the beginning and the end of the productive process and during this period the workers who had become specialists had to live. So it became necessary to provide ever larger and larger quantities of wealth to keep the workers while they worked and it was here that capital came in and, as it were, caught the worker by the throat, for the worker is without capital and depends upon wages to keep him from week to week.

Now let us see what was the source from which this capital flowed.

If we examine the present and the past we are struck by the fact that a number of people, the privileged or ruling class in each system, have been able to live without working. The conclusion is, therefore, forced upon us that at each period those who were engaged in production must have produced far more than would keep themselves, otherwise there would not have been enough to keep the idlers.

Now feudalism with its system of customary payments makes this as clear as daylight for the serf worked 3 or 4 days for himself—that is on his own plot of land raising enough for his keep—and gave three days’ work to the lord’s land to keep the lord and his retainers. The feudal worker was, therefore, exploited and robbed of nearly half of the product of his energies and he realized this fact so well that he used to dawdle and take tilings easy when working on the lord’s land. In fact this became such a crying evil, from the lords’ point of view, that it had a great influence upon the movement for substituting money payments for payments by service.

Now the worker is also exploited to-day, but his exploitation is cioaked by the complexity of the present system. Whereas in the past the payment of service to the employer was made directly and openly, now it is hidden by the system of paying wages.

Trading is the buying and selling of goods and originally was accomplished by means of barter—that is by exchanging one kind of goods directly for another. As the business of exchanging grew, it became necessary to have a certain fixed medium of exchange, whose value would be recognised by everyone and at the most distant trading points. Custom and its handincss finally made gold the universally recognised medium or money. Later still titles to quantities of gold, if sound enough, became as good as gold in normal times, and so the habit grew of accumulating a store of money to buy goods. These goods were then sold for a greater amount of money than they cost. The trader pocketed the difference and used his original store of money over and over again.

This money that was used is capital. From the purely trading side, capital gradually intruded into the productive side until we have to-day capital as the starting-point for every productive and trading enterprise—in fact, the whole process of production and distribution, in a multitude of cases, is accomplished by the one business organisation. Big trusts, like the Oil Trust, control the product from its origin as a natural product to its delivery as a finished article to the consumer.

In all the processes connected with production money enters as a paying medium, and except in the profit accounts of the companies there is nothing to show where the exploitation of the worker comes in. For while it is said that money talks, it gives no secrets away.

Consequently, when the capitalist pays wages for work done the matter is supposed to have ended and the worker is supposed to have received full value for his work. But what in fact has the worker received? What does his wage represent? A glance at tlie condition of workers in general will give the answer. The worker receives in wages, on the average, only what is necessary to keep him fit to continue his occupation and bring up a family to replace him. Sometimes he does not even receive that, and has to resort to charitable and other sources.

But what has the worker produced during the time he has been working? The capitalist will say that the worker is but a cog in the machinery and has only taken part in the work of a fractional portion of production. Very well then ! What does the working class as a whole produce? The total wealth of society. And what docs the working class receive back? Only a fraction of what they have produced. The rest goes to provide means for the riotous living of the privileged class. It goes to help tine ladies to ride in Rotten Row—to play tennis on the Riviera, to go yachting in the Tropics. It goes to provide fine ladies and gentlemen with the army of servants to answer their beck and call.

The workers produce wealth in such quantities to-day that it chokes society, and means have to be devised to limit production ; and this because the worker’s wage limits what he can buy back, and this wage is so far below the value of what has been produced that ihe capitalists, in spite of their wasteful methods of living, cannot consume the whole of the surplus. The capitalists, therefore, live out of the surplus value extracted from the exploited worker. The sooner the workers pull up the blinds and see this fact in the clear daylight the sooner will they make away with wage slavery, and the oppression to which it gives rise.

Gilmac

What is Capital? (1928)

From the July 1928 issue of the Socialist Standard

We do not evade discussions regarding words or terms and their definite meanings. Such discussion is not, as we are told, mere hair-splitting. A term frequently misused by our opponents is the one, Capital, and there are very good reasons why those intent on spreading confusion should make special efforts to prevent the Workers obtaining correct views regarding its nature and function. To understand this form of wealth it is first necessary to realise that similar methods of production have not prevailed from all time. Those claiming that “Capital is wealth used to produce further wealth” draw such inference.

All previous social systems may be said to have used part of their wealth for future production, but no previous system has existed in which the mass of the wealth producers were property-less wage workers, hiring themselves out by the day, week or month to a non-working property-owning class as the Capitalists of to-day. In no previous system was profit the primary motive of production, a profit derived from the unpaid labours of the Working Class, as we shall show. These are features distinctive of Capitalism. If the slaves of antiquity, kept directly by their masters, and producing wealth with crude methods, could sustain such Empires as that of Greece or Rome, it is obvious that wage workers to-day, with colossal steam-and electricity-driven machinery, can produce an enormous surplus above the value of their keep given them in money (wages). As in previous slave systems, the wealth produced becomes the property of the Masters, its great proportionate increase explains the orgies of luxury enjoyed by the Capitalists and their hangers-on to-day.

Exploitation gives the key to an under standing of Capital. To-day the Workers as a class are born, and remain, propertyless; they therefore do not own Capital, which is a form of wealth. Capital is the accumulated wealth of the Capitalist Class. It is used for further production, but with only one object—that it may absorb the further unpaid labour of the Workers, and thus produce the surplus value mentioned— the source of Rent, Interest and Profit. Not the means of wealth production in themselves, but the class relations under which they are used to obtain surplus value, realised through sale in the world market— make them Capital.

Bodies like the Labour Party and the I.L.P. do not stand as we do for common ownership, which would mean the abolition of such class relations. The I.L.P. (Forward, May 12th, 1928) asks :—

“When and where any Socialist ever pretended or suggested that we could dispense with Capital. Socialists propose that Capital should be publicly owned.”

Socialists do nothing of the kind. By Public Ownership the I.L.P. means Nationalisation or Government Ownership, a condition under which the Capitalists would still collectively own their property as Bond Holders, while the Workers would still be exploited by receiving wages which presuppose unpaid labour. That explains their enthusiasm for a Living Wage and their desire to retain Capital. Even when they call Government Ownership Socialism, as in their pamphlet “Socialism at Work in Queensland,” we find the wages system in full working Capitalist “order.”

During a recent dispute in which 11,000 of Queensland’s State employees were suspended or dismissed for refusing to handle what they called “Black” traffic for the Lo. Johnstone sugar mill,

Mr. McCormack’s Labour Government fought the Railwayman’s leaders, as an employer, and won. (Report ”Daily Chronicle,” 12/9/27.)

All Socialists stand for the abolition of Capital. It is implied in the abolition of class society through the Workers’ emancipation. Common ownership must end exploitation because society’s means of livelihood would cease to be the private property of the Capitalist few—in their hands, Capital.

W. E. MacHaffie

Letter: What capitalism means. (1927)

Letter to the Editors from the October 1927 issue of the Socialist Standard

Sir,—-I am taking keen interest in economics and would like to know the exact relation of things and definition concerning what capital means.

I listen to all parties and read all literature of all parties.

G. Peace, a speaker for the “Commonwealth [Land] Party,” speaking in Hanley, said that last year he visited the outcrops in Hanley and saw men working using their own capital, which proved the worker will do without bosses when all the workers followed the example of the men out-cropping.

Now I wish to know if the tools such as unscientific things as old wheels of bicycles, etc., ropes and buckets to draw the coal up from the outcrop comes under the true definition of capital. Seeing that your definition of capital is the means of exploitation or legalised robbery of the workers.

There is another point perhaps you will be good enough to correct me on. Mr. G. Peace also said during his discourse on the outcroppers that he was amazed to learn the outcroppers were charged five shillings for every ton of coal carted away by the owners of the land.

To me, the economic renters, like Mr. G. Peace, under their single tax or economic scheme, would be somewhat similar, but the only difference would be the State officials, would collect the economic rent instead of private or group Capitalist officials; just assuming that we would gain access to the land in the manner the outcroppers did, this would not bring economic security to all, for there would be disorder instead of proper organisation. Plenty of outcroppers would not find a market for their coal and would be forced to leave their outcrops. So it appears to me competition for markets will be in existence under Capitalism, under economic rent, nationalisation, etc.

Of course, I ask for correction on the points raised.

Thanking your in anticipation, 

Yours sincerely.

—Inquirer.

Answer to Inquirer.

Capital is wealth used for the purpose of obtaining a profit. The owner of this wealth —the Capitalist—purchases buildings, plant, machinery, raw materials, etc. Then he purchases labour-power to use the plant and machinery on the raw materials for the purpose of producing commodities, or article for sale. The value of the raw materials and of the portion of the plant and machinery, used up in a given time, form part of the value of the commodities, and pass over unchanged into the latter value.

The value of the labour-power can be represented at any given period by a particular number of hours’ work. If the labourer only worked this particular number of hours each day there would be no surplus produced as the value of the commodities would be equal to the sum of the values of (1) the raw materials used; (2) the portion of plant and machinery worn out; and (3) the labour-power expended. But, by using the whip of hunger, the Capitalist compels the labourer to work for a longer number of hours than is necessary to replace the value of his labour-power. In these extra hours of work is produced the surplus-value which is afterwards split up into various parts. One part may be used to extend the business. Another part may be absorbed in advertising the goods for sale. Still another part may go to pay rates and taxes. The part remaining to the Capitalist after these distributions forms his profit. Surplus-value is thus seen to consist of the products taken by the Capitalist that the labourer has produced in the time during which he works, but for which he has not been paid. In other words, surplus value is based upon the robbery of the worker. Profit is a part of the results of this robbery.

This explanation makes it quite clear that an individual only obtains profit when he robs some worker, or workers. Whatever tools or plant a man employs in working for himself obviously cannot be capital, as he does not obtain a profit because he does not rob anyone. Only when he uses these tools and plant to rob some worker or workers of the values they have produced, do they become capital and he a Capitalist. The fact that the appliances may be out of date or unscientific, does not prevent them becoming capital in the above circumstances —though it certainly places the Capitalist using them at a disadvantage in competition with other Capitalists who are better equipped.

Mr. Peace’s statements are therefore quite inaccurate. The “outcroppers” were not using capital at all. Their few crude appliances were not used to rob anyone, and therefore, in those conditions, could not be capital. Moreover, if the “outcroppers” had to pay five shillings a ton for the coal obtained the landowners were certainly “bosses” of the situation, and so contradicted Mr. Pearce’s other statement that “the outcroppers were doing without in bosses.”

“Inquirer” is quite correct when he says that under the single tax theory the economic rent would go into the Government coffers instead of into those of private or group Capitalists. This would leave the workers just as they are to-day, slaves to the master class, and robbed of the larger portion of the wealth they produce. Only Socialism can end this slavery.

Editorial Committee.

Letter: What is capital? (1927)

Letter to the Editors from the September 1927 issue of the Socialist Standard

“Critic” writes objecting to a statement made by “Gilmac” in an article, “The Source of Wealth” in the March “S.S.” The offending passage was “Capital is wealth used in a way that profit results from such use.” “Critic” says that, “Capital is capital whether profits or losses accrue from the use of wealth.”

“Critic” also writes the following :—

“The S.P.G.B. argue that the workers pay neither rates nor taxes; that the workers do not contribute to rates or taxes in the prices they pay for food, clothing, and shelter.

“If so, why the rush on the part of merchants and such people to take tea, tobacco, etc., out of bond before the operation of a new Budget.”

A Critic.

Answers.

Question 1 : Our critic is too smart entirely; but why did not he quote the following sentence? Let me assist him with the quotation in full :

“Capital is wealth used in a way that profit results from such use. Strictly speaking, capital is money invested.”

Of course, from the point of view of a definition, it does not matter whether profits or losses accrue, hence the statement “money invested.” The first sentence was intended to be no more than a general statement (which is quite correct) to introduce the substance of the article, “The Source of Wealth,” a few paragraphs on profit.

Question 2 : “The rush on the part of merchants and such people to take tea, tobacco, etc., out of bond before the operation of a new Budget” is due to their fear that the new Budget may cut into their profits. What this has to do with the payment or non-payment of rates and taxes in food prices, etc., is too subtle for me to grasp. Perhaps our critic will explain at greater length.

Gilmac.

Letter: Can we do without capital? (1926)

Letter to the Editors from the July 1926 issue of the Socialist Standard

A correspondent asks :—

“How can the workers do without capital? I quite agree that they do not get a fair wage in many cases ; but if capital were abolished, as you suggest, where would the money come from to pay any wages at all ? Would it not be far more practicable to limit profits by law and compel the employers to give the balance to the workers in the shape of increased wages?”

Our correspondent, like a good many people, seizes upon a half-truth and loses sight of other facts which would enable him to understand it. It is, of course, quite true that wages form part of capital, and that the abolition of capital involves the abolition of wages; but only a person ignorant of history and economics imagines that the workers have always depended upon wages and must continue to do so.

Capitalism has not always existed. In the modern sense it dates in England from the sixteenth century. Previous to that time the workers were either peasants or handicraftsmen. The peasants, whether bond or free, held at least sufficient land on which to grow their own foodstuffs, etc., while the craftsmen in the towns owned their own tools and sold the products of their hands on their own account. All of them rendered tribute to their feudal lords either in labour, kind, money or military service, but in few cases did they depend upon wages. In fact, the bulk of the wealth then produced was for the direct use, either of the producers, or of their superiors in the social scale. Only a comparatively small surplus was for sale, and, consequently, money played a correspondingly small part in the affairs of mankind.

The merchants and moneylenders of those days occupied a subordinate and despised position in society, little dreaming of the future which lay before their successors, the modern capitalists.

If we enquire still further back into social development, we discover yet other conditions of labour, such as the chattel-slavery of Greece and Rome and the primitive communism of the barbaric races. Under these conditions, wages and capital in all its forms were as yet undeveloped.

The barbaric tribesmen hunted, fished, pastured cattle or rudely tilled the soil without waiting for any enterprising capitalist to come along to provide them with work.

On the other hand, the slave-owners of the ancient empires had no need to disguise the fact that they lived by exploiting their slaves. They possessed the persons of the workers and consequently had to feed, clothe, and house them. They no more thought of paying them wages than a farmer thinks of paying wages to his cattle.

If our correspondent has followed the argument thus far, he will see that the dependence of the workers upon masters arises out of the control by the latter of the means of living. Where the workers possessed their own means of producing wealth (as in the case of the barbarian or the mediaeval craftsmen) they were able also to appropriate the fruits of their labour without asking the permission of masters. It is only where n class has appropriated either the persons of the workers, the land on which they live, or the instruments by which they produce wealth that the workers become the exploited chattels, serfs or wage-slaves.

Further, it is only when the powers of production have reached their present scale, when most of the wealth is produced for sale, that the bulk of the population become dependent upon wages ; but why have goods to be sold, and whence arises the need for money ? The answer lies in the fact that the different instruments of labour, the mines, factories, farms, etc., are all the private property of different individuals or groups and that the products of labour become the private property of these groups likewise. Wealth to-day, therefore, can only be distributed by a process of exchange between the respective owners of commodities.

The workers, however, only possess their own energy. They lack the means whereby to apply it to nature in order to maintain themselves. All the accumulated fruits of the labour of their ancestors have been appropriated by a small class who have no need to labour ; for the workers are compelled to offer their power to produce, in exchange for the means of subsistence. Seeing that nearly everything is produced for sale, these means take the form of money-wages—by which the capitalists become the possessors of the force which wins wealth from nature. The workers produce a much greater value than is represented by their wages, however, and this value, when realised by the sale of the goods produced, thus yields a surplus from which the capitalist class derive their income.

The Socialist, approaching the matter scientifically, rather than sentimentally, is not concerned to argue about the “fairness” or “justice” of this order of things. From the workers’ point of view such argument is mere waste of time, seeing that the only standard of “justice” admissible under the present system is based upon the exchange of commodities, on the average, at their value. Thus, without doubt, the workers, on the average, obtain their dues according to capitalist canons. They obtain the value of their commodity, that is to say, they receive enough to enable them to replace the energy they expend in the production of wealth. This, however, does not alter the fact that the process involves their exploitation and is, therefore, contrary to their interests.

It is, then, from the conflict between the interests of the workers and the masters that the Socialist develops his proposition for the overthrow of capitalism. This conflict, which manifests itself on the industrial field in an endless series of strikes and lockouts, must find expression on the political field also. Here it can only have one conclusion ; that is, the organised capture of the machinery of government by the working-class who constitute the ever-increasing majority of the population.

Let us now consider our correspondent’s proposition, i.e., the legal limitation of profits. What party is going to introduce such a measure he does not tell us. It is difficult to conceive any such measure being seriously adopted except as a last resort, a sop with which to buy off a steadily growing revolutionary class. Admitting its possibility, however, our correspondent has not indicated what he considers a fair profit or a fair wage, nor how such an arbitrary standard of fairness could be enforced. The experience of centuries shows that Acts of Parliament cannot alter the trend of economic development unless they uproot entirely the property conditions.

Thus we find that legal efforts to keep wages down after the Black Death, failed because the number of labourers remained so small. Not until the great enclosures of land commenced, with the resulting dispossession of the peasantry, did the price of labour-power become subject to a steady fall.

To-day, any attempt to keep up the level of wages, much less increase it, has to contend with the rapid and constant improvement in labour-saving machinery, which increases the number of the unemployed, intensifying the competition for jobs, and thereby weakening the resistance of the workers to wage-reductions.

Thus, there is already at work a force tending to increase profits more rapidly than a legal enactment could limit them ; and the workers are left with the only remedy for their poverty-stricken, enslaved condition, that is, the conversion of the instruments of labour into the common property of all.

When that has been accomplished by means of their political control, they will no longer need wages. The products of labour, like the means of production, will be common property, accessible to all without money and without price. In the place of competitive exchange there will be established a system of co-operative distribution. Our correspondent’s question is, therefore, answered.

The workers can do without capital just so soon as they exercise their collective knowledge and organise democratically to obtain possession and control of the means of living; for the term “capital” simply expresses the fact that the means of social labour, and consequently the products of that labour are private property. In the same way, the terms “wages” expresses the fact that the power to labour is a mere commodity, exploited for the profit of those who purchase it.

When the workers act as we foresee, these terms will simply become as meaningless and obsolete as the terms of the feudal law (“villeinage” and “suzerainty”) or those of ancient Rome with its “patrons” and “clients,” its “bond” and “free.” In the place of class-society we shall have humanity.

Eric Boden

A Look Round. (1925)

From the July 1925 issue of the Socialist Standard

The Meaning of Capital.

A study of past and present human society shows it to be marked off by distinctly different methods of producing and distributing the wealth that maintains such society. Each social economy, chattel slavery, serfdom, capitalism, has had its own particular religion, morals, philosophy, etc., and each system has developed within itself the elements that made possible the revolutionary change to the new social order. These changes mark important steps in the development of mankind.

To analyse and understand the workings and the forces within the capitalist system is the mission of the Socialist. The capitalists and their agents will fight such a method at every step, for it reveals them as a useless but property-owning class. Their wealth is used primarily for their own profit, irrespective of societies’ needs. Such profit is obtained without effort on their part, because the value of the workers’ means of subsistence for a given time is a minute proportion of the values he can produce in that same time.

Production is carried on to-day for the world’s markets, and profit is derived from the unpaid labour of workers who sell their energy in the labour market as a commodity. Only the capitalist system has presented these features in general, and it was not until the present system prevailed that economic wealth became known as capital. (Evolution of Property Lafargue.)

Capital is not a thing, it is a definite social relation, it presupposes a working class who possess nothing but labour force. In order to spread confusion our opponents often claim that we all possess capital of a sort, we are all capitalists; capital they say may be the workers’ health, the poor woman’s sewing machine, the navvy’s shovel; others, like the I.L.P. and the Labour Party, believe it ought to be publicly owned, while the university professors say it is wealth used to produce further wealth. All fail or pretend to be unable to see that capital is the wealth owned by the capitalists and used to exploit the working class for profit. As Socialism stands for the abolition of exploitation, it stands for the abolition of capital.

A Doctor's Dope.

According to a Dr. Shadwell (Quoted Observer, 17/5/26), there are over two hundred definitions of Socialism, which he says are cities of refuge to its apologists since:—

  “It is always possible to shift the ground and to say when any particular aspect is criticised that it is not Socialism.”

Fortunately Socialists do not rely on definitions, but facts, though there is a maxim that “all colours look alike in the dark.” Our pedantic doctor is eager to find some redeeming features of capitalism, especially as there are still Marxians who adhere to the doctrine of the inevitable “increasing misery.” He can dispose of them in a few words, thus :—

  “There has been a levelling up at one end and a levelling down at the other. It stares one in the face in visible matters of houses, clothes, and locomotion . . . As for clothes, it is no longer possible as it used to be to distinguish classes by clothes . . . and if Capitalists dash about by road in their own cars the proletariat do the same in charabancs.” (Ibid.)

We need not weary you with details of the delightful houses you habitate, every snob in the country has said that the dear workers must be better housed (some day), and the object of the Housing Bill, we were told, was to provide cheap houses for “us” (bye and bye). Clothes (sic)—we do not judge classes by clothes, but by methods of living, hirers and hired, robbers and robbed, but locomotion—ah ! the charabanc, what profligates ! Even the publican says, “No charabancs served here.” And, despite all, we still adhere to the fact that the workers’ conditions can only be measured in relation to the wealth and the pleasures they provide for their hereditary enemies, the capitalists. We fail to find consolation in the fact that when we are dead, other workers may have better houses. We do not appreciate the shoddy, bad fitting garments that cover our ill-fed bodies. Ungrateful scoundrels that we are, we cannot be soothed, because the growth of poverty and pauperism keeps pace with the increase in millionaires. We still want, and will fight on to obtain, the full use of the best that the skill and dexterity of the workers makes possible. We want the world for the workers.

W. E. MacHaffie

Economics at Central Labour College. (1919)

From the May 1919 issue of the Socialist Standard

When the Central Labour College was established in 1909, the working-class movement, according to its founders, was about to be placed on a sound educational basis. Young men from the trade unions were to be thoroughly equipped with the necessary knowledge to leaven the whole labour movement with revolutionary principles. Classes were to be formed all over the country, and the "Plebs' Magazine" was to be published monthly, in order that the workers might be instructed in Politics, History, Sociology and Economics.

The founders of the college advertised their wares so effectually among the trade unions that they have reduced the debt they started out with almost to zero, and are now completely subsidised by the South Wales Miners' Federation and the National Union of Railwaymen—the college being owned and controlled by these two unions. This fact accounts for the almost purely trade-union propaganda of the magazine: those who pay the piper call the tune, and the C.L.C. tune is trade unionism, industrial unionism, labourism, or any other ism where its pupils can find jobs after they have gained their "degree" at this "Clark's College" of the labour world.

In its curriculum the college advertises economics according to Marx. But in the columns of the "Plebs" the readers are treated to the same economics they get from Municipal Reform candidates at County Counoil elections. In the current number, for instance, Mr. George Barker (Miners' Agent, Abertillery), says: "There are about fifty millions of debt hanging round the necks of the workers of Europe. The worker cannot pay huge dividends to the capitalist class and pay the interest on this colossal debt."

Of course not ! as wage slaves they can only pay away what they receive as wages, and wages —even according to the "Plebs"—being barely sufficient to supply the worker with necessaries, must be spent on necessaries. If they were able to do more there would be something wrong with the capitalist system, which, generally speaking, operates in favour of the ruling class by compelling the workers to accept wages that only provide them with the wherewithal to live and propagate their kind.

In the same number Mr. W. W. Craik, dealing with the Coal Commission, asks a simple question in economics : "What is capital ?" But although economics is an important subject at the college, and a correct definition of "capital" is very essential to that subject, the writer seems quite unable to give one. "What is capital ?" he asks. "Wealth used to produce more wealth," he replies, quite ignoring the fact that, thousands of years before Capitalism evolved, men used weapons and tools to "produce more wealth," and no one—either then or now—with the exception, perhaps, of avowed anti-socialists, would think of describing such things as capital.

Of course, the anti-socialist uses this more general definition to cover up or mask the true one. Capital is wealth used for exploitation. But Mr. Craik is not obliged to accept the anti-socialist definftion, and, to do him justice, he does not seem satisfied with it; and as there appears to be no limit to the number of guesses allowed, he tries again. "Capital is the ownership of labour, the ownership of the labour of yesterday and of to-day," and further on still he refers to capital as "i.e., ownership."

Now, it must be obvious that capital is something that is owned, and not the act of ownership, and Mr. Craik is only adding to the confusion that already prevails when he tells the "Plebs" readers that capital is the ownership of pit props, winding gear, machinery, etc. Adam Smith's definition that capital is "wealth used for the production of profit" is a far more scientific one, and always good enough for the Socialist, because it can easily be shown that there are no profits without exploitation.

When the Central Labour College was established its object was stated as follows: "The Central Labour College is founded to train men and women for the industrial, political and social work of the organised Labour Movement, under the supreme control of the Labour organisations in the United Kingdom, and to assist in the establishment of similar institutions elsewhere."

The founders declared for independence in the three fields—educational, industrial and political. The so called independence of the Labour Party is, therefore, the measure of Labour College independence—no more and no less. The mistaken notions of the South Wales miners, and the Liberal politics of the Labour Party, form the basis of the college instruction, which is carried back to the trade union and I.L.P. branches as independent and scientific knowledge of the working-class position. Thus neither the college nor the unions can get beyond the compromising and reform attitude of the Labour Party.

Notwithstandingall their frothy denunciations of Capitalism, and their continued affirmation that they are travelling the right road toward the emancipation of the working class, they are merely supporting and countenancing a movement that opposes the ruling class within the basis of its own system, and with no definite or settled principles for carrying through the revolution for which they admit the necessity.

They ruled themselves out of the revolutionary movement right from the first, when they said: "Just as the needs of the individual correspond to his environment, growing in complexity with his development, so the needs of the working class change and become more complex with industrial evolution. Industrial, Political and Educational organisation are each in their turn called into existence by the development of productive forces."

Thus, instead of learning from Marx that the workers can achieve their emancipation as soon aa they acquire the knowledge of their class position, and see clearly that the source of capitalist power is the political machinery, the C.L.C. waits on industrial evolution—to instruct them in a new philosophy for each epoch—and marks time with the political and industrial labour leaders until the rank and file shall have marched past to achieve their own emancipation.

F. Foan

Social capital? (2010)

Book Review from the May 2010 issue of the Socialist Standard

Theories of Social Capital. By Ben Fine, Pluto Press, 2010

In Marxian economics capital only exists when the appropriate historical and social conditions are present. Specifically, when the means of production are generally used to exploit wage labour for profit. In capitalist economics capital is one of the ‘factors of production’ along with land and labour (and, in some definitions, entrepreneurship or management). Capital is money invested in production with the expectation of profit, though in capitalist economics capital is primarily a timeless asset. This is why those who have been exposed to capitalist economics will sometimes express bafflement at the socialist proposal to abolish capital. ‘But any society must have capital,’ they exclaim, as if we propose to physically destroy means of production. No, any modern society must have means of production (land, factories, railways, etc.), but it is only in the capitalist system of society that the means of production takes the form of capital. Socialists want to abolish capital by establishing common ownership of the means of production, replacing production for profit with production solely for use.

In the last 20 years or so, in an attempt to promote the illusion of the inevitability of capital, the term has been widened to include ‘social capital’. Fine defines social capital as ‘any aspect of the social that cannot be deemed to be economic but which can be deemed to be an asset’. It can be anything from your personal acquaintances, through communal or associational activity, to your identity or culture, and so on. The objective, whether clearly recognised as such or not, is to get the notion of profit into every aspect of our lives. It should come as no surprise that one of the main sponsors of the idea of ‘social capital’ is the World Bank, though its use is now well-established in certain academic disciplines, such as management studies.

Fine has also written, along with Alfredo Saad-Filho, a highly recommended work on Marxian economics called Marx’s ‘Capital’. Now in its fourth edition (2003) it is a remarkably succinct summary (216 pages) of Marx’s multi-volume Capital.

Lew Higgins

Jottings. (1921)

The Jottings Column from the April 1921 issue of the Socialist Standard

The speeches of the Labour members in the debate on German reparations show once more the futility of supporting them. To support the Labour Party means to support capitalism—the monstrous system to remove which ought to be the endeavour of every worker. Speeches are too long to quote here: no doubt they have been widely read.

The Prime Minister, criticising J. R. Clynes' contribution, thought his words would have no practical effect except to stiffen the German resistance to payment. He (George) claimed that we ought to give Germany the appearance of complete unanimity in this matter, whereupon Clynes went one better by retorting that he wanted the fact of unanimity; not the appearance of it! He meant, of course, that they should all present one united front in the method of extracting payment, and not to let Germany see that they quibbled over details. The business was straightened out eventually by J. H. Thomas coming to the rescue and announcing that the Labour Party would not vote against the Bill in order to show a united front to Germany, although, inconsistently enough, he had supported Wedgwood when he pointed out that "the British workers, through unemployment, were paying the indemnity."

Without speculating as to how it comes about that the British workers are paying the indemnity beyond remarking that it shows a remarkable ignorance of elementary economics, it is seen that by identifying themselves with the question of the amount and method of payment of war indemnities, they are concerning themselves with something that is purely a capitalist issue. As Mr. J. L. Garvin points out in the "Observer" (20.3.21),

   . . . the Labour Party, considering its nominal convictions on international affairs, gave last week on the Reparation Bill as miserable an exhibition of shuffling, ducking and retreating as Parliament ever has presented. . . . Labour denounces the unparalleled iniquity of the Government, and yet does all it can by these methods to keep the Government in. Labour's feebleness in the House and tactics in the constituencies are the chief support and hope of the Coalition. . . Altogether, nothing more convenient and providential could be imagined for the Government than the Labour Party as it stands, and as it is likely for some indefinite period to remain.

These truths could not have been better stated, and the Socialist unhesitatingly subscribes to, no matter what their source. 

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In the "Labour Leader" for March 17 there is a criticism of Lord Leverhulme's definition of capital. Leverhulme's definition was not the correct one by any means (capitalists take care to have special definitions where working-class audiences are concerned), but what I am concerned with here is the ''Labour Leader'' critic’s conception of capital. He appears to believe that capital is necessary to the well-being of any society, that it is only its possession in the hands of a few individuals which constitutes a menace. "No one in his senses wants to destroy capital, any more than anyone wants to destroy the air we breathe. Capital is almost as necessary as air—and because of this it should be as much the common property of all."

As this individual (John Jacks) runs a column in every issue of the "Labour Leader," we may take it that this represents the official view of the I.L.P.—indeed, it is laid down in their programme that "Socialism requires that land and capital necessary for industrial operations should be owned and used collectively." Socialism, of course, requires nothing of the kind, and statements like these only go to prove that the I.L.P.'s understanding of Socialism and capital resides in the same quarter as "the air we breathe."

Capital is a means of robbery, whether in the hands of the few or the many, and being so must be abolished. Robbery and slavery are the basis of present-day society, and that basis must be smashed in the interests of toiling humanity. If the I.LP. believes that capital will exist under Socialism—which they claim— and if capital can only arise through exploitation, then, clearly exploitation will continue !

To take it a little further, if capital is taken out of the hands of the few and placed in the hands of the whole of the people, then the people, collectively, are going to exploit or rob themselves collectively ! The absurdity will be seen.

The clever individual referred to above recommends Lord Leverhulme to get a text book on elementary economics in order to learn what capital is. I advise him to do the same, and to read it twice. In the meantime I offer him— and others—the correct definition of capital:

 Capital is wealth used to exploit labour.

Capital is unpaid labour, therefore robbery and slavery are the terms used to denote the conditions of human beings who are compelled to submit to being robbed, bludgeoned, and butchered through their ignorance of the factors operating within the capitalist system and the means necessary to remove them. This ignorance is not dispelled by so-called Socialist organisations preaching capitalist economics.

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The great boom in diamonds has come to an end. During the war, when thousands of men of the working class were being blown to hell daily, those for whom they were fighting splashed their money about like water. Diamonds especially found a tremendous sale, but like most things with the moneyed class, they soon tired of one thing and turned to another.

To prevent diamonds coming down in price the supply has been purposely restricted by partially closing down the mines, and in some cases closing them down altogether. This has the effect of cheapening labour power by augmenting the available supply, and at the same time keeping up the price of diamonds at about three times the pre-war level by restricting output. As the world's output is controlled by a strong syndicate, they have things pretty much their own way. Production being for sale, glutting the markets is avoided as much as possible. Thousands of tons of foodstuffs have been destroyed for no other purpose than to keep up the price artificially. Under Socialism production will be for use.

Tom Sala.

Answers To Correspondents. (1908)

Letter to the Editors from the July 1908 issue of the Socialist Standard

  W. L. B. (Manchester).—1. Could you give me a. good definition of Capital ? 2. I suppose Marx, when he mentions labour, includes mental and physical. 3. Will wine increase in value without labour of any kind ? Many years ago an aerolite fell in Sweden. The curator of the museum bought it for £84. Did labour create the aerolite and give it value?

Reply:

1. Perhaps the best general definition of capital is "Wealth used for the object of obtaining a profit." In the narrowest technical sense, capital is money used to obtain more money; but Marx's own formula (in "Capital," p. 133) is as simple and direct as any student could wish. Our correspondent is referred thereto.

2. Alexander Bain has shown in his "Mind and Body" that it is impossible to separate mental from physical actions, and that the two are inseparably connected. And Marx himself had already recognised this fact in "Capital," (p. 11) where he says ''different productive activities are each a productive expenditure of human brains, nerves and muscles, and in this sense are human labour." But it should be noted that the apologists for capitalism usually state that Marx only dealt with manual labour, and left out of consideration the organising and directive activities required in production. This is a deliberate falsification of Marx's position. (See "Capital," pp. 311, 321, 322 (Vol. I.) 

3. No. For wine to reach a given stage in ripeness or maturity, it is necessary to store it under certain conditions in specially constructed buildings, vaults, etc. This often involves a heavy initial outlay, to which there is to be added the cost of maintenance and upkeep of these places, and the various plants (machinery, etc.) used therein. To replace all these means of production a certain sum is set aside yearly, depending upon the average time these things last under normal wear and tear. Obviously the longer the wine is stored, the larger is the total amount of labour expended upon the storage, and—in general—the higher will be the price of the wine. 

4. With reference to the aerolite, there is here a confusion of price and value. Price is the amount of money given for a thing, while value is the social labour-time embodied in the thing. On the average, and taken over sufficient periods of time, price is the monetary exponent of value, but in detail "the deviations of market prices from values are continual," while, strange though it may seem, things may have a price without having value. Marx says: "Objects that in themselves are no commodities, such as conscience, honour, etc., are capable of being offered for sale by their holders and of thus acquiring, through their price, the form of commodities. Hence an object may have a price without having value." ("Capital," p. 75). Labour did not create the aerolite, nor—except for the small amount of energy expended in bringing it to the curator—did it give the aerolite value. The price paid was entirely the subjective estimate of the curator for his museum purposes.

An Economist Misses Her Marx (1944)

Book Review from the January 1944 issue of the Socialist Standard

“An Essay on Marxian Economics," Joan Robinson (McMillan, 7s. 6d)

Those who have read Robert Tressell’s sketch of working-class existence, "The Ragged Trousered Philanthropists," will remember the chapter entitled “The Oblong,” in which Owen, the house painter, tried to explain to his mates the division of wealth among the classes in modern society. Although nicknamed "the Professor,” Owen would hardly have passed first-class in an examination in Marxian economics. None the less, he expressed the gist of the matter fairly clearly in the remark, "As the money they get in wages is not equal in value to the things they produce, they find that they are only able to buy back a very-small part.” (P. 177.)

It is noteworthy that he used the idea of value. Though his two dozen fellow-workers made no pretence of culture, they were not so simple as to imagine that they were reconditioning and re-decorating that most desirable residence, "The Cave,” for the accommodation of any working-class family. So many ceilings sloshed with whitewash, so many walls stripped of old paper, so many rotten floorboards replaced by new ones, new fire-grates for old—all these things had to be brought into relation to the items of subsistence of those who could hardly aspire to a council house in the days of which Tressell wrote. In spite of their obvious differences push-bikes have something in common with Rolls-Royces. Shoddy is akin to broadcloth and black-puddings can be expressed in the same terms as the best grills at the Savoy, i.e., coin of the realm; for all have value. All have occupied a certain portion of the labour-time of society. In this respect they differ only in the quantity of value, in the amount of time which is necessary to produce them. The workers spend more time in producing for their masters than they spend in producing for themselves. This simple fact is hidden by wage-contracts. Like Owen's mates, the majority of the workers think that they are paid for their labour. The "great money trick,” as Owen called it, has to be analysed before the fallacy of their ideas can be grasped.

Any student of Marx knows that he based his analysis of Capitalism upon his analysis of value. Incredible though it may seem, an economist has "discovered" that “none of the important ideas which he [Marx] expresses in terms of the concept of value cannot be better expressed without it.” “An Essay on Marxian Economics," Joan Robinson (McMillan, 7s. 6d.; page 24). 'Again, "No point of substance in Marx's argument depends upon the labour theory of value” (p. 27). Once more, "The concept of value has no more application in the economics of Socialism than it has in the economics of the capitalist system” (p. 33). Readers of Marx may well wonder why such an insult is offered to them, .loan Robinson offers the following explanation: "The chief difficulty in learning from him [Marx] arises from the peculiar language and the crabbed method of argument which he used, and my purpose is to explain what I understand Marx to have been saying in language intelligible to the academic economist” (pp. v and vi), "Foreword.” The result is that, in spite of 114 references to "Capital” (Vols. I, II and III). "as a gauge of good faith” (p. vii), she manages to falsify Marx's meaning on his most fundamental points. Marx, of course, did not write specifically for academic economists. He merely presupposed "a reader who is willing to learn something new and therefore to think for himself” (p. xvi. Author's Preface, "Capital,” Vol. I, Sonnenschein Edition). He had therefore no use for the slick professional jargon current among the above-mentioned gentry, but preferred to express his meaning in terms which he was careful to define. Joan Robinson is equally careful not to define the terms which she coolly substitutes for those of Marx. One can only infer the sense in which she uses a term from the conclusions at which she arrives. Thus she persists in using the term "capital” to refer to what Marx defines as "constant capital," i.e., the money invested in the factors of production (other than human labour-power); such as machinery, raw material, etc.; and has the cool impudence to put forward the following travesty of Marx’s views: "Land and capital produce no value, for value is the product of labour-time” (p. 20). Marx sub-entitled his first volume "A Critical Analysis of Capitalist Production.” The second chapter of volume II is entitled "The Rotation of Productive Capital.” Lastly, in volume I (p. 383), he wrote: ”Machinery, like every other component of constant capital, creates no new value, but yields up its own value to the product that it serves to beget.”

Marx went to considerable pains to make it clear that before the worker can indulge in labour-time he must sell his labour-power to the capitalist; whereupon it becomes just as much a part of productive capital as the machinery, raw materials, etc. Under Capitalism, therefore, production, that is, the labour-process, is a function of capital. It is capital's means of self-expansion.

Money makes money only because labour-power, fraught and sold for money, creates a value greater than its own. It does this by transforming the raw materials, by means of the machinery provided, into articles of consumption; thus preserving their value and adding further value to them at the same time. The process does not end with the bare re-production of their wages by the workers. It goes on in order that they may produce profit. Hence, the struggle between the workers (who are not interested in the production of profit) and their masters (who are) arises from the conditions of production under Capitalism.

Joan Robinson misconceives capital as a material thing. On p. 22 she attempts to distinguish between "capital” and “ownership of capital”; but: what is capital if not a particular form of ownership?

Machinery is not, in itself, capital, any more than is labour-power. Both productive factors have to be purchased by the capitalist and set in motion with a view to the production of profit. We may readily agree that "capital is necessary to make labour productive ” (p. 21) beyond a certain point; but only in the sense that the whip is necessary in order to make the chattel-slave produce. When the means of production have been converted into the common property of society they will have lost their capitalistic character. They will be used for the common good instead of being instruments of exploitation.

A glaring example of Joan Robinson's failure to present Marx's views correctly occurs on p. 27. Quoting two sentences from Vol. III, p. 221, she omits a most important bracket and thus manages to make Marx appear to suggest that "the exchange, or sale, of commodities” will continue under Socialism in spite of the fact that the plain meaning of the first sentence is contrary to any such assumption. When society establishes "a direct relation between the quantity of social labour-time employed in the production of definite articles and the quantity of demand of society for them," it will by that very act abolish the production and exchange of commodities, i.e., of articles of sale. Exchange is manifestly an indirect way of regulating the relationship between the labour-time spent and social demand.

.
On this flimsy basis our. authoress proceeds to juggle with alleged "problems of Socialism." These have been neatly exposed by Mr. T. A. Jackson in his criticism of her work (see “Plebs," May, 1943),, though it is to be regretted that even he lapses, however momentarily,' into her jargon when he refers to " increases in capital" in a socialist community,

To the present writer it appears that Joan Robinson's crowning audacity consists of her assertion on p. 42 that “Marx can only demonstrate a falling tendency in profits" (she means rate of profit) “by abandoning his argument that real wages tend to be constant."

This is on the strength of Marx's “assumption" of a constant rate of exploitation in his illustration on p. 247 of vol. III. An examination of this page shows clearly that Marx's purpose here is simply to demonstrate that a given rate of surplus value will express itself in different rates of profit according to the different volumes of constant capital.

As one goes through the chapter one finds that Marx gives illustrations which completely refute Joan Robinson's contention. On p. 253 Marx devotes half the page to showing that a higher rate of exploitation is consistent with a lower rate of profit. Instead of analysing Marx's figures and showing wherein they are wrong, our academic guide trots out some hotch-potch of her own from which her bugbear, the concept of value, has been completely eliminated. This prevents her from showing even what the rate of profit actually is, but she is not to be deterred by mere trifles like that. She proceeds to assert that if (as a result of an increase in productivity) a 10 per cent. increase in constant capital leads to an equal increase in the mass of profit (in terms of “product" as distinct from value) then "the rate of profit on capital would be constant" (p. 44).

A consideration of the following figures should show the falsity of this remark. It will be observed that a principle which applies to a 10 per cent. increase applies equally to an increase of 200 per cent. in capital and profit in terms of “ product," to avoid awkward fractions.

1. Constant Capital £100. Variable Capital £50. Surplus value £50.
2. Constant Capital £300. Variable Capital £25.  Surplus value £75.

In (1) the rate of exploitation is 100 per cent., that of profit 33-1/3 per cent.
In (2) the rate of exploitation is 300 per cent., that of profit 23-1/13 per cent.

In (2) productivity is assumed to have doubled, while real wages (in terms of "product") have remained constant, falling in value by half. The capitalist's share (whether expressed in terms of "product" or value) is now three times us large as that of the worker's, just as the constant capital is three times as large as in the first instance. None the less the rate of profit (as distinct from its mass) has fallen by 10 per cent.

This illustration is not intended to do anything more than to show the unreliability of "the more precise and refined methods of modern analysis " (Joan Robinson's “ Foreword." p. vi), and to point the suggestion that even academic economists might do worse than to read Marx for themselves.

This brief review does not profess to have dealt exhaustively with Joan Robinson's misconceptions. It may be noted, however, that her unreliability is not confined to purely theoretical points. On p. 38 she says, “Marx's argument requires modification if it is to be brought into line with the rise in real wages which has actually occurred in modern times." Here is a magnificent opportunity for her to produce some practical evidence in support of a statement. One looks for it in vain, as we are merely referred to certain unnamed "conservative trade-anion leaders, who look back to their own ragged and barefoot childhood and count up the blessings which Capitalism has brought to the workers." (Footnote to p. 39.)

In his small volume, “The Worker's Share” (Allen A Unwin), Mr. A. W. Humphrey showed in 1930 that, " accepting the estimate of Dr. Bowley and Sir Josiah Stamp, we may say that a problematical 5 per cent. was the only improvement in the average income of working-class households between 1914 and 1929 " (p. 80). Has Joan Robinson forgotten the posters on the hoardings in the winter of 1928-9: " A million of your fellow countrymen are in need of food and clothing"? This referred, moreover, only to the miners, at one time among the highest-paid workers. The fact that some of the lower-paid workers have risen towards the average level in living memory by no means offsets the lot which has overtaken others who were above the average; particularly noticeable being those in the export trades (such as the textiles), shipbuilding, etc. Increases in wage-rates by no means guarantees employment at those rates.

In spite of her academic outlook it must be conceded that Joan Robinson admits the exploitation of the workers, and here and there hints at expropriation of the capitalists as the remedy. She even credits Marx with penetrating insight. Her attempts to criticise his theories, however, fail just as effectively as those of her predecessors.

Eric Boden

The origin and rise of capital. (1910)

From the March 1910 issue of the Socialist Standard

While to-day, in the domain of natural science, the theory of evolution is generally accepted as the basis of research, the reverse is the case in the field of political economy. The reason is that natural evolution can be “squared” with individualism, but social evolution cannot. Natural organic development can admittedly be evolutionary without interfering with the “God-and-creation” idea which attributes the privileged position of the few to Omnipotent favour. Social development along evolutionary lines must, if logically and persistently traced, demonstrate more clearly that all men are social products and economic positions, therefore, merely the result of necessity and not of choice.

While orthodox political economy at the bidding of the possessing class, is at all times concerned to prove that capital and wage labour have existed through all history, the historic and economic teachings of Karl Marx, particularly the “Materialist Conception of History” and the “Theory of Surplus Value,” supply ample evidence that capital and wage-labour are conditions of a social system of production forming but a comparatively small link in the great chain of social evolution.

In the “seventies” and “eighties” the orthodox political economists who set out to demolish the “pernicious” theories of Marx had not yet acquired the craftiness of present-day “economic experts”, and therefore contented themselves with mere fairy tales to explain the origin of capital and wage-labour. Thus Wilhelm Roscher, professor of political economy at the University of Leipsic (until his death in 1894) wrote (Principles of National Economy, Stuttgart, 1874., Vol, I. p. 423) : “Let us imagine a fisher folk without private property and capital, naked and living in caves, gaining their sustenance by catching with their bare hands sea-fish left behind by the tide in pools on the shore. All workers may here be of an equal standing, each catching and consuming 3 fishes a day. Now a wise man limits for 100 days his consumption to 2 fishes a day and uses the 100 fishes accumulated in that way to devote his labour-power for 50 days to the production of a boat and a fish-net. With the aid of this capital he commences in future to catch 30 fishes a day,”

To-day, at the beginning of the twentieth century, however, the origin of and justification for the employment of capital are no longer ascribed by the economic prize-fighters of capitalism to the thriftlessness and laziness of the many and the thrift and industry of the few. No, the mighty annihilators of Marxian theories of the Mallock school have to their own satisfaction, adopted the more profound explanation that it is the “directive ability” of the few and not the mere labour of the workers which creates the greater portion of capital and is the most important factor in wealth production; and, strange to say, they draw the deduction that this factor can be and is supplied by the capitalist class alone. But European history from the 14th century explains the primitive accumulation of capital in quite a different way. Some bourgeois historians have described it from the standpoint essential to the glorification of capitalism. It was left to Karl Marx to explain it from the standpoint of the proletariat.

The literary advocates of the bourgeoisie at times described the rise of capitalism correctly in order to impress upon the workers the bourgeois standpoint that the struggle of capitalism against feudalism was a struggle against tyranny and privilege – a fight for liberty and equality. These capitalist scribes then rightly point out that industrial capital could not rise without “free” workers – workers who had ceased to come under the domination of chattel-slavery, serfdom, or the craft-guilds. They also emphasise the fact that capitalist wealth production had to be freed from the fetters of feudalism, from the clutches of the feudal lords. Socialists have no reason to detract from the importance of that struggle, considering that the capitalist class are most anxious to deny its character when they hear us now proclaiming the need for social revolution.

While a number of bourgeois writers contributed considerably to the records of the history of primitive accumulation, it was left to Marx and his life co-worker, Engels, to point out its significance from the working-class stand-point. It was they who laid stress upon the fact that  this accumulation spelt the creation of the proletariat and of capital itself. Marx, having already given in The Poverty of Philosophy some indications of the conditions that in England – the motherland of capitalism – prepared the way for primitive accumulation, furnished a full and lucid history of it in his great work, Capital.

That fascinating history teaches us that, apart from the craft-guilds in the towns, the greatest hindrance to the rise of capital was the common ownership in the soil by village communities. While such property existed proletarians in large numbers were impossible. Fortunately for capitalism, its development was considerably assisted by the feudal nobility. After the Crusades the production of and commerce in commodities, developed by leaps and bounds, increasing greatly the demand for goods made by the craftsmen and sold by the merchants of the towns for money. The feudal nobility, dependent for their existence upon the direct services of, or goods supplied by, their peasant dependents, began to develope a craving for money. The military power of the towns and princes precluded all possibility of robbing or extorting money from the merchants or craftsmen, while the very poverty of the peasants did the same in their direction. Hence they determined to become producers of commodities like the townfolk – to produce wool, corn and other products for money instead of for their own use only.

Such a change could only be brought about at the expense of the peasantry. These, reduced to serfdom, could now be driven from their homesteads, which were added to the adjacent territory of their lords and masters. And to complete the ruin of the peasants, the communally owned land of the villages standing under the suzerainty of the feudal lords, was turned into the latter’s private property. At that time wool was much in demand by the textile undertakings of  the towns. But the extension of wool production necessitated the turning of arable land into sheep runs. To accomplish this end a great number of peasants were driven from their farms by legal or illegal means, that is, either by economic compulsion or by the use of physical force. (For confirmation of Marx’s statements on these points see H. de Gibbins’ Industrial History of England, pp. 40-57.) With the growth of the textile industry the number of expropriated and evicted peasants increased continually. Besides, the nobility dissolved their retinues, which had under the changed conditions ceased to be a source of power, but on the contrary had become a decided source of financial weakness. The Reformation, too, favoured the rise of capitalism by depriving the old sub-tenants of their holdings of Church property, driving them out, in order to hand the same over, almost for nothing, to speculating farmers and citizens, thus forcing these sub-tenants, like the inmates of the suppressed monasteries, into the proletariat. (See de Gibbins’  Industrial History of England, p. 83, for confirmation on this point.)

By such means a large proportion of the country population was divorced from the soil, from their means of production, with the result that an army of proletarians was created – proletarians compelled, in order to live, to sell their labour-power to the highest capitalist bidder. The feudal lords were thus instrumental in paving the way for agricultural commodity production on a large scale, while at the same time supplying the capitalists of the towns with the wage-workers they so urgently needed.

The consequence of the wholesale expropriation of the peasantry in the 15th and 16th centuries in Western Europe, was general vagabondage, which threatened to overwhelm society, and, as a deterrent., cruel and heartless punishments were meted out to vagabonds and paupers, such as whipping, branding, slicing off ears, and even death. Marx sums up the horror of this treatment as follows (Capital, p. 761) :

 Thus were the agricultural people first forcibly expropriated from the soil, driven from their homes, turned into vagabonds, and then whipped, branded, tortured by laws grotesquely terrible, into the discipline necessary for the wage system.

But while more workers were thus set “free” than capital could employ, the supply of efficient workers fell behind the demands of capital, as during the period of actual manufacture proper, which led to a division of manual labour, production depended upon workers who had gained a certain proficiency (in many cases taking years to acquire) in the various part processes. Besides, much more capital was needed for wages than for tools and materials. Hence with the accumulation of capital the demand for wage labour grew rapidly, while the supply of competent workers proceeded in much slower ratio. Skilled workers were very scarce, and in great demand. The fact that they still retained the high notions of handicraftsmen made the wage-workers during the infancy of capitalism independent, defiant and often rebellious against the hard discipline and wretched monotony of capitalist production. Therefore, to obtain submissive workers, the capitalists had to introduce the same powerful authority by whose aid the peasants were expropriated, the land made private property, and the vagabonds and paupers tortured and murdered  – the authority of the State. The most stringent legislation was enacted to fix a maximum wage, extend the working day, and prohibit combination of the workers. (See Capital, Karl Marx, pp. 761-765; also Industrial History of England, de Gibbins, pp. 71, 106 and 118.)

And how hypocritical was the cry of liberty, fraternity and equality of the French industrial capitalists at the time of the French Revolution was proved by the fact that as soon as they had conquered political power (mainly by the assistance of the workers) these “just” people instituted a bitter campaign for the abolition of the remainder of common land and for the strictest prohibition of any kind of labour combination. (Capital, pp. 765-6.)

The foregoing historical survey explains how the proletariat, and subsequently a “surplus” number of wage-workers, were created and how they made possible the development or capitalism, which in its turn reproduced to an ever larger extent the proletariat and a “surplus” of wage-workers. Another important question remains: whence originated the wealth which provided the nucleus of industrial capital? The usurers’ and merchants’ capital inherited from ancient society played an important part in the middle ages. Ever since the crusades commerce with the near and far East had expanded, with the result that the merchants’ capital had become concentrated in few hands. But usury and commerce were not the only sources which supplied the nucleus of industrial capital. Readers desirous of an explicit exposition of the historical development bearing on this point should study the brilliant chapter relating to primitive accumulation in Marx’s Capital. Here a quotation from that work (p. 775) summing up the  various methods of this accumulation must suffice:

  The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England’s Anti-Jacobin War, and is still going on in the opium wars against China, etc. 

  The different moments of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But, they all employ the power of the State, the concentrated and organised force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with a new one. It is itself an economic power.

The foregoing brief outline of the brilliant history of the origins of capital demonstrate beyond doubt that primitive capital was the result of robbery, murder and rapine, and that therefore it is only to be expected that the orthodox political economists, the cat’s-paws of the capitalists, should lie and shuffle to the utmost degree in order to prove that capital is the outcome of thrift and industry, or the result of the “directive ability” of the capitalists. And there is no reason for surprise in the fact that, in the face of the overwhelming evidence as to the origin and development of capitalism furnished by Marx, the present orthodox school is averse to accepting the theory of evolution as the basis of its research. For pinned down to the glaring facts of history, it loses every vestige of argument against Marx’s theory of value and his explanation of the origin of capital. Unfortunately the misrepresentations and lies levelled by the bourgeois economists, politicians and diplomatists against the sound and irrefutable teachings of Marx, are still swallowed without much hesitation by the workers of this country. But we Socialists, as evolutionists and revolutionists, know that the failure of the capitalist quack remedies for the great social evils of to-day, must, in the long run, convince the bulk of the proletariat that their salvation is to be found in Socialism alone.

Hans Neumann