Cooking the Books: Blowing up the global financial system (2026)

The Cooking the Books column from the October 2026 issue of the Socialist Standard

On 24 July US Treasury Secretary Scott Bessent announced that the US  would be taking measures against any individual, bank or organisation that helped Iran engage in international trade but also secondary sanctions against any state that continued to trade with Iran. Asked why these measures weren’t going to be applied immediately, Bessent replied ‘Why would I want to blow up the global financial system?’. It was a good question, but an evasive answer even if it did at least show an understanding of what might happen if secondary sanctions were strictly enforced.

Capitalism depends on international trade, and international trade requires a generally accepted means of payment. Originally gold was this ‘universal equivalent’ that could be exchanged against any other product of labour of equivalent value. The pound sterling, the dollar and the currencies of the other major states trading and investing internationally were convertible on demand into a fixed amount of gold.

This Gold Standard was suspended in 1914 and never fully recovered, with Britain going off it in 1931 and the United States in 1933. It was revived after the Second World War in a modified form known as the Gold Exchange Standard where national currencies were tied to a fixed amount of a national currency that was convertible into gold at a fixed rate. That currency was the US dollar and was convertible at a rate of 1 ounce of gold = 35 dollars. It meant that a unit of a national currency could be expressed as a fixed amount of gold.

This system ended in 1971 when the United States stopped agreeing to buy gold at a fixed rate. However, the dollar remained the main means of international payment and the world’s main reserve currency, which central banks hold for international payments for trade and investment, and which they can use to buy their own currency to try to maintain its rate of exchange.

This puts the United States in a privileged position. Other states’ dollar reserves are held in the form of interest-bearing US Treasury Bills, which means that those states are in effect lending money to the US. In fact it is said that these loans not only cover the US’s trade deficit but also provide it with the money to sustain its military might.

It also puts the US in a position to use sanctions as a foreign policy tool, penalising or threatening to penalise individuals, businesses, and other states by excluding them from dollar transactions if they fail to comply. Trump evidently thinks that it is a good idea to use this power even though it undermines the dollar’s reliability. Whether he will use it to impose secondary sanctions against China for refusing to stop trading with Iran remains to be seen. Banning China from paying with dollars really would ‘blow up the global payments system’.

Other states are taking note of how, from their point of view, the US is abusing its position in the global payments system and have been taking precautions, such as by paying with other currencies and by holding more of their reserves as gold.

Goldman Sachs noted (28 August) that ‘central banks have been diversifying their holdings using gold; which is considered less likely to be frozen than reserves held in foreign currencies’.

Gold may no longer be the money-commodity but it is still a store of value because it’s a product of labour. No interest is paid on gold reserves and gold is not a stable store of value since its price fluctuates up and down as a result of capitalists speculating in it, but at least it is not an asset that another state can stop you using or use to exact compliance.

Cooking the Books: Prisoners of the market (2026)

The Cooking the Books column from the October 2026 issue of the Socialist Standard

‘Mounting costs are damaging business investment and undermine the government’s attempts to raise living standards, the CBI has warned’, wrote the Times (9 September), reporting on a document prepared by the employers’ association for the Budget. The CBI’s chief executive, Rain Newton-Smith, argued that:

‘When firms are forced to absorb higher taxes, energy bills, and regulatory costs, the consequences are weaker investment, job losses and less scope to raise wages’.

Employers are always complaining of increased costs due to taxes and stricter regulation, but there is more than a grain of truth in their argument.

‘Absorb’ is a delicate way of saying that, as they can’t pass on the extra costs by raising their prices, their profits have to take a hit. So what Newton-Smith is really saying is: ‘when firms make lower profits due to higher taxes …’ Reduced profits could indeed lead to ‘weaker investment’ (but they could also mean lower dividends for shareholders). Insofar as they do, that does weaken investment. So there is less economic growth. Which, as Newton-Smith pointed out, would undermine the government’s strategy of relying on growth to bring it a bigger tax revenue and so allow it to improve people’s living standard by spending more on education, health, housing and the like.

Irrespective of whether on this occasion the employers are bluffing in order to extract concessions from the government, there is the question of the wider relationship between government and private employers.  The American political scientist, Charles Lindblom, wrote an article in 1982 called ‘The Market as Prison’ in which he argued that, in an economy in which production was in the hands of profit-seeking private enterprises, government decisions were tied to the success of these enterprises. Not only that. If the government didn’t respect this — if it didn’t allow enterprises to make the profits they expected — it would be automatically ‘punished’ by the operation of the market.

His argument went like this: If a government raises taxes too much or imposes too many regulations, companies cut back on investment. This leads to job losses and financial crises. Voters blame the government for this, not the business owners. The government loses the next election. The politicians responsible are punished.

As Lindblom remarked in an earlier book:

‘To understand the peculiar character of politics in market-oriented systems requires, however, no conspiracy theory of politics, no theory of common social origins uniting government and business officials, no crude allegation of a power elite established by clandestine forces. Business simply needs inducements, hence a privileged position in government and politics, if it is to do its job’ (Politics and Markets, p.175).

The market works, he suggested, like an invisible prison in that it limits how far governments can go with social reforms that threaten profits that are business’s ‘inducement’. Anything radical is ruled out. It makes politicians afraid to challenge the ‘privileged position’ of the private sector. They tone down their proposals so as not to scare the market.

A recent example is Burnham’s choice not to appoint Miliband as Chancellor because business perceived him as somehow anti-business. Other examples are Starmer and Reeves’s pre-election statements about Labour being ‘the party of business’ and Burnham’s that his ‘socialism’ is of the ‘business-friendly’ variety.

Politicians in office must help business in its pursuit of profits and certainly not do anything to hamper it. They must serve the interest of business owners.

Cooking the Books: Housing: the market versus promises (2026)

The Cooking The Books column from the June 2026 issue of the Socialist Standard

One of Labour’s election promises in 2024 was to build 1.5 million new houses by the end of its normal term in office in 2029. Actually, it wasn’t a promise that the government would itself organise the building of this number of houses but a promise that it would create conditions in which profit-seeking housing ‘developers’ would.

This made achieving the 1.5 million target dependent on it being profitable for the house-building firms to build that many new houses. Which was why, in an article in February 2025, we expressed scepticism about Labour being able to meet its target as it had no control over which way the market would turn. ‘The 1.5 million target,’ we wrote, ‘will only be met if the market expands enough’. Now, analysts are concluding that the market won’t expand to that extent.

An article in the Times (4 May) by Tom Haywood headed ‘Mayday: distressing signs in housing data’ and subtitled ‘Labour’s 1.5m target may be dead in the water after a steep fall in property enquiries’ is a case in point. Noting that a survey of estate agents covering March ‘showed the steepest monthly drop in new buyer enquiries in almost three years’, Haywood wrote:

‘All of this is yet another blow to Labour’s ambitious target of delivering 1.5 million homes by the end of 2029, which now looks close to impossible. The government needs developers to be busier, not quieter, given that they will only build when they can sell at the price they need to make a decent return for shareholders’ (our emphasis).

Precisely. As further evidence, and more convincing than one month’s figures, Haywood noted that hedge funds are betting that the share prices of house-builders and their suppliers will fall in the future, an indication that these vulture capitalists are not expecting the companies they have targeted to make much profit in the next few years. The betting takes the form of ‘short selling’, in which the vultures borrow shares at their current price, sell them, buy them back at their expected future lower price, then return them to the original owners and pocket the difference. Money, apparently, is also to be made from houses not being built!

Faced with rising costs but falling demand, house-builders are unable to pass on to potential buyers all the increased costs and so ‘are struggling to make the economics of projects in the capital stack up’, but not just in London as one survey ‘found that it was not financially viable to build homes in almost half of England.’

There is not much the government can do to make building houses more profitable. Why, then, does the government not give money to local councils to build more houses, as certain naive reformists are demanding? Well, for a start, it hasn’t got the money to give or, rather, could only take it from profits either through increased taxes (these ultimately fall on profits) or borrow it at a higher interest rate that would have to be paid from profits. Which no government, under economic pressure to give priority to profit-making, as all governments of capitalism are, can do, at least not without making general economic conditions worse.

Under capitalism, where houses are commodities produced for profit, there is no way out. Houses will only be produced directly for use — simply for people to live in — when this is the aim of all production. And that is possible only when the resources to produce what people need cease to be managed by profit-seeking companies pursuing ‘a decent return for shareholders’ and become the common heritage of all under democratic control.

Cooking the Books: Fully automated luxury capitalism? (2026)

The Cooking the Books column from the September 2026 issue of the Socialist Standard

Elon Musk has said it again. That money will eventually become meaningless. This time he also gave a date: 2036. In an interview with the editor-in-chief of the Economist, Zanny Minton Beddoes on 20 July, he claimed that in ten years’ time advances in intelligent AI and robotics will have helped usher in an era of ‘such amazing abundance’ that money will have become meaningless. The work of production will be done by robots, leaving humans free to do work they enjoy — he gives gardening as an example — while having access to the abundance of wealth that the robots produce.

There may well be the technological advances he predicts but making something possible does not mean that it will actually happen. Under capitalism technological advances are only applied to production when they become the cheapest way of producing something. The complete robotisation that Musk envisages wouldn’t be cheap. He himself mentioned the cost in terms of electricity usage and computer chips.  As long as paying humans a wage to produce wealth for sale is cheaper, then that is what will happen, as it is now in almost every field of production and, given capitalism continuing, we counter-predict still will be in 2036. In fact, insofar as robotisation did replace human labour and create a large pool of unemployed workers, that would exert a downward pressure on wages that would cheapen the cost of employing humans, so slowing down the application of robotisation to production.

Then there is the problem of how Musk’s vision would come about. Minton Beddoes pressed him on this point, asking if he thought that it would be through the mass of displaced workers electing a left-wing government that would nationalise everything; which she implied was surely anathema to him as it was to the Economist. Musk evaded the question, re-asserting that there would be an abundance produced by AI-driven robots by 2036 and that this would lead to deflation unless something was done to maintain demand, as by the government writing cheques to provide everybody with a Universal High Income.

Quite apart from this meaning that there would still be money, it would require the election of a government that would do this. Unless, that is, he has in mind the cheques being written by him and the other tech bros. The obvious solution, assuming that the predicted robotisation and abundance was to come about, would be either to hand out to people what they needed or (better) let them take it. But that would imply that the robots and the rest of the means and instruments of production had already become commonly owned. A fully automated luxury capitalism is not possible.

However, in suggesting that a fully-automated moneyless society of abundance could come about Musk has undermined the argument that capitalism is the only game in town. As we pointed out on one of our Facebook pages:

‘Has Musk thought through the consequences of his “Money won’t matter in 2036” prediction? With a moneyless free-access society with the ability to produce more than enough of what everyone needs, why should an elite continue to own the means of production and distribution, decide how these are used, retain power over humankind because of this ownership, and continue to enjoy immensely superior living standards compared to everyone else?’

Cooking the Books: What is a commodity ship? (2026)

The Cooking the Books column from the September 2026 issue of the Socialist Standard

On 29 July Reuters reported that ‘thirty-nine commodity ships passed through the Bab el-Mandeb strait’. A ‘commodity ship’, what is that? Presumably a ship that carries commodities, but what is a commodity? According to Reuters, the ships were all carrying either crude oil or chemical products made from oil.

If you look through a paper like the Financial Times you will come across a page which, alongside a list of share and bond prices, shows the prices of ‘commodities’; besides oil and natural gas, such products as coffee, sugar, cocoa and wheat.

According to Wikipedia, a commodity is

‘an economic good, usually a resource that specifically has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a commodity good is typically determined as a function of its market as a whole. (…) Most commodities are raw materials, basic resources, agricultural, or mining products, such as iron ore, sugar, or grains like rice and wheat. Commodities can also be mass-produced unspecialized products such as chemicals and computer memory. Popular commodities include crude oil, corn, and gold.’

In this sense, commodities are goods that have a single world price. The price of some of them is included in financial publications because financial capitalists speculate on how these prices move as well as on share and bond prices. The fact that their price is fixed by the world market puts countries which depend heavily on producing and selling them at the mercy of world economic forces, with dire consequences when the price falls.

This is a narrower use of the term than in the 19th century when a commodity meant anything useful that has been produced for sale on a market. This definition was shared by Marx. In fact the opening lines of Marx’s Capital are: ‘The wealth of societies in which a capitalistic mode of production prevails appears as an ‘immense collection of commodities’; the individual commodity appears as its elementary form. Our investigation therefore begins with the analysis of the commodity.’

As a commodity is something useful that has been produced for sale on a market, it has an exchange-value in addition to its use-value. Not all useful things are commodities, for example things produced directly to satisfy some need or want, such as food produced by farmers to satisfy their own needs or taken from them to satisfy the needs of some exploiting class. Under feudalism and previous class societies most wealth — useful things — was not produced as commodities.

The two definitions of a commodity are not necessarily incompatible as one can be seen as a subset of the other and closer to the ideal form. However, for Marxian economics all commercial cargo vessels are commodity ships.

In socialism, wealth will not take the form of commodities as it will not be produced for sale but directly for use, both by other workplaces to produce their product and by individuals to use and consume. Ships will still transport natural resources and agricultural products from the part of the world where they were extracted or grown to another part where they will be used but they won’t be commodity ships, just tankers and bulk carriers.

Cooking the Books: ‘Raise everyone’s wages’ (2026)

The Cooking The Books column from the August 2026 issue of the Socialist Standard

‘Cut bills and raise everyone’s wages’ promised the Green Party in a leaflet put out for elections earlier this year (‘Stop Reform. Replace Labour. Vote Green’). Wage increases all round is more typical of Trotskyist candidates trying to get workers to follow them by dangling impossible ‘transitional demands’ in front of them. In this case it was an example of Polanski’s professed ‘ecopopulism’ which consists of making attractive promises on bread-and-butter issues to gather votes, in particular from those who normally vote for the Labour Party. But it is just as unobtainable as any Trotskyist carrot.

If ever the Green Party came to form the government and decreed that all employers should pay their workers more, the result would be an immediate financial and economic crisis since everyone’s wages could only be increased at the expense of overall profits and profits are what drive the capitalist economy. A lower economy-wide rate of profit would mean less investment and so a drop in production.

Derek Wall, a one-time speaker for the Green Party (before they had a Leader) and still a Green Party activist, described in 1990 what he expected to happen if a Green government came into office on a programme of putting the environment before profits:

‘A Green government will be controlled by the economy rather than being in control. On coming to office through coalition or more absolute electoral success, it would be met by an instant collapse of Sterling as “hot money” and entrepreneurial capital went elsewhere. The exchange rate would fall and industrialists would move their factories to countries with more relaxed environmental controls and workplace regulation. Sources of finance would dry up as unemployment rocketed, slashing revenue from taxation and putting up social security bills. The money for ecological reconstruction — the building of railways, the closing of motorways and construction of a proper sewage system — would run out’ (Getting There. Steps to a Green Society, p. 78).

As the Green Party accepts the ownership of the means of production by private corporations and individuals and doesn’t even have any state-capitalist pretensions, it is fair to assume that they would come into office, if ever they did, under capitalism as it is today. So Wall’s scenario is entirely plausible.

Wall envisaged this happening if the Green government was elected on the basis of implementing far-reaching measures to protect the environment. The Green Party doesn’t seem to say much these days about protecting the environment (the leaflet in question doesn’t mention it at all) but the same would happen if a Green government were elected on a pledge to make all employers pay their workers more. In fact, the immediate crisis would be economic and not just financial as Wall envisaged. Some employers would go bankrupt immediately. Others would lay off workers. Unemployment would soar. Production would slump.

The Greens are taking workers for fools, though we doubt many were fooled into voting for them because they believed that the Greens would, or even could, bring about a general increase in wages. Increased wages for everybody sounds good but is too good to be possible under capitalism.

Blogger's Note:

Derek Wall's 1990 book, Getting There. Steps to a Green Society, was reviewed in the September 1990 issue of the Socialist Standard.

Cooking the Books: Manchesterism (2026)

The Cooking The Books column from the August 2026 issue of the Socialist Standard

Until Andy Burnham, as Mayor of Greater Manchester, re-coined the word, ‘Manchesterism’ meant the economic doctrine of the Manchester and district cotton mill owners who favoured a policy of complete tariff-free trade and opposed state interference in industry, as expressed by Richard Cobden, one of the leaders of the Anti-Corn Law League of the 1840s. In England they were known as the Manchester School. On the continent their doctrine was called manchesterisme in French and Manchesterismus in German. It wasn’t that popular there as the local factory owners realised what was behind it — that their British rivals wanted wider access to continental markets for their cheaper goods.

Engels lived and worked in Manchester for over twenty years and was well aware of the views of the Manchester School, if only from socialising with them. Writing in English he used ‘Manchester School’, but in German he used the word ‘Manchesterismus’ as in a note he wrote about a May Day meeting in London in 1890 where he refers to new trade union members wanting ‘no more to do with the Manchesterism of the old Trade Unions’ (‘4 May’, Marx-Engels Collected Works, Volume 27).

When he re-coined the term, Burnham may not have been aware of its previous use and meaning, but others were and asked him if there was any connection. PoliticsHome (15 April) recorded:

‘Asked whether he identifies more with Richard Cobden or Friedrich Engels, he chooses Cobden, the Mancunian Radical and free-trader.’

There is not in fact that much in common between Burnham’s and Cobden’s Manchesterism. Cobden was a free marketeer while Burnham has defined it as ‘business-friendly socialism’. It is, however, revealing that when asked to choose between a capitalist free-marketeer and an opponent of capitalism in all its forms, Burnham identified more with the former.

What Cobden and Burnham have in common is that they both support capitalism. ‘Business-friendly socialism’ is an oxymoron but if you understand ‘socialism’ to mean Labourism then it becomes, like a ‘round circle’, a pleonasm. Starmer and Reeves expressed it more directly when they said that Labour was ‘the party of business’.

Insofar as Burnham’s Manchesterism is more than a populist slogan which sets workers in the North against workers in London and the South East, it seems to mean giving regional authorities more freedom to raise money locally and to attract capitalist investment to their region. In other words, a mere change in the political superstructure in the hope that it will stimulate ‘growth’. But what drives growth is the pursuit, and accumulation as new capital, of profits. If the prospect of a profit is not good, then investment won’t take place, whatever the political arrangements.

But what sort of investment? These days British capitalism lives not so much by producing surplus value directly in industry as by capturing, through selling financial and legal services, surplus value produced elsewhere in the world. Under Burnham, Manchester has been able to divert some of this from London to Manchester, but not everywhere will be able to do this.

The other type of capitalist investment that regional authorities can seek is ‘property development’. In fact the two businesspeople that the Times’s Economics Editor, Meerhen Khan, interviewed (25 June) who had found Burnham ‘business friendly’ were both in the property business. One said that ‘all the evidence suggests that he’s incredibly pro-business’ and that ‘his comments on the excesses of neo-liberalism were also a critique of its social impact on communities in post-industrial cities like Manchester rather than an outright rejection of market capitalism’.

So says a Labour-friendly capitalist.

Cooking the Books: Human capital (2026)

The Cooking The Books column from the July 2026 issue of the Socialist Standard

Announcing plans to cut nearly 8,000 jobs by using AI instead, Bill Winters, the CEO of Standard Bank, told reporters:

‘It’s not cost-cutting. It’s replacing in some cases lower-value human capital with the financial capital and the investment capital we’re putting in’.

He seemed to have forgotten that he was not addressing a board meeting but the general public. The resulting outrage at him calling his employees ‘lower-value human capital’ forced him to apologise. But he was actually accurately describing a fact.

What a capitalist firm has to set aside to pay its workers is part of its capital. You could call it ‘human’ capital as opposed to the capital invested in plant, equipment, machines, materials and power.  Or, expressed another way, it is the difference between ‘living’ labour and ‘dead’ labour, useful as it brings out that the other factors that capital is invested in have been produced by people working.

The terms Marx used to make this distinction were ‘variable’ capital and ‘constant’ capital, as set out in chapter 8 of Volume I of Capital:

‘The means of production on the one hand, labour-power on the other, are merely the different modes of existence which the value of the original capital assumed when from being money it was transformed into the various factors of the labour-process. That part of capital then, which is represented by the means of production, by the raw material, auxiliary material and the instruments of labour does not, in the process of production, undergo any quantitative alteration of value. I therefore call it the constant part of capital, or, more shortly, constant capital. On the other hand, that part of capital, represented by labour-power, does, in the process of production, undergo an alteration of value. It both reproduces the equivalent of its own value, and also produces an excess, a surplus-value, which may itself vary, may be more or less according to circumstances. This part of capital is continually being transformed from a constant into a variable magnitude. I therefore call it the variable part of capital, or, shortly, variable capital’.

So the money invested in buying the ability to work of employees is indeed a part of capital. Economically speaking, that’s what workers are and that’s what they are treated as.

Winters claimed that it wasn’t about cost-cutting. Of course it was. What would be the point of investing in AI if it wasn’t cheaper than having the work done by humans? What he was probably trying to say was that the board had decided to use a larger proportion of its capital as non-human capital than as human capital and that some of the latter was of ‘lower value’ to his business because it was costing more and so reducing profits.

He would be really ignorant if he thought that human capital in general was of ‘lower value’ to a capitalist business than non-human capital. The source of profits is precisely the extra value over and above its own value that living labour produces, the amount by which such capital ‘varies’ compared to its original value. But perhaps he was misled because he is running a bank and banks don’t actually produce anything but siphon off a part of the surplus value produced in industry.

The indignation of workers at being called ‘human capital’ brings out a key difference between the two types of capital. Humans can think and act and so can get together to end their economic status as a part of a capitalist business’s capital — by ending the whole economic system where production is in the hands of money-investing, profit-seeking businesses.

Cooking the Books: Economic leverage (2026)

The Cooking The Books column from the July 2026 issue of the Socialist Standard

‘Workers face worst squeeze on real pay since 2022’ was the headline of an article in the Times (20 May) by its Economics Editor Mehreen Khan. In the first three months of this year, average weekly earnings increased by 3.4 percent, which was more or less the same as the rise in the Consumer Prices Index. ‘However’, Khan writes,

‘while real incomes are on course to flatline this year, the jump in global oil prices is expected to push annual inflation close to 4 per cent in the coming months’.

If average earnings go up by 3.4 percent and consumer prices go up by 4 percent, that’s a reduction in real pay for workers. So why don’t they simply go on strike and push up wages to keep up?

The answer is that workers don’t have the power to put up the price of what they have for sale — their labour power — just because they want to, even to cover a rise in the cost of what they need to produce what they are selling. They, like all other sellers, can only charge ‘what the market will bear’. And, as Khan and the economists she quotes note, the current state of the labour market will not allow an increase:

‘Rising prices, combined with a weakening job market — where unemployment has risen to 5 per cent — means workers are losing their bargaining power to demand pay rises, economists said.’

One of the economists, Josie Anderson of the financial services group Namura, used the term ‘soft labour market’. This doesn’t mean what you might expect — surely, the current labour market is a ‘hard’ one as far as workers are concerned? — until you realise she was writing from the employers’ point of view as buyers of labour power. An AI definition of the term (cobbled together from other definitions) makes this clear:

‘A soft labor market (also called a “cooling” or “loose” labour market) is an economic environment where the supply of available workers outpaces the demand for labour. In this climate, hiring slows down, job seekers face stiffer competition, and employers regain negotiating leverage.’

Whether or by how much real pay goes up or down is a question of the respective bargaining strength of employers and workers, which in turn depends on the state of the labour market, but that is not something we are usually told by the media. Normally the story is of greedy workers causing inflation by forcing employers to agree to excessive wage demands.

Sometimes workers are in a favourable bargaining position and can maintain or push up real pay: when business is booming, finding a job is easy, and employers are making good profits; this ‘hard’ labour market for employers gives workers some ‘negotiating leverage’. That is the time to strike or threaten to strike. But the reverse of this is a ‘soft’ labour market for employers; it is they who are then in a stronger bargaining position, as at present and, according to one of the economists, for the fourth time ‘in less than two decades’.

We are talking here just about changes in bargaining leverage over the shortish-time price of labour power. Ultimately, over wages, the capitalist class have the upper hand as they monopolise productive resources. This gives them leverage to force workers to sell their labour-power for a wage in the first place. There is no bargaining about this; it’s just a fact of capitalist life that is imposed on workers. The way out for them is political not economic: to take political action to make the means of life commonly owned and democratically controlled by the whole community. Then there will be no labour market and no wages system.

Cooking the Books: All workers’ parties now? (2026)

The Cooking The Books column from the June 2026 issue of the Socialist Standard

‘We’re now the workers’ party’ proclaimed the headline of an article by Nigel Farage in the Times (10 May) following his party’s gains in the local council elections. A week or so earlier on May Day, Zack Polanski had declared that ‘the Greens are the new workers’ party’.

So, who are ‘the workers’? Capitalist society is divided into two basic classes: a class that owns the resources needed to produce what the members of society need to survive, and a class, without such ownership, whose members are obliged to try to sell their working skills to obtain money to buy what they need to survive. The vast majority of the population are members of this working class, irrespective of what job they do or whether they work in an office or an industrial unit.

Farage wrote about ‘guys wearing orange jackets working for local councils, paid-up trade union members, or the self-employed’, which suggests he is thinking more of manual and industrial workers. That is certainly a common usage of the term ‘working class’, defined by occupation rather than exclusion from ownership of productive resources. There is evidence that many such workers who traditionally supported Labour have switched to Reform.

But if a party is to be judged a workers’ party because of the number of workers who vote for it, any party which has substantial support would be a ‘workers party’ as the vast majority of voters are workers. The Tories, the Liberals and the Scots and Welsh Nats would be workers’ parties too.

Polanski’s claim that the Greens are now the workers’ party is based on promising measures to benefit workers in the workplace. He sounds like a Labour politician of yesteryear:

‘The reforms introduced by Margaret Thatcher nearly half a century ago began the long march downwards in the balance of power and wealth in our country — from those who produce and do the work to those who profit from it …. We will address the massive imbalance in our workplaces and give control back to workers’.

His claim that the Greens are the new workers’ party is in effect a claim that Greens are the new ‘Labour’ party. But why does he think that the Green Party would be any more successful in shifting the balance of power and wealth in favour of those who produce the wealth? Why does he think that the Labour Party failed to do this? And, incidentally, when did workers ever control their places of work?

The Labour Party started off as a trade union pressure group to get legislation passed that would benefit workers. At best it could be seen as a party that aimed to improve the position of workers within capitalism but, although some reforms can do and have done this, capitalism can never be made to run in the interest of the working class, because it is a profit-making system and profits come from the unpaid labour of those ‘who produce and do the work’. It is an anti-worker system and no government can change that.

Farage’s claim that his party is a workers’ party is laughable in view of its openly pro-capitalist policies. Polanski’s claim can be dismissed as vote-catching rhetoric by an opposition party that has no chance of being called to honour its promise — and, if ever it was in that position, it would fail just as the Labour Party has done and for the same reason. Capitalism simply cannot be made to work for the workers.

A real workers’ party is one that advocates political action to bring about the immediate common ownership and democratic control of productive resources.

Cooking the Books: Money problems (2026)

The Cooking The Books column from the May 2026 issue of the Socialist Standard

Central banks and ordinary banks are both concerned about the spread of ‘private credit’, as reflected in two headlines last month in the Times: ‘Dimon alert on private credit loans’ (7 April) and ‘Bailey warns of private credit “lemons”’ (11 April). Dimon is the chief executive of JP Morgan and Bailey is the Governor of the Bank of England.

‘Private credit refers to loans that are provided by private equity firms, asset managers or hedge funds rather than banks. The sector has grown rapidly since the financial crisis [of 2008], as tighter restrictions on traditional banks pushed riskier forms of finance into unregulated markets. Dimon estimated that lending from private credit funds to heavily indebted companies was worth about $1.8 trillion.’

These financial institutions may not be banks from a regulatory point of view but, economically, they are as they borrow money from one source and lend it to another.  As the other article, on Bailey, put it, ‘private credit funds … take money from investors and lend it to other often privately-owned companies’.

Some of those engaging in this type of ‘shadow banking’ have got into difficulty or even gone bankrupt through making bad loans. Seeing this, some of those providing the funds have been asking for their money back or to be moved elsewhere. The concern is that, if the whole sector were to be affected, this could provoke a more general financial crisis just as another form of subprime lending did in 2008.

This brings out that governments can’t control lending in the way they — and the textbooks — claim. Where there is a demand for loans and money to be made from lending, then that demand will be met, one way or another.

It also brings out that the money that is loaned doesn’t come from nowhere. Not that anybody claims that it does; everybody can see that it comes from those who confide their money to the hedge funds, asset management companies and private equity firms concerned.

A question to ponder, then, for those who think that banks can create money to lend out of thin air: if private credit firms, which are performing the same economic function as banks, can’t, how come that ordinary banks can?

The other news about money is the Bank of England’s decision to replace pictures of famous people on bank notes with pictures of animals. This of course is a trivial matter but it led Private Eye (3 April) to ask why so many bank notes are needed in the first place. It quoted figures showing that the number of payments using cash ‘has fallen roughly 70 percent from around £17bn in 2015 to fewer than £5bn, or less than 10 percent of all transactions, last year’ but that, despite this, the total value of bank notes in circulation has continued to go up not down, even taking into account inflation.

The answer Private Eye came up with is that it is ‘very likely to be tax evasion and money laundering’. This seems a reasonable assumption as, normally, if cash transactions fall, the economy will need fewer notes for its economic transactions and, if the amount in circulation is not reduced, the result would be inflation in the sense of a rise in the general price level due to a depreciation of the currency. The fact that the non-reduction in notes issued has not resulted in such inflation suggests that there is a real demand in the economy for certain cash transactions, in the event tax evasion and money laundering. There is still a certain irony in the government making more cash available for this.

Cooking the Books: Who does capitalism work for? (2026)

The Cooking The Books column from the May 2026 issue of the Socialist Standard

‘AI risks widening inequality, warns Fink’ was the headline in the Times (24 March) reporting on the annual letter from billionaire Larry Fink to the shareholders of his asset management company BlackRock. The caption under a photo of Fink read:

‘Larry Fink said that most people who work for an income would be left behind by those enjoying returns on investment.’

These weren’t Fink’s exact words but they expressed his meaning. They also point to the two classes of capitalist society — the working class (those who work for an income) and the capitalist class (those who enjoy returns on investment).

More accurately, the working class is composed of all those who have to work for an income to survive, and the capitalist class of those who have sufficient returns on investment to survive without having to work.

What Fink wrote was that over recent decades:

‘… the vast majority of wealth has flowed to people who owned assets, not to people who earned most of their money by working. Since 1989, a dollar in the U.S. stock market has grown more than 15 times the value of a dollar tied to median wages. Now AI threatens to repeat that pattern at an even larger scale—concentrating wealth among the companies and investors positioned to capture it. This is where much of today’s economic anxiety comes from: a deeper feeling that capitalism is working—just not for enough people.’

He may be exaggerating — he himself later pointed out that when there is some technological innovation the companies producing and adopting it benefit and that this is ‘not unusual’ nor ‘inherently problematic’ — but he has an axe to grind. He argues that widening inequality could be avoided if more people owned stocks and shares; if they owned shares in these companies they would benefit from the rise in their stock market capitalisation. And of course BlackRock will be there to manage their share portfolio, for a fee.

It’s the old fraud of a ‘people’s capitalism’ that the Tories and the Liberals over here used to propose — making capitalism work for more people by giving them a share in profits.

Quite a few workers do own shares, though not enough to bring them an income to allow them to live without having to work, like capitalists. Fink quoted figures showing that in the US more than half of households own shares and that this is ‘a distinctive feature of American capitalism’ compared with Europe where only a third of households do.

This doesn’t mean that workers in the US are better off than those in Europe. It simply means that more workers there hold their savings as shares compared to Europe where more hold theirs as savings in a bank. The source of both the dividends on shares and the interest on savings accounts is profits made in capitalist industry, only in the case of interest on bank savings in a roundabout way.

Banks and assets management companies are in competition for the savings that workers might have. In Britain the asset management companies are currently running an aggressive advertising campaign to persuade workers to entrust their savings to them. Workers can make up their own minds on this. Savings in a bank are secure but, as they say, shares can go down as well as up.

One thing, however, is clear: workers will never have enough savings, whether in shares or in a bank, to allow them to live without having to work for wages. After all, if they did, who would produce the profits? Or the wealth society needs to continue to exist?

Cooking the Books: AI, profits and Engels (2026)

The Cooking The Books column from the April 2026 issue of the Socialist Standard

City gents reading the business section of their Times (24 February) might have been surprised to come across a photo of Engels. Socialists would have been intrigued more by the caption ‘could AI create a new Engels pause, named after Friedrich Engels’. The term ‘Engels pause’ was not coined by Engels but by an economic historian, Robert Allen, to describe the course of economic development that led to the workers being in the situation described by Engels in his 1845 book The Condition of the Working Class in England.

Normally, a period of sustained capital accumulation should lead to some increase in working-class living standards, both because of employers bidding up wages as they compete for workers and because the increase in profits means they can afford to pay more. Allen noted that this had not happened in Britain during the period of rapid industrialisation from 1790 to 1840 as wages had stagnated. As in the period after 1840 wages did increase, Allen called this a ‘pause’ and named it after Engels.

Engels might not have regarded this as a compliment. He might have preferred the term ‘the Engels profit bonanza’ as, if wages stagnate in a period of economic growth, that means that profits will be more than they otherwise would.

The article in the Times, by its former business editor David Wighton, discussed two views of the possible economic impact of AI. He quoted a former Google executive as saying that ‘the most likely outcome is an economy in which corporate profits explode as labour costs fall, while workers’ share of output shrinks’. In short, another ‘Engels pause’. The opposite view was put by Jamie Dimon, the head of the bank JP Morgan Chase, who is quoted as saying that while AI will increase profits, ‘this isn’t like you’re going to build three points of margin and you get to keep it — you don’t’. Competition sees to that.

Who is more likely to be right? Critics of capitalism might be tempted to agree with the one-time Google executive as it would be another good argument against capitalism. However, Dimon has a point. His view reflects more accurately what happens when one capitalist enterprise makes extra profits by reducing its costs through some innovation and outcompetes its rivals.

‘An enterprise or industrial sector with an above average level of productivity (…) economizes in its expenditure of social labour and therefore makes a surplus profit, that is to say, the difference between its costs and selling prices will be greater than the average profit. The pursuit of this surplus profit is, of course, the driving force behind the entire capitalist economy. Every capitalist enterprise is forced by competition to try to get greater profits, for this is the only way it can constantly improve its technology and labour productivity. Consequently all firms are forced to take this same direction, and this of course implies that what at one time was an above-average productivity ends up as the new average productivity, whereupon the surplus profit disappears. All the strategy of capitalist industry stems from this desire on the part of every enterprise to achieve a rate of productivity superior to the national average and thereby make a surplus profit, and this in turn provokes a movement which causes the surplus profit to disappear, by virtue of the trend for the average rate of labour productivity to rise continuously’ (E. Mandel, An Introduction to Marxist Economic Theory.)

That’s the likely outcome of the spread of AI to production and business. A temporary increase in profits for the firms that are the first to use AI in their branch of activity but no ‘profit explosion’ in the sense of a general increase in profits for all firms which eventually adopt it.

Cooking the Books: Outdated measures (2026)

The Cooking The Books column from the April 2026 issue of the Socialist Standard

The Communist Manifesto was published on 21 February 1848. The Morning Star, the paper run by nostalgics for the former USSR, chose that date this year for an editorial headed ‘The Communist Manifesto is as relevant today as it was in 1848’. Yes, most of it is. It is a brilliant description and analysis of the development of capitalism, its role in history in bringing into existence a working class struggling against exploitation and to replace capitalism with a society based on the common ownership of the means and instruments of production. It remains today a good introduction to socialist ideas which those interested in understanding the society we live in should read.

However, it was not this part that the Morning Star considered ‘relevant today’ but the ten measures listed at the end of Chapter 2, which include: abolition of property in land and application of all rents of land to public purposes; a heavy progressive or graduated income tax; centralisation of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly; centralisation of the means of communication and transport in the hands of the state; extension of factories and instruments of production owned by the state; and free education for all children in public schools.

The Morning Star sees them ‘as a series of direct demands which challenge the material basis of existing society’, as reforms which the working class should campaign for under capitalism. But this is a misinterpretation as the context, both textual and historical, makes clear. The preceding paragraphs indicate that they were measures that the working class should implement after it had won control of political power. One of the measures — the ‘confiscation of the property of all emigrants and rebels’ — doesn’t make sense except in that context.

The historical context is the uprising that had broken out in Germany against autocratic dynastic rule. Marx and Engels thought that this ‘bourgeois revolution will be but the prelude to an immediately following proletarian revolution’. In other words, they were measures for the working class to implement on winning political control in 1848. This didn’t happen and, in exile in London three years later, Marx and Engels recognised that they had been mistaken and that this was never really on the cards. So the listed measures weren’t relevant even in 1848, let alone today 178 years later.

Some of them, such as a progressive income tax, a state bank, railway nationalisation, and free education, have since been implemented under capitalism; which rather undermines the Morning Star’s claim that they ‘challenge the basis of existing society’. In fact, that claim reveals that those behind it envisage existing capitalism being gradually transformed into state capitalism by a series of reforms and nationalisations.

But the killer quote that disposes of the Morning Star’s misinterpretation is what Engels wrote in the Preface to the 1872 re-edition:

‘The practical application of the principles will depend, as the Manifesto itself states, everywhere and at all times, on the historical conditions for the time being existing, and, for that reason, no special stress is laid on the revolutionary measures proposed at the end of Section II. That passage would, in many respects, be very differently worded today’ (Our emphasis).

Today of course they would be even more differently worded, not that it would make sense to draw any up today since we don’t know what the conditions will be in which the working class will assume control of political power. But we can safely say that they won’t need to include any of those listed in 1848.

Cooking The Books: Capitalism to blame not ‘neoliberalism’ (2026)

The Cooking The Books column from the March 2026 issue of the Socialist Standard

Adnan Hussain, MP for Blackburn, one of the four pro-Gaza MPs who are allied with Corbyn in the Independent Alliance parliamentary group, was as such one of the provisional leaders of Your Party. He subsequently quit Your Party but is still a member of the Independent Alliance and he still agrees with the new party’s basic position that capitalism can be reformed so as to benefit the many.

The Socialist (the paper of one of the remnants of the Militant Tendency) reported that he told a meeting in Blackburn on 30 August:

‘“Neoliberal policies have destroyed the unity of communities”, creating loneliness, isolation, and mental ill-health. He said that the new party will fight for the funding needed for housing, health, education, and transport, and to reopen youth clubs and community centres’.

Normal reformist rhetoric, encouraging the mistaken belief that capitalism could be made to provide adequately these essential services that people need.

That it is ‘neoliberalism’ that is the problem has been a constant theme of his tweets. For instance, this on 23 October:

‘Capitalism, unrestrained, measures everything, even human life, by its economic yield. Neoliberalism then sanctifies this as “freedom.” The result? A society where dignity is traded for productivity and compassion is seen as inefficiency’.

This suggests that it is neoliberalism — unrestrained capitalism, or giving capitalist enterprises freer rein to pursue profits as they see fit — that results in this, and that state intervention to restrain capitalism could prevent it. But it wouldn’t.

All the things he criticises — communities destroyed, people treated as things — have happened, but because of capitalism. Governments have had to give priority to profit-making as that is what drives the capitalist economy. Public services and amenities are paid for out of taxes and taxes fall in the end on profits. So, after the post-war boom came to an end in the mid-1970s, governments had to decide between maintaining these services and encouraging profit-making. It wasn’t a real choice as, capitalism being what it is, a system driven by profit, they had to give priority to profit-making.

Corbyn himself always criticises neoliberalism rather than capitalism itself. But it is not the ‘neoliberal capitalist order’ that is the problem. It is the capitalist production-for-profit system as such. Neoliberalism is not a system but a policy forced on governments, particularly since the 1980s, of reducing state intervention in the economy. A return to more state intervention won’t prevent capitalism measuring everything by its ‘economic yield’ or putting productivity before dignity and efficiency before compassion. No action by a reformist government can change that. In fact, any serious attempt to restrain capitalism from giving priority to profit-making and to spend more on meeting people’s needs would provoke an economic downturn as the search for profits is what drives the economy.

Cooking The Books: What Epstein reveals (2026)

The Cooking The Books column from the March 2026 issue of the Socialist Standard

Epstein was not just a pimp for the more dissolute members of the global elite. As Gerard Baker wrote in his column in the Times (6 February), headed ‘Epstein saga is a fable of modern capitalism’, ‘sexual scandal aside, the attraction of the financier was that he ran a global network of the rich and powerful’.

Epstein’s email contacts, Baker suggested, would be a representative sample of those in top positions in government, finance, law, media, academia and big tech, ‘the most advantaged individuals [who] moved around a borderless world’ and ‘who have wielded the controlling influence over our lives, our culture, our jobs and much else for most of the last quarter century’:

‘Thanks to Epstein’s crimes, we have been given a glimpse into the way the liberal capitalist global order has worked. And in the process, perhaps, we can see even more clearly why so many people want to sweep it away.’

There is a temptation, amongst those who want this, to see a network like Epstein’s as part of some set-up whereby some global elite make decisions about what happens in the world. Some have not resisted this temptation and have concluded that the world actually is run by a global elite who plan what to do at their meetings in Davos or at the Bilderberg group or on Epstein’s island. Baker adds some credence to this when he wrote of them ‘wielding the controlling influence over our lives’.

In reality, they are not fundamentally in control of what happens under capitalism. They don’t plan booms and slumps or wars or revolutions. Some of them, in their role as the government of a state, do secretly organise — conspire, if you like — to bring about political changes in other countries in the interest of their particular state or group of states. Stock exchange speculators conspire to influence share prices. But nobody controls, or could control, the way the capitalist economic system works; that depends on impersonal market forces which impose themselves, even on the members of the global elite. That’s ‘the controlling influence over our lives’.

Baker corrected himself when he went to write that ‘Epstein enticed them into his web not with his harem of adolescent girls but … the chance for a few words in the ear of someone who could make you even richer, even more powerful; a little inside info, a potential deal…’ That is the limit of what goes on, not some grand conspiracy.

To some extent the situation resembles that described by Marx on the eve of the overthrow of French monarchy in 1848 when under the dominance of the ‘finance aristocracy’:

‘the same prostitution, the same blatant swindling, the same mania for self-enrichment – not from production but by sleight-of-hand with other people’s wealth – was to be found in all spheres of society, from the Court to the Café Borgne. The same unbridled assertion of unhealthy and vicious appetites broke forth, appetites which were in permanent conflict with the bourgeois law itself, and which were to be found particularly in the upper reaches of society, appetites in which the wealth created by financial gambles seeks its natural fulfilment, in which pleasure becomes debauched, in which money, filth and blood commingle. In the way it acquires wealth and enjoys it the financial aristocracy is nothing but the lumpenproletariat reborn at the pinnacle of bourgeois society’ (The Class Struggles in France: 1848 to 1850).

But even if people like them were swept away (as they were in 1848) there would still be capitalism, the real problem and controlling influence.

Cooking the Books: No Marx without Adam Smith? (2026)

The Cooking the Books Column from the February 2026 issue of the Socialist Standard

Next month is the 250th anniversary of the publication of Adam Smith’s The Wealth of Nations. In the run-up to this, the Economist (18 December) carried an article by its ‘senior economics writer’, Callum Williams, in which he suggested that Smith had been ‘misinterpreted and his influence overstated’.

His case was that Smith wasn’t the originator of the ideas he expressed, that he copied from others and was a bad writer, and that he also made mistakes:

‘In the “Wealth of Nations”, he argued for the “labour theory of value” (the idea that the amount of work that goes into a product determines its price, rather than how useful that product is). This theory distracted economists for decades and laid the groundwork for Marxism. Exploitation, in Marx’s view, arose from the difference between how much workers had laboured to create a good and what they were paid for producing it. Without Smith, there could have been no Marx’.

The last sentence is ridiculous. There were others before Smith who put forward the view that the exchange-value of a product of labour depended on the amount of labour required to produce it. In a footnote early on in the opening chapter of Capital, Marx’s quotes Benjamin Franklin as having pointed out in 1729 that:

‘Trade in general being nothing else but the exchange of labour for labour, the value of all things is … justly measured by labour’.

Prior to Capital, in A Contribution to the Critique of Political Economy (1859), Marx credited Franklin as the person ‘who for the first time deliberately and clearly … reduces exchange-value to labour-time.’

In a podcast on the same subject on 1 January, Williams attempted to refute the labour theory of value by saying that, on the contrary, ‘what determines the price of a good is … how much demand there is for that good and how much of that good is supplied by the market’. This differs from what he had written in his article that a product’s price is determined by ‘how useful that product is’. That argument is easy to refute —there are a lot of things that are more useful than gold or diamonds yet gold and diamonds have a higher price; which, clearly, must have something to do with the fact that it is more difficult (takes more work and time) to produce gold and diamonds than it does to produce the other, more useful products.

Supply and demand determine the short-term market price but, in the longer term, supply will only continue if the suppliers — profit-seeking capitalist firms — cover their costs and make a profit. In bringing about the longer-term price the play of market forces will take into account the labour-time required to produce the product from start to finish.

Not that Marx did argue that under capitalism products exchanged at their labour-time value. He was well aware that the pursuit of profits resulted in this happening only accidentally but that the prices at which products sold could only be explained on the basis of a labour theory of value.

The reason why economists came to reject any labour theory of value (Smith’s as well as Marx’s) was that it led to the conclusion Marx reached who, said Williams, based ‘his entire theory of exploitation on the labour theory of value’. It was, he said, ‘precisely because Smith was so influential, his wrong-headedness about the labour theory of value was a big problem.’

This problem was solved, says Williams, when economic theory ‘gets wrestled back through the correct understanding of value by the marginalists at the end of the 19th century’. How convenient for the exploiters of labour, but it turned academic economics from a science into apologetics for capitalism.

Cooking the Books: Wages for housework? (2026)

The Cooking the Books Column from the February 2026 issue of the Socialist Standard

The BBC News website carried an article on 9 December headed ‘A wage for housework? India’s sweeping experiment in paying women’ which described schemes in various Indian states under which some poorer women were given a regular monthly payment by the state. The International Wages for Housework campaign trumpeted this as a victory for their campaign, issuing a media statement that ‘after more than 50 years of campaigning, wages for housework is becoming a reality – in India and elsewhere’.

They date the beginning of their campaign to when Selma James raised their demand at a women’s liberation conference in Manchester in March 1972 but went further back to ‘the work of Eleanor Rathbone, the Independent MP who won Family Allowances (now Child Benefit) in the UK’. The payments under the Indian schemes are not ‘wages’ at all but, like family allowances and child benefits, a handout from the state. The whole ‘wages for housework’ campaign is basically a campaign for this social reform; not necessarily a bad reform, as paying the money directly to the woman rather than her husband is an advance. Even so, it is still a social reform and, as with all reforms that involve the state paying workers money, one that has unintended consequences.

When, during the last world war, a scheme for family allowances became practical politics thanks in large part to Eleanor Rathbone, the Socialist Party brought out a pamphlet Family Allowances: A Socialist Analysis which argued that ‘family allowances will lower the workers’ standards of living instead of raising them’. This was based on what wages are and what ultimately determines their level.

Wages are a price of what workers have to sell: their mental and physical energies. Their amount reflects the cost of buying the goods and services required to produce and reproduce this. In the days before family allowances, this included an element to raise future workers and so covered, at least partially, the cost of maintaining a ‘housewife’ and bringing up children. The economic effect of paying family allowances would be to reduce the amount that the employer needed to pay workers to reproduce their labour power and raise a family. As the pamphlet put it:

‘Once it is established that the children (or some of the children) of the workers have been “provided for” by other means, the tendency will be for wage levels to sink to new standards which will not include the cost of maintaining such children’.

Thirty years later we made the same point in commenting on James’s pamphlet Women, the Unions and Work. Her demand for ‘wages for housework’, the May 1973 Socialist Standard said, ‘seems a little naive’:

‘Wages are the price for which workers sell their labour power. That price will be generally sufficient to keep a worker, and his family, at a socially accepted standard. Payment made for housework, like family allowances or free transport, would act as a brake on wages’.

The payments to poor women in India are likely in time to put a brake on wages too, even if, through being paid directly to women, they represent an improvement for the women concerned in making them less dependent on a man.

Selma James had been a Trotskyist (though of a group that recognised that Russia was state capitalist) and quoted Marx, but Marxian economics was not her strong point. Marx would have advised her to change the reformist slogan ‘Wages for Housework’ to the revolutionary watchword ‘Abolish The Wages System’. Then both men and women would have access on the same basis to what they needed to live and enjoy life.

Cooking the Books: The best laid schemes (2026)

The Cooking the Books column from the January 2026 issue of the Socialist Standard

Before the budget on 26 November speculation was rife as to what might be in it. In opposition Rachel Reeves, as Shadow Chancellor, had promised that the priority of a future Labour government would be growth, growth, growth.

But what is ‘growth’? She seems to mean a growth in Gross Domestic Product which is a measure of the inflation-adjusted price of all the goods and services produced in a year. The trouble is that this is not something that a government can bring about. As she herself pointed out in her budget speech, ‘private investment is the lifeblood of economic growth’. So, her plan is to create the best conditions for private investment for profit, one of which in her view is government investment in infrastructure projects. This, however, has to be paid for. As she doesn’t want to rely too much on borrowing she has had to increase taxes. Not that increased government investment will necessarily encourage more private investment; it might for a short while but in the end the only encouragement is the prospect of making a profit.

Capitalism is a system of production for profit where the aim is not growth as such but making profits which, when reinvested, bring about an increase in the production of wealth. It is a result of what Marx called ‘the accumulation of capital’.

Marx himself pointed out that, when it occurs, the more rapid the accumulation of capital, the more jobs there are and the higher are wages due to employers competing for workers. These days, it would also mean an increase in tax income for governments. Reeves seemed to be making the same point when she described ‘economic growth’ as ‘the best means to improve wages, create jobs, and support public services’.

But there is a difference. Marx never expected the accumulation of capital to be continuously onwards and upwards. He saw the process of capital accumulation as ‘a series of periods of moderate activity, prosperity, over-production, crisis and stagnation’ (Capital, vol 1, ch. 15, section 7). Despite all the evidence to the contrary, Reeves believes — and not only her but all the parties that aspire to manage capitalism — that, if the government gets it right, there can be a permanent boom.

A government might be lucky and be in office during the ‘prosperity’ phase of the cycle but not even the government’s own advisers at the Office for Budgetary Responsibility are predicting that. They are currently estimating that ‘growth’ over the next four or five years will be only 1.5 percent a year. Which is slow by previous capitalist standards and won’t bring about many more jobs or higher wages or enough tax revenue to honour Labour’s promises to improve public services.

In any event, the OBR forecasts are little more than a guess. The fact is that economic forecasts, especially over a longer period, are hardly worth the paper they are printed on as nobody can foretell how the capitalist economy will move. If they turn out to be correct, it will have been a lucky guess.

What will happen in practice over the next few years is that the government will merely react to whatever the workings of capitalism present it with. They will just be muddling through, or, to use the nautical language governments do when they seek to explain their failure by having to ‘face strong headwinds’ or being ‘blown off course’, they will just be navigating by sight.

Cooking the Books: Capitalist musings on money (2026)

The Cooking the Books column from the January 2026 issue of the Socialist Standard

Some capitalists have been philosophising recently on their favourite subject — money. One-time investment banker Matt Levine titled his ‘Money Stuff’ column in Bloomberg News (24 November) “Leave the Gold in the Ground”.

Gold is no longer used as the currency — what Marx called the ‘money commodity’ — as it was for millennia. It is, however, still a store of value. ‘Even now’, Levine pointed out, ‘gold is an important reserve asset, and people hold it in their financial portfolios in the form of gold futures, gold exchange-traded funds, etc’. What is being traded are titles to the ownership of gold. Those who buy and sell these are speculating on how the price of gold will move in the future. The gold itself is stored underground in a safe vault. When these titles are exchanged what happens is just that an entry of who it belongs to is changed in a database. The gold stays where it is.

Levine discusses the case of a group of capitalists who, noticing this, have come up with the idea of selling titles to gold that is still in the ground. They are either fools or knaves as they are assuming that unmined gold in the ground is as valuable as gold bars in a vault. But, of course, it is not. Unmined gold has no value precisely because it hasn’t been mined, though the land under which it lies will have a price based on what royalties might be received were it to be mined. Gold bars in an underground vault have value only because they have been mined, refined, made into bars and transported, their value reflecting the amount of labour that has had to go into doing all this.

What is perhaps surprising is that this is the explanation put forward in a news site for capitalists, surprising because it is an application of the labour theory of value that pro-capitalist economists teach is nonsense. After noting that ‘that modern finance creates layers of abstraction on top of real-world activity, and sometimes those abstractions become unmoored from the reality’, Levine applies this not just to titles to gold but to the shares in any business. As an example he takes Amazon:

‘A share of Apple Inc. stock encapsulates all of the labor and creativity that went into inventing the iPhone and manufacturing it and selling it and building app stores and everything else; all the factories and offices and decades of decisions are all reflected in the tradeable electronic token that is a share of stock’.

Another capitalist who has been philosophising on money is the richest person in the world himself, Elon Musk. Fox News reported him as telling a business forum on 17 November:

‘“If you go out long enough, assuming there’s a continued improvement in AI and robotics, which seems likely, the money will stop being relevant at some point in the future,” Musk said. He added there will still be constraints on power, such as electricity and mass. “The fundamental physics elements will still be constraints, but I think at some point currency becomes irrelevant,” Musk said’.

Musk seems to be embracing here the FALC — Fully Automated Luxury Communism — thesis. Improvements in AI and robotics will certainly make socialism easier but it is not that which will make money irrelevant. What will is only the conversion of the means of production from the private property of the few into common property of all. And that doesn’t have to wait for ‘full automation’, nor will it come about automatically through advances in technology.