Studies in Economic Fallacy (1930)

From the October 1930 issue of the Socialist Standard

Invest your savings—Don't "save” them.

Mr. Robert McLaurin has been writing in the Labour press, advocating that money should be turned into productive fields. The way to do it, he says, is to stop the banks paying interest on deposit accounts, and so compel the depositors to invest their “savings” in industry. The fact that we are suffering from over-production of goods is ignored by this finance reformer. If more goods were produced by more concerns being started, the situation would simply grow worse. Goods are produced for sale to-day, and as the market is already glutted in almost every trade, the suggested reform would not touch the situation. This writer savs “the system worked with comparative smoothness” until 1914 ! Poverty, insecurity, and unemployment of wage-slaves is apparently a post-war condition to this reformer !

Proudhon and his modern followers who advocate “Free Banking,” the currency cranks like Arthur Kitson, and the Labour crowd who want money reform, are all Utopians who seek a commercial competitive system without the laws of commerce or of competition. Most of them imagine that goods should be money and that banks should allow every owner of goods credit for the amount of his wealth. If the goods cannot find a market in exchange for the universal means of circulation—money—how can they find a market any easier by being put in pawn—if such a childish notion ever was adopted?

* * *

Will reduced wages mean more work?

Another “short cut to more jobs” is being advocated by some employers in the press. The simple scheme suggests that the money paid to “out of works” by the Government should be handed to employers instead, to enable them to capture orders from abroad. Every unemployed man engaged by the employers will get the difference between the so-called “dole” and his usual wage, made up by the employer. Present wages prevent contracts being obtained against foreign competition—so runs the cry! The profits, of course, are quite in order! Such a pass has capitalism come to, that the competition employers adore prevents them being able to pay a subsistence wage ! Does it? They don’t suggest that capitalism should be abolished, but that the ruling-class as a whole should subsidise those employers who cannot pay wages and profits out of their business.

Seeing that these same people complain that foreign countries subsidise industries and pay “low” wages, where will the process of cutting wages end ? The miners and many other workers in recent years have had such low wages that poor law relief has had lo make them up to subsistence level. Did that prevent unemployment growing amongst them? And when the rationalisation and electrification of foreign industries is copied here more and more, the unemployed will increase. The countries of “low wages” abroad have a growing unemployed army. “Low wages” hasn’t saved them.

The general adoption of the policy of supplementing part wages with so-called “doles” simply means that wages will be pushed down throughout the country. The employers who have not the capital to modernise their plants cry out for more wage reductions, and in the meantime the larger concern crushes or absorbs them.

* * *

The economic trend.

It is a plausible catch-cry to shout “wages determine prices,” but economic facts dispel that moonshine. Ford’s Motors in their last annual report showed that where they paid the highest wage in Europe (in Denmark) output was greatest, and where they paid the lowest (Belgium) the output was least. The real basis of world competitive prices is the amount of labour that it takes on the average to produce articles with modern methods. Where manufacturers, like Ford, have the capital to buy the latest and biggest quantity of machinery, they can reduce the time taken to produce goods, and so sell for less.

The manufacturers who cry out for subsidies to help them pay wages, won’t face the issue that production for the world market is wiping out many competitors and producing the combine or trust in every field. The successful firms have won by reducing costs, which means reducing the numbers of workers required to produce a given quantity of articles. Therefore, the chronic unemployment of to-day becomes a fixed feature of capitalism. Every country and every manufacturer is out for trade, and therefore profit, and in the wild scramble the workers do not count. They just produce the wealth and under the best conditions get just about enough of it back to keep them alive.

* * *

Shall we demand "lower prices”?

Labourites and “short-cut Socialists” are demanding cheaper goods. Consumers’ Bills and anti-profiteering campaigns are on the road to cut prices. These people are chasing a Will-of-the-wisp. “Reduce the cost of living” may be a good battle-cry for those who are consumers only, but the working class is a producing class. It does all the producing, but only a part of the consuming. How much the workers consume is determined by their wages. And what determines their wages? The basis of wages is the money needed on the average to keep a worker and his family. The number demanding work and the number of jobs available decides the daily fluctuations in wages, but the average level of wages is the cost of living of the worker. When the official index figures of the cost of living show a reduction, wages are reduced accordingly. In the daily Press of July 23rd we read that the Civil Servants have just been notified that their salaries are to be reduced, as the cost of living has fallen. Therefore, the campaign for cheaper goods will simply result, if successful, in reducing the worker’s wage. The money wages are only nominal—the buying power is the real wage. If the necessaries of life are “high,” wages may be raised to cover the increase, but the purchasing power of wages is always related to the cost of living of the workers. However cheap goods are, wages will always represent but a fraction of the wealth made by the workers.

The cry for cheapness to-day overlooks the economic tendencies of the system.

* * *

The march to monopoly. 

On the one side mass production serves to produce cheaply, but alongside of that is the rising power of monopoly, rings, and trusts to corner the supply and exact monopoly prices. Many manufacturers are against the prices of necessaries being raised and so driving them to pay higher wages. The general tendency of modern capitalism, however, is to concentrate the great sources of wealth and the products into fewer and fewer hands. If nature and man are very productive, and the supply grows quicker than the demand, the owners scheme to restrict production and actually to destroy products, in order to keep prices high enough to ensure their growing’ profits.

Centralised production on a large scale certainly works towards reducing costs, but the great combine owners are not interested in usefulness or cheapness as such—they are interested in profits. Once they have cut out the competitors, they plan “to get all the market will bear” by controlling the market. There is, of course, a limit which they cannot go beyond without reducing the amount they can sell.

The Consumers’ Leagues and similar bodies are powerless to effect their wishes, whatever Bills are passed to stem the economic tide. The concentration of wealth and the combine are the natural outgrowth of commercial competition, and can only be dealt with effectively by abolishing private and class ownership.

One other factor in “high” prices is the falling value of gold due to modern improvements in working gold-bearing ore. Thus economic development and economic laws of capitalism cannot be dodged by reform legislation. They must be understood—and then we’ll fight for Socialism.

* * *

The economics of "Labour.”

David Kirkwood, of the Clyde, Labour M.P. and I.L.P. chieftain, has a mental upsurge. He has discovered how to stop the downward march of workers’ conditions. He has brought in a Bill to make it illegal for employers to reduce wages. A Government in charge of the capitalist system of profit and exploitation is asked simply to decide “No more reductions in wages.” Employers must not cut the workers’ pay. Wages will then automatically stay put. Wages will fluctuate no longer downwards—but only upwards. Thus poverty will be grappled with.

A little economic knowledge would be dangerous to a Labour M.P. We will, however, try a small quantity.

Under this system an employer is not compelled to employ the workers seeking work. The number of men and women seeking work being greater than the number of jobs, wages tend downwards. The market—the labour market—is the place where competition for work causes men to accept the master’s terms. Having no wealth, the workers cannot hold out. Does Kirkwood’s Bill abolish that market and its competition? Does it wipe out unemployment? Does it abolish the lack of property—the force that drives men to work for others for a fodder wage? Does it alter the fodder basis of wrages ?

No. Kirkwood, playing with effects, would like to abolish the effects of capitalist system whilst leaving the system running. It is more sensational, vote-catching, and sounds drastic; it is easier than explaining capitalism and advocating Socialism.

* * *

Economic laws override statues.

A law to stop wages going down ! A war might do it for a time, whilst the demand exceeded the supply of workers, but a law under capitalism cannot stop the employer buying better and more effective machinery whenever wages tend to rise, and thus pushing numbers out. The rationalisation which Kirkwood criticises (New Leader, July 18th) would play havoc with his “law.” Centuries ago, laws were passed making it criminal to pay more or less than the wage fixed by statute. The plague had swept huge numbers of workers away, and wages rose rapidly. Conditions made the statute a dead letter. The cry of employers for labourers and the favourable situation for the men made reductions of wages impossible. Too many employers were willing to pay more than the legal wage.

When hunger drives hard, men and women go back to work even at terms (fixed with Labour Government’s assistance) involving ten per cent. reduction, as in the woollen trade. What has happened to the Minimum Wage Laws “won” by miners from Lloyd George? Where are the miners’ work and wages to-day? David Kirkwood, like his fellow Labour Members, should stick to “Pleasant Sunday Afternoon” meetings at the kirk.

* * *

Is shorter hours the remedy?

Mr. Geo. Hicks, of the General Council of the Trade Union Congress, has been telling his Building Trade Union of the effects of rationalisation on the building-trade. One hundred and fifty thousand are out of work in this industry, but more machinery and efficiency schemes are being used every week to get the work done “cheaper.” “A shorter working day,” he told them, would absorb some of the unemployed, and those pushed out by machinery should be given alternative employment or fully maintained.

Hours have been continually shortened in the builders’ craft, but has that absorbed the unemployed? The Union that can’t win a strike over some detail of their conditions is not in a position to win full maintenance. Mr. Hicks, like most Labour leaders, is busy supporting the Labour Government, which carries on capitalism and advocates the wholesale rationalisation which he complains about to his members.

Labour leaders do not tell their members the truth that the only way out is to abolish this system by winning political power for Socialism. It’s a much easier and more profitable way for leaders to keep the workers ignorant. Then they can be led.

* * *

A lesson for trade unionists.

Whilst the Trade Union leaders are busy as Labour M.P.’s supporting rationalisation, which will add to unemployment, the Unions beg the members not to add to the financial burden of the Unions by temporary stoppages, etc. The Boot and Shoe Union used to boast that by a “no strike” policy of conciliation they had won the best conditions. Now they complain that unemployment of their members in this machine industry is draining all their funds. The Cardroom Amalgamation of Lancashire has issued a circular to its members, warning them that the scales of contributions and benefits will not stand the chronic unemployment to-day.

The eight looms per weaver scheme, however, is being put through in Lancashire, where more than one-third of the operatives are already out of work. The Labour Government’s Committee of Enquiry, headed by J. R. Clynes, the Labour Minister, advised the greater rationalisation of the industry with the latest wages-saving automatic looms.

The workers in the Unions are still supporting the leaders who mislead them. Not by changing leaders, but by completely changing’ their ideas about society, is the only way the members can cure the situation.

Let the working class own the machines, etc., in common. Stop improving the machinery for the masters. Organise politically to end this system of profit-making.

* * *

Another "sheltered trade" gone.

The Railway Unions have benefited so much by brilliant leadership that since they got back their 2½ per cent. reduction in wages, short time or dismissal has been the rule in the railway shops. A greater speeding up of the work is the owners’ reply to the cancelled reduction of wages. Now we learn from the Daily Herald of June 17th that owing to the drop in the official cost of living figures, thousands of railwaymen have lost two shillings a week. Seventy-five per cent. of the railwaymen, according to the same authority, are down to the minimum rates of wages. They give the figures of £2 6s. for porters, and lamp-men and permanent way men £2 8s. In the meantime the railway companies have been buying up their ‘bus competitors, the money for which, I suppose, comes out of their losses. The Transport Unions and the Railway Union are now busy squabbling over which Union the members must join. Mr. Thomas, we expect, will add to the railway workers’ prestige by finding a place in the House of Lords. Such are the fruits of conciliation in industrv.

* * *

“The Iron Law of Wages." 

"The corner-stone of Marx’s theory, as expounded in ‘Das Kapital,’ is that labour is the creator of all wealth, but that under Capitalism labour is not paid by the value it produces, but by the price of labour power as a commodity on the market. This price, according to Karl Marx, is fixed by the economic laws under which we live at a point which just secures an adequate supply of labour for industry. This he called the ‘Iron Law of Wages’.”—(H. H. Tiltman in his Life of Ramsay MacDonald.)

The above is an example of the ignorance of Marx’s economics by the brainy bourgeoisie who write about him.

Marx did not call his law of wages the “Iron Law of Wages.” In fact he exposed the “Iron Law” theory, which was taught, not by Marx, but by Lassalle. In his criticism of the Gotha programme of the German Labour Party of 1875, Marx pointed out that the so-called Iron Law of Wages was a mixture of Malthus’ over-population theory with economic facts. The “iron law of wages” presupposes that wages cannot rise owing to an increase of population taking place if the subsistence level is increased. More workers born would crowd the labour market and bring wages down. Too few workers would raise wages, which, in turn, would induce larger families, and thus, through competition for work, wages would again fall to their former level.

Marx, on the other hand, showed that the cost of subsistence was the basis of wages. The level of wages, however, was not fixed and was not like iron. The union of workers and their struggle played a part in the raising of wages. The standard of living, too, was not fixed, but fluctuated, due to the changing social conditions; the efforts of workers to adapt their way of living to the period they lived in; and the need of employers to adapt the living standards of the workers to enable the speed and efficiency of industry to be maintained or increased.

The really vital factor in overcrowding the labour market was not the birth-rate, but the use of machinery by the employers. The critics of Marx seem to get their knowledge of him from his opponents.

Adolph Kohn

A Queer Party. (1929)

From the October 1929 issue of the Socialist Standard

Mr. David Kirkwood, M.P., writes a letter to the Daily Herald (19th September) giving a corrected version of a speech he made on his party—the I.L.P.

These are his words :—

“The time was not far away when they would have to decide whether their aims could be realised within Capitalism or not. He did not believe that they could. If they could be realised under Capitalism, then there was no use for an I.L.P.”

One can only gasp in amazement at the spectacle of an alleged Socialist organisation which, after existing for 36 years, has not yet found the time opportune to consider whether its aims could be realised within capitalism or not. We implore Mr. Kirkwood to tell us how far away the time for decision is.

Editorial: The Labour Party Drops Its Programme. (1931)

Editorial from the January 1931 issue of the Socialist Standard

A very significant declaration has been made by Mr. Ramsay MacDonald in the House of Commons. He was asked by Mr. Kirkwood whether the Labour Government are prepared to introduce legislation for the purpose of preventing reductions in wages. The Prime Minister replied:—

 Wages, either real or nominal, cannot be fixed by legislation for the wage-earners generally. The Government’s policy is to maintain standards of living and secure as equitable a distribution of wealth as is possible. (Hansard, 26 November, 1930.)

This declaration of policy—or lack of policy—is tantamount to the abandonment of the whole Labour Party programme so painstakingly built up by the efforts of its members during the past thirty years. The Labour Party in office at a stroke sends tumbling down the castle of cards that the Labour Party in opposition had set up. If wages cannot be kept up by legislation, for what purpose did the Labour Party take office? And for what purpose, other than their salaries and to qualify for Cabinet Ministers’ pensions, do they remain there? How does the Government propose to “maintain standards of living ”? Mr. MacDonald does not say. He does not know. His Cabinet have been in office since June, 1929, and during that year and a half, standards have not been kept up. According to the records of the Ministry of Labour, published monthly in the Labour Gazette, nearly two million workers have had their wages reduced between June, 1929, and October, 1930 (the last published figures). The number who have had increases is not one-tenth as large. The net decrease in wages, after deducting the increases, is equivalent to more than £6 million a year; to which must be added the decreases in pay of clerical workers, agricultural workers, shop assistants, Civil Servants, and others not included in the Ministry’s figures.

To that must be added, again, the far greater losses to the workers caused by the growing volume of unemployment under the Labour Government. On a most moderate estimate, the increase in unemployment has meant a loss in wages amounting to £100 million a year over and above the loss in wages which was going on before the Labour Ministry came in.

The Labour Party’s own “Index of Real Wages,” published monthly in the Labour Bulletin, shows the industrial workers to be 6 per cent. or 7 per cent. worse off now than they were when the Labour Government took office. The Index in question allows for the percentage of unemployment and also for the decline in prices, but takes no account of short-time working.

It may be said that the workers’ losses are not the fault of the Labour Government; they have done their best. But that is only another way of saying that the Labour Party has not got any policy which will meet the situation in which the workers find themselves under Capitalism.

It is also urged in their defence that the Labour Government do not enjoy a Parliamentary majority. They have to depend on Liberal votes, and therefore the Labour policy cannot be applied. But taking office as a minority is itself part of the Labour policy. They are there by the unanimous vote of the Parliamentary Labour Party (including Maxton and his group), taken at the first meeting after the General Election.

From the right wing to the most left of the several fragments into which the I.L.P. is now split, the Labour policy is the one of trying to improve the workers’ standard of living by an accumulation of reforms. But of what use are reforms if every reform is accompanied or followed by a fall in wages? Of what use is a reformist political party which cannot use its political power for the purpose of preventing reductions in wages? Mr. MacDonald’s reply to Mr. Kirkwood is an admission of abject failure; an intimation to Trade Unionists that they have supported the Labour Party to no purpose; a curt reminder that they must fight their own battles without help from those whom they have lifted into eminence.

In practice they have not been helped, but hindered. The wages of large bodies of workers in the woollen and cotton industries, in agriculture, and in the Civil Service, have been reduced by the Government itself or by bodies appointed by the Government.

The Government’s failure is fast exposing the hollowness of the case put forward by all the parties which believe in reforming Capitalism. They promised that a period of "practical work” performed by a Labour Government would convert the workers to Socialism. Experience of Labour Government, if we may judge by the elections, is fast converting the Labour supporters back to Liberalism and Toryism.

When the red flag flew over Glasgow (2019)

Glasgow 1919

From the February 2019 issue of the Socialist Standard

‘Engineers!…We want your demands to be more exacting, and more deep the principles you struggle for. Fight with your brothers of other industries for these bigger and nobler things as earnestly and solidly as you recently fought. Fight politically as well as industrially, then, with the principle of the class struggle to guide your fighting’ (Socialist Standard, June 1917).

The story of Red Clydeside is one of disappointment in that there was no ‘revolutionary’ movement. Willie Gallagher observed in his memoir, Revolt on the Clyde: ‘A rising was expected. A rising should have taken place. The workers were ready to effect it; the leadership had never thought of it.’ There is little evidence that any such revolt was expected.

The Clyde Workers Committee (CWC), an informal network of shop stewards, was formed in 1915 to defend workers’ interests, further their industrial demands, and for some of them, to oppose the war. Under pressure from the CWC, a general strike in pursuit of a 40-hour working week was called for 27 January, 1919. It led to ‘Bloody Friday’, when strikers clashed with police in George Square on 31 January amid ‘unprecedented scenes of violence and bloodshed’ as the Glasgow Herald put it.

Myths circulate and re-circulate, and new ‘facts’ add to the mix. The troops and tanks in George Square, Glasgow is an example of imaginary incidents. A riot happened. There is no doubt about that but it was a police riot, who launched a violent attack on the strikers. The police had anticipated that their baton charge would drive the crowd out of the square – not so. Not only did the strikers and their supporters stand their ground but drove the police back. There was a re-grouping and the workers marched to Glasgow Green. When they reached the Green the police were waiting, ready to charge again. Undaunted the strikers pulled up the park railings and chased off their attackers. For the rest of the day and into the night, sporadic fighting took place throughout the city.

The event has to be viewed in the context of the capitalist class’s paranoia about revolution that they saw occurring in Russia, Germany and other places. The Lord Provost of Glasgow wired to London portraying the strike as an unconstitutional threat and indicated that the strikers’ demand was an ultimatum. ‘It is a misnomer to call the situation in Glasgow a strike – this is a Bolshevist uprising’ were the words of hysteria from the Secretary of State for Scotland. The Lord Advocate later concluded that in the strike ‘every act of revolution was in progress.’ The over-reaction to a threat from the working class demonstrates the willingness of our rulers to suppress any challenge to their political and economic supremacy. Emanuel Shinwell described the 40-hour campaign as ‘not revolutionary in character … It was attributable solely to the fear of unemployment in the near future and the desire to make room for the men from the Army and the Navy.’

There are lots of myths, including that the government used tanks against protestors but they didn’t. 10,000 men and six tanks were dispatched to Glasgow, arriving after the rioting was over. No-one was shot, beaten up or forced back to work by the army. No rioters faced troops with fixed bayonets and there were no tanks in George Square.

For years a photograph of a tank making its way through crowds at Glasgow’s Trongate was wrongly identified as dating from January 1919 but the picture was taken in 1918 during a campaign to promote war bonds. The ‘all the troops were English’ myth can be dismissed as the press at the time listed and photographed men from Scottish regiments such as the Seaforths and the Gordon Highlanders plus the 1,600 men from two English regiments (one of them based, in 1919, at Bridge of Allan, near Stirling, the other in Co Durham). Glaswegian troops at Maryhill, however, were confined to barracks as a precautionary measure. The soldiers stood guard at railway stations, tram depots, power plants and gas-works, and, with the still fresh memory of the GPO in Dublin’s Easter Rising, the city’s main post office.

The other exaggeration was the revolutionary nature of Clydeside’s Independent Labour Party (ILP). This was a reformist left-wing party whose vast majority of leaders were far from Bolshevik revolutionaries. The ILP in 1922 returned several MPs, among them James Maxton, David Kirkwood, John Wheatley, Thomas Johnston, John McGovern and Shinwell. They were sent to Westminster in a wave of left-wing enthusiasm.

David Kirkwood would later reflect, ‘We were going to do big things. The people believed that. We believed that. At our onslaught, the grinding poverty which existed in the midst of plenty was to be wiped out. We were going to scare away the grim spectre of unemployment … Alas, that we were able to do so little!’

Clydeside was far more revolutionary in hindsight than it ever was in reality. Iain McLean in The Legend of the Red Clydeside asserted that what took place was neither a revolution nor ‘a class movement; it was an interest-group movement’, engineers defending their skilled status and their pay differentials.

ALJO

ILLUSION
“Had there been an experienced revolutionary leadership, instead of a march to Glasgow Green there would have been a march to the city’s Maryhill Barracks. There we could easily have persuaded the soldiers to come out, and Glasgow would have been in our hands.” (W. Gallagher, Communist Party)

REALITY
“This was a widely supported trade union dispute but it was a reformist not a revolutionary gathering and it turned into anarchy only because of political nervousness in London and maladroit policing.” Professor John Foster, University of West of Scotland (Observer, 6 January)

Editorial: The Rent Strike Stunt. (1932)

Editorial from the February 1932 issue of the Socialist Standard

The Independent Labour Party, like all reform parties, is constantly faced with the need to discover a new programme to hide the failure of all the old ones. Family Allowances and the Living Wage Scheme are already fading from the picture and going the way of nationalisation, bulk purchase, housing schemes, rationalisation, trade boards and all the rest of the junk that has served the purpose temporarily of keeping alive the illusion that the I.L.P. is doing something and getting somewhere. At the moment the nationalisation of the banks is sharing the honours with public utility corporations and with the latest stunt, a “rent strike." The I.L.P. are backing the London and Manchester Trades Councils in a demand that, wages having fallen, rents should be reduced. The I.L.P. has, time after time, pointed to Vienna as a city where their ideal of low rents has operated to perfection, and they have talked of the millions of pounds supposed to have been saved to the workers by the Rent Restriction Acts in this and other countries. The whole of it is based on illusion.

Rents were kept low here and in every European country at the instigation of the employers. They knew that high rents would raise the workers’ cost of living and leave the employers to face either lowered efficiency among their wage-slaves or the alternative of paying a larger wage. Rent restriction has lowered the average cost of living, and wages on the whole have fallen proportionately, leaving the workers just where they were before. Even where this policy of plundering landlords to help industrial capitalists has been carried to its furthest point, as in Vienna, the workers were not the gainers, but their employers. In 1925 the International Labour Office published the results of an inquiry into rents, wages, etc., under the title “The Workers’ Standard of Life in Countries with Depreciated Currency.” The Report dealt especially with the effects of rent restriction. Writing of Germany, it says:—

   Since wages no longer had to cover rent, the cost of labour was correspondingly reduced. (P. 37).

In other words, the employers reaped the advantage. In Austria the same thing was found by the investigators:—

  Most of the workers were in the same position as those in Germany; they had practically no liabilities under the heading of rent, but the corresponding amount was not included in their wages. The actual gain was thus nil. (P. 97).

The Report continues:—

  Industry, on the other hand, benefited, as in Germany, by the reduction in the cost of most labour by the full amount which rent represented in wages before the war. (P. 97).

In Great Britain the policy of rent restriction has had the further defect that it has badly hit the section of workers who have had to get into houses whose rents have been “decontrolled.” The average wage has not allowed for the exceptionally high rents in decontrolled houses, and these individuals have been the sufferers.

The only sound policy for the working class under capitalism is to use whatever strength their economic organisation can give them to press for higher pay from the employers, not to lend themselves to stunt campaigns whose only result will be to make reputations for a few Labour leaders, and help the industrial capitalists to secure more profit. The workers should, however, face up to the limits of Trade Union action. Socialism is the only remedy for the workers' poverty problem, and Trade Union action cannot bring about Socialism.

Returning to this latest I.L.P. stunt, we read in Forward (December 26th) an amusing account of what happened some years ago in the last Clydeside rent strike. Mr. David Kirkwood, M.P., made a fighting speech in which he said that there would be no evictions in Clydebank "except over my dead body." In spite of this, as his local critics complain, the evictions took place, but the "dead body" goes about—talking as usual.

The Case Against The 'Living Wage'. (1931)

From the March 1931 issue of the Socialist Standard

Maxton's Curious Mixture.

On February 6th, Mr. Maxton, on behalf of the Independent Labour Party, introduced into the House of Commons a Living Wage Bill. -

The Living Wage, as defined in the Bill, "means a wage at least sufficient to meet the normal needs of the average worker regarded as a human being living in a civilised community, including the satisfaction of reasonable minimum requirements of health and efficiency and of cultural life and the provision of reasonable rest and recreation."

The amount of this living wage is to be determined by a Committee, appointed by the Board of Trade, "and which shall include among its members at least three working housewives, three representatives of trade unions, and three representatives of co-operative societies.”

The Committee is to take into account "actual retail prices and other costs of living,” in addition to various other factors, and is to review the wage at least once a year. 

The wage is then to be made obligatory on Government departments, local authorities, Government contractors, and finally on all industries. That is to say, no industry may pay less than this minimum. Should any industry not be able to afford the wage, a body called the "National Industrial Reorganisation Commission” is to have power to re-organise the industry.

The I.L.P.'s Main Plank.

Mr. Maxton explained in his House of Commons speech that the living wage proposals are the basis upon which the whole programme of the I.L.P. is built up. The programme includes many items, from increased pensions and increased unemployment pay, to nationalisation of the banks and the principal industries, and State control of the import and export trade; but "this proposal for a living wage is a pivotal proposal round which all the others are arranged.”

Miss Jennie Lee, M.P., whose name also appears on the Bill, went further and admitted that the "pivotal proposal” cannot be applied without the other proposals also being applied. She said :—

  I do not pretend that this Bill could be carried into effect without great stress and great difficulties in the country. I believe that it would mean that we should have to go in for controlled prices, and once we got on to controlled prices we shall have to control the banking system.

Let us now examine the theory behind the Living Wage Bill and ask ourselves whether its effects will be worth the time and trouble necessary to apply it. Is it worth the "great stress and great difficulties,” together with all the further measures which Miss Lee admits are necessary?

What is a Living Wage?

The backers of the Bill claim to have defined a living wage. But have they? What are "normal needs”? What is an "average worker regarded as a human being”? What are the "reasonable requirements of a civilised community”? What amount of rest and recreation are "reasonable”?

The employers regard as "reasonable” any wage which makes the worker an efficient producer of profits. Hundreds of thousands of workers in the cotton mills, on the railways, in the Civil Service and Post Office, on the land and in the mines, are getting well under 40s. for a full week's work. Miss Dorothy Evans, Secretary of the Association of Women Clerks, is reported in the Daily Herald (February 19th) as stating that women clerks in the Civil Service, 21 years of age, are paid as little as 24s. 7d. in the provinces and 31s. in London. The Daily Herald on February 17th reported that the pay of farm workers in Suffolk had just been reduced from 30s. to 28s. a week.

This last case is of special interest because agricultural workers already have their “living wage” fixed by law! The Agricultural Wages Act, 1924, passed by the Labour Government (which the I.L.P. claimed was an essentially I.L.P. Government) lays it down that the minimum wage paid to an able-bodied agricultural worker shall be

   adequate to promote efficiency and to enable a man in an ordinary case to maintain himself and his family in accordance with such standard of comfort as may be reasonable in relation to the nature of his occupation:

Translated into hard cash, this means 28s. or 30s. a week!

All Mr. Maxton proposes to do, in effect, is to substitute his nebulous phrase for the nebulous phrase in the above Act, and apply it all round.

Employers To Fix The Wage.

The Bill provides that the wage shall be fixed by a Committee including working women, trade unionists and co-operative society representatives.

The Bill does not say how many persons the Committee shall consist of, nor does it say what other interests are to be represented. It is, however, to include employers.

When the seconder, Mr. Kirkwood, M.P., was asked if employers are to be excluded, he replied, “They are not excluded ” (Hansard, February 6th, col. 2297).

So we have this extraordinary position put up by a so-called working-class party, the I.L.P., that they want the employing class to have a hand in fixing what is a living wage for the workers whom they exploit!

It will be noticed, also, that the co-operative societies are expressly brought in. Why? Does it need legislation to allow the co-operative societies to pay their own employees a living wage? The co-operative societies constantly have strikes and lockouts in their concerns, and have on several occasions been charged by their employees with paying less even than the standard rates of pay. Within the past few months there has been a strike of co-operative employees—the insurance agents. Yet the I.L.P. wants the co-operative societies, with their characteristic petty employer's outlook, to sit,with other employers on the Living Wage Committee. The extent to which the co-operative societies exploit the workers in their employ is shown by the amount of wages, and the amount of profits. The retail distributive societies in 1929 (see New Leader, February 6th) paid an average amount of £130 during the year to its wage-earning and salaried staff. The surplus left after meeting all trading expenses was over £22 million pounds, equal to a further £148 per head of the staff of 176,000. They could double the wages of their workers and still have a surplus. Why does not Mr. Maxton start his living wage campaign among his friends, the co-operators?

Another important point emerges from the composition of the Living Wage Committee. It is usual on committees of this kind for the Government to appoint equal numbers of workers’ and employers’ representatives, together with some so-called "neutral” members representing the Government. Seeing that the Labour Government during their present term of office have appointed at least two wage committees which have recommended lower wages, it certainly cannot be assumed that Labour Government representatives on a Living Wage Committee would press for a wage higher than present wages. On the other hand, the co-operators who would be there to look after their own interests as employers are regarded by Mr. Maxton as being on the workers’ side. So that in fact the Living Wage Committee will be dominated by employers.

Living Wage or Lower Wage?

How much will the minimum wage be? We are given some indication that it will actually be lower than the present average wage of industrial workers.

Miss Eleanor Rathbone, M.P., the enthusiast for lower wages by means of family allowances, gave her conditional blessing to the Bill, but wanted to be assured that the wage would not be enough to keep a family, but only enough to keep a man and wife. Miss Jennie Lee, M.P., gave the desired assurance (Hansard, February 6th, col. 2313). The effect of this is obvious, and it is the effect which Miss Rathbone makes no secret of desiring. It would mean that all unmarried and childless workers would be paid less than the standard rate of wages—to the benefit of the employing class, who would get a supply of cheaper labour. In view of the composition of the Committee, the “living wage” might well be below the present average wage of industrial workers.

The Australian Model.

A memorandum attached to the Bill refers to the Australian attempts to fix and apply a “living wage.” The reference is interesting, because it gives a practical illustration of the futility of the whole scheme. In Australia a “living wage” was fixed before the war, and the scheme has had a run of about twenty years.

Mr. Maxton claims for the living wage proposal that it would permanently raise the standard of living of the workers, and be a definite step towards Socialism. Australian experience shows that it does neither.

In the Australian Senate, on November 14th, 1930, Senator Daly, for the Government, gave the information that, after allowing for the increase in unemployment and the increase in prices, the average real wage in 1929-30 was almost exactly the same as it was in 1911-12. Then in January of this year the Arbitration Court ordered a reduction of 10 per cent. in the basic wage (see Daily Telegraph, January 23rd). This reduction is quite separate from the regular adjustments for alterations in the cost of living. So that after twenty years of “living wageism” the Australian workers are now 10 per cent. worse off than when they started, and are not one iota nearer to Socialism than they were then. That is how capitalism has worked havoc with all the pretty but false theories of the Australian reformers of capitalism. Capitalism here would quickly falsify every one of the flashy. promises of the I.L.P.

Capitalism and Wages.

The living wage scheme is as full of holes as a sieve. Every attempt to fix a statutory wage has run up against the snag of unemployment. If the living wage is not higher than the existing one, it is useless. If it is higher, it will give the employers an added inducement to instal labour-saving machinery and thus increase unemployment. This tendency to instal machines operates in agriculture to-day, in spite of the low level of wages fixed by the Wages Committees.

How is the living wage to be enforced? Anyone who has seen at close hand the operation of the Agricultural Wages Act knows that in many districts the minimum rates are largely ignored. The men prefer to take less than the minimum rather than lose their employment. What remedy has the I.L.P. to offer for that? What will it do with the older men and, those not up to the average standard of fitness who will be sacked to make way for young and fit workers?

It is no answer to say that the I.L.P. also proposes to nationalise various industries. State capitalism, as applied in the Post Office, leaves the worker subject to practically all of the forces which face him in private capitalist concerns. The process of selection and throwing out the less fit men and women goes on in the Post Office as on the land and in the mines and elsewhere, although in the Post Office the method of securing the same end is slightly different. The workers in State industries suffer the additional disadvantage that they cannot seek similar employment with a different employer.

Patching Up Capitalism.

And what justification can the I.L.P. offer for a proposal which in effect is patching up the capitalist system? Mr. Maxton expected that criticism and tried to forestall it. In an interview given to the New Leader (February 6th) he said :—

  I admit that the old method of approaching the living wage problem would be correctly described as patching up capitalism. . . . Our approach is fundamentally different.

This, incidentally, is an admission that the I.L.P. ’s past policy for most of the period of the party’s existence has been a policy of patching up capitalism, as indeed was avowed by Mr. Wheatley in reference to the Housing Act he introduced as Minister of Health in the 1924 Labour Government.

The only difference Mr. Maxton could point to was that the present scheme is not based on what any particular industry can afford to pay, but on what the “nation” can afford. This is a distinction without a difference. The two schemes have precisely the same fundamental defect that they leave the capitalist system intact, and leave the capitalist class in ownership and control of the means of life. Does Mr. Maxton think that the capitalist class as a body will show a different attitude towards the wages question because they are approached nationally instead of industrially? He gives his own answer when he quotes Civil Servants as being people who are already “guaranteed a minimum wage” and whose good fortune he wishes to extend to other workers. Thousands of Civil Servants—adults working a full week —receive less than 40s. Yet influential bodies of employers constantly complain that the levels of pay in the Civil Service are too high and should be reduced. A demand has just been made to the Government by an employers' association, that Civil Service wages should be reduced to the level of the depressed export trades (see Times, February 20th). A postman, aged 32, charged with theft at Kingston, on February 21st, was receiving 49s. Id. per week. Out of this he had to keep a wife and two children and was paying 27s. 6d. a week rent (Evening News, February 21st). Mr. Maxton is a supporter of State capitalism as it exists in the Post Office, and wants to solve the workers' problems by extending that system.

Socialism The Only Remedy.

The only solution for the economic problems of the workers is Socialism. Chasing after the endless revivals of old fallacies evolved by the perverted ingenuity of the I.L.P. has brought them no lasting advantage. It has diverted their attention from things that really matter and has left them as far as ever from achieving Socialism.

Even as regards making the best of capitalism, the living wage scheme is an illusion. It is no substitute for trade unionism—Mr. Maxton admits that—it is not an improvement on trade unionism, and it is open to serious objections from which the former is free. In Australia the 10 per cent. reduction in the basic wage, referred to above, has taken place in spite of a Labour Federal Government. Resistance to the award of the Arbitration Court set up by the Australian Maxtons devolves upon the trade unions.

A measure of the irresponsibility of the I.L.P. is provided by the speech of Mr. David Kirkwood, seconding the Bill. He was asked from what source any higher wage would come. Instead of replying that an increase in the wages of the workers would be at the expense of the employers' profits, he informed an amused House of Commons that wealth can be created without limit merely by printing more bank notes.

It does not seem to have occurred to Messrs. Maxton and Kirkwood that if their money theory is sound, it is a sheer waste of time and trouble to print bank notes at all. Why not issue free blanks to the workers and let them write their own bank notes? Or, better still, solve the street litter problem by presenting used-up bus tickets over the counter in payment for goods ?

It was a curious but appropriate coincidence that on the day of Mr. Kirkwood's speech a very similar purveyor of quack nostrums—a German who collected money on the strength of a claim that he knew how to create gold out of base metals— was sentenced to a longish term of imprisonment. Political quacks who trade on the ignorance and trustfulness of the working class suffer no such penalties.

Edgar Hardcastle

The "Friends" of Scottish Workers (1945)

From the April 1945 issue of the Socialist Standard

Since the working class was granted the vote there has never been a shortage of busy-bodies who—hand-on-heart, have declared their ardent sympathy and interest in workers' problems.

When elected, of course, the workers become the "constituency" and each M.P. "looks after his constituency" and looks ahead to the next election. W. Gallacher, A. Woodburn, D. Kirkwood and other Parliamentary luminaries are engaged at the moment—amid other equally laudable pursuits—in pressing the post-war claims of Prestwick Aerodrome. All three are campaigning for the "Forth Road Transport Bridge and have endorsed Hector McNeil, Labour M.P.'s efforts to modernize the Clyde so that the largest ships can be docked at Greenock and Glasgow"

Other Scottish M.P.'s—with an eye on their constituency—are eloquently expatiating on Scottish needs and problems. The "Daily Express," February 15th, gave considerable space to a report of a Parliamentary debate on a Town and Country Planning (Scotland) Bill. Thos. Johnston—the mover the bill said: "In the Tradeston division of Glasgow, for example, there are 127 houses or more than 700 persons to the acre." He said: "The measure won't bring a new Jerusalem to Scotland, but would assist local authorities to deal with problems." In short, a confession of impotence unuusal in its frankness. In the came report there is a gem of a phrase coined by Campbell Stephen, I.L.P., M.P.:— "We in Scotland have had a raw deal. Our association with England has not given us an opportunity to deal with housing and industry." Characteristically, however, W. Gallacher, M.P., capped the lot with "Effete Sassenachs were incapable of dealing with the planning problems which confronted them in Scotland and in consequence the Sturdy Scot had been bound hand and foot and dragged behind them in this miserable bill." He then went on to talk about the class war, which, he said, had done a thousand times more damage that the War.

Have the Scottish workers any doubts that Gallacher, Woodburn, Campbell-Stephen and Co., are really interested in working class affairs? Could they have?

Those of them who have, however vaguely, identified Socialism with an international outlook will be bewildered at Gallacher's talk of "effete" Englishmen and "Sturdy" Scots, particularly in view of his later and inexplicable reference to a class war.

They will think of "effete" "Scots," who bide here in Scotland for the "Glorious 12th" and "sturdy" Englishmen who "carry hods" here all the year round.

Supporters of the "Socialist" I.L.P. should feel uneasy about Campbell Stephen's "Our association—hasn't given us an opportunity."—They will, or should wonder who "Our and us" means and conclude that if it was Scottish workers—that is was Capitalism rather than association with England that had been and still is the source of working class problems.

The England, Irish, Welsh and American capitalists with investments in Scottish aviation, building, shipping and transport will applaud the efforts of the Scottish Communist, Labour and I.L.P. M.P.'s.

Kirkwood has already earned the title of "M.P. for John Brown's" among Clydeside workers: now it will be Woodburn "M.P. for Scottish Airways," McNeil "M.P. for Clyde Trust" and Gallacher "M.P. for Arrols and Wimpey's."

What all this has to do with the interests of the working class in Scotland no one knows. Perhaps the M.P.'s could tell us?

It certainly does not require genius or a microscope to perceive that Scotland, like every other country, has a population which is divided into a majority who are non-owning workers and a minority who are non-working owners. And that after centuries of joint development with England that all means of producing wealth are owned and controlled by large concerns whose shareholders are spread throughout Britain and the rest of the world.

Just as certainly it does not need extraordinary intelligence to know that workers in specifically "Scottish" concerns merely receive in wages enough to continue working—barely enough, as for workers everywhere.

The Scottish workers don't have to attend a University to know that the ruling class of Scotland since the days of the Highland "clearances" referred to by Marx in biting terms in "Capital" (Vol. 1), are any less brutal and avaricious than their English counterparts. Or do they?

Thos. Johnston's burning indictments of the Scottish ruling class make curious reading nowadays when he is Secretary of State for Scotland and seems to be on terms of easy familiarity with the present scions. The same remark applies to old copies of the "Forward" during his period of editorship.

There is a story told by John S. Clarke regarding Lenin's estimate of Gallacher in which he described Gallacher as a "_____ fool"; a story which Gallacher repudiated indignantly and inexplicably as "an insult to Lenin." Whether the story is true or otherwise is unimportant but at least reflects a view of Gallacher, increasingly common, among workers with memories and intelligence.

The ability of the Gallachers, Johnstons, Maxtons, Kirkwoods in getting away with their anti working class nonsense and buffoonery rests on the—as yet, political ignorance of the Scottish workers.

Their political and social interests—like their fellows everywhere—are opposed to those of their masters and does not lie in schemes which will enable their employers to wring yet more surplus value from their skill and energy.

The political power that enables the privileged class to retain their social privilege is vested in control of the machinery which has its centre in Westminster.

This fact enables the Scottish, English and Welsh working class to co-ordinate their task of intelligently wresting this supremely vital control of political machinery from the hands of their class enemies—the masters; a co-ordination which has a fit and ready instrument in the Socialist Party of Great Britain.

The duty of the Scottish workers—like the workers the world over—is to-day—not tomorrow—to attempt an understanding of the basic nature of their problems and having done so, to organise in the Socialist Party democratically to take over power to establish Socialism.

Capitalism in Scotland, in England, America, Germany, Russia, in every country in the world produces the same set of problems to workers—poverty, unemployment, insecurity, war, and so on.

These problems arise with sublime impartiality as to forms of government, climate and previous political history, they arise in democracies and dictatorships in the two hemispheres and in big and wee countries.

The Socialist analysis and solution is international in scope and outlook and the only way in which the Scottish workers can assist their fellows in India and Greece as elsewhere is to study, understand and organise for Socialism. As they do so, the boloney of the Labour, I.L.P. and Communist M.P.'s will become clearly apparent. "Our" problems are the problems arising from the capitalist nature of Society which is now world-wide and the solution for "us"—World Socialism in which wealth will be produced, controlled and enjoyed by all.

Thomas Anthony.

Scottish Home Rule. (1927)

From the February 1927 issue of the Socialist Standard

One of the favourite futilities of the Clyde group of Labour M.P.s is to advocate Scottish independence. It has never been explained in what way capitalism administered by Scots from Edinburgh will be better for Scotch workers than capitalism administered from London. Mr. Kirkwood has, however, now learned by experience that it may even be worse.

At an Independent Labour Party meeting in Edinburgh he spoke as follows: -

Referring to a deputation to the Secretary of State for Scotland on behalf of the starving children of Dunbartonshire, he said "the officials of the Scottish Office were harder to deal with than those of the English Office."—Manchester Guardian, January 15th.

The simple truth is that capitalism will be just the same as far as the working class are concerned. What is required is another system of society, not new administrators for the old one.